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Highlights from this episode include:

  • The unbelievable impact the pandemic has had on banks, and why it is killing your savings (3:41)
  • The amazing way you can beat the banks at their own game and grow your wealth in the process (6:33)
  • Why paying off your mortgage early can prevent you from retiring (8:16)
  • Three naive reasons people keep large sums of money in banks, and why that costs more than it saves (10:44)
  • The surprisingly simple way that “dual-purpose dollars” make you rich (11:58)
  • These two emotions rob you of your savings and funnel it straight into the banker’s wallets (12:38)
Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:20): Oh, hi everybody. This is Harold Green of rights refinance and it is time to stop doing what you hate. How's everyone doing today? It's Saturday for me here in Hawaii. And looking forward to sharing today's show with you, title banks are in it to win it. That's right. Thanks. And then to win it, but just before I get into that, I just want to share something with you guys here real quick. Awesome. Some things that I see that are going on in the world. So I shared before a little bit about mental health and different things of that nature and how mental health is impacting a lot of people in the world today with the whole thing with coronavirus and all the shutdowns. I've heard reports and seen reports of people actually having more problems today. And yes, it's justified because people are going through a lot of stuff.

(01:11): Drug prescriptions for antidepressants are up and people are just having a really hard time with that. And you know, I've been really busy here lately doing a lot of things. I'm starting to feel myself run down a little bit. And so, you know, if you're kind of feeling the same thing and it just feels like the world is trying to sack all your energy and just like, just kinda like try to take you down when you may want to take a couple of days off for mental health. And just, I know it sounds corny or whatnot, but just taking a couple of days off to decompress and to just, you know, like just let it all go and try to find your happy place in your happy space. And maybe sitting down and jotting out a list of things that you'd like to do when the coronavirus is over.

(01:56): Maybe they find a vaccine, maybe you don't take that trip or go visit those friends and just kinda make a list of things to look forward to. I know that that was one of the big things I did in the past was I would sit down and write up my list of, of what I wanted to accomplish for the year. If I was going to take a trip that year, I may post photos of the hotel that I'm going to stay at, or, you know, maybe the mall that I'm going to go shop in. Just little simple things like that. The last time I did it, I think it was last year. And I was looking forward to kind of going out to Arizona and you know, I stayed at this one hotel and I think I've stayed there probably maybe twice now. And it's the sanctuary resort out in Arizona.

(02:37): You guys are listening to me out there in Arizona. You, you know, that's a very nice place. It's in the side of a mountain. It is very quiet secluded. It's just really nice and it overlooks the city. And so the last time I was out there, I took some photos and just, I kind of have him as my screensaver on my phone or my, my background. And I look at that and I just kind of draw strength from that. So if you're out there and you're listening to me and you know, you're going through some things and maybe you feel like your energy is just being sapped out of you, life is being drained out of you, just take a day off and then just try to find something you enjoy and something that you look forward to. All right, so we're going to get back on this thing.

(03:14): Today's show about the banks being in it to win it. And I'm going to reference something here by CNBC. The written on June 21st, 2020, it says U S banks are swimming in money as deposits increased by $2 trillion amid the coronavirus. I'm going to stop right there. And a previous show, I talked about how there's about 3 trillion or so corporations that are just kind of like sitting on that money. And now deposits by just, you know, people in general, I surge to, you know, $2 trillion. I mean, that is a lot of money. It talks about the wall of money. Flowing into banks has no precedent in history. And April alone deposits grew by 865 billion, basically deposit gains were concentrated out that top. JP Morgan chase bank of America city group grew much faster than smaller firms. One consequence of the boom banks will likely lower their already paltry interest rates.

