Do you lose money if your bank is robbed?

No. Nearly all banks have private insurance that covers them if they are robbed. (It is not the
same as federal deposit insurance.)
In addition, most banks take elaborate measures to safeguard the cash and other valuable items
left in their care. Bank vaults have long been protected by reinforced concrete walls, time locks, and metal alloy doors that resist drilling and explosions.
At one time, armed security guards stood watch over banks, but today most banks seem to have decided (wisely) that they would rather not expose their customers and employees to
gunplay. Shotguns and revolvers have been replaced by closed-circuit television cameras that maintain a constant watch over everyone who enters or exits the bank.
Another innovation is the exploding dye pack. In certain cases, bank employees are able to place a package of red dye in with the robber’s stash of stolen cash. Later, when the crook opens the stash, the concealed dye pack explodes, covering the robber and the ill-gotten money with dye that won’t wash off.

Do you lose money if your bank fails?

The Federal Deposit Insurance Corporation (FDIC) has protected bank deposits since 1934. In all that time, no one has lost money that was FDIC-insured. Federal deposit insurance covers most types of deposits, including savings deposits, checking deposits, and certificates of deposit.
The basic insured amount is $100,000. In the days before federal deposit insurance, the U.S. banking system was plagued by bank “runs” or “panics.” At the slightest hint of trouble, depositors would run to the bank and line up to withdraw their money. All too often, only the first few people in line had any hope of ever seeing their money again; others lost everything. Even healthy banks sometimes failed after rumors caused depositors to panic and withdraw their money.
For many years, the public seemed willing to accept the losses. But then came the Great
Depression of the 1930s, and financial pressures forced thousands of banks to close their
doors forever. Losses ran into the hundreds of millions of dollars, and many people lost their life savings.
The wave of bank failures shattered public confidence in the banking system, and Americans looked to the federal government for help. Congress responded by establishing the FDIC, which provided deposit insurance coverage of up to $2,500 per depositor. Public confidence rebounded, and bank failures declined from approximately 4,000 in 1933 to 62 in 1934.
Over the years, the federal deposit insurance limit has increased, and federal deposit insurance has helped to maintain public confidence in the U.S. banking system. Bank failures have not been eliminated, but long lines of panic-stricken depositors have  become an uncommon sight.

what are Basis Point?

The City calls them Bips. This just means 0.01 per cent. So 100 basis points sound enormous but are in fact only 1 per cent. The need for such teensy-weensy calibrations in interest rates has arisen because such vast quantities of money are being chucked around in the form of loans, bonds, currency trades, etc, that every tiny movement in interest rates can mean the loss or gain of a huge sum of money.

Wall Street

 

The term Wall Street technically describes the location where most of the hot-shot American bankers and stockbrokers have their offices. But it is also used as slang to describe the US share market, which is huge. No, in fact it’s huger than huge; it’s vast. The American stock market makes up about 55 per cent, by value, of the world’s stock markets and is unquestionably the largest in the world. It’s valued at about 12 trillion dollars. The Japanese and UK stock markets follow behind, each about a fifth of its size. So it’s no wonder that the US market is what obsesses most financiers across the globe.

Save As You Earn – SAYE

The lucky employee contributes money to the scheme over a number of years, which can be topped up by the employer. When the time’s up, he or she gets a tax-free bonus (whoopee!) and can buy shares in the company at a pre-agreed fixed price. Anyone who is offered this option usually finds they’re on to a good thing, unless the company they work for is about to go up the creek, in which case, being a shareholder isn’t such a hot idea. This is similar to an Employee Share Option Plan, but not exactly the same.

What are Junk Bonds?

Like junk food, these are bonds that make you feel momentarily good but can have nasty side-effects afterwards. As the name implies, they are not the crème de la crème on offer to investors in the bond world. More like curdled crème. Junk bonds should carry a high-risk health warning. In order to compensate investors for this higher risk, the borrowers who issue them (companies that are on a shaky financial footing) pay a higher rate of interest than the more solid, safe ones. But buyer beware (caveat emptor for all you posh Latin speakers). The sexier it looks the riskier it usually is.
Me, I do not have the bottle to put my money in this type of investment. Other more swashbuckling types who like to take big bets may find these attractive. More seriously, these bonds have poor credit ratings .

what is inflation

Sir Stafford Cripps, the Labour Chancellor in office just after World War II, put it very succinctly when he described inflation as ‘too much money chasing too few goods’. When the government prints lots of money to stop the economy from nose-diving into recession, this creates inflation. Prices and wages rise. The stock market booms and so does the property market. Why? Because, generally speaking, there are only a fixed number of shares and houses on offer. Lots of extra money in the financial system just pushes prices up further. There is much talk about the death of inflation, but when have you known prices to stay the same or to go down over a really long period of time? 

