query: How to stress test an investment plan?

positive: Here are a few things I've already done, and others reading this for their own use may want to try.  It is very easy to find a pattern in any set of data. It is difficult to find a pattern that holds true in different data pulled from the same population.  Using similar logic, don't look for a pattern in the data from the entire population. If you do, you won't have anything to test it against. If you don't have anything to test it against, it is difficult to tell the difference between a pattern that has a cause (and will likely continue) and a pattern that comes from random noise (which has no reason to continue). If you lose money in bad years, that's okay. Just make sure that the gains in good years are collectively greater than the losses in bad years. If you put $10 in and lose 50%, you then need a 100% gain just to get back up to $10.  A Black Swan event (popularized by Nassim Taleb, if memory serves) is something that is unpredictable but will almost certainly happen at some point. For example, a significant natural disaster will almost certainly impact the United States (or any other large country) in the next year or two. However, at the moment we have very little idea what that disaster will be or where it will hit.  By the same token, there will be Black Swan events in the financial market. I do not know what they will be or when they will happen, but I do know that they will happen. When building a system, make sure that it can survive those Black Swan events (stay above the death line, for any fellow Jim Collins fans). Recreate your work from scratch. Going through your work again will make you reevaluate your initial assumptions in the context of the final system. If you can recreate it with a different medium (i.e. paper and pen instead of a computer), this will also help you catch mistakes.

negative: Having a very high payout ratio is fine if there aren't any sensible investments available for the company, and citi already had their payout ratio somewhere in the 80% range.   The remaining excess is from them reducing the capital bed they were required to hold for the stress tests; cash that was essentially sitting around doing nothing.  [WSJ link](https://www.wsj.com/articles/BT-CO-20170628-711143) for u/LupusSuperius

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Dismiss cookie message Accessibility helpSkip to navigationSkip to contentSkip to footer    Financial Times MYFT HOME WORLD UK COMPANIES MARKETS OPINION WORK & CAREERS LIFE & ARTS Portfolio My Account    HOME WORLD UK COMPANIES MARKETS OPINION WORK & CAREERS LIFE & ARTS MYFT Bank stress tests  Add to myFT US banks pass first round of annual stress tests  Clean bill of health from Federal Reserve opens door to increased shareholder payouts Read next Week in Review Week in Review, July 1   © AFP Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email4 Save JUNE 22, 2017 by: Alistair Gray and Ben McLannahan in New York and Barney Jopson in Washington US banks have big enough capital buffers to keep trading through an economic meltdown, regulators said on Thursday, in a finding that improves their chances of boosting payouts to shareholders.  In the first round of this year’s stress tests, the Federal Reserve probed how 34 banks would fare in a financial and economic slump in which the unemployment rate doubles and the stock market loses half its value. The central bank calculated that the banking sector would endure $493bn in losses in the simulated downturn.  Yet officials concluded that the banks would emerge from the crash “well capitalised”, with cushions of shareholder funding still above the Fed’s minimum required levels.  The largely upbeat results augur well for US banks as the Fed prepares to unveil the results of the tests’ second round next week, when investors will learn how much capital they can return through dividends and share buybacks.  However, the figures released on Thursday do not foretell what the Fed will say about payouts, not least because regulators can approve or block US banks’ capital plans on qualitative as well as quantitative grounds.  Lex Bank stress tests: chilled The once-vital check on the industry’s health is outliving its usefulness   UBS analysts estimate that the four biggest by assets — JPMorgan, Bank of America, Citigroup and Wells Fargo — will be able to return a net $59.8bn this year, rising to $72.3bn in 2018.  Citi and Morgan Stanley could be among about a dozen banks that will make requests to return more than 100 per cent of their annual earnings to shareholders, according to Goldman Sachs analysts.  Despite the positive stress test results, not all investors would be comfortable with such a bonanza. Bill Hines, a fixed-income investment manager at Aberdeen Asset Management in Philadelphia, said the prospect of payouts in excess of profits “does scare us a little bit”.  “If the safety blanket is pulled away . . . that may come to the detriment of capital and safety.”  Across-the-board passes for the stress-test are “a good thing,” he said, as it shows that banks have rebuilt capital levels substantially since the crisis. “But from a creditor’s standpoint you don’t want to see all the profits go out the door.”   While banks have already told the Fed what they propose to do on dividends and buybacks, they are now able to make more conservative payout plans if, based on the first-round results, they think it will reject them in the second round.  Related article Regulators back Trump on looser financial rules Officials endorse Volcker rule revamp and bank relief from burden of ‘stress tests’   The regulator’s simulated downturn lasts for nine quarters. Banks’ overall loan losses and declines in capital under the worst crisis scenario were smaller than in last year’s stress tests, Fed officials said.  Still, the test found that some banks would come close to breaching regulatory minimums during the meltdown on some metrics. For instance, Morgan Stanley’s “supplementary leverage ratio” — a new measure of financial strength that takes effect in 2018 — would drop as low as 3.8 per cent compared with a required level of 3 per cent.  The results also drew attention to banks’ exposure to credit card lending. The Fed found banks would suffer the biggest losses in their card portfolios in the hypothetical crisis.  Fed officials said that partly reflected a rapid expansion in the size of banks’ credit card assets and rising delinquency rates in the real world.  Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. 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negative: "I think you're on the wrong track.  Getting more and more samples from the real world does not make your backtest more accurate, it just confirms that your strategy can withstand one particular sample path of a stochastic process. The reason why you find it simple to incorporate fees, commissions, taxes, etc. is because they're a static and constant process -- well they might change over time but most definitely uncorrelated to the markets. Modelling overnight returns or the top levels of the order book the next day is serious work.  First you have to select a suitable model (that's mostly theoretical work but experience can help a lot).  Then, in order to do it data-driven, you'd have to plough through thousands of days of sample data on a set of thousands of instruments to get a ""feeling"" (aka significant model parameters).   Apropos data mining, I think Excel might be the wrong tool for the job.  Level-2 data (even just the first 10 levels) is a massive blob.  For example, the NYSE OpenBook historical data weighs in at a massive 15 TB compressed (uncompressed 74 TB) for the last 10 years, and costs USD 200k.  Anyway, as for other factors to take into account: So how to account for all this in a backtest?  Personally, I would put in some penalty terms (as % on a return basis) for every factor you want to consider, don't hardcode them.  You can then run a stress test by exploring these parameters (i.e. assign some values in the range of 0 to whatever fits).  Explore them individually (only set one penalty term at a time) to get a feeling how the strategy might react to stress from that factor.  Then you can run the backtest with typical (or observed) combinations of penalty factors and slowly stress them altogether. Edit Just to avoid confusion about terminology.  A backtest in the strict sense (had I implemented this strategy X years ago, what would have happened?) won't benefit from any modelling simply because the real-world ""does the sampling"" for us. However, to evaluate a strategy's robustness you should account for the additional factors and run some stress tests.  If the strategy performs well in the real-world or no-stress scenario but produces losses once a tiny slippage occurs every now and again, you could conclude that the strategy is very fragile.  The key is to explore the maximum stress the strategy can handle (by whatever measure); if a lot you can call the strategy robust. The latter is what I personally call a backtest; the first procedure would go by the name ""extension towards the past"" or so. Some lightweight literature:"

negative: It isn't the first initiative (see link below) and maybe this one will stick around.  Time will be a good test.   Here is an article on it.... http://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp  They plan to make money off unused balances - so they hope to get the masses signed up using the 0$ fees.  Also, no type of advanced trading, just limit and market orders.   Think of it this way - even if someone puts in 100$ and buys a stock at 88$...that 12$ sits there.  Multiply that by say....200,000 accounts and then do a basic 3% return on that.   Also, they plan for margin accounts in the future.   Time will tell....  sort of like I use Acorn right now (but it charges a fee to invest - a slightly higher than normal one). I signed up for fun and am just letting it ride.

