Category Archives: Money

How Does Fiscal and Monetary Policy Impact Your Personal Finance?

How Does Fiscal and Monetary Policy Impact Your Personal Finance?

What is fiscal policy?

Fiscal policy can be defined as the means by which governments adjust spending levels as well as tax rates to influence a country’s economy.

What is monetary policy?

Monetary policy can be defined as the process by which monetary authorities of a country i.e. the central banks or currency boards control the supply of money by changing interest rates.

Effects of fiscal policy on personal finance

Since fiscal policy is simply about how the government decides to spend money as well as the tax rates/rules it puts in place, fiscal policy has a significant impact on the personal finances of citizens in a country. Government spending takes many forms varying from government investments in development to spending on social security payments, welfare, etc.

When a government spends more on development, there is a positive impact on the economy. For instance, more jobs are created, and citizens have more money in their pockets to spend on goods and services. When people have more money, they are able to support small businesses which are the main drivers of the economy. The opposite happens when the government lowers spending on development. Unemployment is bound to rise. The price of goods and services also rises making life expensive.

The government’s stand on taxes also has a direct impact on your personal finance. When the government lowers income tax, for instance, citizens have more money to spend on goods and services. This, in turn, propels the industries that make those goods and services boosting the economy in the process. When the income tax is too high, citizens have less money in their pockets which reduces their buying power and slows down the economy.

In a nutshell, your personal finances are bound to be affected favourably when there are favourable tax laws and the government is spending money on things that grow the economy and put more money into the pockets of ordinary citizens.

Effects of monetary policy on personal finance

The monetary authorities of a country i.e. the central banks control the supply of money mainly to boost the economy. Central banks have several of tools for controlling the money supply. For instance, central banks can increase or decrease the amount of reserves banks are required to maintain. This increases or decreases the amount of money banks have for lending to the public as loans. Central banks can also buy or sell financial instruments like bonds to increase or decrease the money supply. Central banks can also raise or lower interest rates to make loans expensive or cheap.

Central banks can maintain tight, neutral or loose monetary policy depending on the performance of the economy. For instance, central banks tend to lower interest rates when there is poor economic growth. This encourages people to borrow since people have more access to cheap loans. This type of monetary policy is accommodative. Central banks can also take tight monetary policy stands i.e. raising short-term interest rates to moderate the pace of economic growth. This usually takes place when inflation is increasing significantly, and central banks want to reduce the amount of money in circulation to stabilise prices.

Monetary policy has a direct and indirect impact on personal finance. The direct impact revolves around the direction of interest rates while the indirect impact revolves around the expectations of economic players. When central banks raise interests, the cost of credit also increases as lenders increase the interest rates charged on loans. New, as well as existing loans, become more expensive. In regards to expectations, potential investors who depend on loans are bound to slow down or stop investing when the cost of loans increases. Monetary policy also has an effect on asset classes such as bonds, equities, real estate, commodities, and currencies. In real estate, for instance, high-interest rates tend to make mortgages expensive.

Summary

Fiscal and monetary policies have a significant impact on every person’s finances. Government spending and tax rates have a significant impact on development, employment, social security payments and overall economic growth which determines how much money citizens have in their pockets. The interest rates set by central banks also determines how much money is circulating in the economy at any given time and this has an effect on how much citizens pay for goods and services.
You must strive to understand fiscal and monetary policy in-depth for you to be able to make smart personal finance decisions.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

The Pros and Cons of Living in a Cashless Society

The Pros and Cons of Living in a Cashless Society

Cash hasn’t disappeared from our everyday life although innovation is already working towards replacing physical (paper) money with wireless payments systems via computers and mobile phones. Global IT giants like IBM have already taken steps to link biometric signatures to wireless payments to prevent identity theft in cashless transactions. There are many digital wallets available today, and all indications suggest that we will be living in a cashless society in the near future. In a cashless society, physical money is held by third parties like banks or the government.These third parties allow you to transact as you wish. This presents both pros and cons. Some people argue in support of a cashless society while others argue against. To help you make your own decision, below are the top pros and cons of living in a cashless society.

Pros of a cashless society

1. Reduced crime rates: Numerous studies have shown that going cashless reduces crime rates significantly. When people stop handling physical cash as much, the rate of crimes like bank robberies, burglaries, extortion, and corruption decline significantly. Going cashless creates a money trail that discourages crime.

2. Financial inclusion: A cashless society enhances financial inclusion. For instance, mobile money systems have made it possible to provide financial services to people who wouldn’t otherwise have access. Increased access to financial services like loans to people who didn’t have access automatically reduces poverty. Mobile money platforms have allowed many poor people in third world countries send and receive money as well as get access to small loans instantly. Such individuals wouldn’t have access to financial services were it not for cashless systems.

3. Increased tax revenue: A cashless society also enhances tax collection since more people have money trails making it harder to evade tax. Tax authorities also have an easier time finding tax evaders. Increased tax revenue means governments will have more money to spend on development among many other programs beneficial to citizens.

