For clarity’s sake, I do not hate banks. I do think they have their place in society but I also know that a lot of people may be using the services of banks from a wrong perspective not knowing they are the ones at the losing end.
Below are areas I think the average banking consumer should consider because these are ways your bank might be ripping you apart.
1. Low interest on your money:
Most people put their money on a fixed savings account or CD (Certificate of Deposit) thinking it’s a smart way to grow their fund when in fact the interest gains from this is just too small. If the inflation rate is 13% and you get 10% interest, you are losing 3% in the real sense. This is one reason the rich keep getting richer and the poor poorer.
2. Taxes on your Savings:
One thing a lot of people don’t put into consideration most of the time especially in Nigeria is Taxes. I remember those days I used to be a “Saver” whenever the small interest comes in it is then taxed. The fact is that you are already losing because of inflation and Government taxes on your interest which is already a loss. This is another reason “savers are losers”.
3. Hide their top-yielding investment from you according to LAW:
The high yielding banking investments are not shown to the average individual and this is required by law in almost every country I know of. Banks have private equity firms that help individual’s and institutional clients invest their money for a really good return higher than inflation but they can’t take money from the poor just the rich.
Personally I’m about to kick off my own private equity firm but The Security and Exchange Commission won’t let me take money from poor people, so basically my job is to make rich people richer while the poor just try to get by, it’s sad I know but it’s the law.
4. Use your money to print more money:
Right now the reserve ratio in Nigeria is 30%, this means if you deposit 10 naira they keep only 3 naira and lend out the remaining 7 naira but here is the magic, that 7 that they lend would be another deposit that they would have to keep 30% of and lend the rest and the circle goes on. When you do the math you would see they are ripping you apart. This is the core reason they want your money.
Banks want inflation because they took money from people and would have to pay a fixed interest to them. In economics, inflation is bad for the lender (depositor/you) but good for the borrower (The Banks). One of the ways inflation rise is the increase of money in supply and the fractional reserve banking system help the banks do so which put savers at the losing end.
6. They trade and invest with your money:
Another thing banks are allowed to do is to invest your money on things they feel are profitable and they are good at this because of the calibre of professionals they employ to do this but the return is just for them but on the risk side you share part of it because it’s your money they are using.
Sometimes things can go wrong like what happened in the year 2008 and the depositor can actually lose most of their money, although some part of your deposit is insured by The Nation Deposit Insurance Scheme but not all. I’ll advise you to keep in mind anything can happen.
I hope this has helped you see the big conspiracy that these big institutions don’t want the general public to know about. Let me know your thoughts in the comment section.
ABOUT THE WRITER
My name is Joshua Eriaborosan OFOMAJA (JEO), I solve investment and marketing/business problems for individuals and businesses.