Quote:
Originally Posted by tmvijai
I understand what you are trying to say. I concur. It surely can be used for investing but its not really an investing vehicle. I do take my CC balance transfer for 0% and put in CD to get free interest money. So it is one way of investing. I don't deny that but it not a true investing vehicle.
You said banking also has risk associate with it. Yeah but its that risk is different than investment risk. Banking risk more towards bank going under whereas the investment risk when the company invested goes under and volatile all the time.
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Um... I know I am opinionated guy. I know I am hard-headed. And I think we ultimately agree more than we disagree, and will probably have to agree to disagree with the rest.
But to be clear, you did say that it "didn't make practical sense", which I've only tried to illustrate that it does. And you did say that "there was no risk involved in it", which I was only trying to illustrate that it does. I'm not trying to be pain in the butt or anything, only that I was trying to answer these direct criticisms.
Honestly, depositing money in a savings account is no different in some ways than buying a CD. You're still lending the bank money, you're still promised a fixed interest in return, and you're still maintaining capital preservation. About the only pragmatic difference between the two is liquidity, and why should that be the determining factor in terms of what constitutes as an investment and what does not?
So, then, what seems to be the problem? I think it's a matter of perception, and I think it's unfortunate. Sure, maybe most people only see it as putting money in the bank to save it somehow... and yet, banks don't keep that money in their vault. They loan it back out, with leverage and a higher interest rate. That's also why, no matter how low the risk, there is a chance that banks can go under from it (and thus, the need for FDIC).
So, perception aside, we are indeed investing. That's the honest truth. It's just not how we end users typically look at it....
But anyways, this really isn't a big deal, so I won't harp on it anymore after this.