Question about MBS and how it pays
A security is a class of financial instrument you can trade on the market.  A share of stock is a kind of security, for example, as is a bond. In the case of your mortgage, what happens: You take out a loan for $180k.  The loan has two components. a.  The payment stream (meaning the principal and the interest) from the loan b.  The servicing of the loan, meaning the company who is responsible for accepting payments, giving the resulting income to whomever owns it. Many originating banks, such as my initial lender, do neither of these things - they sell the payment stream to a large bank or consortium (often Fannie Mae) and they also sell the servicing of the loan to another company. The payment stream is the primary value here (the servicing is worth essentially a tip off the top).  The originating bank lends $180k of their own money.  Then they have something that is worth some amount - say $450k total value, $15k per year for 30 years - and they sell it for however much they can get for it.  The actual value of $15k/year for 30 years is somewhere in between - less than $450k more than $180k - since there is risk involved, and the present value is far less.  The originating bank has the benefit of selling that they can then originate more mortgages (and make money off the fees) plus they can reduce their risk exposure. Then a security is created by the bigger bank, where they take a bunch of mortgages of different risk levels and group them together to make something with a very predictable risk quotient.  Very similar to insurance, really, except the other way around.  One mortage will either default or not at some % chance, but it's a one off thing - any good statistician will tell you that you don't do statistics on n=1.  One hundred mortgages, each with some risk level, will very consistently return a particular amount, within a certain error, and thus you have something that people are willing to pay money on the market for. A Mortgage Backed Security or MBS is the security.  It's not an entity, it's essentially a contract.  As an investment they function more or less the same way a bond does. There is nothing wrong with the concept behind a Mortgage Backed Security.  Functionally securities like these allows banks and other institutions to lend to high-risk borrowers.  You package small slices of a wide range of risk from a large number of mortgages and the investor sill receive something similar to the average of the rates being charged.  Essentially from a big pool of mortgages of varying risk you will create a different big pool of bonds that can be sold to investors based on some sort of expected return.  For a frame of reference on a much smaller scale look at peer to peer lending sites like LendingClub and Prosper.  The idea is lots of people of varying risk profiles make requests for loans of varying amounts.  You bring your $2,500 and invest $25 in to 100 different loans.  This way even if a few default you will still eek out a profit.  It also allows you to include riskier borrowers without materially impacting your expected return.
Banks are audited, for obvious reasons. Their software is carefully audited and protected, also for obvious reasons. A branch manager can't normally bypass those without getting caught quite quickly. He might be able to issue himself a loan -- but it will have to be a loan that at least appears to conform to the bank's standards, and he'll have to pay it off just like any other loan. Running a sandwich shop and, say, a software consulting service are quite different things.  I had two employees at one point, following the kind of thinking in the article.  But I found what that meant was that I had to spend more time being a manager and salesperson and much less time doing the work I enjoyed.  To make it viable I would have had to scale up to the point where I had at least one salesperson and maybe a manager, which would have required more income-producing staff to support them.  Instead, I scaled back to just myself, and have been very happy with that decision.  The article also underestimates what can be made in consulting or IT contracting.  Rates well above $100/hr are common for people with expertise (as opposed to commodity providers), and billing at least 40 hours a week is not usually a problem.  It's certainly true that a one-man operation is much more likely to put a ceiling on your earnings, but (a) that ceiling can be a lot higher than the article suggests, and (b) depending on the business, breaking that ceiling and earning much more is certainly possible in some businesses, for example where you have the opportunity to sell your work in product form rather than hourly. "I feel that getting money sooner than later is always advantageous. If I offered you the choice between getting: Which option would you take? I would take the last option. And for the same reason, from a purely-numbers point of view, I would argue that getting paid biweekly is preferable (assuming the the annual salary is pro-rated fairly, and barring any compulsive spending habits). Your calculations suggest to me that they are trying to answer the question, ""Looking at a single year or month (or some other fixed amount of time) in a vacuum, is there any financial benefit to being paid bi-weekly over monthly?"". The analysis seems to be focusing on comparing the two pay schedules on a month-by-month basis, noting when one is paid bi-weekly, some months you get paid more times than the other. However, one could also compare the two pay schedules on a fortnight-by-fortnight basis, and note that when one is paid monthly, many fortnights you don't get paid at all, and some you get paid a lot. Or one could compare the two pay schedules on an hour-by-hour basis, too. But in the long run, the money adds up to be the same amount. I prefer getting it as soon as I can." Sorry to call you out on this, but your numbers are definitely off. If someone takes you seriously you'll be misleading them and I'd like to avoid that. Maybe you had this conversation with your friends many years ago when salaries were lower?  The big consulting firms all have set base salary and signing bonus for all entry level positions in the US. Everyone in the starting class out of undergrand has the same starting salary (across all geographic regions). Depending on the firm and your performance, you then receive a year end bonus (or no bonus at all). For MBB, you can expect close to a 6 figure salary in your first year. With an MBA, you're closer to $200k with bonus.  Source: I work for a top consulting firm, but here are some hard figures: http://managementconsulted.com/consulting-jobs/2012-management-consulting-salaries-undergraduate-post-mba/# Probably more like ELI10.  