“If you borrow a thousand Pounds, the bank owns you. If you borrow a million pounds, you own the bank.” John Maynard Keyes (paraphrased)
These days the banks and financial companies are fighting to control your money because they know a fundamental truth about Wealth Creation:
‘The more money moves around, the more wealth is created.’
The banks make money when your money moves around, and the higher the frequency with which that happens, the more money is created. Why do you think that despite the administrative work it creates for the banks they have continued to make it more and more simple for you to move your money around? More and more ATMs are springing up everywhere, even in corner shops.
Technology today has enabled money to move around in a heartbeat, and all this liquidity is good for the general economy. Every time that money moves around, value is created, and someone somewhere, usually the banks harvest some of this value. They either charge you direct fees, or there is either unpaid interest or hidden cost inherent in every transaction.
For example, every time you get towards the end of repaying the bank a loan you owe them they are quite happy to give you another loan, to restructure the first. Often when this happens you can bet that you are paying hidden costs. They calculate it in such a way that you probably think you are saving money, which is seldom the case. What they are offering you is only convenience. They are the ones making money while you pay for the convenience.
Don’t get me wrong; it is not a bad thing for your bank to make money so long as you are making money as well, or getting something in return for the transaction. Always look out for the win-win situation, not a lose-win one.
There’s an interesting old banking adage, which is known as the 3-6-3 Rule:
‘Pay 3 percent interest on savings, charge 6 percent interest on loans and head for the golf course at 3 o’clock.’
Banks earn the bulk of their profits from the fees they charge for arranging your loans. Then they turn around and sell these loans, including its income to other banks. They are all making money using your assets.
One way to accelerate your wealth faster is to learn to do what the banks do, not what they say. Banks are known to encourage you to leave your money in savings accounts to earn pittance in interest. Then guess what, they turn around and do the exact opposite. They start moving your money around as fast as they can to earn them more money.
What do you think will happen to your money when you learn to accelerate its movement? You will be able to capture more interest and other income hitherto only being captured by the bank. You most definitely will be able to gain more ownership and control over your money. You will reach your financial goals faster.
Wealth comes through ownership and control, and from the movement of money.
Not many people realise how much wealth can be created by the controlled movement of money. I found this to be extraordinarily true last year when I helped a client of mine septuple her net worth in one year. By a combination of movement of assets from stocks and shares into property and some creativity, we did not double, nor triple, but managed to increase her net worth SEVENFOLD by simply moving her assets from one asset class to another creating value along the way. Despite what I did know, to see this done in real life was just phantasmagorical! How would you like to do this every couple of years?
So when the banks tells you that the longer you leave your money with them, in savings accounts, guaranteed ISAs etc. the more money you will have in the future, think again. Instead, find a way to leverage your money with controlled movement to create more money for yourself. If you don’t know how, just learn how. It’s as simple as ABC. Better still, you will reach your money goals sooner.
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