There are some financial gurus who just have to be listened to and in my book the brilliant Ayden Hector is one of those experts. Over the years Ayden has more than proven his worth with some of the advice that he has offered and personally I have found great success thanks to the lessons which he has shown me in his interviews and his web seminars. One thing which I have always remember is him speaking about leaving large sums of money in a bank account and exactly why this was a bad idea, something that has always resonated with me.
If you have a large chunk of cash, here is why you have to make sure that you put it to work.
Terrible Interest
The banks offer a horrendous interest on the money that you have in the bank, and this is despite the fact that they are actively using your cash. It is no secret that banks use investments for trading and this is par of the agreement that you sign when you join. This is all well and good based on two things, the first being that you always have access to all of ‘your’ money, and the second is that they are compensating you for the use of it. A 0.5% interest rate is worthless and you should avoid it at all costs.
Inflation
You also have to invest in line with inflation because of all of that money just sits there, it will gradually be worth less over time. Let’s say that you have $100,000 right now, and you decide to leave it in the bank for a decade, by the end of the decade it is very possible that your $100,000 is now worth closer to $93,000 in the current day’s valuation. To lose money through inaction is crazy to think of so be sure that you are doing something with that cash.
Money Breeds Money
Those who take big risks on investments and look for huge upsides are those who don’t have a great deal of money and they are shooting for the moon. What these people are missing is the fact that money breeds money. Now if you had $10,000 and you spread out those investments over a diverse portfolio of futures, stocks and precious metals, as an example, now let’s say that you have doubled your investment, great, you now have $20,000, not bad. If you did the same thing with $100,000 you make another $100,000, if you do it with $200,000 then you end up with $400,000, the more that you have, the more you will make, using the same strategy and same risk level. Money will always breed more money and the onus is on you to put those savings to work so that you can reap the rewards as your money grows.
There really is little point in keeping that money in a bank account.