Bob gets 10$ a week in lunch money from his parents.  Jim's dad works as a travelling salesman and makes a fixed salary plus a weekly commission, jim gets 5$ in allowance + whatever extra his dad makes, some weeks 20$ some 5$ some 7.  So Jim wants to make his allowance a bit more constant and bob wants a piece of the commission.  Mathematically: Bob's allowance = 10$/week  Jim's allowance = 5$ + C / week  C is unknown.   So they make a deal. Jim will receive 5$ from Bob every week. In return Jim will pay bob the  extra allowance every week.  The new deal is  Bob = 5$ + C  Jim = 10$   How they get to this arrangement is every week they sit at the lunch table. Bob takes out 5$, jim takes out his extra commission. They net the amount and pay whomever profits. You need to look at where the profits are coming from. In this case, compressed wage growth and extreme cost-cutting. I mean shit, Dimon ripped out all of JPMs Bloomberg terminals. Work happiness at banks are much lower and people are leaving, save for at certain types of banks. The profits are just coming from employees. Overtime is a lot lower to non-existent in right to work states and you'll pull 10-30 hours over what you signed on for on a weekly basis.   If you're not aware of what capital requirements are then I really can't dive into this. I suggest you read up on Basel 3, the US system, liquidity cover ratio (LCR) and then understand generally what products yield more and the risks attached to those.   If you do know those then I feel like you know where my response is going, but I'm happy to get into it more. 1.   It is difficult.  There is no formal process outside of undergrad and MBA programs to easily gain access to interviews.  At your level, its mostly about connections.  If willing to start near bottom, go to your business school and start applying to bank associate programs.  Sounds like you would like sales and trading more than M&amp;A, so focus there. 2.   If you got in at associate level, you would do 1-3 months of training and then get assigned a desk.  Finance going through a tough time right now, so trajectory isn't what it used to be.  Expect to be a VP after 2-4 years, then its all dependent on luck and skill. 3.   If you land a job at a top 15 bank, you should be making total comp of 150k or more after the first year.  Salaries not quite at 150k, but most VPS make over 150k salary, not to mention bigger bonus's.  4.   If you did M&amp;A you would be working very serious hours.  If you go into Sales and Trading your hours will be anywhere from 40 to 60 hours a week depending on the desk.  Trading hours tend to be the shortest. 5.  Boston isn't a hot bed for i-banking finance.  NYC, London, Sing, Hong Kong tend to be the places to be.  I know nobody in Boston that could help. If I recall correctly, the pay schedule is such that you initially pay mostly interest.  As James Roth suggests, look at the terms of the loan, specifically the payment schedule.  It should detail how much is being applied to interest and how much to the actual balance. Well this was an interesting read, but sadly no one has given me anything I asked for. I'm not complaining, as I didn't expect a complete stranger to actually tell me how much they make, but I figured it'd be worth a try. Anyway, I'm gonna assume that you work in NY? If so, what were your starting hours like (approx) and also, do you work as a quant, cause it seems (correct me if I'm wrong) that you're describing an I-Banking job. Also, if you feel comfortable, a starting salary would be helpful as well. I'm trying to get real figures here cause everyone that I ask tells me something different.  Finally, I haven't completely taken NY off the table as an option, I would just prefer Toronto if it's possible. Its kind of a dumb question because no one believes that you can earn 8% in the short term in the market, but for arguments sake the math is painfully easy.  Keep in mind I am an engineer not a finance guy. So the first payment will earn you one month at 8%, the second, two.  In effect three months at 8% on 997.  You can do it that way because the payments are equal: 997 * (.08 /12) *3 = earnings ~= 20 So with the second method you pay: 997 * 3 - 20 =  2971 Questions:   When you say feds inject money into the system, what do you mean?  What system?  the commercial banks?  Or Government so they can pay govt salaries?     And can commercial banks such as chase, bofa  create money out of thin air regardless of FED(and i dont mean by frac reserve either)??  Meaning giving out credit cards, or lending money they don't have.  Coz it seems banks don't need to have savings in the bank to lend/create debt money.   M2 increase regardless to M1 or Mbase money proves that.    there needs to be a federal govt nationalized franchise of utilty banks to compete with commercial banks.  let com banks speculate, and average conservative savers go bank with the nationalized utility banks. In my experience, even if you are invaluable to the company, you won't be dutifully compensated or recognized. It is very rare that a company has a good enough performance assessment system that actually measures this with any measure of accuracy. The end result is that the only people compensated are those that make themselves close to management, AKA Brown Noses... If you participate, you will either get some money or some other renumeration. If you do not participate, you will not get anything. The only risk of participating is that if you have suffered actual damages, the settlement may under-compensate you. By significant, I mean thousands of dollars, since bringing suit yourself would be very expensive. Unless you can demonstrate that you have suffered from significant damages as a result of MBNA's bad behavior, joining the class to get whatever you are going to get is almost certainly a no-brainer decision. To give you an idea, HBS will often do interviews at McKinsey offices. Accounting has nothing to do with what we're talking about and the pay grades are completely different. A partner at KPMG or PWC is going to make as much as some 5 years out in a good investment bank. "Question: Does a billion dollars make you 1,000 times more happy than a million dollars? Answer: It doesn't.  What counts is not the amount of money, but the subjective improvement that it makes to your life. And that improvement isn't linear, which is way the expected value of the inrease in your happiness / welfare / wellbeing is negative.  The picture changes if you consider that by buying a ticket you can tell yourself for one week ""next week I might be a billionaire"". What you actually pay for is not the expected value of the win, but one week of hope of becoming rich."