The world economy has experienced a slow down and recession and stock markets are experiencing discouraging fluctuations. A safe way in this time of recession to look for investment alternatives is to let your cash grow in a saving account, which is offering you high interest rates.

The Importance of Saving Accounts

Savings account is a safe and sure way of investment, where your savings grow. A good saving scheme will serve to enhance your savings at a good rate and besides this, there is no risk involved. You are sure to get a stable return from your deposited amount; you also have the option of choosing the scheme which would suit you the best. In case of any emergency, for instance if you get all of a sudden unemployed or any other urgency or situation arises. Your bank account may serve as a cushion in those times, an additional benefit is that if you have a saving account, you can also avoid taking out loans and getting into debt as your cash would be readily available.

Do A Little Research before You Choose

To be able to avail this way of building your savings, you will have to do a little research and know who is offering the best savings rates, where the costs associated with transactions are low and even who is offering a cash bonus for opening an account.

Online Banks

While you do your research, the avenues to look into would also include the online banks along with other banks.

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Wall Street is the name of a famous street which runs through lower Manhattan. It is the historic site where many financial institutions are located, and as such, it has become a symbol of commerce and the American economy.

2 Explanations for the name Wall Street

There are two explanations for the name “Wall Street.” It is presumed by some historians that the street references a literal wall that was built by the Dutch in the 1600s in order to protect themselves from invasions. Others have suggested that the name is a reference to the Walloons, who are known to be the citizens from Belgium who played a great role in the construction of New Amsterdam, better known as New York City today.

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In personal finance, the term “net worth” means the financial position of an individual, and it is calculated by using the value of all of the individual’s assets, subtracting the total debt that the individual owes. For instance, if a person has got $10,000 U.S. Dollars (USD) in cash, and $2,000 USD in stock, and he owes $5,000 USD in debt on a vehicle, then that individual this means that the individual has a net worth of $7,000 USD. A person is known as a High Net Worth Individual (HNWI) when his net worth exceeds from a certain amount, usually defined at $1 million USD.

Calculation of net worth

Usually in the calculation of net worth the value or liability of a person’s primary residence is not included. However, a HNWI is defined by the U.S. Securities and Exchange Commission (SEC) by slightly different criteria for their own purposes. It is requirement of  SEC that all investment advisers who are registered with the SEC have to file reports, periodically, stating how many of their clients are HNWIs by the SEC’s definition.

HNWI defined by SEC

For the purposes of filing this form, a HNWI is someone who is having at least $750,000 USD being managed by the investment adviser filing the report. If it is reasonably believed by the advisor that the individual’s net worth exceeds $1.5 million, then this individual is also defined as a HNWI by the SEC. Unlike the criteria that is accepted in the banking and financial trade, the SEC also includes the value of a person’s primary residence in determining net worth.

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The largest U.S. student loan company, SLM Corp. also known as Sallie Mae reported a loss of $123 million. Last year it made a profit of $ 266 million. The main reason of this huge loss is because it failed to make a provision for $484 million loss it sustained due to it’s involvement in Hedging and derivative market related activities.

In addition to above loss, it also set aside another $278 million for student loans that will go bad this year.

Although the core profit in last quarter was $170 million but it lost money as it engaged itself with toxic investments like hedging and derivatives.

Analysts were expecting a decrease in profit but no one seemed to be ready for such a phenomenal loss. The company stocks were down to $9.38 which is more than 7.8% decrease from before the announcement. The company stocks remained volatile during past 12 months and price varied between $3 and $14 per share.

At the end of academic session of 2008 – 2009, Sallie Mae issued loans of about $20 billion to students. This is 11 percent higher than last year. The company has been reported to issue even larger number of loans this year.

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If we look into history of different countries we will find that different countries faced the financial crises at different times. As the world is facing now financial crisis now also, the question comes in mind that who are those who run this finance horse, what are the reasons which leads to financial crises? Or is there is someone who is holding all the strings and keep them pulling? So many questions come in mind when mind starts thinking about it.

Well I had searched about this and compiled these ten nasty crises. Check out these ten dramatic crises.

1 – Argentine economic crisis (1999 – 2002)

Argentinean economy was destabilized in 1980s when Latin American Crisis struck it. Argentine was an import dependent country where people usually convert their peso into dollars to feel secure. The high inflation rate leads its currency to lose the confidence and adding oil to fire the government that time spent generously on itself while ignoring the country’s crumbling industrial infrastructure.

Mexico and Brazil were the major trade partners of the Argentine in 1980s both countries suffered the economic crises which spread out in Latin America. Brazil’s currency was devalued in 1999 that damaged a lot Argentinean exports and adding fuel to fire the dollar was revalued giving a harsh blow to Argentinean Peso.

