The US Credit Score Went Down — What Does That Mean for Your Money?
The US Credit Score Went Down — What Does That Mean for Your Money?
Jordan Rosenfeld Thu, August 10, 2023
Most of us know that adults have a personal credit score that reflects how well they handle their debt-to-income ratio, how quickly they pay off debts and how long they hold these debts, among other things. This personal credit score is the way institutions and people that might loan money or make other fiscal decisions decide whether it is low-risk enough for them to do so.
The United States also has an overall credit score, typically bestowed upon it by one of a few credit rating agencies such as Moodys, Fitch or Standard and Poors. Fitch just delivered America a bit of a blow by “downgrading” its rating from “AAA” to “AA+.” What does this mean for the country and for your personal money? Experts explain.
The US Credit Score Went Down — What Does That Mean for Your Money?
Jordan Rosenfeld Thu, August 10, 2023
Most of us know that adults have a personal credit score that reflects how well they handle their debt-to-income ratio, how quickly they pay off debts and how long they hold these debts, among other things. This personal credit score is the way institutions and people that might loan money or make other fiscal decisions decide whether it is low-risk enough for them to do so.
The United States also has an overall credit score, typically bestowed upon it by one of a few credit rating agencies such as Moodys, Fitch or Standard and Poors. Fitch just delivered America a bit of a blow by “downgrading” its rating from “AAA” to “AA+.” What does this mean for the country and for your personal money? Experts explain.
Why Did Fitch Downgrade the US?
Fitch made this assessment based on “the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance…” The rating takes into account how well a country is doing in relationship to other “peers” and the U.S. is just not rating high right now.
Fitch actually threatened this action back in May when Democrat and Republican lawmakers could not agree on the borrowing limit and the Federal Treasury was scarily close to running out of money. The rating downgrade is partly a way to get governments and their treasuries to think carefully about their decisions’ effects on the economy at large.
Fitch made its downgrade decision by looking at economic indicators, which are not pointing to a rosy next few years. Fitch expects that over the next three years, things like tax cuts, additional spending and “political gridlock” will cause our nation’s finances to “deteriorate.” It is also taking into consideration factors such as the $1.39 trillion federal deficit, which is an increase of 170% from where it was around the same time last year.
What the Credit Score Drop Means
“A credit rating is simply a rating… that is gauging the likelihood of a credit default from companies, governments, central banks, or municipalities, etc.,” said Shawn Stone, CRPC®, director advisory services at Retirement Planners of America.
The higher the rating, the lower probability of a default. The lower the rating, the higher probability of a default. “The lower the rating, the higher yield providers must give on their debt issuance to entice people to buy their bonds creating debt to operate on. Same but in opposite of higher rated companies, they will offer lower rates on debt/bonds,” he said.
No Immediate Cause for Concern
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/us-credit-score-went-down-120040254.html
Five Freedoms
Five Freedoms
Jonathan Clements HumbleDollar
FOR THREE YEARS, I lived on Roosevelt Island, in the middle of New York City’s East River. It’s a wonderful place—a quiet, friendly, low-crime oasis in the middle of one of the world’s largest, most frenetic cities.
During my time there, the Franklin D. Roosevelt Four Freedoms Park opened on the island’s southern tip. The park is named after a 1941 FDR speech, where he articulated “four essential human freedoms”: freedom of speech, of worship, from fear and from want.
FDR’s speech was inspiring. Managing money is altogether more prosaic. Still, I’d argue that our pursuit of money is also about a hunger for freedom—with five dimensions:
Five Freedoms
Jonathan Clements HumbleDollar
FOR THREE YEARS, I lived on Roosevelt Island, in the middle of New York City’s East River. It’s a wonderful place—a quiet, friendly, low-crime oasis in the middle of one of the world’s largest, most frenetic cities.
During my time there, the Franklin D. Roosevelt Four Freedoms Park opened on the island’s southern tip. The park is named after a 1941 FDR speech, where he articulated “four essential human freedoms”: freedom of speech, of worship, from fear and from want.
FDR’s speech was inspiring. Managing money is altogether more prosaic. Still, I’d argue that our pursuit of money is also about a hunger for freedom—with five dimensions:
1. Freedom from fear.
We all want a sense of financial security—and yet all too many folks lead fragile financial lives. If our income barely covers our expenses, we may be okay if it’s a typical month. But so few months turn out to be typical.
