LosGoobos [2239140] —
Original article
Introducing a trust-based passive income strategy that could change the way you invest money in Torn City. Losgoobos shares his insights and calculations regarding the practice known as Buddy Banking.
One of the fundamental principles of finance is that money makes money. The more money you have, the more you can make. This is also true in Torn City, but to a lesser extent than in the real world, as in order to keep the game balanced, the authorities have to impose limits on how much money you can invest.
What if I told you there was a way to surpass these limits in a completely legal way? What if you could potentially invest an unlimited amount of excess funds in return for significant passive gain? That's something you'd be interested in, right? Of course you would, so let me explain to you the system of Buddy Banking.
Buddy Banking
Let me begin by saying that despite the corny name, Buddy Banking is a legitimate way to make good money in Torn. I would also like to state for the record that although I have stumbled upon this method, I am by no means the only one to have tried something like this. I’m sure others have used some form of bank sharing to earn themselves some sweet cash (especially with one’s own recruits), I am just here to help flesh out the idea and explain it.
Buddy Banking works by allowing a player with excess funds to use the investment potential of another player who does not have enough liquid cash to reach their personal investment limit. Just think about it. There are tens of thousands of active players in Torn, and a large number of them have absolutely nothing in the bank. Between just ten players there is a $20 billion investment opportunity waiting to be made by using the bank alone.
To make the most of this opportunity, an established player finds one or more partners who they trust explicity not to screw them over - almost certainly the hardest part of this scheme. Ideally, these players are then sent enough cash to max out the bank's base investment amount of $2 billion. If they have an Oil Rig and can afford to put $3 billion in the bank, they're probably not broke enough to take you up on your offer.
In order to avoid depriving your partners of the opportunity to gain interest on their own investments, it may be necessary to migrate funds over time to backup bankers as they start to use up more of their banking allowance. As this is a long-term strategy, the easiest thing is to let the banker choose the duration of your investment with them, while still encouraging longer durations for maximum profit.
Buddy Bankers should have the full ten merits in bank interest so as to maximise the interest they can earn. Once the investment has matured, the banker keeps all of the interest gained on their own deposit, and the interest on the investor's funds is split and allocated in an agreed-upon manner. The investor's money can then be added to (banking space permitting), left alone, or lowered prior to the next investment cycle.
Say the banker has $1 billion in the bank and the investor contributes a further $1 billion, and let's say each has the potential to generate about $30m. If the agreed-upon division of the investor's interest was 50:50, the investor would profit $15m from this venture, but the banker would gain $15m of the investor's interest, plus $30m of their own interest for a $45m total profit.
Passive Income in Torn
How does Buddy Banking stack up when compared to Torn's other sources of passive income? There are of course many complex ways to use your money to make money in Torn, with companies, properties, factions, and trading all potential sources of profit if you know what you're doing. But if you aren't experienced in these industries, and you've already maxed out the bank limit, your next stop will either be the Cayman Islands, or the newly revitalised stock market.
Even though you can invest an unlimited amount in the Caymans, it is still one of the worst places to put your money - and that's aside from all the mugging. The maximum interest rate you can enjoy at the Caymans is 0.675%, and that's only if you have the 7-star Tax Haven job special from an Oil Rig, in addition to the faction special boost of 25% to the base rate. In short, avoid the Cayman Islands like the plague.
The Stock Market is a far better proposition for those with money to invest. There are countless guides in the forums that teach you how to invest wisely in the new market, so I won't repeat what they have said. What I will say is that the ability to acquire multiple stock benefit blocks with doubled stock increments amounts to a soft cap on investments in this market. While you can, of course, invest purely in the hope that your stocks will rise in value, most people put money into stocks that will provide a good return via their dividends.
However, since the amount of shares you need to acquire each additional benefit block doubles each time, investing in this sector can become financially risky very quickly, with your percentage returns dropping with each additional block.