negative: "But I don't see how it's any different than buying a stock at a low price and holding on to it for some months. Based on your question, I would say the difference is time. Day trading by its nature is a 6-hour endeavor. If you buy low and are planning to sell high, then you only have a few hours to make this happen. As a previous poster mentioned, there is a lot of ""white noise"" that occurs on a weekly/daily/hourly/min basis. Long-term investors have the time to wait it out. Although, as a side note, if you were a buy-and-hold investor from the 1960s-early 1980s, then buy and hold was not very good. Is it just the psychological/addictive aspect of it? This is the biggest reason. Day trading is stressful and stress can cause financially destructive decisions such as over-leveraging, over-trading, etc. Why is day trading stressful? Because you are managing hundreds to thousands of trades a year. When combined with the lack of time in a day to make moves, it becomes stressful. Also, many day traders do it full time. Which adds to the pressure to be correct and to be incredible at money managment. A lot of buy-and-hold investors have full time jobs and may only check their positions every month or so."

negative: I got sucked into working with a tech company when I was striving to be an Investment banker in San Francisco.   I can't stress enough how much better I have it now working with a great tech company, with great pay, flexible hours and great vacation time.   But i'll admit, sometimes it feels like we're in our own little flourishing world.

negative: "I think practically, although we most surely will have real estate ""bubbles"", nothing will hit 2008 style panic for a long time, as the banks are now not nearly as leveraged as they were back then. All large banks passed the feds ""stress test"" this year for the first time. Housing prices may drop a bit, and that correction may dip the market (or vice versa), but there will be much less damage to the economy."

negative: Revolutionary business development tools and templates. Use them to build excellent plans creatively and collaboratively. They are 100% tested and proven and cover   most key functions like sales, marketing, strategic planning,business planning, merger, acquisition, joint venture, change management, financial projections, and more.

negative: "Highly Compensated Employee Rules Aim to Make 401k's Fair would be the piece that I suspect you are missing here.  I remember hearing of this rule when I worked in the US and can understand why it exists.  A key quote from the article: You wouldn't think the prospect of getting money from an employer   would be nerve-wracking. But those jittery co-workers are highly   compensated employees (HCEs) concerned that they will receive a refund   of excess 401k contributions because their plan failed its   discrimination test. A refund means they will owe more income tax for   the current tax year. Geersk (a pseudonym), who is also an HCE, is in   information services and manages the computers that process his firm's   401k plan. 401(k) - Wikipedia reference on this:  To help ensure that companies extend their 401(k) plans to low-paid   employees, an IRS rule limits the maximum deferral by the company's   ""highly compensated"" employees, based on the average deferral by the   company's non-highly compensated employees. If the less compensated   employees are allowed to save more for retirement, then the executives   are allowed to save more for retirement. This provision is enforced   via ""non-discrimination testing"". Non-discrimination testing takes the   deferral rates of ""highly compensated employees"" (HCEs) and compares   them to non-highly compensated employees (NHCEs). An HCE in 2008 is   defined as an employee with compensation of greater than $100,000 in   2007 or an employee that owned more than 5% of the business at any   time during the year or the preceding year.[13] In addition to the   $100,000 limit for determining HCEs, employers can elect to limit the   top-paid group of employees to the top 20% of employees ranked by   compensation.[13] That is for plans whose first day of the plan year   is in calendar year 2007, we look to each employee's prior year gross   compensation (also known as 'Medicare wages') and those who earned   more than $100,000 are HCEs. Most testing done now in 2009 will be for   the 2008 plan year and compare employees' 2007 plan year gross   compensation to the $100,000 threshold for 2007 to determine who is   HCE and who is a NHCE. The threshold was $110,000 in 2010 and it did   not change for 2011. The average deferral percentage (ADP) of all HCEs, as a group, can be   no more than 2 percentage points greater (or 125% of, whichever is   more) than the NHCEs, as a group. This is known as the ADP test. When   a plan fails the ADP test, it essentially has two options to come into   compliance. It can have a return of excess done to the HCEs to bring   their ADP to a lower, passing, level. Or it can process a ""qualified   non-elective contribution"" (QNEC) to some or all of the NHCEs to raise   their ADP to a passing level. The return of excess requires the plan   to send a taxable distribution to the HCEs (or reclassify regular   contributions as catch-up contributions subject to the annual catch-up   limit for those HCEs over 50) by March 15 of the year following the   failed test. A QNEC must be an immediately vested contribution. The annual contribution percentage (ACP) test is similarly performed   but also includes employer matching and employee after-tax   contributions. ACPs do not use the simple 2% threshold, and include   other provisions which can allow the plan to ""shift"" excess passing   rates from the ADP over to the ACP. A failed ACP test is likewise   addressed through return of excess, or a QNEC or qualified match   (QMAC). There are a number of ""safe harbor"" provisions that can allow a   company to be exempted from the ADP test. This includes making a ""safe   harbor"" employer contribution to employees' accounts. Safe harbor   contributions can take the form of a match (generally totaling 4% of   pay) or a non-elective profit sharing (totaling 3% of pay). Safe   harbor 401(k) contributions must be 100% vested at all times with   immediate eligibility for employees. There are other administrative   requirements within the safe harbor, such as requiring the employer to   notify all eligible employees of the opportunity to participate in the   plan, and restricting the employer from suspending participants for   any reason other than due to a hardship withdrawal."

negative: ">ignores over a decade of rigorous testing because it doesn't support your narrative.  FAULTY TESTING. How fucking hard is it for you to get that point through your thick head? The testing is irrelevant because it's possible to get past it. It was not rigorous at all because again, it couldn't test for everything, the drug Armstrong used being one of them.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.      Do you finally understand why saying ""He passed all the tests"" is useless? If he did have positive tests then that would be evidence of guilt, saying there is no positive test is not evidence of innocence, just absence of the evidence of guilt. It would be evidence of innocence if it was absolutely impossible for him to beat the test, but he can beat the test.  Get that through your thick fucking head.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  IT IS POSSIBLE TO BEAT THE TEST.  It is just fucking mind blowingly retarded of you to continually push the fact that he passed the tests as fact he isn't doping when I have repeatedly told you that the was able to beat the test, and it has been outlined how he did it. So yes you are like a creationist in the sense that you ignore the evidence, said evidence being information on how it is possible for someone to beat the test, and yet you still say ""He passed the test""  Saying he passed the tests which couldn't check for the drug he was on and therefore he is innocent is like saying ""We used a shitty camera to check for microscopic gun shot residue on the murder suspect, the shitty camera couldn't detect any gunshot residue therefore he has no gunshot residue on him and therefore he isn't the murder suspect""  Fucking idiot.  I really do think you're a troll at this point because the fact that he was able to beat the tests is the basic core of the argument against your claims of ""His tests are all clean!"" and you still don't seem to understand that."