We face frequent financial shocks, some large, some small. The car breaks down. The roof needs to be replaced. We lose our job. If we have scant savings and little financial breathing room in our monthly budget, such shocks can leave us scrambling to cover the bills and send our anxiety soaring.
As I mentioned last week, a Consumer Financial Protection Bureau study found that the sum we keep in liquid savings—meaning cash, checking accounts and savings accounts—has a huge impact on financial well-being. The price to escape much of our financial fear? All it may take is a few thousand dollars tucked away in the bank.
2. Freedom from financial dependence.
We’re all dependent on other folks. Even billionaires need others to produce the goods and services they consume, to buy the investments they sell and to purchase the products their businesses make.
But there are degrees of financial dependence—and the more dependent we are, the shakier our financial life can seem. I don’t like being financially dependent on others, and I can’t imagine many do.
Don’t get me wrong: When the day comes, I won’t have any qualms about claiming my Social Security check. But I would never want to be entirely dependent on a government program, a charity or family members.
Even working for others strikes me as a form of financial dependence, though it’s one most of us can’t avoid. It’s terrible to feel our livelihood hinges on a capricious boss. True, if we’re unhappy, we can always take our labor elsewhere. But switching employers is a costly, anxiety-inducing business.
3. Freedom from financial obligations.
To continue reading, please go to the original article here:
Everyone Has Their Own Money Trauma
Everyone Has Their Own Money Trauma
Posted August 10, 2023 by Ben Carlson
A reader asks:
I’m 38 years old and for most of my adult life I didn’t make much money. I made just enough to survive with nothing left to invest. Everything changed a few years ago. I went from making $35k per year to around $140k in about 4 years. At first I spent everything, but in the last two years I’ve started doing the opposite. I save everything. My monthly expenses including my mortgage are less than $1,000. My after-tax saving rate is somewhere in the neighborhood of 80-90%. In the last two years I’ve saved about $150k not including maxing my 401k and Roth. My job isn’t going anywhere but I have a constant fear that something is going to happen and everything will be ripped away. Key thing is I have no real skills but happened to hit the lottery at a company that has rewarded me for a decade of hard work. My question is: most financial experts would probably say I’m saving too much but I’m wondering if my situation justifies the high savings rate?
I love this question because it shows how money is more about your mind than math.
Everyone Has Their Own Money Trauma
Posted August 10, 2023 by Ben Carlson
A reader asks:
I’m 38 years old and for most of my adult life I didn’t make much money. I made just enough to survive with nothing left to invest. Everything changed a few years ago. I went from making $35k per year to around $140k in about 4 years. At first I spent everything, but in the last two years I’ve started doing the opposite. I save everything. My monthly expenses including my mortgage are less than $1,000. My after-tax saving rate is somewhere in the neighborhood of 80-90%. In the last two years I’ve saved about $150k not including maxing my 401k and Roth. My job isn’t going anywhere but I have a constant fear that something is going to happen and everything will be ripped away. Key thing is I have no real skills but happened to hit the lottery at a company that has rewarded me for a decade of hard work. My question is: most financial experts would probably say I’m saving too much but I’m wondering if my situation justifies the high savings rate?
I love this question because it shows how money is more about your mind than math.
A lot of the questions I receive can be similar from a financial perspective but we all have our own forms of money trauma depending on our circumstances.
First off, while I like it when people remain humble but don’t sell yourself short. Hard work is a skillset and if your company has given you a 4x raise in four years you’re obviously doing something right.
I understand the trepidation to spend money in a situation like this.
The lottery mindset can cause some conflicting money emotions.
Most people spend their entire careers methodically increasing the amount they make over time and slowly building wealth through regular savings.
One of the reasons so many actual lottery winners end up broke is because it’s not normal to experience such an abrupt increase in your wealth.
I wrote about this in Don’t Fall For It:
According to the Certified Financial Planner Board of Standards, almost one-third of lottery winners declare bankruptcy. These winners ended up in a worse place than they were in before winning gobs of money. Lottery winners have also been shown to be more susceptible to drug and alcohol abuse, depression, divorce, suicide, or estrangement from their family.