According to my numbers, players are hit by diminishing returns the more stock blocks they acquire. I've calculated that players should turn to Buddy Banking after they have picked up the top four to six most profitable stocks. Bank sharing acts as a nice intermediary - or a permanent detour - after picking up the most useful benefit blocks. If you are working with people you trust, the risk is actually a lot less than you'd be exposed to when compared to item trading, stock buying/selling, gambling, or buy-mugging as an active hobby.
The Numbers, the Beautiful Numbers
Although some financial advisors prefer to use “Days to Break Even” or APR as a way of calculating the value of their investments, I prefer to look at the monthly return on investment, or ROI as it will be referred to moving forward. Say you were to invest $100m into one method, and it had an average ROI of 1%, conceivably it would generate $1m of profit every month. I find that using this metric makes it easy to compare investments across banks, stocks, and other ventures.
With all that explained, it's time to look at the hard numbers to see if Buddy Banking stacks up against other sources of investment. The figures below are based on two buddy bankers agreeing to a straight 50/50 split on the interest profits. I calculated the values for various stocks on Day 1 of Stocks 3.0, so obviously these may have changed slightly since then - especially so in the case of TCHS. I have also excluded McSmoogle from this analysis. McSmoogle is arguably a great stock, and I would love to give my subjective opinion on its valuation in terms of ROI in private.
With those disclaimers out of the way, here are my calculations which compare the best passive earning sources in Torn City.
Larger Link
If you look at the nice color coding, it's clear that your own bank with full merits is the best passive earner in Torn - it's more than twice as effective as others, in some cases. This is why Buddy Banking is such a good idea, especially if you can negotiate a more aggressive cut of the interest with your associate!
The green entries refer to the best four stocks in the game in terms of ROI on Day 1 of Stocks 3.0. If you wish to start in stocks before trying buddy banking, these are the ones I would go for. In blue are the buddy banking options, assuming a 50:50 split of the interest gained. In orange, we see some of the less-profitable stocks, and in red are the PI rentals, the TCI bank interest stock (which I do miss borrowing, but I do not recommend), and the abysmal Caymans - do they still offer the free mug upon opening an account?
PI rental is a mediocre earner compared to some of the low-value stocks, giving us yet another reason to deprioritize your property portfolio and focus on more profitable ventures. Even a short-term buddy bank for two weeks outstrips a PI rental as well as all but one of the orange stocks, and while you do need to put in the max of $2 billion to make the most of it, Buddy Banking gives you the choice to invest less if you want to.
This flexibility is even starker when you consider that a PI will cost you $1 - $2 billion up front to buy and kit out (even if you use a broker.) Bank sharing is a much more liquid venture as if you ever need your funds returned, you simply have to wait until the investment is over! Renting an island out isn't that profitable either, and buying an island to save on that rental fee is only a marginal saving too.
If finances are a top priority, you might consider holding off on making a PI purchase until factors such as vault access, merits, and convenience rise in priority for you. Here's what one-month of Buddy Banking looks like with the provided sample of 2.86% ROI.
What About Buddy BB's?
No, I'm not talking about the adorable Star Wars droid. In addition to Buddy Banking, you could also try applying this system to the stock market when purchasing benefit blocks. For example, the Crude & Co benefit block pays out $80,000,000 if you own 7,500,000 shares. If you want a second block, you need to buy another 15,000,000 shares on top of this, bringing your total to 22,500,000 shares in return for $160,000,000 every 31 days. Effectively, the return of the second block is 50% of the first.
Let's assume you wanted to avoid this by sending enough money to a friend to buy block 1 of CNC and splitting the returns. At this level, if the split is 50:50, a buddy benefit block holder would be equal to your second block, as you would still only be getting 50% returns compared to your own first block. The way to make a buddy BB system advantageous is to either A) increase your portion above 50% or B) expand your BB network for that particular stock to two or more total BB buddies.
Even a base 50% split is twice as good as buying your own third block, as it would require 30,000,000 shares and only provide 25% returns compared to your own first block. You might want to let your buddy investor keep one quarter of monthly cash dividends, or one in every four weekly dividends, perhaps, especially when it comes to item payouts such as Drug Packs or Feathery Hotel Coupons. In this instance, a lesser share for the 'Buddy' is more forgivable, as there could be virtually no lost opportunity cost (if it involves a stock they were not going to purchase), and they can always buy you out with an agreeable valuation on the shares.