negative: Moving your office to St. Louis? A move, be it local or interstate move, is always stressful because you need to shift an entire office to another place. Planning and co-ordination are necessary steps in such cases and the best way to organize things is to hire professional movers.

negative: "    Crumbling infrastructure after decades of insufficient funding and maintenance throughout the country.  Crumbling"" gets thrown out a lot. Just because we don't build high speed trains that we cannot afford doesn't mean our infrastructure is crumbling. We have the best freight railroad network in the world, the best highway system in the world, and cities all over the country are heavily investing in mass transit.""   Wait - how many bridges collapsed in the past few years?  How many more need major renovation or replacement?   How many water mains broke last year?  How stressed is our power grid?  Infrastructure goes way beyond the rail systems."

negative: This isn't super specific to your question, but I'd recommend that you invest a ton of time in practice questions (then review the answers to the ones you got wrong). This is a good strategy for most exams, but it's particularly true for the Series 7, as the S7 is notorious for using questions on the actual exam that are almost identical to practice questions. I was amazed at how many questions I recognized almost word-for-word when I took it.   I recently took my CFP test, so I'm pretty brushed-up on testing concepts and that sort of thing right now. If you are running into anything in particular, feel free to PM me!

negative: His business isn't producing anything of value. In fact a quick search and all I can see is people complaining about high stress sales people and payments larger than their mortgage and never being able to use the time share they are paying for. If he is having troubles it likely has to do with his business plan being complete shit.

negative: Complexity has mentioned some good points. I'd also like to add on the downsides:  It's not that easy to get rid of a tenant!  Imagine if your tenant passed your background check with flying colors but then turned out to be the tenant from hell...  How would you resolve the situation?  If the thought of that kind of situation stresses you (it would stress me!), I would consider carefully whether you really want to be a landlord.

negative: An index fund is just copying the definition of an index. The group that defines the index determines how to weight the different parts of the index. The index fund just makes sure they invest the same way the index creator wants.  Think of a non-investment scenario. A teacher can grade tests, quizzes, homework, in-class assignments, research papers. They decide how much weight to give each category and how much weight to give each part of each category. when a student wants to see how they are doing they take the information in the syllabus, and generate a few formulas in a spreadsheet to calculate their current grade. They can also calculate what they need to get on the final exam to get the grade they want.

negative: Investing money in the stock market with [Compound Stock Earnings](http://www.compoundstockearnings.com) is a great way to build wealth and plan for the future. However, few people know what the stock market is let alone how to begin investing in it. It is important to understand how companies and stocks work before investing in them.

negative: "It's a problem from hell because all solutions have drawbacks/unintended consequences and because they are all pretty complex to implement in practice.  Breaking up the big banks so that no bank is enough to bring down the economy with it is the strongest move, but is riddled with problems when you start looking at it practically. How do you determine the ""maximum size"" a bank should have? Should it be based on assets? Systemic importance (i.e. interconnectedness with other banks)? How do you enforce it? Banks will find ways to offload assets, etc. into special purpose corporations to get around the laws somehow. How do you compensate for the fact that size does help financial efficiency in some ways?  Imposing higher capital requirements is the next solution. But that too is not so easy to implement with full success in practice. What should be classified as a low-risk asset? How much capital do you require against a CDO vs a Mexican government bond? How often do you need to revise these standards? At what point does the cost of higher capital requirements start to strangle lending and financial flows?  The weaker maneuvers are things like constant government-imposed stress tests, orderly resolution mechanisms, higher standards for internal risk management practices, etc. but those may not be adequate and also have their implementation problems."

negative: If you want to retire in 7 years at age 35 and only currently have 150k, and you need to ask this question of how to invest your money (risk free), then you will not be retiring at age 35 nor buying your house.  It is possible to do (but not risk free - in fact you will need to take quite a bit of risk) but you would need to have a detailed plan about how you would go about to achieve this goal, what assets you would be investing in, and what risk management you would have in place. If you have to ask this question all you have is a goal but no plan. You probably will need to do plenty of research in the types of investment you prefer and develop a plan to take you to your destination. This could take you a year or 10 years, depending on how motivated you are in acheiving your goals.

negative: > stop partying so much  Seems to point at the root of the problem. Like drugs, it's a temporary high and hard to sustain. If you're self-medicating to cope with stress on the job or other parts of your life, work at fixing those root problems. If the things you did for pleasure (including working and downtime) didn't cost you money, then you'd be set. The hard part is how to structure your work and life situation to both minimize stress and make you look forward to it.

negative: "Just like all employee benefits there is a focus on removing or limiting owners of businesses' ability to abuse tax preferences under the guise of an employee benefit. As you point out there is an overall plan maximum 401(k) for employer contributions and match contributions.  There is a nondiscrimination test for FSA programs (there is also a nondiscrimination test for medical plans under sections 125 and 105(h)).  Employer contributions are counted toward the total of HSA contributions.   Why an HSA has a different maximum arrangement than 401(k) is anyone's guess.  But the purpose of the limit is to prevent owners of companies from setting up plans that do little more than funnel tax free funds to themselves.  An owner/employee could pay themselves a wage, contribute the maximum, then have the ""employer"" also match the maximum, so there are limits in place."

negative: You'll have much more flexibility and peace of mind if your expenses are based on your current income and that income increases in the future. It's great that you aren't comfortable with spending more, you don't want to end up in the position you just removed yourself from.  That said, you don't just ignore planned income altogether. Personally, my wife and I feel best knowing that I have the essentials covered with my income, and that her income primarily helps us put away more for retirement, home renovations, and vacations, because she likely won't work for a long while if we have kids. How you plan depends on your wife's career aspirations and prospects, if your wife has high income potential and you don't plan to buy until after she resumes work, then it may suit you to plan on her income too. You'll have to balance the certainty and amount of her income with your goals.  If you're trying to make up ground on savings/retirement, then a less expensive house seems wise anyway. It's a much easier problem to decide what to do with excess funds than feeling trapped/stressed by a high mortgage payment.

negative: "This stupid argument again? Testimonies explicitly explain how he was able to pass the blood tests. Don't you see how futile it is to argue that he has never doped just because he passed the blood tests when it is known that he can easily pass them? I'm not saying the lack of positive blood tests classifies as proof of guilt, but it certainly cannot be used to prove his innocence. Let's say you commit a crime and the police comb through the scene of the crime and find none of your fingerprints. Wouldn't it be stupid of you to argue ""You have not found any of my fingerprints at the scene of the crime, therefore I must be innocent!""? You could easily have worn gloves. Likewise it was easy for Armstrong to pass the blood tests even if he was doping, therefore the fact that he passed isn't proof of his innocence."