Even the neighbors of lottery winners are more likely to go bankrupt than the average household. Researchers at the Federal Reserve discovered close neighbors of lottery winners in Canada were more likely to increase their spending, take on more debt, put more money into speculative investments, and eventually file for bankruptcy. And the larger the winnings, the more likely it was others in that neighborhood would go bankrupt.
Wealth is simply the difference between what you make and what you spend, so the secret sauce to building wealth over time is avoiding lifestyle creep as your income rises. This is one of the reasons so many lottery winners go broke. Their lifestyle grows exponentially larger than their pile of money.
To continue reading, please go to the original article here:
https://awealthofcommonsense.com/2023/08/everyone-has-their-own-money-trauma/
5 Key Signs Your Finances Are in Trouble
5 Key Signs Your Finances Are in Trouble
Crystal Mayer Tue, August 8, 2023
If you feel like there is never enough money in your bank account, you are not alone. According to a survey conducted by the LendingClub Corporation and PYMNTS.com, 64% of adults in America reported living paycheck to paycheck in March 2022. Millions of people are unable to get ahead or put money aside for savings, meaning that they may be struggling financially.
When you are in the middle of it, however, it can be challenging to determine just how dire your financial situation is. You may have become numb to the fact that you routinely pay bills late or are swimming in overdraft fees. Many people simply have no other choice, given that wages have not kept pace with the high cost of living in most areas. But recognizing that your bank account is not healthy is half the battle, so here are five key signs your finances are in trouble.
5 Key Signs Your Finances Are in Trouble
Crystal Mayer Tue, August 8, 2023
If you feel like there is never enough money in your bank account, you are not alone. According to a survey conducted by the LendingClub Corporation and PYMNTS.com, 64% of adults in America reported living paycheck to paycheck in March 2022. Millions of people are unable to get ahead or put money aside for savings, meaning that they may be struggling financially.
When you are in the middle of it, however, it can be challenging to determine just how dire your financial situation is. You may have become numb to the fact that you routinely pay bills late or are swimming in overdraft fees. Many people simply have no other choice, given that wages have not kept pace with the high cost of living in most areas. But recognizing that your bank account is not healthy is half the battle, so here are five key signs your finances are in trouble.
You Are Late or Miss Your Monthly Payments
One of the most telling signs that you may be spending more than you make is if you regularly miss payments or even if you have to pay them past the due date. If you cannot make payments on time, your credit score will be negatively impacted.
As your credit score drops, you will get less favorable lending terms making it more expensive for you to buy a car or home. In some cases, you may not qualify at all. If you find yourself missing due dates, you need to evaluate your spending habits. Start by writing down all of your income and expenses. See if there are ways that you can cut back to ensure that you pay your monthly bills on time. Set the bills on automatic payments to ensure they are made in a timely manner.
You Live Paycheck to Paycheck
If you are one of the 166 million that live paycheck to paycheck, you may be in more financial trouble than you realize. Living paycheck to paycheck is not only stressful, it is not sustainable. One emergency, such as a car wreck or job loss, could spell financial ruin.
To get out of the habit, determine if you are living paycheck to paycheck because you spend beyond your means or if it is that you truly cannot afford even a modest lifestyle. If you spend a lot of money on nonessentials, then you should be able to cut back and put money into savings. If your paycheck strictly goes toward the basics, you might need to consider relocating to a less expensive area or taking on a side hustle.
You Don’t Have an Emergency Fund
To continue reading, please go to the original article here:
https://www.yahoo.com/finance/news/5-key-signs-finances-trouble-120008832.html
What to Know About Hidden Fees That Increase the Price of Everything
What to Know About Hidden Fees That Increase the Price of Everything
Farnoosh Torabi Aug. 21, 2022
What's happening
Many companies have found ways of passing down increased costs to consumers, with extra charges tacked on to your bill at checkout.
Why it matters
It's called drip pricing, and these new fees and surcharges are affecting customers who are already struggling with rampant inflation.
What's next
What to Know About Hidden Fees That Increase the Price of Everything
Farnoosh Torabi Aug. 21, 2022
What's happening
Many companies have found ways of passing down increased costs to consumers, with extra charges tacked on to your bill at checkout.
