The Answers to Three Critical Questions – Understanding Interest Part 3

by | Nov 28, 2023 | Blog, Level 1: Wealth Principles

Watch George Antoine’s three-part series of videos to uncover the truth about how interest works and how it can affect you on your financial journey.

There are three critical questions you need to answer if you are to achieve your financial goals with any certainty. To answer these questions, you need to have an in-depth understanding of the principles that govern interest in the financial system. ‍

‍In part three of the Understanding Interest series, George ties up all the information provided in the first two parts of the series to help you answer three critical questions.

The Two Sides Of The Financial System

The financial system can be divided into two sides.

On the one side you have the vast majority of people who hand their hard-earned money over to others in an effort to participate in the economy.

On the paying side, you pay banking fees to deposit your money in an account. You then pay interest on loans needed to buy assets and you still need to cover your basic living expenses and cover your taxes. It is very difficult to build wealth if you are on the paying side of the financial system.

On the other side of the financial system are those that receive other people’s money and use it to build their own wealth.

Think about how banks use capital provided by depositors to fund loans for borrowers. The bank makes a profit by charging borrowers a much higher interest rate than they will give the depositor. This strategy is called a ‘spread’. Sophisticated investors use spreads to ensure that they are receiving rather than paying interest.

Find out if you are on the paying or the receiving side of the financial system by watching: “Understanding Interest Part 1: Are You a Payer or Receiver?”

The Four Types of Investors When It Comes to Interest

In Part 2 of Understanding Interest, George explains that when it comes to interest, investors fall into one of four groups.

  • Those who pay interest
  • Those who receive interest
  • Those who avoid it altogether
  • And those who pass interest on

Find out which group you fall into and how you can move into the only group that is actually going to successfully build wealth on their financial journey by watching Understanding Interest Part 2: The Four Types of Investors.

Answering The Three Critical Questions

1. What side of the financial system are you on?

  • The paying side
  • The receiving side

2. What kind of investor are you when it comes to interest?

  • You pay interest
  • You avoid debt and therefore interest but are losing purchasing power
  • You receive interest but are losing purchasing power
  • You pass interest and benefit from ‘the spread’

3. Are you winning or losing the race against inflation?

  •  My purchasing power is beating inflation
  •  My purchasing power is losing against inflation
  •  I don’t know…

If your answers to these questions leave you feeling uncertain about your financial future, you are not alone.

The vast majority of investors are on the paying side of the financial system. They are not using their money efficiently, and they are losing purchasing power over time.

Fortunately, there are strategies that you can use to get on the right path to achieving your goals faster, safer and with more certainty.

Fynanc Team

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