Many different types of banks operate in the modern economy, from small local banks to the biggest banks on the planet. Understanding the difference is important when you're making investment decisions. Money-center banks are just one type of bank that you may be considering buying shares of, but do you know what they are and what they do?
Why do money-center banks matter to investors?
For dividend investors, money-center banks can offer a highly secure investment that has very little potential downside. These banks are so intertwined with the global economy that they are highly unlikely to fail, short of a cataclysmic event (and if that happens, one of the last things anybody is going to be worrying about is their investment portfolio).
Money-center banks are a great way to hedge against losses in riskier types of investments, like tech startups, that offer a huge upside potential but a very significant chance of complete failure. They also pay dividends, so on top of the generally steady growth of stock prices, you will get a monthly payout that can provide income to live on.
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