Why I detest finance and financial institutions

Here’s an Olympia Trust account belonging to a client of mine. See above.

She’s made a self-directed loan from her LIRA (locked in retirement account) to a neighbor to help him install a new chicken coop.

It is supposed to return 3% pa, which doesn’t sound like a lot, but it’s better than the 1.7% she was getting before from her bank. Or at least she thought so. Not so fast.

Olympia’s fees make up 14.1% (!) of her monthly payments so her effective simple interest rate is just 1.9% per annum over the three year term of her mortgage. 

Frigging financial institution fees are eating up 35% of her return. Are you kidding me? Unfortunately not.

No wonder average Wall Street salaries are $900,000 per year. No industry on earth, not even Apple of Google, make as much money as financial types.

So anyway after three years, her LIRA will have around $35,450 in it, up from $33,500. How long will it take for her to double her money at this rate?

The rule of 72 is a fast way to estimate this: you divide 72 by the interest rate (expressed as a numeral so if you are using a spreadsheet, remember to multiply your percent by 100 and reformat that cell to a number) to give you the approximate number of years to double your money.

So in her case, the answer is 37 years. That, my friends, is far too long.

#horrible

That’s why, IMHO, real estate is THE ONLY WAY TO MAKE ANY REAL MONEY VIA INVESTING.

Come to Realtopia to learn more or get some real estate coaching from @ profbruce!