(04:14): So a lot of people that I talked to who have tons of money sitting in the bank, the money is sitting there primarily for one reason. And I'll get into that in a little bit. You know, why do people sit so much money in the bank? And then what do banks do with that money? One of the other things that credit was companies drawing down on their line of credit. A lot of corporations have big, big lines of credits with the banks and they took that cash and they dumped it in the bank just because they thought they may need it. It goes on to say any way you look at it. This world has been absolutely extraordinary, said Brian, for an analyst that autonomous research banks are flooded with cash. They're like Scrooge McDuck, swimming in money. And that's a, and that's a big deal.

(05:03): And so what do banks normally do with the money that they have? What are they required to do? What are the reserve requirements? I'm not going to get too deep into that, but a lot of times they are required to keep percentage of their deposits sitting in cash reserves. There's one stat that shows if they have basically $200 million in deposits, they have to keep 10% of those deposits and cash reserves. And so 10%. So that's basically $20 million. So what do they do with the rest of the money? Well, they loan it out, right? So they keep 20 million in deposits. They can loan out $180 million, but who says the money or let's go back and say, okay, where does the deposit sit? There's something banks use called bank owned, life insurance. And it's a tax efficient method that offsets employee benefit costs. So the bank purchases and owns an insurance policy on an executive's life and is the beneficiary.

(06:11): And then the cash render values grow tax deferred, providing the bank with monthly bookable income. So let's say you're sitting on 60, $70,000 and you just want to put that in the bank. Well, basically, depending on how much of the reserves, your, you know, your, your pile of cash makes up the bank then turns around and they lend out that money for loans and different things of that nature, mortgages cars. And then yet they're paying you like half percentage or whatever it is on that money. So let's go back and talk about why do people sit tons of money in the bank? Well, I had a conversation with my sister-in-law the other day and you know, we don't, we don't talk much or anything like that. My brother called me up and he said, I've got a question for you. And he said, we're looking at we're looking at refinancing our house for another 30, actually 15 years.

(07:10): And then our payment would be the same or a little bit more, but our house would be paid off in 15 years. What do you think? And so the planner in me kicked in the, the advisor in me kicked in the fiduciary, thinking about people's best interests kicked in. And I started to ask questions. One of the first things I said was, well, what's your goal? Is it to retire with as much income every month as you can possibly get your hands on? Or do you want to retire with your house fully paid off? And she said, that's a good question. I never thought about that. And I said, well here, let me give you an example. But then we, before that we got into, you know, college or what are you saving for college? And then, you know, what are you putting into your retirement?

(07:50): And then what do you have in savings and different things of that nature? You know, what are your long term goals and so on and so forth. And, you know, just to back up a little bit further, I did a show with Matt Shanley and my mortgage guy out of Ohio. And we were talking about which one makes the most sense, a house fully paid off or income that allows you to the rest of your life that would pay your mortgage. And so I kind of gave him a sister-in-law the same thing I said, look, if you have the option of retiring at age, say 60 to 65, and you have two choices, you could either have a mortgage that say maybe a thousand dollars a month and $5 million in retirement funds or a million dollars in retirement funds and a house fully paid off. And she said, well, I, I would want the $5 million and the income that will last me, the rest of my life, and I can pay the mortgage and do it, whatever I want to do.

(08:38): And I said, well, why would you refinance for 15 years? Then what's the process behind that? And she said, well, I never thought about it like that. And we just had some more discussion on it. And we dove deeper into some of different strategies and things like that. And I said, you know, most of the people that are out there, they really don't what to do with the cash that they have. So they sit it in the bank because they feel like the bank is safe while knowing that the banks are lending out $180 million. And of course the banks are lending it out based on credit and different things like that. And we're hoping that they don't, you know, the banks are not making bad lending, lending decisions and so on and so forth. But one of the concerns I have is in times of crises with coronavirus and people are not able to pay mortgages and different things of that nature, the question is, is where are people going to get the money from the pay, the mortgages?