negative: "401(k) doesn't have a ""return rate"", because 401(k) is not a type of investment -- it is a vehicle for investment, with certain tax treatments. Just like your money that's not in a 401(k), you can invest it in either the bank, a CD, stocks, mutual funds, bonds, etc., you can similarly (depending on the options given to you by your 401(k) plan) invest the money in the 401(k) in a cash account, buy stocks, mutual funds, etc. Your return is dependent on how you invest your money, not whether it's in a 401(k) or not. Whether it's in a (Roth or Traditional) 401(k) simply affects when and how it gets taxed. (It is true that most 401(k) plans offer little variety in types of investments you can choose; however, this is not a big deal, as chances are that in a few years, you will leave your company, at which point you are able to rollover the 401(k) into an IRA, at which point you will have many, many options for how to invest it.) To make a valid comparison, you should be comparing the same type of investment in both cases. That means, you should assume the same return for both the money outside the 401(k), and the money inside the 401(k), and only consider the taxes and penalties (if you plan to withdraw early)."

negative: I think you are answering your own question. :)  I merely meant to stress that the original comment had no idea what he/she was talking about. Nobody buys a boat as an investment. The idea is ludicrous. That is what I meant.

negative: I'm a successful day trader. I turned $300,000 into over $10 million over the course of a few years. I went into trading after I sold my failing company for around $1 million just to bring me out of debt and give me some cash. To give you an idea of how I did it, I just studied everything possible for a few months before I even made my first trade. Instead of having a 9-5 job, I was studying the market from 9-5. I looked at graphs, patterns, everything. I subscribed to multiple real time news feeds and have around 6 college students currently working under me just sifting through patterns and watching real time news feed. I only plan on doing this for 5 or 10 more years before I go into long term investing as it is incredibly stressful, but the returns are very good. Feel free to ask me any questions or to send me a PM if you want any specifics.

negative: I know there are plenty of people who have to deal with the stress and know it isn't pleasant...but it's hard to see how much worse it is as far as stress goes because I have to pay $1950 in rent each month and don't get the option to default and if I do, I don't get to wait for 8 months while the banks get their paperwork in order to evict me.  I want to believe that in the end I will come out ahead but either I've been incredibly smart with my life decisions or incredibly naive...

negative: Here are the specific Vanguard index funds and ETF's I use to mimic Ray Dalio's all weather portfolio for my taxable investment savings. I invest into this with Vanguard personal investor and brokerage accounts. Here's a summary of the performance results from 2007 to today:  2007 is when the DBC commodity fund was created, so that's why my results are only tested back that far. I've tested the broader asset class as well and the results are similar, but I suggest doing that as well for yourself. I use portfoliovisualizer.com to backtest the results of my portfolio along with various asset classes, that's been tremendously useful. My opinionated advice would be to ignore the local investment advisor recommendations. Nobody will ever care more about your money than you, and their incentives are misaligned as Tony mentions in his book.  Mutual funds were chosen over ETF's for the simplicity of auto-investment.  Unfortunately I have to manually buy the ETF shares each month (DBC and GLD). I'm 29 and don't use this for retirement savings. My retirement is 100% VSMAX. I'll adjust this in 20 years or so to be more conservative. However, when I get close to age 45-50 I'm planning to shift into this allocation at a market high point.  When I approach retirement, this is EXACTLY where I want to be. Let's say you had $2.7M in your retirement account on Oct 31, 2007 that was invested in 100% US Stocks. In Feb of 2009 your balance would be roughly $1.35M. If you wanted to retire in 2009 you most likely couldn't. If you had invested with this approach you're account would have dropped to $2.4M in Feb of 2009.  Disclaimer: I'm not a financial planner or advisor, nor do I claim to be. I'm a software engineer and I've heavily researched this approach solely for my own benefit. I have absolutely no affiliation with any of the tools, organizations, or funds mentioned here and there's no possible way for me to profit or gain from this. I'm not recommending anyone use this, I'm merely providing an overview of how I choose to invest my own money. Take or leave it, that's up to you. The loss/gain incured from this is your responsibility, and I can't be held accountable.

negative: "It depends on how long you stay and where you earn your income. You can be a US resident for tax purposes even if you are not for immigration purposes. The ""substantive presence test"" probably applies to you: You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: https://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test There are some exceptions to this test, and tax treaties may also apply.  See IRS Publication 519 for more information."

negative: "That's actually a great question. I'm not really sure how much they're pumping into that sector yet, but I know Exxon and a few others are very interested in what renewable energy avenues they can take advantage of. This article is a little old, but gives a good overview (there are many others like it). I think a lot is still in the ""testing"" phase right now though. https://www.theguardian.com/business/2016/may/21/oil-majors-investments-renewable-energy-solar-wind"

negative: This is a really good point. The only caveat I'd make here is that junior professionals at investment banks / management consulting firms (let's call them analysts) generally have absolute no agency over their schedules, which is stressful and definitely impedes one's ability to have a social life.

negative: "It's a trollish reading of a standardized process in the US.  http://www.businessinsider.com/impossible-foods-seeks-fda-approval-for-heme-ingredient-2017-8  >The FDA does not officially approve ingredients in food products, like it does for drugs. The burden falls on the manufacturer to show through rigorous testing that a food is ""generally recognized as safe,"" or GRAS. Once a manufacturer makes a determination that a food meets the basis for GRAS, it may invite the FDA to conduct an independent review. The agency may respond with no further questions or raise concerns, according to the FDA website.  >After conducting its own testing of the burger, Impossible Foods sought the agency's review. The FDA came back with questions, which is not unusual. A spokesperson for Impossible Foods, citing the FDA website, said one in five submissions come back with questions.  >The FDA wants the company to show through additional testing that soy leghemoglobin — and the 40 other proteins besides heme it contains — is safe for humans, not just rats.  >Impossible Foods plans to engage the FDA in another review in the future.  The FDA approves a lot of sketchy ingredients, including many banned elsewhere in the world, as a point of reference, and [the entire process is shortcoming and voluntary](https://www.forbes.com/sites/quora/2017/08/31/how-the-impossible-burger-revealed-some-disturbing-fda-practices/#655158dd6aa9)--Impossible could have just not sought FDA approval and would have been fine."


query: What happened in Argentina in 2001 bank sector? did the banks closed? all or some?

positive: One place you might consider looking for answers is in case studies from Harvard Business School.  When I was working an MBA, we studied the default of Argentina as part of our economics coursework. Other sources for your consideration might include:

negative: There are many different things that can happen, all or some. Taking Russia and Argentina as precedence - you may not be able to withdraw funds from your bank for some period of time. Not because your accounts will be drained, but because the cash supply will be restricted. Similar thing has also happened recently in Cyprus. However, the fact that the governments of Russia and Argentina limited the use of cash for a period of time doesn't mean that the US government will have to do the same, it my choose some other means of restraint. What's for sure is that nothing good will happen. Nothing will probably happen to your balance in the bank (Although Cyprus has shown that that is not a given either). But I'm not so sure about FDIC maintaining it's insurance if the bank fails (meaning if the bank defaults as a result of the chain effect - you may lose your money). If the government is defaulting, it might not have enough cash to take over the bank deposits. After the default the currency value will probably drop sharply (devaluation) which will lead to inflation. Meaning your same balance will be worth much less than it is now. So there's something to worry about for everyone.