Till 1999 the country was having 3^rd consistent year of economic decline but the government haven’t devalued the peso, which made the crisis worse. In such conditions the investors ran on banks for dollars to send abroad for safety. Meanwhile the government freezes everyone’s bank accounts. This step of the government raised violence amongst citizens and protests through out country were started. The government was collapsed in 2001. While in crisis the people were bartering for goods because lack of cash, many people eked out a living by scavenging cardboard for recycling plants.

The new government 1^st tried to setup a third currency between dollar and peso but that failed. Then it instructed the banks to convert all dollars into pesos. That step worked and peso was lead to diminish in value. Because of that exports got higher and in meanwhile the government tightened its tax policies, improves social welfare, encourages business growth and put the reserve dollars up for sale in market. The country got the surplus trade because of its agricultural products anyhow its still struggling with inflation.

Lesson

Freezing bank accounts leads the crises to get worst. It can’t be a smart step to tackle the crisis.

2 – Russian Financial Crisis (1998)

The Russian government in 1993 introduced inflation-free short-term treasury bills known as GKOs to finance the country’s deficit. GKOs were traded on currency exchanges. Most of it was state owning while only 1/3 of funding came from foreign speculators who were attracted by high interest rates. Like a classic Ponzi scheme the government used proceeds from sales of new GKOs to payoff interest on matured bills.

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As an analyst upgrade of Goldman Sachs Group Inc. spurred a rally in financial shares, most U.S. stocks gained, tempering a drop in drugmakers and it has been concerned that the economy will require more government stimulus to end the recession.

Goldman Sachs rallied 3.8 percent as it is said by Bank of America Corp. that record trading revenue may be posted by the firm. Southwestern Energy Co. led energy shares higher as for the first time in eight days natural gas has shown an upward movement.

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Early Monday morning a mixed outlook on the global economy from the International Monetary Fund had Wall Street in flux, but the sign that encourages is that the U.S. government is still able to find buyers for its bond offerings. This kept the session’s losses from growing Wednesday afternoon.

The worldwide economic growth forecast has been raised for 2010 from 1.9% to 2.5% by the IMF, but the IMF also warned that as the recession ends recovery will be slow. It is expected by IMF that the global economy will contract by 1.4% in 2009, it is worse than the previous estimate of 1.3%.

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On Monday morning there has been a slump in the energy sector and so the worries about the upcoming earnings season weighed on U.S. stocks.

Along with the stock market the commodity had been putting in solid gains, which is helped by an influx of speculative bets by those traders who are willing to take on risk. But during the recent sessions, this has been hurt by the investor’s worries about the weakness in demand due to the global recession, which now probably looks like that it will last longer than what is expected by many traders expected.

In New York recently crude futures were down $2.54 to $64.19 a barrel, which leads to a broad decline in raw materials. The Dow Jones-UBS Commodity Index was off 2.9%.

One relatively encouraging thing however come from the relatively low-bar set by the year-ago period taken as a comparison to the forthcoming numbers. It has been said by veteran traders and analysts that it’s getting much easier for companies to beat analysts’ earnings expectations with each passing quarter since the U.S. economy has now been in recession for more than a year and a half.

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For a third day treasury two-year notes has shown a rise as the Federal Reserve bought $7 billion in government securities and decline equities stoked demand for the relative safety of fixed-income assets.

The two-year note yield has been pushed by the advance to the lowest level in more than a month. Before this week’s auction of the securities there has been a decline in ten-year notes, and in more than two weeks the yield gap with two- year debt was at the steepest level. In June there has been a contraction in the U.S. service industries from retailers to homebuilders for the ninth straight month.

According to BGCantor Market Data, there has been a fall of five basis points in the two-year note yield, or 0.05 percentage points, to 0.94 percent at 12:50 p.m. in New York. The rate has touched 0.9252%, which has been the lowest level since June 4. The price of the 1.125% security due in June 2011 has increased 3/32, or 94 cents per $1,000 face amount, to 100 12/32. There has been an increase of two basis points in 10-year note yield to 3.52%.

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When the bailout plan was formed, many people were hopeful that the stock market would rise again, but the failure of the bill to pass caused panic in the market and thus led to the greatest single-day point drop! But before everyone starts to transfer their investments to other places, one must consider that this is not the worse we have seen. If your consider point wise, it may be the greatest drop but percentage wise its not the greatest drop. Also, if your original intention was to invest for a long term, then you might be making a mistake in transferring your investments, as it might be an opportunity to buy rather than to sell.

If you are young, then this might be a good buying time for you to start on long-term investments. If you’re older, just try to make sure that your investments are balanced and are going according to your plan for long-term investment. The Iowa Public Employees Retirement System has designed a calculator to help you estimate the investment and the return by adjusting the sliders to correspond to your age, income and requirements.

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