(09:27): And so we have a lot of things going on right now. And so if you're sitting there on a pile of cash and you think the banks are safe, it's, that's okay. We do have FDI insurance and so on and so forth. And banks do have reserves that they, you know, hopefully there is no run on the bank. And in case of crisis, people want their money all at one time, but it can become a very problematic thing. Number two, the reason why people keep a lot of money and cash in the bank is because lack of trust, lack of trust and their financial professional, lack of trust in the market, lack of trust and the government lack of trust in someone else. And to me, I find that a little bit disturbing because most of the people that I see and talk to, they have goals and different things like that.

(10:14): But when I see their money to sitting all over in cash and it's not being utilized to take advantage of the things in this marketplace, it makes me a little bit sad. And so I do my best to educate people and to talk to people about what they should be doing with their money versus just sitting at the bank. So, number one, people keep it because they don't know what to do with it. Number two, they keep it there because they don't know who to trust. And the third reason why they keep it there is because they think the banks are safe. Well, what makes them think the banks are safe? Well, because of the history that we have with banks and people have put money in banks for hundreds and hundreds of years or whatnot. And the banks have just built up this huge, gigantic marketing campaign in terms of like, put your money with us, put your money with us.

(11:05): Your money is safe with us. You know, it's not at risk. We'll give you a high yield interest, savings account and things of that nature. And, you know, put it in a CD and on and on and on. And so, you know, for me, when I see that in a client's overall portfolio, it's just a nonperforming asset. You know, they got goals and things of that nature that they want to accomplish, but this money is just sitting there because of those three reasons. And so, you know, I, if that's you, I want you to do me a favor and go download my rapid retirement brochure. Take a look at that and look at the ways that I put money to work. And one of the things I want to talk to you about too, is money can be very productive if you know what to do with it.

(11:50): And I use a term called dual purpose dollars money. That's doing more than one thing at the same time. And you got to take your clue from the banks, because whenever you put your deposits with them, they don't just sit on the money. They put that money to work, but who are they putting that money to work for? They putting that money to work for you, or are they putting that money to work for themselves? Right? Well, it's time for you to stop letting them put your money to work for them, and then pay you pennies on it. Just because of fear. Now, the market capitalizes on fear and it capitalizes on greed, okay? The markets will capitalize on fear and it will capitalize on greed. So the banks are capitalizing on your fear, fear of loss. I know my money is safe. I know if I, if everything else goes to hell in a hand basket, I got this.

(12:49): Okay. I understand that. But you're going to have to go a little bit step further than that. If you have lofty goals, you have locked the dreams, you have things that you want to do. You have to learn how to put that money to work. Okay? So back to that little tool bank on life insurance, and here's the thing that I talked to people about all the time. You know, banks are always advertising you, what you should do, right? They say, do this, but then don't do that. But if you pull the covers off of their operation, you see them doing the exact opposite of what they're telling you to do. They say, you know, you, you do this, but we're going to go do that. Something totally different. Well, what if you could put your money to work just like the banks do. And I do something called a anchor on yourself.

(13:33): It's a insurance-based program where you buy life insurance policies, and then you build the cash in the policy. Then you pull the cash to put that cash to work. And so the, one of the things I love about the bank on herself is even if I have my money's outside of the policy, the policy is still growing and giving me dividends and so on and so forth because it's the certain type of policy that I bought. And so I'm constantly circling and cycling that cash around in my financial system. It goes from my house, my line of credit to my, my life insurance policies and back and forth. And so inside of rapper retired, there's just a really unique way that I love to put money to work. And so my motto is no nonperforming assets, no nonperforming assets. And so if that's you out there, you've got a lot of cash sitting in the bank.

(14:19): You don't know what to do with it. You don't know who to trust. Get me a buzz. (800) 852-1440 one. And let's talk and see again, if I'm your guy and see if I can coach you to start teaching you how to stop doing the things that you hate and putting your money to work. All right. So until next time, guys, thank you for allowing me to share with you. You guys stay safe and make sure you take a couple of mental days off and things are just not working the way you want. And until the next time, one, two, three, let's get it.

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