Jason HartmanCEO of Empowered Investor and Real Estate Tools

What is a bank account investment?

Name: What is a bank account investment?
Uploaded: 2022-12-07T16:43:27+00:00
Duration: 53 s
Channel: Jason Hartman
Description: In this brief commentary, the speaker argues that bank accounts—such as checking, savings, and money‑market accounts—should be treated as investment…

7 Dec 2022 · 1 min

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In this brief commentary, the speaker argues that bank accounts—such as checking, savings, and money‑market accounts—should be treated as investment vehicles that need evaluation. He emphasizes that holding cash in these accounts results in a guaranteed loss of purchasing power because inflation is eroding value at roughly 8.5% per year. Even when the account yields interest, the interest income is taxed, and because the IRS does not adjust taxable income for inflation, the investor remains effectively underwater. The speaker suggests that the tax system’s failure to account for inflation benefits the government and further harms savers.

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Well, there's one other investment I want to talk to you about, and most people don't consider it an investment, but it has to be evaluated that way, and that is a bank account. If you have your money in cash, maybe you've got it in money market or savings account, checking accounts, whatever. Right. Your money's in cash. You know, for sure, officially, without any argument, that you are losing 8.5% annually. So you're you're losing money for sure just due to inflation. And if you have a little bit of an interest rate return on that money, you're paying tax on that interest rate, even though you're really underwater. Because the IRS doesn't understand inflation. They don't calculate it correctly. And, hey, they don't want to calculate it correctly because it works to their benefit.