Why it matters
It's called drip pricing, and these new fees and surcharges are affecting customers who are already struggling with rampant inflation.
What's next
Knowing what merchants are charging can help you manage your budget and make better buying decisions. The prices for nearly everything have ballooned in the past year. Record high inflation means the cost of food, fuel and other everyday essentials has gone up, which has put severe financial pressure on US households, particularly low-income Americans.
Look out for surcharges like these on your restaurant bills. Courtney Johnston/CNET
And then there's the hidden costs added to your purchase before checkout, or tacked on to the receipt without warning. These additional merchant fees are called drip pricing, and they're inflicting pain on our already-stretched wallets. Businesses often claim these fees are the only way to offset the burden of inflation and supply chain shortages. For consumers, it means the things we buy are pricier than they initially appear.
"Most of the time we find out about these fees when it's time to pay, not before," Ashley Feinstein Gerstley, author of Financial Adulting, told me via email. "Because these fees really run the gamut, you never really know what you are going to get."
I asked my Instagram followers about these new and surprising fees, and they gave me loads of anecdotes. From restaurants to medical offices to rideshare services, here's a look at some charges that I discovered. And I'll offer tips on how to manage these unexpected surcharges.
Restaurants are charging more, and not just for food
Many restaurants are still reeling from a fiscal slump during the first year of the COVID-19 pandemic. Now, with rising food and payroll costs, eateries continue to struggle. "Average small business restaurants run on very tight margins of around 3 to 5% pre-tax," said Hudson Riehle, senior vice president of research with the National Restaurant Association. "The typical restaurant business model is not set up to deal with this sustained and accelerated cost of food and labor, which is putting extraordinary pressure on operators, and indications are these will continue."
Here are some of the new fees you may see on your restaurant bill:
To continue reading, please go to the original article here:
How Much is it Costing Your Business to Accept Paper Checks?
How Much is it Costing Your Business to Accept Paper Checks?
Mar 17, 2023 by Zazil Martinez
Paper checks are one of the most costly ways to collect payments. Still, many businesses think getting paid by check is the most affordable method. In 2021, 91% of organizations across the U.S. continued to receive checks, even though they understand the associated costs and risks. Of course, there are also many indirect costs to check processing, such as labor and processing fees. The bill can quickly eat into your bottom line — and that's before potential errors.
It's no wonder businesses have been shifting from paper checks to digital alternatives that offer more convenience, data, control, and automation. The 2020 pandemic only accelerated the shift as consumers demanded contactless payments.
How Much is it Costing Your Business to Accept Paper Checks?
Mar 17, 2023 by Zazil Martinez
Paper checks are one of the most costly ways to collect payments. Still, many businesses think getting paid by check is the most affordable method. In 2021, 91% of organizations across the U.S. continued to receive checks, even though they understand the associated costs and risks. Of course, there are also many indirect costs to check processing, such as labor and processing fees. The bill can quickly eat into your bottom line — and that's before potential errors.
It's no wonder businesses have been shifting from paper checks to digital alternatives that offer more convenience, data, control, and automation. The 2020 pandemic only accelerated the shift as consumers demanded contactless payments.
Ditching paper-based payment methods can help companies cut costs by reducing the amount of manual work and payment fraud risk. In most cases, the solution will integrate with your ERP, making it easy for AR teams to navigate.
Let's explore what it costs your business to accept paper checks and alternative payment options.
The Real Cost of Writing Paper Checks
Paper checks are 10x more expensive for businesses than digital payments as there are more than processing fees to consider, such as workforce and incidental costs, which are not included when processing payments via digital alternatives.
Based on the check price and postage, Bank of America estimates that a check can cost anywhere from $4 to $20. That's without considering the time your finance team spends writing, mailing, collecting, and reconciling checks. The Wall Street Journal reports businesses can spend up to $25k on materials, staffing, postage, and bank fees.
We ran the numbers to have a better idea of what this looks like in practice. Here's a breakdown of what it would cost your business to process an average of 5,000 checks per month:
https://www.paystand.com/hs-fs/hubfs/Slide - Deconstructing the Costs of Paper Check-1.png?width=880&name=Slide - Deconstructing the Costs of Paper Check-1.png
And from an AR perspective, if some of those checks bounce, things can turn ugly pretty fast. If you deposit a check that bounces, you can add in a returned check fee along with the headache of collecting the money you're due.
