Has the Government Brainwashed You Yet?
I know what you’re thinking: “But bank deposits are insured, Toyin!” As a bank depositor, your money is backed by the good faith and power of the US government and insured by the Federal Deposit Insurance Corporation for up to $250,000. That’s comforting, but not comforting enough to allow your bank to pay you peanuts while it uses your money repeatedly to earn 20 or 30 times what they are paying you in interest.
Wouldn’t it be better for the banks to share the profits with you? No, of course not! That means less profit for them. Besides, the average earner isn’t educated enough about money to count up the costs of letting banks keep their money. Your typical worker wants to work, save, and trust private banks to hang on to their money for them so it’s there when they need it. The worker isn’t interested in finding alternatives so his money can work for him. And that’s exactly what your friendly neighborhood banker is banking on (pun intended).
Are you one of those people who prefers safety to education? You prefer to hang on to what you have so you don’t have to take the risk of getting more? If that is the case, then the banks and their FDIC is for you. If you’re feeling a little aggravated by this whole racket, read on.
Let me preface this next section by telling you that I am not against banks and I think federal deposit insurance is an absolute necessity. But I also think we fool ourselves into believing sitting money retains its value. It doesn’t. With just a little work and the willingness to do try something new, you can make your money work for you by finding an investment that is just as safe as – or safer than – the FDIC. This is a vehicle that is almost guaranteed to preserve your capital, minimize your risk and increase your return ten fold.
If you know me, you already know what I’m going to suggest here: The magic of REAL ESTATE!
The L Word
Case in point: One day, I called my cousin and asked him the following question: “Do you have any money in the bank?”
“Of course!” he answered.
“Well, how much are you earning in interest?” I returned.
His answer saddened me. He was earning 0.25% in interest on his money. Now, in August 2016, the rate of inflation was 1.1% according to www.usinflationcalculator.com. That means inflation more than quadrupled his interest rate, so his investment wasn’t providing enough of a return to even keep up with inflation.
“Okay, well, how would you like to earn 10 times what your bank is paying you in an investment that may be safer and also guaranteed by law?” I asked.
At first, he was silent then the doubt kicked in. “What are you talking about, Toyin? How can you pay me 10 times what the bank is paying and still guarantee that I will not lose my money?”
I explained to him that I made an offer to buy an investment property and needed some money for a down payment. Immediately, his safety alarm bell went off. I could hear it through the phone, even though he was thousands of miles from me.
He shot out his first question with the full intention of shutting the opportunity down if I stammered on my answer. “How much interest are you going to pay me?” he asked. Then, “How can you guarantee I will not lose my money?”
There’s that word – the L word. As humans, we’ve all been conditioned to be risk-averse. We look for safety in all human endeavors, even when safety will slow us down and hinder our progress. He was concerned about losing money, not realizing he was already losing money!
The rich get richer by managing risks. The poor stay poor by running from risk.
I would even go so far as to say people who are not educated about money don’t actually know what “safety” is when it relates to money. It is for that reason that they are so guarded about investing and adamant about keeping their money on vacation. At least if it is on vacation, you know where it is. The government – our culture – has brainwashed them and that line of thinking will keep millions of people in poverty throughout their entire lives.