Why You Shouldn't Keep All Your Money in the Bank

Understanding Banking and Investment Strategies with Prince Darnell

Greetings, everyone! I'm Prince Darnell, founder of the Jumping Jack Tax Franchise. Today, I want to share some crucial insights about why you shouldn't keep all your money in a bank. With a background in banking and now a thriving entrepreneur, I've gathered substantial knowledge that could help you make more informed financial decisions.

My Journey Through the Banking Industry

My career started at a small bank called Republic Bank when I was just 18. Over the years, I moved through various roles at TD Bank and Wells Fargo, gaining experience as a bank teller, banker, and financial services representative. This journey not only taught me about basic banking operations but also about additional services like life insurance and annuities that banks offer.

Why Not to Deposit All Your Money in One Account?

One critical concept to understand here is fractional reserve banking. This principle allows banks to keep only a fraction of your deposits on hand — historically around 10%, though this requirement was dropped to zero during the pandemic. What does this mean for your $10,000 deposited in the bank? The bank is only required to keep $1,000 on hand; the rest is used for loans or other investments which you might not necessarily agree with.

This leads us to question the safety and profitability of keeping all our funds in one place when they could potentially be generating higher returns elsewhere.

The Pitfalls of Traditional Banking Accounts

Banks often lure customers with offers like free checking accounts but what isn't widely marketed are the minimal returns these accounts offer — sometimes close to zero. It's crucial to shift our mindset from viewing banks as the safest place for money because there are numerous other avenues just as secure but with better returns.

Becoming Your Own Bank

To truly grow your wealth beyond inflation rates (which can act like an invisible tax diminishing your purchasing power), you need to start thinking like a bank. This means knowing where every dollar goes — auditing your finances daily can be an excellent start.

Steps Towards Financial Independence:

1. Audit Your Finances: Just like how I had to audit my drawer daily as a teller, you should know where every penny of yours is spent or saved.
2. Educate Yourself About Investing: Understanding investment basics is crucial before diving in. Books like Rich Dad Poor Dad by Robert Kiyosaki and Money Master The Game by Tony Robbins can provide foundational knowledge.
3. Practice Before Investing: Consider paper trading where you simulate investment strategies without actual financial risk before putting real money on the line.
4. Use Credit Wisely: Instead of debit cards, use credit cards strategically to benefit from rewards and cashback options without accruing debt since these provide additional benefits that debit cards don’t offer.
5. Invest Actively: Finally, actively seek out investment opportunities that align with your financial goals instead of relying solely on banks’ minimal interest rates.

Conclusion

By understanding how banks operate and taking control of our own finances through strategic investment and savings practices, we can significantly enhance our financial stability and growth potential. For those interested in more detailed advice on taxes, life insurance, bookkeeping or tax planning — feel free to reach out as described earlier or subscribe for more informative content! Remember, don’t just save; invest wisely!

Article created from: https://www.youtube.com/watch?v=FOSKt-mt1Yg