One of the things we have discovered in our investing journey is that most private lenders are their own banks. It gives them a great deal of control and greater opportunity to build wealth. Why would we want to build a bank outside of the traditional banking system? Why should we stop buying into the myth of compound interest? How can we leverage our homes, 401ks, and IRAs to fund further investments?

On this episode, I share how banks control our transactions, and what we can do to get our own revenue streams working for us.

Money must remain in motion in order to work, otherwise it becomes a liability. - Chris Naugle

Three Things We Learned

If we get our current liabilities to generate income, they can become usable assets.

Don’t do things with money that we wouldn’t do with tangible purchases. We would never buy a car and not drive it for years, or buy a house and not live in it. We have to put our money in motion.

A 401k loan allows us to be the bank and earn an increased return, even when we pay the 5% interest on the loan.

We’ve been taught to believe in the concept of compound interest, that we should just park our money with financial institutions. The problem is, we’re giving up good dollars to the bank today, to get weaker dollars later. In order to become truly financially free, we need to replicate what banks and the wealthy do. The bank controls all the financial transactions, so if we became the bank we can have greater control and get higher returns because of it.

The Truth About How Banks Operate & How to Become the Bank 34:05 Share

Money School Podcast

Shownotes Transcript

The Truth About How Banks Operate & How to Become the Bank