Did you know that banks are the most profitable businesses of all time? But how did they make that money? They did it by lending money at a higher interest rate than the cost of the money they have on hand. That’s right: your money is making the bank rich.
The Specifics of the Banking Business
Have you noticed that the bank gives you an interest rate of less than 1% on the money in your interest-bearing account? But while you’re not making any money, you can bet that they are.
Here’s a scenario:
The bank takes your $1,000. They pay you less than 1% interest. Then they loan that $1,000 to someone else at a higher rate, let’s say 10%. They’re keeping the 9%+ difference for themselves, thereby making money on every transaction.
What if you could do what the bank does and be just as effective at making money? You’d want to explore that option, right? We thought so!
Understanding Fractional Banking
Banks need money from depositors to loan to others. Fractional banking is the term used to describe exactly how the banks flip money. Every time you deposit money in the bank, the bank can turn around and loan 10 to 18 times that amount.
Here’s the math:
If you put $1,000 in the bank, the bank can lend up to $10,000 just from that one deposit. The bank doesn’t let your money sit; they immediately give it to someone else at a higher interest rate. The bank pools the deposits of all of their accounts and then lends that out, even sometimes back to you! Think about it: If you have a bank credit card, mortgage, or auto loan, the bank is taking your money and loaning it back to you—with interest!
Banks complete this process every day with everything we finance.
Make the Banks’ Process Work for You
If the banks have made this money-flipping business so profitable, could we copy that process for ourselves? Yes! You could build a to-scale bank for yourself and your family, including paying yourself interest!
At Wealth Nation, we teach our clients how to do exactly what the banks do. We help you create a secure banking system—backed by companies that have been around for more than 100 years—free from taxes, fees, and penalties. We’ve used this process for ourselves, so we know it works. Just try asking your financial advisor if they’re using the processes they recommend for themselves. Good question, right?
To get started, you can check out our 1-hour free masterclass.