As local banks produce record profits and it appears in the news, and naturally many investors, don’t know if it’s short term or long term investors, are flocking into buying their stocks.

Before you start to deploy a bit of your money into the bank stocks, I’d like to provide you with a slight different perspective.

It isn’t about whether it’s a good buy or not. It’s about your existing and future cash flows.

There are 2 key groups who will benefit from a bank bumper profits.

1. None other than the CEO, and the executive of the bank. As bank make money, they reward to their staff, and one CEO can make a $15m from a single year.

2. The shareholders. Bank make lots of money, and hence eventually will pay out “special dividends” to reward the shareholders of the company.

Now, let me ask you a super simple question. If you owns the bank, which you will if you buy the shares of the bank, will you allow the bank executives to give the depositors (which happen to be you) a high interest rate, and the borrowers (which happen to be you as well) a low interest rate?

A hell NO!

Since you already know the answer, then why are you still parking all your un-utilised cash and future cash into this facility which, by its very nature of their business, will never give you the best yield on your cash?

I know the answer!

There isn’t a better alternative to the bank to store our wealth, in particular cash.

Read my previous post for more clarification and ideas!

In conclusion, what I really like to share with my audience here is this; the news media primary role is not only to provide accurate information, but also sensationalise the news. As that reader of the news, read the content, do some deep thinking on how this news will affect you. On the news above, many will go research on bank stocks and hence start to enter into a small position, but I think it’s best you think about your money in the bank. Bank is making record profits, and you have helped them achieve it by parking your lazy cash with them. They give you a measly interest rate of 0.05%-1% p.a, and they charge borrowers a 8-12% p.a on personal loans.

If you still want to park money in the bank, at the very least, perhaps, start invest in them, so that you can get back a bit of their profits from the dividend payout 😝😝😝