Post: #1

What's going on my fellow forum goers. Quick question for you guys and want to know peoples take with more experience.

Whenever I call my bank about anything with my account I always get a lecture about how I shouldn't be relying on interest and how my money would be at better use if I let the bank invests it in things.

To people who have a lot of money in savings: Do you guys let the bank invest your money or are they just trying to sell me on services solely.

What do you guys do with excess money?

Post: #2

Sure, if it's Goldman


Seriously, depends on how much you have in reserves that's not for spending. You have to evaluate your return desires, the commissions, the guaranteed returns, your risk appetite, and the liquidity.

Post: #3

Your assumption is correct, your bank is trying to sell you on their investment services, the same as any other brokerage company or financial advisor would. Typically they have higher fees for investing your money (1%) than if you did it on your own.

However, they are right about your money not being best utilized sitting in a bank account where it earns very little interest. If you want a simple investing solution, open up an account with vanguard and pick a target retirement date fund that closely matches what year you want to retire. Every month stash as much money as you can in that fund. If you prefer to invest in individual stocks, buy high paying dividend blue chip stocks (Exxon, Coca Cola, proctor and gamble etc). However this method carries more risk than the target retirement date fund.

Also, an online savings account with Barclays or Ally is a good way to earn 1% interest on your cash if you're afraid to invest in the stock
Market, or want to park cash temporarily for a big purchase like a house down payment or business purchase. You're probably earning something like .01% interest in a regular bank checking account which is literally pennies every month.

Post: #4

Another note is that typically banks or financial services companies (Edward Jones, Morgan Stanley) will want to invest your money in funds where they earn more commissions. That is how they make their money. They look out for themselves first, not the best interest of your money. I used to have my money wth an advisor at Edward jones who had most of my money in a mutual fund, that I could've invested on my own and saved a lot of money in fees and commissions.

Bogleheads.com is a good investing forum that you should check out. They're very big on the three fund portfolio as a way of diversifying risk and maximizing potential returns.

Post: #5

Carefully scrutinize the costs of any investment product they offer you. Chances are, there is a non-bank that does the same thing but far cheaper.

Cash is not necessarily a problem at this point. There is a good chance of a 1920's-style stock market crash within our lifetimes. People who have cash will be able to get bargains.

My excess money I invest either in gold or in stocks. I use to put money in index funds but I switched to trying to be a value investor, picking stocks myself (I would not recommend buying individual stocks, though. I do it because for me it is an interesting hobby and I find the stock market to be fun and fascinating. Also, I don't invest money I can't afford to lose, so the few investments that burnt my fingers I was able to laugh off. Unless you find stocks - and losing money - fun, it's better to stick to an index fund.)

As a rule of thumb: the value-for-money of a product is inversely proportional to how hard they are trying to sell it.

In other words, a lot of companies focus on delivering a good product cheaply, relying on word of mouth rather than hard selling and ads. These companies tend to be obscure and offer great deals. On the other hand, inferior products have to sold using selling tactics and ads rather than on their intrinsic worth.

This is not just true of the financial industry, but of capitalism in general. Kellogs runs a heck of a lot of ads on kids TV shows to sell their toxic breakfast junk, precisely because sugary cereal has no intrinsic health worth and cannot be sold on its own merit. On the other hand, when was the last time you saw an amazing TV ad selling healthy apples?

So you are likely to find the best value for money in discrete, low-key companies for your investments, companies that barely advertise or sell; if someone is pushing you hard to invest money, it's because they know they are not offering you a good product to begin with.

So do your research. It's your money, and NO ONE will look after it with the same love, care and attention like you will do, despite what the banks promise.

Post: #6

I agree with above said. When a real estate agent has a great house to sell. He will not waste time on you. If it sucks. They will call you everyday. They also sell the best products to people which can bring them goodwill.

If you don´t want to invest in real estate. Just put the money in vanguard funds SPY:

https://personal.vanguard.com/us/funds/s...Ticker=SPY

With this being said. There´s some probability we are in the end of a cycle. But for the long run. It´s considered a good option.

If they are selling services. Tell them to put their own money. Will they give you a loan with liability limited to the products they sell? Let´s say invest in bonds. You put 100k. They leverage 100k. With a small interest rate. And if there´s a default you liability for the loan is limited to the bonds. Or with an insurance of 25k.

Put your money where your mouth is kind of thing.

Post: #7

if you're asking this question then you need to educate yourself in investing;

Your money in your bank account is reinvested by the bank anyways in the form of loans.

You might as well learn to read financial statements (for equities), build contacts (to get more information) and learn to analyze market trends, to invest actively (specifically in blue chip stocks and/or real estate). Having said that, it's best if your investments are based on your age (risk appetite), capital, and targets. Would recommend that you read wallstreeplayboys.com (their posts on investing and multiple market sectors are legendary; beware, those markets may have changed but the metrics are still pretty similar).

By the way, you can use that excess money to learn new skills (I recommend coding) and start a business.

Post: #8

Thanks for all the responses guys. Just what I figured, just wanted to ask to get other peoples opinion.

Post: #9

No to banks. You can buy car insurance from banks if you want, but why would you?

If you don't have time to become a financial guru then as chakalaka said above just invest in some vanguard funds using the lowest cost investment shop you can find online. The vanguard 20 fund is great for investing over 2 years, the vanguard 40 for 4 years ..... the vanguard 100 is great for a 10 year investment and should make the most in the long run if you leave it for 10 years.

The critical thing to get right is how long you want to invest for i.e. if you want money in 1 year then it is risky to use vanguard 100.