Processing paper checks is more than just expensive. It also slows your payment processing workflow down. This can increase your DSO and impact your cash flow.
These manual processes are no longer necessary thanks to digital payment solutions. With ERP integration, you can receive payments in minutes. The best part? Depending on your payment solution, you won't have to pay any transaction fees.
5 Common Payment Myths About Accepting Paper Checks
To continue reading, please go to the original article here:
https://www.paystand.com/blog/how-much-does-it-cost-business-to-accept-paper-checks
What Is the Banking Crisis of 2023? Is It Over?
What Is the Banking Crisis of 2023? Is It Over?
Laura Rodini updated: Aug 7, 2023 original: May 25, 2023
Banks have been hit by the one-two punch of rising interest rates and a sluggish economy, but the failures at Silicon Valley Bank, Signature Bank, and First Republic Bank may not be the only banking catastrophes to happen in 2023. 2023 may go down in the history books as the year America lost faith in its banks.
Over the course of a few weeks in the spring of 2023, multiple high-profile regional banks suddenly collapsed: Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank. These banks weren’t limited to one geographic area, and there wasn’t one single reason behind their failures.
What Is the Banking Crisis of 2023? Is It Over?
Laura Rodini updated: Aug 7, 2023 original: May 25, 2023
Banks have been hit by the one-two punch of rising interest rates and a sluggish economy, but the failures at Silicon Valley Bank, Signature Bank, and First Republic Bank may not be the only banking catastrophes to happen in 2023. 2023 may go down in the history books as the year America lost faith in its banks.
Over the course of a few weeks in the spring of 2023, multiple high-profile regional banks suddenly collapsed: Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank. These banks weren’t limited to one geographic area, and there wasn’t one single reason behind their failures.
The news roiled the financial markets, pummeled the banking industry, and unsettled the public. Fears mounted that financial contagion was underway, which happens when a problem in one sector spreads to other areas of an economy, country, or region—with disastrous consequences.
But what exactly had happened to these banks? Why did they fail this year and not during the COVID-19 pandemic, when so many other businesses shuttered?
And perhaps the most important question of all is: Has the banking crisis of 2023 ended?
Why Do Banking Crises Happen?
Here’s the setup: Smaller banks have long been considered to be the backbone of America—with strong ties to their local communities, they have the boots-on-the-ground expertise Wall Street institutions and monoliths like JPMorgan Chase simply can’t offer. According to Goldman Sachs, small banks are responsible for 70% of all small business lending. Small businesses make up a critical component of U.S. GDP, comprising nearly half of the nation’s workforce.
Before the Federal Reserve Act, in the Wild West days of the U.S. financial system, states chartered banks, and they were limited to just one branch. It was a scene straight out of It’s a Wonderful Life: Every little town in America had a town hall, a church, and a bank.
By the 1920s, there were nearly 30,000 banks in America.
To continue reading, please go to the original article here:
https://www.thestreet.com/banking/american-banking-crisis?puc=yahoo&cm_ven=YAHOO
Another Day, Another Downgrade For America. Today It’s The Banking Sector
Another Day, Another Downgrade For America. Today It’s The Banking Sector
Notes From the Field By Simon Black August 8, 2023
Another day, another downgrade for America. Today it’s Moody’s Investor Service, one of the three major credit rating agencies alongside Fitch and S&P. Last week Fitch downgraded the sovereign debt rating for the United States of America. And late yesterday, Moody’s downgraded the ratings of several US banks. The implication? The seismic activity that we saw in the banking sector back in March isn’t over. This is no surprise for our readers-- we’ve talked about the ongoing risks in US banks several times since then.
The bottom line is very simple: higher interest rates are bad for banks… and it’s easy to understand why:
Another Day, Another Downgrade For America. Today It’s The Banking Sector
Notes From the Field By Simon Black August 8, 2023
Another day, another downgrade for America. Today it’s Moody’s Investor Service, one of the three major credit rating agencies alongside Fitch and S&P. Last week Fitch downgraded the sovereign debt rating for the United States of America. And late yesterday, Moody’s downgraded the ratings of several US banks. The implication? The seismic activity that we saw in the banking sector back in March isn’t over. This is no surprise for our readers-- we’ve talked about the ongoing risks in US banks several times since then.