negative: > The new exchange bonds will be getting paid as normal in Argentina. (Unless Argentina changes its mind! In which case it will have home-court advantage in changing the terms of the bonds.) The old exchange bonds, and the old old bonds, won't get paid, exactly, but Argentina will deposit money at the central bank for them, which they can get any time they want to swap into new exchange bonds. Presumably many people will hold on to the old exchange bonds, hoping for some improvement in their lot in life, and eventually that hope will turn into lawsuits, as hope does. So there will be two classes of bondholders suing Argentina, and each other, and not getting paid, and being sad.  This paragraph from OP's article is golden

negative: The reason there should really be no bad feelings for the bond-holders is that they knew full well that these were defaulted bonds, but bought them because they saw a loophole they could use to try and force Argentina's hand.   It was basically a setup to enable them to try and blackmail the government into 'undefaylting' on those bonds.   I recon what will happen in the end is that the other creditors, the ones who had accepted the haircut, will end up buying those bonds at close to full price, just to ensure they are paid at least part of their money back. Because around 95% of bond holders agreed to the haircut, the diluted costs would be small.   What is infuriating is the precedent these guys are setting. In the end, all bond will have class-action clauses in which a majority agreeing to a restructure will apply to all bond holders.

negative: "The danger to your savings depends on how much sovereign debt your bank is holding.  If the government defaults then the bank - if it is holding a lot of sovereign debt - could be short funds and not able to meet its obligations. I believe default is the best option for the Euro long term but it will be painful in the short term.  Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis.  See Argentina circa 2001 or US during Great Depression.  The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value. (See the emergency banking act where Title I, Section 4 authorizes the US president:""To make it illegal for a bank to do business during a national emergency (per section 2) without the approval of the President.""  FDR declared a banking holiday four days before the act was approved by Congress.  This documentary on the crisis in Argentina follows a woman as she tries to withdraw her savings from her bank but the government has prevented her from withdrawing her money.) If the printing press is chosen to avoid default then this will allow banks and governments to meet their obligations.  This, however, comes at the cost of a seriously debased euro (i.e. higher prices).  The euro could then soon become a hot potato as everyone tries to get rid of them before the ECB prints more.  The US dollar could meet the same fate. What can you do to avert these risks?  Yes, you could exchange into another currency.  Unfortunately the printing presses of most of the major central banks today are in overdrive.  This may preserve your savings temporarily. I would purchase some gold or silver coins and keep them in your possession.  This isolates you from the banking system and gold and silver have value anywhere you go.  The coins are also portable in case things really start to get interesting.  Attempt to purchase the coins with cash so there is no record of the purchase.  This may not be possible."

negative: "Global banks are without a doubt the new evil empires. They're buying debt for pennies on the dollar, because they know the risk of default/bankruptcy, yet they expect the IMF to do for international debt what W did for student loans. Wasn't Argentina also the country that had a vulture fund ""seize"" one of their naval vessels? Soon banks will have their own standing armies and naval fleets to exact asset forfeiture."

negative: "I think you can do it as long as those money don't come from illegal activities (money laundering, etc). The only taxes you should pay are on the interest generated by those money while sitting in the UK bank account. Since I suppose you already paid taxes on those money in Greece while you were earning those money. About being audited, in my own experience banks don't ask you much where your money are coming from when you bring money to them, they are very willing to help, and happy. (It's a differnte story when you ask to borrow money). When I opened a bank account in US I did not even have an SSN, but they didn't care much they just took my passport and used the passport number for registering the account. Obviously on the interest generated by the money in the US bank account I had to pay taxes, but it was easy because I simply let the IRS via the bank to withdarw the 27% on the interest generated (not on the capital deposited). I didn't put a huge amount of money there I had to live there for 1 year or some more. Maybe if i deposited a huge amount of money someone would have come to ask me how did I make all those money, but those money were legally generated by me working in Italy before so I didn't have anything to be afraid about. BTW: in Italy I was thinking to move money to a German bank in Germany. The risk of default is a nightmare, something of completly new now in UE compared to the past where each state had its own currency. According to Muro history says that in case of default it happened that some government prevented people from withdrawing money form bank accounts: ""Yes, historically governments have   shut down banks to prevent people from   withdrawing their money in times of   crisis. See Argentina circa 2001 or US   during Great Depression. The   government prevented people from   withdrawing their money and people   could do nothing while their money   rapidly lost value."" but in case Greece prevents people from withdrwaing money, those money are still in EURO, so i'm wondering what would be the effect. I mean would it be fair that a Greek guy can not withdraw is EURO money whilest an Italian guy can withdraw the same currency money in Italy?!"

negative: **Economy of the Bahamas**  The Bahamas is a stable, developing nation with an economy heavily dependent on tourism and offshore banking. Steady growth in tourism receipts and a boom in construction of new hotels, resorts, and residences had led to solid GDP growth for many years, but the slowdown in the US economy and the attacks of September 11, 2001 held back growth in these sectors in 2001-03. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. However, since December 2000, when the government enacted new regulations on the financial sector, many international businesses have left The Bahamas. Manufacturing and agriculture together contribute approximately a tenth of GDP and show little growth, despite government incentives aimed at those sectors. Overall growth prospects in the short run rest heavily on the fortunes of the tourism sector, which depends on growth in the US, the source of more than 80% of the visitors.  ***  ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&message=Excludeme&subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/economy/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index)   ^] ^Downvote ^to ^remove ^| ^v0.21

negative: The stock markets are closed on week-ends and public holidays because the Banks are closed. The Banking is a must to settle the payment obligations. So you may buy and sell as much as you wish, but unless money changes hands, nothing has really happened.   Now as to why Banking itself is closed on week-ends and public holidays, well a different question :) Keeping the system 24 hrs up and running does not actually push volumes, but definately push expenses for brokers, Banks etc. There definately is some convinience to buyers and sellers.

negative: >i dont see what's the big deal, all the banks got bailed out. Govt printed over 7 trillion bucks, not much inflation. govt has to help private sector. gave plenty of freebies to the rich mother fukers in the banking sector.  Yes that was bullshit, I agree. The difference is that most of the money that went to the banks is held with the banks. It didn't cause inflation because it isn't circulating in the economy. The government also had to do something with the banks because it would have triggered a major depression if they didn't. I don't think they handled it the best way at all. They should have nationalized the banks after the bailouts rather than let them keep thriving. However, students don't **need** that extra debt. That would be $1 trillion extra that actually is circulating in the economy, which would cause serious inflation. That would mean [doubling](http://www.federalreserve.gov/faqs/currency_12773.htm) the amount of money in circulation. That is a lot different than the trillions the government printed, mostly just to set monetary policy.

negative: What is the best way that I can invest money so that I can always get   returns? If you want something that doesn't require any work on your end, consider having a fee-only financial planner make a plan so that your investments can be automated to generate a cash flow for you or get an annuity as the other classic choices here as most other choices will require some time commitment in one form or other. Note that for stock investments there could be rare instances like what happened for a week in September in 2001 where the markets were closed for 5 days straight that can be the hiccup in having stocks. Bonds can carry a risk of default where there have been municipalities that defaulted on debt as well as federal governments like Russia in the 1990s. Real estate may be subject to natural disasters or other market forces that may prevent there always being a monthly payment coming as if you own a rental property then what happens if there aren't tenants because there was an evacuation of the area? There may be some insurance products to cover some of these cases though what if there are exceptionally high claims all at once that may have an insurance company go under? Would it be to set up an FD in a bank, to buy land, to buy a rental   house, to buy a field, or maybe to purchase gold?  What investment of your own time do you plan on making here? Both in terms of understanding what your long-term strategy is and then the maintenance of the plan. If you put the money in the bank, are you expecting that the interest rate will always be high enough to give you sufficient cash to live as well as having no financial crisis with the bank or currency you are using? Are there any better investments? You may want to reconsider what assumptions you want to make and what risks you want to accept as there isn't likely to be a single solution here that would be perfect.