4. Boosts consumption: A cashless society offers little to no incentives for hoarding cash which in turn encourages consumption. When people are willing to spend more, the economy grows significantly. More jobs are bound to be created, and the overall standard of living also improves.

5. Unmatched security and convenience: Carrying physical cash comes with a lot of security risks and inconveniences. Your chances of being robbed are lower in a cashless society. Physical cash is also bulky, so a cashless society comes with unmatched convenience. You can carry around as much money as you want and transact hassle freely.

Cons of a cashless society

1. Money is controlled by third parties: As mentioned above, third parties such as public/private banks and the government are usually the custodians of physical cash in a cashless society. This gives them a lot of control. In simple terms, you must trust the third parties to act in your best interests. This is scary for most people since the control held by these third parties can be misused. Your money can be withheld if you become an “enemy of the state” for whatever reason. When you are in possession of physical cash, you are not at the mercy of anyone.

2. Unique security risks: Cashless societies may have reduced crime rates i.e. reduced bank robberies, burglaries, etc., however, they are still vulnerable to security risks such as cyber attacks and fraud. Since all transactions are digital, cyber attacks can lead to devastating losses. Crimes such as identity theft are easier in a cashless society since all your details are available online.

3. Unique inconveniences: In a cashless society, eventualities such as power or system outages can leave you cashless for hours or even days. Losing your phone or computer can also deny you access to money for a prolonged time.

4. Reduced liquidity may cause unemployment in some sectors: Liquidity is good for certain sectors such as the retail industry. A cashless society gets rid of liquidity causing unemployment in sectors which depend highly on liquidity.

Summary

Technological advancements are pushing countries to follow the cashless route. Although there are many pros of a cashless society, there are cons as well. The above information on living cashless offers a good basis for deciding whether going cashless is good or bad. It’s, however, important to understand that there is more to cashless living that what is covered above.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Financial Planning Tips For You and Your Family

Financial Planning Tips For You and Your Family

Most couples face serious challenges when it comes to dealing with finances. In fact, many research studies have shown that finances are among the top reasons why couples argue. It gets more challenging when children get into the picture. Couples argue over how to spend money, how to save, invest, share bills, etc. This is usually the case since most marital decisions revolve around money. For instance, you need to consider your finances as a family when deciding where to live, the type of car/s to buy, where to take your children to school, whether you should take a loan, etc.

Furthermore, most people are uncomfortable discussing finances even with their spouses, yet it’s one of the most crucial subjects for couples keen on staying together in peace. This is why family finance is so important. To be able to avoid most family problems, here are the most important family finance tips to consider.

1. Develop mutual finance goals:

This is by far one of the most important family finance tips to consider. As a couple, you must develop finance goals that are acceptable to both of you and your family as a whole otherwise you will end up having endless arguments about money. You must agree from the onset who does what as well as what you intend to do with your money to avoid avenues for arguments. In a nutshell, family finance goals should be developed and accomplished jointly. The finance roles of each spouse should be clear from the onset.

2. Maintain 100% honesty:

This goes without saying. You should be 100% honest with your spouse on every issue including finances from the onset. Most spouses argue about money because they feel shortchanged. This is why it’s advisable to be open about how much money you earn so that your spouse doesn’t have unreasonable expectations about what you can afford to contribute. You should also be open about the loans you have, your credit history, credit cards, etc. from the onset since such things have an effect on your access to credit as a couple/family.

3. Have a budget and follow it:

To avoid overspending and running out of money, you must prepare a family budget and follow it. Running out of money prematurely always causes a lot of tension in families. Preparing a family budget will help to keep your spending in check. You will be able to avoid living beyond your means. You will also be able to know exactly where your money goes which will in turn help in cutting down on expenses if you need to. It doesn’t matter how much money you and your spouse earn. If you don’t have a budget, you won’t be able to move forward financially.

4. Consult each other when making “major” purchases:

Since everyone has different ideas on how they should spend their own money and you seize having your own money when you start a family, it’s important to consult especially on major purchases like cars, homes, expensive jewellery, etc. Consulting your spouse is important because it makes them feel valued as an equal partner in the marriage. Furthermore, there may be a better way to spend the money in question, and you wouldn’t know this if you don’t consult. Furthermore, you would want to be consulted by your spouse when he/she is making a major purchase so, do the same.

5. Set financial goals:

Budgeting isn’t enough since it focuses on how you should spend whatever you make. You need to think of growing your income as a couple so that you can afford the things you want in the future. Financial goals are critical for growth. They help couples avoid the stress associated with being stuck in the same social class for years. If you set solid investment goals now, you should be able to afford a house or new car in the future which eliminates financial stress in the future.