The bottom line is very simple: higher interest rates are bad for banks… and it’s easy to understand why:
Banks typically own vast portfolios of bonds, including US government bonds, commercial real estate bonds, housing bonds, municipal bonds, and more. And one of the key influences over these bonds’ values is interest rates.
If you know nothing else about bonds, just keep this one simple rule in mind: when interest rates rise, bond values fall.
Remember that banks spent most of the pandemic buying up huge amounts of bonds at record low interest rates… as little as 0%. But now interest rates are MUCH higher than they were a few years ago.
This means that all the bonds that banks purchased back in 2020 and 2021 have lost an enormous amount of value.
In finance this is known as an ‘unrealized loss’. It’s similar if you buy a stock, but then the stock price falls. You haven’t actually lost money yet because you haven’t sold the stock. But on paper, you’re down.
It’s the same with the banks; their bond portfolios have lost a ton of value because interest rates have risen so quickly. So on paper, they’re down. A lot.
According to FDIC data, banks across the US had $620 billion in unrealized losses at the end of 2022, equivalent to roughly 30% of total capital. That’s a big number.
But banks actually account for their unrealized losses quite dishonestly. Yes I know it’s shocking to think that banks would be dishonest about anything, but it’s true. I’ll explain--
Banks have the option to categorize their bond portfolios in one of two ways. The first category is called Hold to Maturity, or HTM. By classifying a bond as HTM, the bank is essentially saying, “Hey, we will never sell this bond and intend to keep it until the bond matures.”
So if the bank buys a 30-year US government bond and classifies it as HTM, it means they intend to hold that bond on their books for three decades.
The other category is called Available For Sale, or AFS. Bonds that are classified as AFS are, as the name suggests, available to be sold on the market. So if the bank needs to raise some quick cash, it can liquidate some of its AFS bonds.
There is a key difference in how banks account for these different categories, though. Because AFS bonds might be sold, banks are required to revalue them every quarter and record a gain or loss.
So if the value of their AFS bonds decreases, for example, because interest rates keep rising, then the bank will record a big loss.
HTM bonds, however, don’t have to be revalued. No matter how far the HTM bonds may fall in value due to rising rates, banks never have to record a loss.
Naturally, bank executives don’t want to record losses. Losses mean falling stock prices, which mean lower bonuses and compensation.
So, instead of being intellectually honest about their bond losses, banks hide their AFS bond losses by magically reclassifying them as HTM.
This is a huge scam; it means that banks are deliberately understating their losses and overstating their financial strength.
Remember, the losses that the banks are actually reporting amounts to $620 billion. But how big would the unrealized losses be if they were actually honest?
Well, according to one recent working paper from the National Bureau of Economic Research, the real estimate on potential losses is $2.2 trillion.
This is a number so big that it virtually wipes out all the equity in the US banking system. Incredible.
Not to be outdone, the Federal Reserve is sitting on close to $1 trillion in unrealized losses-- also thanks to the rapid increase in interest rates that they themselves are perpetuating. It boggles the mind.
So it’s quite possible that the largest, most systemically important central bank in the world is hopelessly insolvent, and the US banking system has wiped out all of its equity.
The larger point is that the problems in the banking sector that we saw unfold several months ago haven’t gone away. In fact, given that interest rates are even higher than they were when Silicon Valley Bank went bust, the problems in the banking system have gotten worse.
Almost everyone (except for us) has been happy to ignore the growing risk in the banking sector. The Fed. The FDIC. The Treasury Department. Financial media.
Moody’s has finally pointed out that the emperor obviously has no clothes, citing the banks’ “sizable unrealized losses”.
Now, don’t get me wrong… I’m not suggesting that another major banking collapse is imminent. A house of cards can stand for a really, really long time as long as nothing disturbs it.
But don’t kid yourself and assume that banks are risk-free. The risks are obvious, regardless of whether anyone wants to admit the truth.
