What the???

Raj from Toronto, Ontario writes about RBC profits:

Hey Lou,

I have lost  money in mutual funds which RBC sold me.

The bank invested my money into different commodities and now RBC claims to have made profit?

How is that possible when all the investors have lost their investment… something does not make sense?

Raj,

The banks make money by charging fees to manage your assets, charging interest on loans and mortgages, and other activities such as investment banking, and so on.

I think what often gets missed when we invest our money is that we are ultimately responsible for the outcome. The institutions at times invest their own capital but mostly act as agents on behalf of their clients.

All those streams of income allow banks to make a profit from the services they provide regardless of the outcome of the investments you have agreed to buy.

Happy Capitalism!