negative: You bet if it was so simple. This is when financial acumen comes into its true form. The bank would never ever want to go insolvent. What it does is, take insurance against the borrower defaulting.  Remember the financial crisis of 2008 which was the outcome of borrowers defaulting. The banks had created derivatives based on the loans distributed. CDO, CDS are some of the simple derivatives banks sell to cover their backs in case of defaults. There are derivatives using these derivatives as underlyings which they then sold it across to other buyers including other banks. Google for Fabrice Tourre and you would realise how much deep the banks go to save themselves from defaulters. If everything fails then go to the government for help. That was what happened when the US government doled out $600 billion to save the financial sector.

negative: govt debt and money printing is nothing to the amount of debt in circulation in the private sector (41 trillion).  it was the private sector that created the inflation and bubbles.     giving students 1 trilion to pay off all student loans isn't inflationary, it would be deflationary.  because the banks created the credit out of thin air to lend to the students for college, if you pay it back, it closes the circuit.   Govt would have 1 trilion in debt, but that's nothing, only a trilion dollars.   it can get paid back in tax revenue from economic recovering by the private sector no longer burdened by debt.

negative: Contact the bank where the money is being sent. They should have a record of it, and they will know what happened to it.  In some, maybe even most, banks accounts are never truly closed, they are just made inactive. If that is the case with this bank the 300 euro may be sitting in the account as a credit. If they have the money, ask for them to send it to back by reversing the transaction. If it has been too long they may have another procedure for refunding the money. They might even send it by check. If they already reversed the transaction, contact your bank to determine where the funds went.

negative: I would go speak to the bank manager. With Wells, you have to make sure it is the bank manager and not a service manager or something you are talking to (I learned that a few months ago).  Tell her/him exactly what happened in detail and that you want the credit card closed and the credit inquiry removed from your credit report. Further, say that once all of that is done, you will decide whether to continue banking with them and whether any legal action is appropriate.  If they give you any kind of push back, I'd get advice from a lawyer. The truth is they did open an account against your expressed wishes and it required them to check your credit so it does constitute fraud unless they can produce a signed document saying you agreed to the card.  Edit: I just saw that this happened about a year ago. It may have been easier if you had done something at the time and may be more difficult if you've used the card in the meantime.

negative: "The second part of your question is the easiest to answer, how much manual work is involved in settlement processes? Payment systems which handle low value (i.e. high volume) transactions work on the basis of net settlement. Each of the individual payments are netted across all of the participant banks, so that only one ""real"" payment is made by each bank. Some days banks will receive money, others they will pay money. This is arbitrary and depends on whether their outbound payments exceed their inbound payments for that day.   The payment system will notify each Bank how much it owes/will receive for the day. The money is then transferred between all of the banks simultaneously by the payment system to remove the risk that some pay and others don't. If you're going to make or receive a very large payment, you're going to want to make certain that its correct. This means that if there's a discrepancy, you need operations people available to find out why its wrong.   When dealing with this many payments, answering that question can be hard. Did we miss a payment? Is there a duplicate? Etc.  The vast majority of payments will process without any human involvement, but to make the process work, you always need human brains there to fix problems that occur. This brings me to your first question. On every day that settlement happens, a bank will receive (or pay) a very large sum of money. As a settlement bank you must settle that money - the guarantee that every bank will pay is one of the main reasons these systems exist. For settlement to happen, every bank has to agree to participate, and be ready to verify the data on their side and deliver the funds from their account. So there is no particular reason that this doesn't happen on weekends and holidays other than history. But for any payment system to change, it would require the support of (at least) a majority of participants to pay staff to manage the settlement process on weekends. This would increase costs for banks, but the benefits would only really be for you and me (if at all). That means it's unlikely to happen unless a government forces the issue."

negative: Andrew Lilico has a likely scenario for when Greece defaults on its sovereign debt: What happens when Greece defaults.   Here are a few things: Every bank in Greece will instantly go insolvent. The Greek government will nationalise every bank in Greece. The Greek government will forbid withdrawals from Greek banks. To prevent Greek depositors from rioting on the streets,   Argentina-2002-style (when the   Argentinian president had to flee by   helicopter from the roof of the   presidential palace to evade a mob of   such depositors), the Greek government   will declare a curfew, perhaps even   general martial law. Greece will redenominate all its debts into “New Drachmas” or whatever   it calls the new currency (this is a   classic ploy of countries defaulting) The New Drachma will devalue by some 30-70 per cent (probably around 50 per   cent, though perhaps more),   effectively defaulting 0n 50 per cent   or more of all Greek euro-denominated   debts. As Megan McArdle says, there's more at the link, all depressing. I think you're focusing too much on Greece leaving the euro and not enough on why Greece would leave the euro. Greece would leave the euro precisely so that it could pay back its debt in a new currency worth less than valuable euros. The new currency will devalue, since that's the point of leaving. Along the way the government forces its citizens to take the new currency. The money they have in Greek banks will be converted to the new currency: The citizens don't have a choice to keep their euros.

negative: "Haha, right. Maybe the ""who can think of the biggest number"" game?  I think the 125bln is just the tip of it. They have a lot of frightening liabilities on their balance sheet like their real estate market.  I wonder where the Spanish bond yields will go now."

negative: "There will be no police involved. The police do not care. Only the feds care, and they only care about large amounts (over $100,000). What will happen is that the teller will deposit the money like nothing is unusual, but the amount will trigger a ""Suspicious Transaction Report"" to be filed by the bank. This information goes to the US Treasury and is then circulated by the Treasury to basically every agency in the government: the Department of Defense, the FBI, the NSA, the CIA, the DEA, the IRS, etc. What happens next depends on your relationship with your bank and the personality of the bank. In my case I have made large cash transactions at two different banks, one that I had a long relationship with, and another that I had a long-standing but dormant account. The long-term one was a high end savings bank in a city. The dormant one was one of those bozo retail banks (think ""Citizens"" or ""Bank of America"") in a suburb. The long-term bank ignored my first deposit, but after I made some more including one over $50,000 in cash they summoned me via a letter. I went in, talked to the branch manager and explained why I was making the deposits. He said ""That sounds plausible."" and that was the end of the interview. It is unlikely that they transferred the information. They probably just wrote it down. They did this because they have ""know your customer"" regulations and they wanted to be able to prove that they did ""due diligence"" in case anybody asked about it later. The suburban bank never asked any questions, but they did file the STRs. In general, there is no way to know if the bank will interview you or not. It depends on a lot of different factors. The basic factors are: how much money is it, are you doing a lot of business normally, and how well does the bank know you. If you refuse to answer the bank's questions to their satisfaction, it is a 100% chance that they will close your account. They can also file higher level reports that flag your activity as ""highly suspicious"" as opposed to just the normal ""suspicious"". As long as it is a bank employee, you should have no serious concerns unless the guy seems strange and asks really pointed questions. If you have any question whether the ""employee"" is legitimate, just verify that he/she is a bank employee. Obviously if the feds visit you, you should say nothing. The chance of this happening is 1 in a million."