Fortunately there are alternatives; many banks (especially smaller banks and some foreign banks) have much safer balance sheets and take less risk. But there are also options to hold savings outside of the banking sector altogether, including cash, gold, and crypto.
It’s also worth noting that many major banks in the US were recently reprimanded by the FDIC for deliberately manipulating data in an attempt to downplay the risks of their uninsured deposits.
These institutions are clearly pathological liars with no respect for their customers’ dignity. Coupled with the ongoing risks to their bond portfolios, it certainly makes sense to consider alternatives.
Simon Black, Founder Sovereign Man
Bank Failures: How to Keep Your Money Safe
Bank Failures: How to Keep Your Money Safe
BY PRIYA KAPOOR • APR 6, 2023
SVB's collapse didn't just affect American depositors, but also many Indian start-ups. Hundreds of Indian startups with millions of dollars in their accounts found themselves stuck.
SVB's failure was the second largest in US history and the largest since the financial crisis of 2008
On March 11, 2023, the US President Joe Biden was seen reassuring Americans that their money in banks is safe and the American banking system is strong. This was following the news of the collapse of Silicon Valley Bank (SVB) and Signature Bank. The banks were shut down by the US regulator. Before being closed, SVB Bank was the 16th largest lender. It had $209 billion in total assets, while Signature Bank had $110 billion as of December 2022.
Bank Failures: How to Keep Your Money Safe
BY PRIYA KAPOOR • APR 6, 2023
SVB's collapse didn't just affect American depositors, but also many Indian start-ups. Hundreds of Indian startups with millions of dollars in their accounts found themselves stuck.
SVB's failure was the second largest in US history and the largest since the financial crisis of 2008
On March 11, 2023, the US President Joe Biden was seen reassuring Americans that their money in banks is safe and the American banking system is strong. This was following the news of the collapse of Silicon Valley Bank (SVB) and Signature Bank. The banks were shut down by the US regulator. Before being closed, SVB Bank was the 16th largest lender. It had $209 billion in total assets, while Signature Bank had $110 billion as of December 2022.
What went wrong?
SVB invested in debt like the US treasuries and mortgage backed securities, but as the US Federal Reserve began to increase interest rates to contain inflation, this reduced returns for banks and the value of SVB's investments fell. Amidst venture capital money drying up, clients rushed to withdraw funds, leading SVB to sell assets which created $1.8 billion in losses. The incident spooked the customers of Signature Bank as well who rushed to withdrew large sum of deposits. The run led to its failure.
Many Indian start-ups affected
The collapse didn't just affect American depositors, but also many Indian start-ups. Hundreds of Indian startups with millions of dollars in their accounts found themselves stuck. The fear and panic reflected in the share prices too. The shares of the mobile gaming company Nazara Technologies plunged 7 percent on the day it informed stock exchange that the two of its subsidiaries together had more than $7.75 million in balances at the failed bank.
However, the company now heaves a sigh of relief after getting the amount back in full. "SVB was a very reliable bank and the current situation took us by surprise. However, we have got our full money back, and we have parked it at another bank in the US," says Nitish Mittersain, Founder, Nazara Technologies.
Why did start-ups park funds with SVB?
The SVB fiasco raised an important question: What made so many Indian startups park their funds with American bank SVB in the first place and not with the bank domiciled in India. The answer lies in conditions imposed by foreign entities while agreeing to invest.
To continue reading, please go to the original article here:
https://www.entrepreneur.com/en-in/finance/bank-failures-how-to-keep-your-money-safe/449144
7 Secrets of Self-Made Millionaires
7 Secrets of Self-Made Millionaires
By Grant Cardone
Learn how to generate multimillion-dollar wealth -- and enjoy the journey on your way to the top. First, understand that you no longer want to be just a millionaire. You want to become a multimillionaire. While you may think a million dollars will give you financial security, it will not. Given the volatility in economies, governments and financial markets around the world, it's no longer safe to assume a million dollars will provide you and your family with true security.
In fact, a Fidelity Investments' study of millionaires last year found that 42 percent of them don't feel wealthy and they would need $7.5 million of investable assets to start feeling rich.
