WHY BANKS ARE THE WORST PLACE FOR YOUR MONEY! #Best Education Page #Online Earning

Here's the thing, guys.

Parents give us a lot of good advice,

but they also give us a lot of bad advice, too.

Save more money, good advice.

Shower every couple days, good advice.

Have a nest egg in case of an emergency, great advice.

Brush your teeth, fantastic advice.

But leaving all your money in a back account?

That is terrible advice.

I'm going to explain to you guys

why putting all of your money in the bank

is a guaranteed way to lose money.

Thanks to our friend, inflation.

So first of all, what exactly is inflation?

I'm gonna tell you that right now.

The definition of inflation

is a general increase in prices

and fall in the purchasing value of money over time.

So over time, your money is worth less

as far as buying power.

A perfect example, let's look at the cost of bread

in 1930 compared to the cost of bread today.

So in 1930, you paid nine cents for a loaf of bread,

while today, on average, you're paying $2.50

for that same loaf of bread.

So the purchasing value of your money

decreased significantly from 1930 to 2017.

I want you guys to understand.

Your parents are not intentionally giving you bad advice

by telling you to save money in the bank account.

They are just confused because

this is a strategy that worked for them.

Because in the 1980s, things were very different.

I'm going to explain why that is right now.

So this is not necessarily bad advice for the 1980s.

It worked for them, but it's not gonna work for you.

So for this example, we are talking about a CD,

or a Certificate of Deposit.

Essentially, you deposit your money,

you're not able to touch it for a certain number of years,

and as a result, you earn a guaranteed rate of return.

In 1984, the average yield on a five year CD,

where you deposit your money for five years,

and you can't touch that money,

was 12.06% per year.

In 2016, the average return on a five year

Certificate of Deposit is 0.86%.

From 1984 to 1988, the average rate of inflation was 3.5%.

And since 2000, the average rate of inflation has been 2.2%.

So let's go ahead and do the math on this, okay?

If you had 100,000 dollars in the end of 1983,

by 1988, due to our friend inflation,

that 100,000 dollars would have the

equivalent buying power of 118,769 dollars.

Now let's say you took that 100,000 dollars

and invested it in a five year CD

at the beginning of 1984.

100,000 dollars would have been worth

176,707 dollars five years later.

So for that five year CD,

you made 76,707 dollars,

but you out-paced inflation by 57,938 dollars.

That is why your parents give you this advice.

Because it worked for them.

But it's not gonna work for you.

I'm gonna show you why.

100,000 dollars in 2016,

based on that 2.2% average rate of inflation since 2000,

is the equivalent buying power

of roughly 111,495 dollars in the year 2021.

Now, if you invest in one of those CDs

with a 0.86% return, 100,000 in 2016

will be 104,375 dollars in 2021.

Inflation out-paced you by 7,120 dollars.

But let's say you didn't even

put your money in a CD, because most people don't.

What most people do is they leave

their money in a checking or a savings account.

The average return on a checking account is 0.05%.

So 100,000 in 2016 at 0.05% per year,

would be 100,250 dollars by 2021.

So while it appears that you made 250 dollars,

you actually lost 11,245 dollars

because inflation out-paced you.

I have news for you guys.

The 1980s are over.

(classical music)

Okay, I can not believe I just did that.

But hopefully you guys appreciated that.

Anyways, how can you out-pace inflation?

How can you avoid losing the buying power of your money?

The answer, guys, is to invest.

So I just wanna show you guys

one way that you could invest,

and this is a very conservative way.

So the S&P 500 is a good way

to track the average returns of the stock market.

And you can invest directly in a fund

that tracks the S&P 500 as well.

So I know a lot of people out there

will say things like the stock market is a losing game,

or everyone loses money in the stock market.

But just to show you guys that that's incorrect,

from 1928 to 2016, the S&P 500 Index

had a profitable year 74% of the time.

Now, there may be short term corrections

where you are down on your money,

but you don't sell.

You just hold on, and you continue investing.

The best strategy when you're investing

is dollar cost averaging.

So if you wanted to invest in the S&P 500 Index

if you were investing in a fund that tracked the S&P 500,

you might deposit the same amount every single month

into a fund that tracks the S&P 500.

So at that point, you're buying shares at a high price,

buying them at a low price,

and buying them in the middle.

So as a result, this lowers your average

price paid per share.

Since 1928, the S&P 500 has returned on average 9.8% a year.

The only way to out-pace inflation is to invest.

And by now, I hope you guys understand

that keeping your money in the bank

in a checking account, in a savings account,

in a CD, is a guaranteed way to lose your money.

So you need to make sure you're doing something

to out-pace inflation.

And one of the best ways to do this

is investing in a passive index fund.

I know people are gonna be skeptical

of that 9.8% return because that's based

on almost 90 years of data.

So I wanna give you a real example, okay?

So we're gonna take a look at inflation since 2000,

and the return of the S&P 500 Index since 2000, okay?

So since 2000, inflation has averaged 2.2% per year,

as we said earlier.

So let's take a look at the

performance of the S&P 500 Index.

So on January 1st, 2000, the S&P 500 was at 1,425.59,

and on January 1st, 2017, exactly 17 years later,

the S&P 500 was at 2,275.12.

So over those 17 years, we saw a 59.5% return

on the S&P 500 Index.

So if you had dumped 100,000 dollars

into a fund tracking the S&P 500 Index in 2000,

you would have 159,500 dollars

as of the beginning of 2017.

So you out-paced inflation by 14,735 dollars.

Imagine how much money you would have

if you had just left your money in the bank

earning a small interest rate.

Guys, you have to realize that

putting your money in the bank

is a guaranteed way to lose money.

I want you guys to share this message with your friends.

The next time you're sitting down

and having coffee with someone,

if you're at Starbucks, wherever you are, Dunkin Donuts,

when you're looking for something

to talk to them about, say hey,

I watched this guy on YouTube, Ryan Scribner.

He was telling me about how putting money

in the bank account is a guaranteed way to lose money.

It is something that people don't understand

because your parents are trying to help you.

But unfortunately, they're giving you

terrible advice by telling you

to leave your money in the bank.

It's a guaranteed way to lose money

because you are never going to keep up

with the rate of inflation,

with what the bank pays in savings and checking accounts.

Anyways, guys, I hope you enjoyed this video.

This is all I got for you guys.

If you did, please drop a like,

please share this message with your friends,

and if you are new to my channel,

please consider subscribing.

I make videos like this every single day.

And I hope you guys have a great rest of your day.

#Best Education Page #Online Earning

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