Jelly Bean Jars, The Banks And Your Money

How often do you physically go to the bank these days? With the invention of online banking and cell phones, all your banking can now be done with the push of a button. You can even deposit checks and send money with your smart phone. Banks have put a lot of money into technological infrastructure to make clients happy. The easiness of banking has never been better, yet banks run a real risk of losing current customers and potential clients due to continued low interest rates.

Today I had to actually drive to the bank to cash a smaller check. While waiting in line I noticed a clever marketing sign which featured a large jar full of colorful jelly beans. The wording was, “Guessing is for jelly bean jars, not retirement.” I thought to myself, boy isn’t that true!

Most people are almost clueless when it comes to what their money is earning or when they will be able to retire. No one wants to get low returns. Safe is good, but when you’re not beating inflation with bank savings and money market rates, you’re consistently falling behind.

As I looked at the rate sheet near this clever and colorful marketing poster, I saw a one year CD pays 1.26%, a two year CD pays 1.44% and a five year CD that pays 1.92%. The banks assume this makes them look attractive to their customers, since it’s the way they have always promoted themselves.

Once you understand the math you most likely will not be giving them your money in the future. With a little knowledge of the rule of 72 (take the interest rate — 1.26%, divide it into 72 and now it’s only going to take you 57 years to double your money), you realize not only will inflation eat up the gain, but you’ll have to pay taxes on it as well. This is why it’s important to understand how compounding interest and inflation will affect your money positively or negatively in the future.

Savings rates are even worse than CD rates. What happened to the banks? They were bailed out via the taxpayer’s pockets. Yet, they still haven’t come back to pre-Great Recession levels. Do you remember when savings account in 2006 paid just over 5%? Now you’re lucky if you receive .5%.

Beware of this clever marketing. Wall Street is great at making the stock market look appealing and banks are proficient at making themselves look ultra-safe. The truth is you want to land somewhere in the middle. You may have to take some level of risk in order to get the growth you need and want to stay ahead of inflation. However, you don’t have to take significant risk to do so.

After Tony Robbins interviewed the top 50 investors in America, he came to the conclusion that they all look for two things. First, they fiercely believe ‘do not lose money’. They understand how a loss can set back and slow down any portfolio’s momentum.

Second, they looked for asymmetrical risk to reward opportunities. Meaning they wanted to tip the scales in their favor to get higher returns while lowering their personal risk factors. In other words, they weren’t looking for a balanced scale of higher risk, higher reward. They looked for the tipping point and played to protect their downside.

This can be done with your own money. Whether in real estate, rentals, bridge loans, private loans, alternative investments, private offerings, agro-farming, etc. The key is to fully understand the mechanics of how these companies make money while you are doing your research. You want to understand how they protect their own downside while looking for upside potential.

I agree that guessing is for jelly bean jars and not retirement, but I also believe the growth you seek is definitely not with banks. Put on your thinking cap, start taking wealthy people to lunch, read everything you can and be open to alternative opportunities. Educate yourself now before you run out of time.

To learn more about Stephen’s philosophies on money, check out his website at