7 Secrets of Self-Made Millionaires
By Grant Cardone
Learn how to generate multimillion-dollar wealth -- and enjoy the journey on your way to the top. First, understand that you no longer want to be just a millionaire. You want to become a multimillionaire. While you may think a million dollars will give you financial security, it will not. Given the volatility in economies, governments and financial markets around the world, it's no longer safe to assume a million dollars will provide you and your family with true security.
In fact, a Fidelity Investments' study of millionaires last year found that 42 percent of them don't feel wealthy and they would need $7.5 million of investable assets to start feeling rich.
This isn't a how-to on the accumulation of wealth from a lifetime of saving and pinching pennies. This is about generating multimillion-dollar wealth and enjoying it during the creation process. To get started, consider these seven secrets of multimillionaires.
No. 1: Decide To Be A Multimillionaire
You first have to decide you want to be a self-made millionaire. I went from nothing — no money, just ideas and a lot of hard work — to create a net worth that probably cannot be destroyed in my lifetime.
The first step was making a decision and setting a target. Every day for years, I wrote down this statement: "I am worth over $100,000,000!"
No. 2: Get Rid Of Poverty Thinking
There's no shortage of money on planet Earth, only a shortage of people who think correctly about it. To become a millionaire from scratch, you must end the poverty thinking. I know because I had to.
I was raised by a single mother who did everything possible to put three boys through school and make ends meet. Many of the lessons she taught me encouraged a sense of scarcity and fear: "Eat all your food; there are people starving," "Don't waste anything," "Money doesn't grow on trees." Real wealth and abundance aren't created from such thinking.
No. 3: Treat It Like A Duty
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The 7 Commandments of Common Sense in the Modern World
The 7 Commandments of Common Sense in the Modern World
Hilary Tetenbaum Mon, August 7, 2023
Common sense is a commodity. In some years, it seems to be in shorter supply than at other times. The current decade has already had its shortages and surpluses of it. Fortunately, there are several simple ways to maximize your personal account balance of the intangible asset.
Those who strive to become homeowners instead of lifelong renters already display a penchant for having a ready supply of common sense. Other examples appear among those who work to establish a solid credit score, protect personal information online, and get health advice from reliable sources. Review the following ways you can let commonsense actions and decisions make life much more rewarding and enjoyable.
The 7 Commandments of Common Sense in the Modern World
Hilary Tetenbaum Mon, August 7, 2023
Common sense is a commodity. In some years, it seems to be in shorter supply than at other times. The current decade has already had its shortages and surpluses of it. Fortunately, there are several simple ways to maximize your personal account balance of the intangible asset.
Those who strive to become homeowners instead of lifelong renters already display a penchant for having a ready supply of common sense. Other examples appear among those who work to establish a solid credit score, protect personal information online, and get health advice from reliable sources. Review the following ways you can let commonsense actions and decisions make life much more rewarding and enjoyable.
Don’t Be a Lifelong Renter
With few exceptions, every working adult can benefit from becoming a homeowner. Renting is convenient but expensive. No matter how great of a lease deal you find, the money does not increase your ownership of a tangible asset. The most common route to ownership begins soon after a person lands their first adult job.
They save for a down payment, shop for properties they can afford, clean up their credit, and work with a licensed Realtor to find a house that meets their minimum requirements. The process can take several years, but it’s worth the wait and the effort. Step one is to speak with a financial planner and make a detailed list of steps that can get you from renting to owning within a year or so.
Establish a Good Credit Score
So many of life’s central achievements are related to financial stability. Establishing credit is the surest route to meeting the requirements for other major goals, like financing a vehicle, purchasing a house, paying for college, renting a car, buying a rental property, and more.
One of the main benefits of having a good credit score is that you don’t need to make large down payments on major purchases. For consumers who have no financial history or haven’t established a rating at all, it can be all but impossible to borrow money or make a large purchase of any kind.
Lenders use credit scores as a fast way to evaluate consumer requests for loan approval in dozens of categories. That’s why it’s never too late to begin working to establish and improve your personal credit score. Whether you’re invisible to the reporting agencies or have a minimal financial history, don’t procrastinate. You can take immediate action to remedy the situation and create a foundation of financial security for the future.
Protect Your Personal Information
To continue reading, please go to the original article here:
https://www.yahoo.com/news/7-commandments-common-sense-modern-131301566.html