Bank Yourself -- A Guide to Investing On Your Own

When someone is just starting to invest for the first time -- regardless of age and amount -- my best advice is to learn how to bank yourself.

Empowering yourself with solutions based on informed simplicity can provide independence from large brokerage firms and banks that are obligated to perform for shareholders first, then customers second.

This is not just a beginner’s guide, but the exact same approach I use in my own account to this day, as a professional money manager through multiple Bull and Bear Markets.

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Follow YOUR Money

Have you ever wondered where your money goes after you deposit your savings to a bank or brokerage firm -- before they pay your savings interest rate? I worked at the largest global bank and brokerage firm, so I can tell you.

These places really are a safe place for some of your money -- do not let bad conspiracy theories or great movies fool you. They are required to keep some risk-free reserves in Treasury Bonds and Municipal Bonds. They earn a lot of income holding these individual bonds with your money.

After enough of your money is removed from harm’s way in bonds, then they can take calculated risks with the rest. These investments provide a much bigger yield than the safe bonds, enough to afford a few mistakes along the way.

So, why don’t we just do the exact same thing?

After the banks and brokers collect that yield and profit on your money, you may have noticed it does not all end up in your account…or a portion of it…or even more than a little.

Let’s keep following your money. First, they have a ton of overhead costs to cover, and a lot of people to pay. What ends up making it to their bottom line is still a big number, though.

Their largest obligation still remains, however. Their shareholders need to get paid first -- well before, and much more, than their customers.

If you wonder why your interest rate at the bank or brokerage has remained so low, keep following your money.

My local community bank was purchased by a global bank and brokerage firm that is publicly traded. Their fiduciary duty now is to make money for their shareholders first, not their customers. Compare the direction of your bank or broker’s dividend paid to shareholders to their interest rate paid to customers.

There is more than $100 billion in customer deposits sitting at JPMorgan Chase in Houston, Texas, alone. I am not picking on them; they may be best in class. They just happened to be the bank that bought my little community bank where savings accounts used to be more mutually beneficial.

Follow Your Money...All The Way to The Footnotes?!

I read a 44-page disclosure from a different bank and brokerage firm updating customers about the interest rate environment. The cover noted: “designed to replace the prior version of disclosure(s).”

For starters, if you have an honest and simple business serving others for mutual benefit, disclosures do not multiply like gremlins.

I rubbed my eyes at the designed-to-be-ignored legalese, but then I saw it…why they hoped nobody got that far. Allow me to enlarge the font:

Interest rates are established periodically and may seek to pay a rate as low as possible based on prevailing market and business conditions.

After that one disclosure from only one national bank and brokerage firm, approximately $100 billion was moved from a 2% money market into a 0.3% bank sweep in one year.

This move just about doubled the amount of customer deposits in their lower yielding sweep account. So, that will be close to $3.4 billion in earned interest taken straight from customers’ pockets in only one year.

What’s the Difference Working With an Independent Firm?

At Krueger & Catalano, we cut out all the middle layers of costs and conflicts of interest that stand between you and your money.

You should get more interest payments and dividends in your mailbox. After all, it is YOUR money. You can bank yourself.

“An investment in knowledge pays the best interest.” -- Ben Franklin

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