What is the “efficient market theory”?

It’s a theory suggesting that all available information about a stock is known and factored into its price. Thus, an investor shouldn’t be able to find undervalued or overvalued stocks. There are strong and weak forms of the theory, and it’s not embraced by all. Many Fools tend to think that the market is generally efficient, but there are still occasional pockets of inefficiency that an alert investor can take advantage of.

What are Merchant Kings?

Merchant Kings are companies that share many characteristics with Rule Maker companies, yet never entirely qualify as Rule Makers — usually because their gross and net margins fall short of the required levels. This is to be expected, though, because retailers traditionally do sport lower margins. What they lack in margins, though, they tend to make up for in volume.

Whereas Rule Makers tend to be manufacturers, Merchant Kings are distributors. Examples of Merchant Kings include Wal-Mart, Home Depot, Dell Computer, eBay, and Amazon.com.

What does “ex-dividend” mean?

A company’s dividend is not simply paid to whoever is holding the stock on the day the dividend is paid. Instead, an “ex-dividend” date is set, often several weeks before payday. If you buy shares of a dividend-paying stock on or after the ex-dividend date, you won’t receive the upcoming dividend payment. The person who owned the stock when it went ex-dividend gets that chunk of change. Stocks trading ex-dividend often have an “x” next to their listing in newspapers.

You might think it would be a neat trick to buy such stocks just before they go ex-dividend, so that you can quickly profit from the dividend amount. But stock prices get adjusted downward around the ex-dividend date to compensate for the upcoming dividend payout. As Snidely Whiplash would mutter, “Curses! Foiled again!”

Can you explain what “arbitrage” is?

Arbitrage is the practice of profiting from short-term differences in price. Imagine that you can buy stock in Rent-to-Own Underwear Inc.

(ticker: EWWW) for $25 per share — in the United States. Meanwhile, you see that it’s currently selling for $25.50 per share in England. If you simultaneously buy shares in America and sell the same number of shares in England, you’ve earned a profit of 50 cents per share (not counting commissions). This may not seem like much, but it adds up quickly if you’re dealing with massive numbers of shares. That’s why those who practice arbitrage are usually institutional investors with millions of dollars to invest.

What is a “block trade”?

It’s a large order that has been placed in the stock market. The New York Stock Exchange defines it as an order involving at least 10,000 shares or amounting to at least $200,000 in total market value. The Nasdaq defines it as generally 10,000 shares or more.

What is “front running”?

Front running occurs when a financial expert talks up a company after having bought into it himself.

Imagine that a mutual fund manager is bullish on a company called Magazine Aromatics (ticker: WHIFF). If she buys some shares for her personal portfolio and then begins buying many shares for her fund, that will drive the price up and she’ll profit. Similarly, she might buy many shares of a company for her fund and then appear on television singing the company’s praises. These are instances of front running.

I know that budgeting is important, but for the life of me I just can’t muster up the energy to tackle it. Is there any way you can inspire me to just do it?

Instead of thinking of it as an enormous lifestyle change that will have you miserably pinching pennies for the rest of your life, focus on the positives. Try thinking of it as a game — or something close to that.

Or, think of it as one of those self-quizzes you take in a magazine or online, to learn more about yourself. People who budget know a lot about themselves. In many cases, figuring out where your money comes from and where it goes may even liberate you to some degree. You may learn that you have more than you think!

Why should I bother with budgeting?

Most of us would rather poke ourselves in the eye than sit down and plan a budget. Many would rather slam a door on their hand than actually live according to a budget. That’s just wrong thinking, though.

We should budget with delight. We should even have trouble getting to sleep at night, as we eagerly anticipate tending to our budget in the morning.

Budgeting can be very valuable because it permits you to optimize your spending. You might think that all is fine with your spending habits, but a little time spent on budgeting might reveal that you’re spending a surprising amount on something that you don’t care that much about.

If so, you could tweak your habits a little and end up with more to spend on things you care about more, such as entertainment or investing.

Budgeting is even more vital if you’re having trouble making ends meet. A little analysis of your spending patterns should show you where your money is going and might help you see where you could cut back. Knowledge is power, and going through the budgeting

process gives you a lot of self-knowledge.