What's a money move only rich people know that sounds completely insane? #redditstories #shorts — Transcript

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1. 0:00What's a money move only rich people
2. 0:01know that sounds completely insane? I
3. 0:03process loans at a private bank in
4. 0:04Boston. The kind of place where the
5. 0:05smallest account on the floor still has
6. 0:07seven figures in it. Most of our clients
7. 0:08are predictable. Then there's Mr.
8. 0:10Castellano. He walked in on a Tuesday
9. 0:11wearing a coat that cost more than my
10. 0:12car and asked to borrow $300,000. A
11. 0:15normal request for our floor. Except 30
12. 0:16seconds earlier I'd pulled up his
13. 0:17accounts to verify him and the man had
14. 0:19$9 million sitting with us in cash and
15. 0:21investments. Liquid, available, his to
16. 0:23withdraw that same afternoon. You want
17. 0:24to borrow 300,000? I said slowly,
18. 0:26against the 9 million you already have
19. 0:27here? That's right, he said sliding his
20. 0:29ID across the desk like it was the most
21. 0:30ordinary thing in the world. I figured
22. 0:32he didn't understand his own statements.
23. 0:33People with money rarely read them. Sir,
24. 0:35you don't need a loan. You could just
25. 0:36transfer the cash. No interest, no
26. 0:38paperwork, no monthly payments. It's
27. 0:39already yours. He smiled like I told a
28. 0:41joke he'd heard a hundred times. Run the
29. 0:43loan. Use the portfolio as collateral.
30. 0:44I'll take the standard rate. So I did.
31. 0:46The loan was approved within the hour,
32. 0:47secured against his own investment
33. 0:49account, costing him roughly 5% a year
34. 0:51to borrow money he already owned
35. 0:52outright. He signed, thanked me, and
36. 0:54left. The second the door closed, the
37. 0:55whole desk erupted. Our newest analyst
38. 0:57Hollis nearly fell out of his chair.
39. 0:58He's paying interest, he wheezed, to
40. 1:00borrow his own money. That's the dumbest
41. 1:02thing I've ever seen a rich guy do. Even
42. 1:04Mr. Reyes, our branch head, came out of
43. 1:05his glass office to hear it. By lunch,
44. 1:07half the floor was calling him the man
45. 1:09who rents his own cash. It became a
46. 1:10running joke for weeks. Anytime a client
47. 1:12made a reasonable request, someone would
48. 1:13mutter, or he could just Castellano it
49. 1:15and pay interest on his savings. We were
50. 1:17all certain we'd watched a millionaire
51. 1:18embarrass himself in real time. Then he
52. 1:20came back and he did it again. Another
53. 1:22loan. This time $500,000 against the
54. 1:24same portfolio. Hollis practically
55. 1:25sprinted to my desk afterward. He did it
56. 1:27again. Does he not know we just hand him
57. 1:29his money? The third time Mr. Reyes
58. 1:30decided to step in personally. He's the
59. 1:32type who thinks a problem isn't solved
60. 1:33until he's the one who solved it. He
61. 1:35walked Mr. Castellano into a conference
62. 1:36room to review his options. Really to
63. 1:38explain, slowly and kindly, that he was
64. 1:40bleeding money for no reason. I watched
65. 1:42through the glass. Reyes was drawing
66. 1:44little diagrams on a notepad. Castellano
67. 1:46just sipped his coffee, completely
68. 1:47unbothered. 20 minutes later, Reyes came
69. 1:49out pale. He didn't say a word to any of
70. 1:51us. He walked back into his office and
71. 1:52quietly shut the door. It was Castellano
72. 1:54who finally explained it on his way out
73. 1:56because I think he could tell I was the
74. 1:57only one still curious instead of smug.
75. 1:59He leaned on the counter and asked me
76. 2:00one question. If I withdraw my 9
77. 2:02million, what actually happens? Nothing,
78. 2:03I said. It's your money. Wrong, he said
79. 2:05gently. To get that cash, I'd have to
80. 2:07sell the investments it's parked in. And
81. 2:08the moment I sell, the government takes
82. 2:10capital gains tax on every dollar those
83. 2:12investments have grown. On my portfolio,
84. 2:14selling 500,000 worth triggers about
85. 2:15$140,000 in taxes. Gone forever.
86. 2:18Something clicked in my chest. But a
87. 2:20loan, he continued, a loan isn't income.
88. 2:22Nobody on earth pays tax on borrowed
89. 2:23money. So I borrow against the portfolio
90. 2:25instead of selling it. The loan cost me
91. 2:275%. Selling would have cost me 28%. He
92. 2:29tapped the counter once. And here's the
93. 2:31part your analyst missed while he was
94. 2:32laughing. I never sold a single share.
95. 2:34So while I've been renting my own cash,
96. 2:36that same portfolio climbed 11% this
97. 2:37year. It earned more than every loan I
98. 2:39took cost me. The bank is paying me to
99. 2:41borrow from it. He [music] straightened
100. 2:42his coat and stood. Poor people are
101. 2:43taught to save their money and spend it.
102. 2:45Rich people are taught to keep their
103. 2:46money working and borrow against it.
104. 2:47Selling is for people who don't know the
105. 2:49difference. Then he smiled. Tell Hollis
106. 2:50the dumbest thing in this building is
107. 2:51paying a tax you never had to.