IYBI Lesson 3: That Hard Call With The Bank, AKA Claiming The Money for Your Initial Investment

Who here loves banks?

Oh, nobody? That’s a shocker.

Yet, who here has a substantial positive balance in their bank account (Over 2 months’ expenses)?

I’m assuming around 60% of you.

So, quick reminder: if your money’s in the bank, the bank is investing it, and getting a return (AKA interest) on it, while you never see any of the profits. On the contrary – currency value deflates over time (Read this), so you’re actually losing money by leaving it in the bank.

Raccoon Memes Rock

In other words, If you’re part of that 60%, you may not be buying your bank flowers and chocolate – but you’re definitely showing it A LOT of love without getting any love back. And that’s weird, because we just agreed that nobody loves banks.

Time to put an end to that, and start generating that return for you.

Ain’t Got Kids? Still Do It.

“Yeah”, you’re probably wondering, “But I need that money in the bank for everyday expenses and stuff. I can’t just take all my money out, right?”


This is what you do instead.

Figuring Out How Much You Can Withdraw, Today

This is the math I suggest.

One month’s expenses + $500 emergency money = What you should keep in the bank. EVERYTHING ELSE you should withdraw and invest.

Here’s why.

When banks ran the investment game, not too long ago, it used to be a real pain in the rear to withdraw, AKA liquidate, funds. So, for example, if you had $10,000 in a mutual fund, and needed it to pay for a new car, you’d have to fill out a million forms, pay commissions you had no idea even existed, and wait up to a month sometimes just to make your money available.

That’s why a lot of people preferred to just keep their money in their checkings account.

But in 2016, this isn’t the case anymore.

With eToro, for example, you can have all the money in your account within 6-10 business days (sometimes even less), and the commissions are all laid out in their website. So in terms of availability, there’s really little difference between keeping your money in the bank and utilizing it in an investment platform.

So, why do I still think you should keep money in your checking account?

Because life happens. You forget to withdraw. You need the money RIGHT NOW. A friend needs unexpected help. You need to impress your date with a $500 bottle of wine, only to have her throw up most of it in the cab on the way home. You know, life.

But other than that, invest EVERYTHING. Your future self will thank you.

– Tim Baudin

P.S Oh, you thought we were finished, huh? Nuh-uh, homework time.

Action Items of the day:

  1. Use my simple math to find out how much you can invest today. Write that number down in your course notes.
  2. Get psychologically comfortable with the idea of getting that money out of the bank. Remember why you’re doing this.
  3. Think of any expense, no matter how farfetched, that would require more than the amount I suggested in the bank, urgently.