Lavoz Finance Insurance

Definitions of the Bank

1. REYNOLD

“Bank is the factory of credit”.

2. DR. H.L. HART

“A banker is one who is in the ordinary course of his business receives money which he repays by honouring cheques of persons from whom or for whose account he receives it”.

3. PROF. CROWTHER

“Bank is an institution which gets to lend and in this way creates credit money”.

4. KEYNES

“A bank is an institution which receives deposits and advance loans.

Evolution of Banking

About there thousand years ago there was a nation called “SUMERIAN” who started giving loans to the people. These loans were repayable in form of cash as well as commodities. Sumerian used lumps of gold and silver as money.

1. BANKING IN IRAQ Two thousand years ago the tradition of Banking was introduced and developed in Iraq. The king described legal provisions in writing for giving loans and mud cakes were used for loan agreements. Rate of interest on these advances was 33.3% P.A. 2. BANKING IN GREECE

Banking reached Greece from Iraq and had made great progress in the 14th Century B.C. in Greece temples  served as earliest banks. In 594 B.C. a solaran revised the procedure of giving loans on interest basis.

3. BANKING IN ROME

In 14th Century B.C. an institution was established in Rome which started to accept  deposits and lent the money to needy people.

4. BANKING IN AMERICA

In th USA, the origins of banking services came out of conditions created by the California Gold Rush starting in 1848.

5. BANKING IN BRITAIN

The Bank of England was founded as a private joint stock company in 1694. According to modern experts first modern bank was established in 1694 in England named “Bank of England”. It was the first Bank who got the sole authority of issuing currency notes.

USA is suffering from an economic crisis. So, all of us should be considerate about this and beware of the difficult situation for the country and the people. This crisis has greatly affected the people like us. We should not shy away from the fact that we are going through a difficult time with regards to our financial conditions. It is important to acknowledge this problem and we should try to solve it.

Many Americans are in a state of financial misery. This puts the people in problem as they cannot pay their utility bills. The government has announced a grant to pull people out of this. So, it is due to this government grant, that people are trying to come back to their normal lives. Many of us have started to appreciate, once again, the fact that we can be productive and we have the ability to improve our lives. The people are therefore, able to pay their utility bills on time.

The grant provided by the government is a means of paying out your electricity bill and other such utilities. Medical expenses and day care expenses are also paid for. There are two basic factors that determine the value of your grant. These are your needs throughout the month and the income that you earn every month.

It is very simple to apply for this government program. You can visit an online website that keeps the application form. Fill in the details asked and attach all the necessary documents required for the application. You should try your level best to convince the authorities about your need for the financial grant.

If you start researching small business pension options, the alternatives quickly overwhelm. Banks, financial planners, insurance agents and many others clamor for your attention and offer up what they tout as the obvious best option.

Fortunately, and perhaps surprisingly, you can create easy pension options for your small business. These easy options are usually available regardless of whether you operate as a sole proprietorship, partnership, limited liability company or corporation. And for many small business owners, the easy options also often represent the best value.

Easy Option #1: A Traditional Individual Retirement Account

To start, don’t overlook the traditional individual retirement account. No matter what your income, as long as neither you nor your spouse are covered by some other qualified retirement plan, you can setup and deduct contributions to a traditional individual retirement account. Typically, neither the business nor the individual pay fees or pay only modest fees to have an IRA in place.

Regular annual contributions to a traditional IRA grow large over time. A $5,000 annual contribution (the standard amount allowed in 2008) made over 35 years grows to more than $550,000 after adjusting for inflation. (I’m assuming you earn an after-inflation 6% rate of return in this scenario and the others that follow.)

That $550,000 IRA balance is actually a pretty good ending account balance–enough for many business owners’ retirements if they’ve also paid off a mortgage and qualified for social security. And remember that married couples can often double the ending value amount by doubling the annual contributions.

In summary, then, a traditional IRA shouldn’t be overlooked–especially if you and any employees want to save only a few thousand dollars a year.

Easy Option #2: A Simple-IRA

If you or employees want to save more money than is possible with a traditional IRA, you can often for free or almost free set up a Simple-IRA plan for the business.

Essentially, a Simple-IRA works like a “lite” version of a 401(k). With a Simple-IRA, employees and the business owner can contribute up to $10,500 ($13,000 if aged 50 or older) of their earned income to the Simple-IRA account. The employer typically matches the contributions, too, with a standard three-percent-of-salary contribution.

If someone making $50,000 contributes the maximum $10,500 amount to the Simple-IRA and the employer contributes another $1,500 (three percent of the $50,000), the employee accumulates roughly $1.2 million in savings after 35 years. Again, I’ve adjusted for inflation and used a 6% after-inflation return.

Easy Option #3: A SEP-IRA

One other inexpensive yet powerful small business pension plan option deserves mention.

If you’re a one-person business or employees usually don’t stay around for very long, you may want to consider the SEP-IRA option. With a SEP-IRA, you can contribute up to 20% of your business profits in the case of a sole proprietorship or partnership or up to 25% of your wages in the case of a corporation, including an S corporation.

To give you an example of this, assume your sole proprietorship makes $100,000 each year, in this case, you can contribute $20,000 (20% of the $100,000) to a SEP-IRA account. Or, as another example, assume your S corporation pays you $80,000 in wages. In this case, you can contribute $20,000 (25% of the $80,000) to a SEP-IRA account.

Over 35 years, after adjusting for inflation, a $20,000 a year SEP-IRA contribution grows to roughly $2.2 million dollars. Here again, by the way, I’ve used a 6% annual investment return in my calculations.

Like the traditional IRA and Simple-IRA option, a SEP-IRA usually costs the business owner nothing or next to nothing. You won’t get burdened with expensive set up fees or annual administration costs.

However, while you can make large annual contributions to SEP-IRA accounts (up to roughly $46,000), the plans don’t work for every small business. And here’s why: You must cover all employees who have been employed by you for more than three years and who are over the age of 21.

SEP-IRAs, then, are probably most attractive to one-person businesses-such as consultants and tradespeople-that don’t need to worry ever about making the SEP-IRA contribution for employees.

Moving Forward

I’ve been pretty birds-eye in my discussions in this article, so you may have more questions. You should be able get answers about all of these retirement savings from just about any mutual fund company, bank or stock broker. Note, too, that the contribution amounts allowed regularly get adjusted for inflation.