Land banking is a term commonly used in real estate and it means buying of several undeveloped land at a cheap or affordable price – allow it appreciate over a period and later resell to make huge profit.
It is the surest way of maximizing your wealth because leaving your money in the bank will make the value of it to drop as inflation will have eaten deep into it.
We all know that one million of today will not buy the same thing a million will buy 10 years ago.
Also Land banking gives your children leverage in life, as you will have something to pass on to your children that will shape their life.
There is, however, the issue of collateral security. Land owners enjoy easy financing of their projects when applying for loan from bank because they rely heavily on collateral securities before giving out loans.
There is also Retirement Security. Land or property owners always have an edge over those that just save their money in the bank that inflation will have eaten it. Land owners property will have appreciated over the years, making them rich in the process.
Lastly physical asset is way over liquid assets. Land is a physical asset that can’t be easily converted into cash at any time but cash in the bank can be withdrawn and spent at will thereby making you spend frivolously but when your money is tied to a physical asset it is not converted easily.