XPost: nf.general 
 From: butlerandreww@nospam.hotmail.com 
  
 Genius wrote: 
 > Banks should only be used for saving emergency cash that you might need to 
 > repair a broken tooth or car trouble or other unexpected and possibly 
 > expensive expenses. The other reason is for having enough cash there to pay 
 > bills such as rent and utilities. 
 > 
 > Any other money you have is being wasted by putting it in a bank. Inflation 
 > last year averaged 2.6 percent. If you are earning only 1 percent interest 
 > on your banking account you are losing 1.6 percent of your money in that 
 > year because the money you put in is not worth as much in today's dollars. 
  
 Not sure I understad this. I understand inflation alright, but if I put 
 money in the bank I gain interest. If I put it under the bed or in a 
 book I don't. This in mind, I don't understand how I am losing money by 
 using a bank. After 12 months $800 that I put in my bank has increased 
 but the $800 in my top drawer is still $800. Inflation has nothing to do 
 with it. 
  
  
 > 
 > The bank takes your money and invests it in companies through the stock 
 > market, municipal bonds, and other financial instruments. They make 10-15 
 > percent on your money but only give you back 1 percent. 
  
 And thats a business.  Cell phone companies buy a leather case from a 
 distributor for $3 and sell it to you for $30+ 
  
 > 
 > Another way they make money is by lending you back your money at anywhere 
 > from 4 percent for a mortgage to 8 percent for a car loan. Again they only 
 > pay you  1 percent interest on your savings but charge high interest when 
 > you take a loan of your own money. 
 > 
 If you had that sum of "your own money" you would not be borrowing it. 
 You borrow money because you do not have enough to cover your 
 requirement, thusly, you're not borrowing YOUR money. Thats called 
 "withdrawal" not borrowing. 
  
  
 > The thing I don't like is when they have your money and make 10-15 percent 
 > interest but only give you one percent. That is lopsided. But that is why 
 > they are so rich and have billions in profit. 
 > 
 > To get around the loss of the value of your money due to inflation and 
 > having your money in a bank that doesn't even cover that basic amount you 
 > must invest where the bank does. That is in equities, mutual funds, and 
 > other financial instruments. 
 > 
  
 Again, there is nothing you can do to prevent the changing value of a 
 dollar due to inflation. Where you store your cash does not directly 
 affect the value of $1 in 1984 versus 2006. 
  
 > If you really want to save money a savings or checking account is the worst 
 > way to do it. 
 > You can put your money in a DRIP (Dividend Reinvestment Plan). Companies 
 > such as Coca-Cola will let you invest directly with them and pay about 8 
 > percent interest yearly. Then they reinvest the interest to buy more shares 
 > for you. You are guaranteed the interest rate a long as you are in the 
 drip. 
 > You can also put in as little as $25.00 per month. Many companies offer 
 this 
 > and you beat inflation and actually earn some money on your money. After 
 all 
 > there are only two ways to make money and that is through your own work and 
 > your money working for you. Make the most of it. 
 > 
 > Always remember to get the highest interest possible if you want to 
 prosper. 
 > Putting your savings in a bank account actually causes you to lose money 
 > because of inflation if nothing else. 
 > 
 > Follow this rule about interest to determine how long it will take your 
 > money to double. 
 > Take the number 72 and divide by the interest rate. 
 > For a banking account that pays one percent interest; 72 divide by 1% = 72 
 > years for your money to double. Obviously not a good choice for saving. You 
 > actually lose money because of inflation which is usually between 2 and 3 
 > percent. 
 > But lets say you invest in a money market fund which pays 3%; 72 divide by 
 3 
 > =  24 years for your money to double. You might break even because of 
 > inflation which has eroded your savings. 
 > A good mutual fund which averages 10% would be; 72 divide by 10 = 7.2 years 
 > for your savings to double. 
 > So you see it is most important to get a higher interest than what the bank 
 > offers if you want to keep your savings ahead of inflation and actually 
 earn 
 > money to buy your home or for retirement. 
 > 
 > It just boils me that banks pay so little interest on your money but are 
 > constantly making billions off it. 
 > 
 > 
 ..aaaand you work for which financial advisor/investor company? 
  
 Thanks for making me think today! 
  
 A 
  
  
  
 > 
  
 --- SoupGate-Win32 v1.05 
  * Origin: you cannot sedate... all the things you hate (1:229/2)