negative: I don't think the verbal confirmation from the branch manager is worth anything, unless you got it in writing it basically never happened. That said, what did you sign exactly? An application? I'd think they would be well within their rights to deny that, no matter what the branch manager said. If you actually signed a binding contract between you and the bank, things would be different but the fact that 'approval' was mentioned suggests that all you and the bank signed was an application and the bank manager made some unreasonable promises he or she doesn't want to be reminded of now. If the complaints department can't get off their collective backsides, a firm but polite letter to the CEO's office might help, or it might end up in the round filing cabinet. But it's worth a try. Other than that, if you are unhappy enough to go through the pain, you can try to remortgage with another bank and end the business relationship with your current bank.

negative: "I agree with you, but both are bad. What happens with fractional reserve banking is inflation, but this inflation isn't distributed evenly across all the markets, those who the banks lend to are who see the inflation first I.e. the Dow. But nobody gets a loan to buy commodities, so these lag in the inflation. When a recession hits the banks slow their loaning while the commodities play catch-up. During this period it makes more sense to ""invest"" in commodities than in the majority of businesses. So in an effort to make capital ""available"" you've created an entire community of investors investing in an unproductive sector for just as long as you had them hyper-investing in productive sectors. Net zero gain, with a decade of time lost.  I wont ever believe we need frac reserve lending to have a bank, especially when the bank collapses the currency every 30-50 years. If someone's to loan money they should do it with their own money, with approval, or somehow prevent 2-3-10 people from racing to the same reserve."

negative: I think that the 2008 events represented a loss of a very large amount of equity for Americas, also it had a ripple effect around the world on other countries.  Now - almost as if they wanted it to happen again, the Obama Administration's trade policy and big EU banks are pushing to use the [global TISA trade in services trade deal](http://corporateeurope.org/blog/342-civil-society-groups-oppose-deregulation-and-privatisation-proposed-services-agreement-tisa) to quietly irreversibly deregulate a huge number of areas whch will effect hundreds of millions of people, including the banking industry- deregulate global banks, which is exactly the wrong thing to do.  Deregulation is what caused the 2008 crisis- http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis

negative: In my experience earning interest is not enough to keep the account in a non-dormant state. If payment of interest was the trigger to reset the clock then no savings account would ever be considered dormant. In general as the account got close to the deadline we were notified that a single transaction moving money into or out of the account would reset the clock. I have had this happen in recent years with a bank account and a credit union account.  In researching for the exact definition of a dormant account I found this regarding interest on the FDIC website: That means that the state law may set the definition, it also means that you should look at the information regarding the bank policy. I did try and see if the rules for a credit union are the same. The added twist with a credit union is that if the account is closed, they are no longer a share holder and that brings into the discussion voting rights. So the policy/guidelines is even more complex. If the account does go inactive state law will define what happens to the account, and how you can get the funds back.

negative: I'm pretty sure employees were instructed to give loans to people who they knew would not be able to pay it back. [This](http://thinkprogress.org/economy/2011/12/01/379332/former-banker-subprime-pushed/) (about chase rather than BoA but still relevant) is just from a quick search but the key phrase is predatory lending. So they give out all these loans they knew were at risk and then packaged them up in investments that looked good from the outside but were rotten within. So from what I gather they basically double fucked both people who shouldn't have taken a loan, and then people who invested in whatever investment packages they were selling.   Now you know more about the technicalities of all this than I do, so let me ask. What is it that they *did* do that was unscrupulous?

negative: "Keep in mind this is an opinion piece. The Foreign Sovereign Immunities Act (FSIA) would have indemnified Argentina from virtually all of these suits. FISA lets sovereigns opt out of its protections, which Argentina did. Argentina waived immunity from suit in New York state or federal court and its immunity from the attachment of its assets within the US to satisfy a judgement.   In this particular case, it also agreed this issuance of debt would ""rank *pari passu* [with its other debt obligations] and ***without any preference among themselves***"" (emphasis added) (1994 Bondholder Agreement). This is the clause the court used when deciding whether Argentina could pay some bondholders and not others. It is fairly unambiguous that bondholders are all on equal footing. It also added that these debt obligations would rank at least equally with Argentina's other unsecured debt.   This was not a coincidence. By issuing in New York and subjecting itself to New York/US law, Argentina was able to obtain a *much* more favorable borrowing rate. Argentina was the drafter of the debt agreement where it promised to treat all borrowers the same, and it was the party who waived its immunities inherent under US law. It benefited greatly from the substantially lower borrowing costs it enjoyed by doing so.   Because Argentina waived its sovereign immunities, the court looked to the language in the contract. It states the debt will all be treated the same, and will be subject to NY/US law. It is hard to say it is ""unfair"" for a New York court to enforce a contract Argentina wrote and then subjected itself to New York jurisdiction/law.   NOTE: Three US government agencies sided with Argentina (Justice, State, Treasury), claiming FSIA should at least partially apply regardless of waiver. They made mostly policy arguments about how sovereigns should enjoy at least partial immunity. Argentina's debt contract was very liberal with its waiver of sovereign immunity, so it is not surprising the court looked to the actual contract when deciding what rights bondholders have."

negative: Don't worry. The Cyprus situation could only occur because those banks were paying interest rates well above EU market rates, and the government did not tax them at all. Even the one-time 6.75% tax discussed is comparable to e.g. Germany and the Netherlands, if you average over the last 5 years. The simple solution is to just spread your money over multiple banks, with assets at each bank staying below EUR 100.000. There are more than 100 banks large enough that they'll come under ECB supervision this year; you'd be able to squirrel away over 10 million there. (Each branch of the Dutch Rabobank is insured individually, so you could even save 14 million there alone, and they're collectively AAA-rated.) Additionally, those savings will then be backed by more than 10 governments, many of which are still AAA-rated.  Once you have to worry about those limits, you should really talk to an independent advisor. Investing in AAA government bonds is also pretty safe. The examples given by littleadv all involve known risky bonds. E.g. Argentina was on a credit watch, and paying 16% interest rates.

negative: "National City Bank did great on subprime.  They bought First Franklin for around $100m, took millions out in profit for about a decade, and sold first franklin for $1b to Merrill Lynch.  What killed NCB was home equity lines or credit, 2nd liens, which were given to high scoring conforming borrowers.  But when the panic set in the media told people ""dont pay your mortgages, the government will bail you out"" and people stopped paying on their 2nds.  Values dropped and in order to foreclose on a 2nd you have to buy out the 1st lien too... not possible.  That killed the NCB balance sheet and the sharks in DC all but forced NCB to capitulate to PNC and be acquired for cheap."

negative: Banks loan out money they don't have to you to get you to pay them interest. It's all just computer bits. Papier maché would require that they actually have money. If everybody told BofA that they wanted to close their accounts and to get the money in cash, it would never be able to happen.

