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This is sort of what a money market account is. If you have a regular bank offering a regular savings account to members of the general public, that's commercial banking. If the money is invested in the stock market, that's investment banking. A commercial bank doing investment banking is very illegal. As in, you'd better have given millions of dollars to ...


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Your question displays that you're really interested in the subject matter, and that's great to see! I'll answer your questions below, and I would helpfully suggest you do some background reading focusing on interest rates and credit risk. If you really want to get crazy you can progress to mean variance portfolio theory, the capital asset pricing model ...


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The answer is really about how to handle risks. The general rule in investments is: high rate of return = high risk. Stock markets carry a risk -- they can turn down very quickly but they generally have higher rate of return than a savings account. The regulations set on banks are there to protect the saving accounts from banks taking too much risk. You ...


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the boring answer to the question of why banks don't borrow cheap money from the fed and invest in the stock market is bc federal regulations don't allow banks to invest depositor money in the stock market.


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Banks have to have enough assets to cover the value of savers’ deposits at all times. Just relying on having enough cash on hand to cover withdrawals is what Ponzi schemes and fraudsters do. (Note that the assets don’t have to be liquid, so banks can still run into trouble when they can’t call in the long-term loans they have made to cover a sudden rush of ...


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Why doesn't any (serious) bank offer a savings account with a fixed 2% interest rate for an unlimited amount of time? I don't want to assume your age but you may not remember that this was actually a completely real situation in the past. When I was a growing up in the 80's I recall my basic savings account had an annual interest rate of somewhere between ...


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Because your "bank" will fail The related questions assumes a "buy low, sell high", or even better, a "buy low, never sell" scheme of investment. But your proposed geared fund will not have that. They will have clients. Clients that can withdraw at worst possible moment. Recessions come hand to hand with markets down run. Long recessions will cause ...


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Why doesn't any (serious) bank offer a savings account with a fixed 2% interest rate for an unlimited amount of time? If they did that, I would do this: Divide my money 50-50 between the bank account and stocks Balance yearly. That way I would end up taking money from the bank account whenever stocks are low, and put money there whenever stocks are high. ...


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Fundamentally, I think there's a high level (and perhaps unsatisfying) answer to this. It's because that's not "banking" as a business, and a bank is established to do banking, not to get into the stock market. In other words, this question strikes me about the same as asking, why don't ice cream shops stop selling ice cream, and instead get in the ...


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