If you increase your scheme to three buddy investors, or you increase the number of blocks you buy for each investor, you can increase your returns and maintain a fairer cut for all. Of course, doing all of this also increases your exposure to risk in the stock market, and you will have to factor in potential losses if the stock price drops. There is likely a sweet spot where it makes more sense to go in the direction of acquiring additional buddy investors with one or two blocks each, or more than one type of stock, than buying up more benefit blocks for everyone.
The fact that stocks grant items with regularity means their payouts can be more accurately estimated and compared than before, especially cash, which is not impacted by market fluctuations like items are. However, passive stock dividends are quite useless in this situation, unless you wish to temporarily provide someone with a stock benefit in return for an agreed fee - an arrangement that used to be common when stock blocks could be traded directly between players.
Nevertheless, this setup has the distinct appeal of not requiring an interest calculation each time you invest, and may appeal to some for its simplicity. With many stock blocks having had their values changed and payouts altered, you may find that it makes more sense to invest in the same stock via buddies than to spread your portfolio across multiple, less profitable stocks.
Final Thoughts
If you have made it this far and I haven’t lost you all the way, thank you for reading! I enjoy sharing info that might have helped me when I was a younger player, so I hope I have inspired at least a few of you out there to give this a try. I would be happy to talk numbers with any of you or to talk about how the last 6 months of buddy banking have treated me. I would also be willing to share tracking sheets and other resources if you would like to set something up for yourself!
I will end with one final disclaimer that tackles the elephant in the room: what is stopping the banker from just running off with my money? The honest truth is absolutely nothing. However, I have specifically chosen to operate with individuals within my own faction for that very reason, and haven’t had a single issue (not even a late banker) in 6 months. I’ve found that folks seem pretty enthusiastic about making money off of empty space they weren’t using.
Also if you remember the example above, bankers have a pretty dang good gig out of this scheme. Ultimately, If you treat your buddy bankers fairly, you're giving them no reason to screw you over. In the long run, it is in their best interest to keep you happy until their own bank is full!
DISCLAIMER: Neither The Torn City Times nor the Torn authorities bear any responsibility for losses you may incur as a result of Buddy Banking. If you pass on money to another player for whatever reason, you do so at your own risk.
What if I told you there was a way to surpass these limits in a completely legal way? What if you could potentially invest an unlimited amount of excess funds in return for significant passive gain? That's something you'd be interested in, right? Of course you would, so let me explain to you the system of Buddy Banking.
Buddy Banking
Let me begin by saying that despite the corny name, Buddy Banking is a legitimate way to make good money in Torn. I would also like to state for the record that although I have stumbled upon this method, I am by no means the only one to have tried something like this. I’m sure others have used some form of bank sharing to earn themselves some sweet cash (especially with one’s own recruits), I am just here to help flesh out the idea and explain it.
Buddy Banking works by allowing a player with excess funds to use the investment potential of another player who does not have enough liquid cash to reach their personal investment limit. Just think about it. There are tens of thousands of active players in Torn, and a large number of them have absolutely nothing in the bank. Between just ten players there is a $20 billion investment opportunity waiting to be made by using the bank alone.
To make the most of this opportunity, an established player finds one or more partners who they trust explicity not to screw them over - almost certainly the hardest part of this scheme. Ideally, these players are then sent enough cash to max out the bank's base investment amount of $2 billion. If they have an Oil Rig and can afford to put $3 billion in the bank, they're probably not broke enough to take you up on your offer.
In order to avoid depriving your partners of the opportunity to gain interest on their own investments, it may be necessary to migrate funds over time to backup bankers as they start to use up more of their banking allowance. As this is a long-term strategy, the easiest thing is to let the banker choose the duration of your investment with them, while still encouraging longer durations for maximum profit.