negative: From mid 2007 to early 2009 the DJI went down about 50 %. This market setback won't happen on a single day or even a few weeks.  Emergency funds should be in cash only. Markets could be closed for an unknown period of time.  Markets where closed September 11 until September 17 in 2001.

negative: "There are three possibilities.  This is a scam, as others have pointed out, it works by you sending money, then them stopping the original transfer, meaning you sent them your money and not theirs. They make money cause a stop payment only costs $50 (or around there) but you sent $1,000. So they profit $950. You lose $1,000 and maybe some processing fees. This is money hiding, or money laundering. They send you $1,000 in drug money, you send them $1,000 in ""clean"" money. You don't lose any money. But they gain a clear paper trail. With large sums of money (in the U.S. anything over $5k) you have to prove a paper trail. They just did. You gifted it to them. On your end, it looks like you just profited from illegal activity, which in the worst case ends in confiscation of ALL your assets and jail time. It might not come to that, but it could.  This was an honest mistake, by an idiot. It is possible to wire a complete stranger money. If you make a mistake on the wire transfer forms, and the account number exists, it will go through.  Now what makes the sender an idiot is not the mistake. We all do that. It's the fact that banks have a built in system for handling these mistakes. Simply put, you can make a stop payment. It's around $50 (varies by bank and sometimes amount transferred), it's easy to do, and almost automatic. If you tell a bank rep that you made a mistake they will likely have you fill out a paper, and in many cases will ""just take care of it"". If ""the idiot"" didn't want to tell the bank of the mistake, or didn't ask for help, or didn't want to pay the fee. Then maybe they would contact the receiving party. But that's pretty dumb. Resolution The resolution in all cases is the same. Visit your local branch, or send in writing, an explanation: ""I found $1,000 in my bank account that I didn't put there, and got this email (see attached print out). Please advise."" They will ""freeze"" the $1,000 (or maybe the account but I have never seen that) while they investigate.  You won't be able to spend it, they might even remove it pending the investigation. They will contact the bank that issued the transfer and attempt to sort things out. You shouldn't be charged anything. You also won't get to keep the money. Eventually the bank will send you a letter stating what happened with the investigation.  And the money will vanish from your account.  Specific questions I wanted to state the information above even though it doesn't address your concerns directly because it is important. To address your specific questions: Question 1) Surely bank account numbers have a checksum, which make it relatively difficult for a typo to result in a payment going to the wrong person? Nope, that's up to each bank. Usually the account numbers are not sequential, but there is no ""checksum"" either. Just like credit cards, there are rules, but once you know those rules you can generate fake ones all day long. In some cases, account numbers 5487-8954-7854 and 5487-8945-7854 are both valid. It happens.  Question 2) What are likely sources of them being able to find my phone number to call me? Phone numbers are not private. Not even close. Phone books, Google, Websites, etc etc. if you think your phone number is in any way a secret then your totally misinformed.  Account numbers are not a secret either. Especially bank account numbers. You could totally just call a bank, and say ""What is the name on account 12345?"" and they would tell you. Checks have your name and account number on them, as do MANY documents from a bank. So anything from asking the bank, to finding a copy of a check or document in the trash are valid ways to make the link.  Question 3) How were they expecting to benefit? See options 1 and 2 above. If is is really option 3, then your bank should have directed the money back. But if the person was so messed up as you say, the account may have been closed and ""written off"". When that happens a lot of weird stuff can happen. Essentially the bank is ""taking a loss"" of money and doesn't want the money back even if the account was closed with a negative balance. Usually though contract with debt collectors, they may have already been ""paid"" for that debt, and are not allowed to take the money back. These things happen, but it seems like a pretty odd set of things that need to line up for #3 to be valid. About your Length of time Usually these things resolve in less then 90 days. Usually far less. At the 90 day mark, it gets really hard to reverse a transaction. It's possible that it was a scam and so many people fell for it that the scammers just let you keep the money instead of ""highlighting"" their scam.  The fact that your using a ""net bank"" means that your can't go in person, but you should get details in writing. State the transaction number (it should be in your account records) and ask them for a ""letter of resolution"" or some form of official document stating the outcome of their investigation. I suspect that no one every really investigated the issue and the rep you spoke to never did anything then ask you to ask them to fill out a stop payment. You need a record of trying to sort this out. You don't want to up for some legal battle 10 years from now because someone found out that the money was part of a pool that was used to fund some terrorist group or some such. So get a paper trail, then go with what the bank says."

negative: Keep in mind that the only portion of the MBS that was rated AAA was the most senior tranche. It achieved this rating due to the buffer to principal losses provided by the equity and mezzanine tranches. So for the principal to be at risk for the AAA senior tranche, 10% of the mortgages in the pool would have to default. Since this number was way higher than historical default rates - it seemed safe. Obviously looking back we know that risk management underestimated the effect that lowered lending standards would have on the default rates (if they did project a rise in default rates, they did not project a large enough rise).  As well, while the MBS is exposed to systemic risk - as happened, when the entire country was affected by the collapse - they were packaged to avoid other risks. For example, the pool would spread out mortgages across the country and other various factors would be hedged so that if a natural disaster hits state X and everyone defaults on their mortgage, you are only losing a small part of the underlying.  I assume (hope) that at some point the quantitative analysis people in risk management at the major investment banks realized that the default rates would rise given the lower lending standards being employed - but chose to ignore it. They chose to ignore it because investors still wanted to buy it, and the banks make money by collecting fees on issuing securities.

negative: "I have family in Argentina, this is no surprise to them.  Everybody I know over there, family and friends, are going crazy ""blowing up their credit cards"" and going through savings like there is no tomorrow.  Their mantra is.. ""enjoy it today, because tomorrow its evaporated""."

negative: (Assuming in the US) There are several possibilities, but to be honest anyone here is only going to be able to make guesses.  To get the answer, the account holder (your girlfriend) is going to have to contact the bank and ask them directly.      Some possibilities include:  Suspicion of money laundering, suspicion of possible illegal activities in the account (e.g. check kiting), suspicion of possible prohibited activities (not necessarily illegal, but as defined in the account agreement, they may not allow activity related to gambling or pornographic businesses, for example), suspicion of business activity taking place in a non-business account, insufficient KYC (Know Your Customer) information on the account (such as they did not or could not verify required information during the account opening process), a negative ChexSystems report (for example, they found out through ChexSystems she had derogatory information reported on another account at another bank previously), or extended period of time it was overdrafted (usually 30+ days).    I should also add that any bank/credit union has just as much a right to close an account with a customer, as the customer has the right to close their account with the bank/credit union, at any time, without notice.      In *most* cases (although not all), when a bank closes an account, they will send a letter to the address on file for the account beforehand explaining the reasons.  Have her check her mail.      Are you sure the account is actually *closed*, and not just *blocked*?   It could just be in a blocked status due to overdraft or some other reason, which is very different from being closed.      As for where the direct deposit went - if the account is truly closed, then the money is being returned back to the company that initiated the direct deposit - usually takes 2-3 business days.  Your girlfriend will have to contact the company's payroll department to arrange other means of payment, such as a check.      In any case, it's all speculation at this point until the bank can be contacted to find out the real reason why.  (Tip for the future:  Look at switching to a bank that has 24/7 customer service)