THE GLOBAL MARKET

Have you ever seen a Bank go out of business? ..Of course not...Banks never close down instead what they do is combine together to enforce power. From the last Post we discussed a the rule of 72. Now that you have an understanding of how money accumulates our next question should be how do banks manage to get a 10 to 12 percent interest. The most common false belief is that the government supports banks and withdrawals from Taxes, but the truth of the matter is Banks Invest as we do. When you open a Savings account and begin to put money into an account the Bank doesn't hold your money in a vault somewhere downstairs with your name on it. Instead your money is immediately shipped out the back door and invested into the Global Market. It is the Global Market where high percentages are earned. While the Banks are making 10 to 12% with your own money they give the hard working person not even half of what they make 2 to 3 percent is what is most common, therefore investing all or most of your money into a Savings account isn't a very good idea. Lets break down a example to make the understanding clearer. Lets use John as an example. John is 30 years of age whom invested 100k into a savings account at his local Bank with a 3% interest. Using the rule of 72 for Johns money to double to have 200k John would have to wait twenty four years now at age 54. Now lets take a look at the Banks perspective. 100k is invested into the Global Market gaining a 12% interest. Using the rule of 72 with a 12% interest the 100k would double in six years. Now we can break the math down John invested for 24 years and his money accumulated to 200k. If the Bank invest Johns money for the exact number of years the Bank will have 4 doubling periods meaning for the first six years the money will accumulate to 200k since the money doubles the second accumulation period the bank now makes 400k. There is still two more doubling periods six years later the money raises to 800k until finally the last periods the bank makes a total of 1,600,000 dollars!! John who invested for 24 years with 100k money accumulates to 200k while the bank whom used Johns money to invest in the first place makes 1,500,000 dollars. This is why Banks never go out of business and the average hard working person is foolish allowing Banks to take advantage. Do the smart thing. Don't invest large percentages into Banks.

HOW MONEY ACCUMULATES

Now that you understand why debt is a leading issue it is obvious to understand Savings is the key aspect. It may sound simple enough to save a percentage of your pay check weekly or bi-weekly, yet the question isn't how do I save money, rather where do I input my money to invest.
Many decide to open a Savings account at a local Bank with a three to five percent interest rate hoping a dollar increase will occur, but at a three or five percent interest rate do you realize how long it will take for your money to double or even triple? This question can be answered from a simple Banking rule that Banks do not want you to know. This is called the rule of 72. The rule of 72 works in the following way. Take the Interest rate that is given and divide it into the number 72. The result is the number of years it would take for your money to double, therefore at 3% interest divided into 72 it would take twenty four years for your money to double. Lets take a look at another logic. If you put 1000$ into the Bank. It would take 24 years for your money to reach 2000$ .
It is definitely not worth investing your money into a bank because one can only live one 24 year cycle not giving you a chance to triple your money. If you were to invest the same amount of money, but this time into a 6% interest your money will double in twelve years. Twelve years Does seem reasonable because you can triple your money, yet the banks are receiving 12% interest investing your money! My next post will Explain How and Why Banks are taking advantage of working people and Sharing such a small percentage with their consumers and what you can do to turn the odds to your favor.

DEBT IN OUR SOCIETY

Families of the recent century are finding themselves drowning in a pool of debt. This leading issue is the result from failing to plan ahead for a debt free financial independent future. In the 1980's statistics show that on a average were saving a total of 10% of their income, Today -1% is what is being saved. From this study it is understood the working Person is spending more then they earn. As a result families become buried in debt leading a road ahead of Stress and depression. No one can be blamed in this matter for the simple fact that people are not Knowledgeable on how or where to start. In this Blog "Financial Source" we will be discussing Basic rules and Tips to understand how to make educated decisions with your finances, so one can set a strong Financial Future.