Buddy Bankers should have the full ten merits in bank interest so as to maximise the interest they can earn. Once the investment has matured, the banker keeps all of the interest gained on their own deposit, and the interest on the investor's funds is split and allocated in an agreed-upon manner. The investor's money can then be added to (banking space permitting), left alone, or lowered prior to the next investment cycle.
Say the banker has $1 billion in the bank and the investor contributes a further $1 billion, and let's say each has the potential to generate about $30m. If the agreed-upon division of the investor's interest was 50:50, the investor would profit $15m from this venture, but the banker would gain $15m of the investor's interest, plus $30m of their own interest for a $45m total profit.
Passive Income in Torn
How does Buddy Banking stack up when compared to Torn's other sources of passive income? There are of course many complex ways to use your money to make money in Torn, with companies, properties, factions, and trading all potential sources of profit if you know what you're doing. But if you aren't experienced in these industries, and you've already maxed out the bank limit, your next stop will either be the Cayman Islands, or the newly revitalised stock market.
Even though you can invest an unlimited amount in the Caymans, it is still one of the worst places to put your money - and that's aside from all the mugging. The maximum interest rate you can enjoy at the Caymans is 0.675%, and that's only if you have the 7-star Tax Haven job special from an Oil Rig, in addition to the faction special boost of 25% to the base rate. In short, avoid the Cayman Islands like the plague.
The Stock Market is a far better proposition for those with money to invest. There are countless guides in the forums that teach you how to invest wisely in the new market, so I won't repeat what they have said. What I will say is that the ability to acquire multiple stock benefit blocks with doubled stock increments amounts to a soft cap on investments in this market. While you can, of course, invest purely in the hope that your stocks will rise in value, most people put money into stocks that will provide a good return via their dividends.
However, since the amount of shares you need to acquire each additional benefit block doubles each time, investing in this sector can become financially risky very quickly, with your percentage returns dropping with each additional block.
The Numbers, the Beautiful Numbers
Although some financial advisors prefer to use “Days to Break Even” or APR as a way of calculating the value of their investments, I prefer to look at the monthly return on investment, or ROI as it will be referred to moving forward. Say you were to invest $100m into one method, and it had an average ROI of 1%, conceivably it would generate $1m of profit every month. I find that using this metric makes it easy to compare investments across banks, stocks, and other ventures.
With all that explained, it's time to look at the hard numbers to see if Buddy Banking stacks up against other sources of investment. The figures below are based on two buddy bankers agreeing to a straight 50/50 split on the interest profits. I calculated the values for various stocks on Day 1 of Stocks 3.0, so obviously these may have changed slightly since then - especially so in the case of TCHS. I have also excluded McSmoogle from this analysis. McSmoogle is arguably a great stock, and I would love to give my subjective opinion on its valuation in terms of ROI in private.
With those disclaimers out of the way, here are my calculations which compare the best passive earning sources in Torn City.
If you look at the nice color coding, it's clear that your own bank with full merits is the best passive earner in Torn - it's more than twice as effective as others, in some cases. This is why Buddy Banking is such a good idea, especially if you can negotiate a more aggressive cut of the interest with your associate!
The green entries refer to the best four stocks in the game in terms of ROI on Day 1 of Stocks 3.0. If you wish to start in stocks before trying buddy banking, these are the ones I would go for. In blue are the buddy banking options, assuming a 50:50 split of the interest gained. In orange, we see some of the less-profitable stocks, and in red are the PI rentals, the TCI bank interest stock (which I do miss borrowing, but I do not recommend), and the abysmal Caymans - do they still offer the free mug upon opening an account?
PI rental is a mediocre earner compared to some of the low-value stocks, giving us yet another reason to deprioritize your property portfolio and focus on more profitable ventures. Even a short-term buddy bank for two weeks outstrips a PI rental as well as all but one of the orange stocks, and while you do need to put in the max of $2 billion to make the most of it, Buddy Banking gives you the choice to invest less if you want to.
This flexibility is even starker when you consider that a PI will cost you $1 - $2 billion up front to buy and kit out (even if you use a broker.) Bank sharing is a much more liquid venture as if you ever need your funds returned, you simply have to wait until the investment is over! Renting an island out isn't that profitable either, and buying an island to save on that rental fee is only a marginal saving too.
If finances are a top priority, you might consider holding off on making a PI purchase until factors such as vault access, merits, and convenience rise in priority for you. Here's what one-month of Buddy Banking looks like with the provided sample of 2.86% ROI.
What About Buddy BB's?
No, I'm not talking about the adorable Star Wars droid. In addition to Buddy Banking, you could also try applying this system to the stock market when purchasing benefit blocks. For example, the Crude & Co benefit block pays out $80,000,000 if you own 7,500,000 shares. If you want a second block, you need to buy another 15,000,000 shares on top of this, bringing your total to 22,500,000 shares in return for $160,000,000 every 31 days. Effectively, the return of the second block is 50% of the first.
Let's assume you wanted to avoid this by sending enough money to a friend to buy block 1 of CNC and splitting the returns. At this level, if the split is 50:50, a buddy benefit block holder would be equal to your second block, as you would still only be getting 50% returns compared to your own first block. The way to make a buddy BB system advantageous is to either A) increase your portion above 50% or B) expand your BB network for that particular stock to two or more total BB buddies.
Even a base 50% split is twice as good as buying your own third block, as it would require 30,000,000 shares and only provide 25% returns compared to your own first block. You might want to let your buddy investor keep one quarter of monthly cash dividends, or one in every four weekly dividends, perhaps, especially when it comes to item payouts such as Drug Packs or Feathery Hotel Coupons. In this instance, a lesser share for the 'Buddy' is more forgivable, as there could be virtually no lost opportunity cost (if it involves a stock they were not going to purchase), and they can always buy you out with an agreeable valuation on the shares.
If you increase your scheme to three buddy investors, or you increase the number of blocks you buy for each investor, you can increase your returns and maintain a fairer cut for all. Of course, doing all of this also increases your exposure to risk in the stock market, and you will have to factor in potential losses if the stock price drops. There is likely a sweet spot where it makes more sense to go in the direction of acquiring additional buddy investors with one or two blocks each, or more than one type of stock, than buying up more benefit blocks for everyone.
The fact that stocks grant items with regularity means their payouts can be more accurately estimated and compared than before, especially cash, which is not impacted by market fluctuations like items are. However, passive stock dividends are quite useless in this situation, unless you wish to temporarily provide someone with a stock benefit in return for an agreed fee - an arrangement that used to be common when stock blocks could be traded directly between players.
Nevertheless, this setup has the distinct appeal of not requiring an interest calculation each time you invest, and may appeal to some for its simplicity. With many stock blocks having had their values changed and payouts altered, you may find that it makes more sense to invest in the same stock via buddies than to spread your portfolio across multiple, less profitable stocks.
Final Thoughts
If you have made it this far and I haven’t lost you all the way, thank you for reading! I enjoy sharing info that might have helped me when I was a younger player, so I hope I have inspired at least a few of you out there to give this a try. I would be happy to talk numbers with any of you or to talk about how the last 6 months of buddy banking have treated me. I would also be willing to share tracking sheets and other resources if you would like to set something up for yourself!
I will end with one final disclaimer that tackles the elephant in the room: what is stopping the banker from just running off with my money? The honest truth is absolutely nothing. However, I have specifically chosen to operate with individuals within my own faction for that very reason, and haven’t had a single issue (not even a late banker) in 6 months. I’ve found that folks seem pretty enthusiastic about making money off of empty space they weren’t using.
Also if you remember the example above, bankers have a pretty dang good gig out of this scheme. Ultimately, If you treat your buddy bankers fairly, you're giving them no reason to screw you over. In the long run, it is in their best interest to keep you happy until their own bank is full!
DISCLAIMER: Neither The Torn City Times nor the Torn authorities bear any responsibility for losses you may incur as a result of Buddy Banking. If you pass on money to another player for whatever reason, you do so at your own risk.
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