6. Review your financial progress periodically:

Having a budget and following it isn’t enough. You need to review your financial progress often to ensure you are on track. Furthermore, money discussions shouldn’t be confined to budgeting. You should also review the progress of your long-term financial goals. For instance, you should discuss progress on your savings and investment accounts. Reviewing your finances periodically helps to identify and solve potential problems. It also helps families focus on achieving their goals.

Summary

Most family problems revolve around finances. Most couples argue because of lack of enough money, misappropriation of money, dishonesty when dealing with money, name it! The above information highlights the basics of family finance every family should follow to avoid common family finance problems.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Unexpected Payments in Britain and How to Deal With Them

Unexpected Payments in Britain and How to Deal With Them

A new study by online lender MYJAR has revealed that unexpected payments have cost British citizens approximately £175 billion. According to the study which involved 2,000 participants, every adult Briton incurs £3,146 in unexpected payments over their lifetime. The study also reveals that the latest unexpected bill sets each Briton back £485 on average.

According to MYJAR’s spokesman, there are many studies on how much money people have, how much they save, etc. The study uncovers how unexpected payments accumulate over a lifetime to an incredibly high figure. The study also brings the importance of having an emergency fund to cover unexpected costs given that 50% of the respondents in the study stated that they were anxious about receiving unexpected bills. 10% stated they were extremely worried about receiving unexpected bills.

The study also revealed that the most common unexpected payments in Britain are absolute necessities such as expenses associated with a damaged washing machine or dishwasher. Parking ticket expenses are also among Britain’s top unexpected payments. The third most common expense is computer-related expenses followed by boiler, car damage, and dental surgery expenses respectively.

What’s more interesting is; more than 25% of all Britons adults have had to pay overdraft fees as unexpected expenses. This is a shocking statistic given the high fees associated with unexpected overdrafts. Pet related illnesses or injury also top the list of most common unexpected payments in Britain.

According to the study, Britons encounter unexpected payments at least three times a year, and 60% usually have no spare money to cater for the expense which forces them to spend money allocated for another expense. The study also revealed that 25% of Britons faced with unexpected payments struggle to pay bills that are £500 or more.

In an effort to take care of unexpected payments, most Britons turn to their savings, take short term loans like payday loans, borrow from friends and family or sell assets. From the study, it is clear that most Britons turn to friends and family first before taking short term loans or selling assets. 40% of the respondents in the study also stated that unexpected bills have left them struggling to cater for other necessities such as electricity, medical care, and gas.

Given the impact of getting unexpected payments, it’s important to forge a way forward. So, how do you deal with unexpected bills/payments?

Change your budget allocation: When you are faced with an emergency payment, your first step should be checking if you can change your budget allocation. If the expense is not as much, you can cut allocations from different expenses to raise enough money for the unexpected expense. You can slash your clothes, shoes or entertainment budget.

Split the cost: If the unexpected payment is too big to be catered for by re-allocating your monthly budget, you can consider splitting the cost over two months. Of course, this applies if you have the luxury of time to settle a payment. You can also choose to forgo something in your current budget for the next few months to raise enough funds to cover the expense.

Turn to your emergency fund: If you can’t change your budget allocation or split the cost, you can turn to your emergency fund. If you don’t have one, you should start thinking of setting one up immediately. Meanwhile, you can;

Take a payday loan: Payday loans are specially meant for taking care of unexpected payments/expenses. You can apply from a reputable payday loan broker like SwiftMoney to enjoy the best rates. Reputable payday loan lenders have the best lending practices as they are all authorised and regulated by the FCA. Apply online and get a payday loan within minutes.

Summary

Unexpected payments are increasing at an alarming rate in Britain. Most Britons worry about getting unexpected payments. Those that get them struggle to pay them. To avoid worrying about unexpected payments, you need to set up an emergency fund immediately if you don’t have one already. If your current emergency fund is inadequate, you need to refine your cash strategy and build a reserve that is capable of handling the most common unexpected expenses as well as other serious eventualities such as unemployment. Since you can never tell when you will be hit by unexpected bills, its better stay prepared.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Top Financial Scams in The UK and What You Should do to Protect Yourself

Top Financial Scams in The UK and What You Should do to Protect Yourself

Financial scams have been estimated to cost innocent UK civilians approximately £10 billion a year.

Top financial scams

Although there are very many types of financial scams in the UK today, “goods not received” scams are the most popular today. As the name suggests, such scams are characterised by customers paying for goods or services which they never receive. What’s more interesting is; only a fraction of the people who are scammed this way (approximately 30%) report the incidences. This is according to Natwest statistics. The same statistics also show that most ”goods not received scams” happen online in auctions as well as marketplaces.

Invoice scams are the most expensive scams against businesses in the UK. On average, every UK business which falls prey to invoice scams loses £30,000. The scams occur when businesses receive invoices that appear to originate from trusted partners but are actually fake. The scammers usually communicate new payment arrangements i.e. the business in question should settle the invoice by sending money to a new account which in reality is operated by fraudsters and not the partner. Invoice scams are the 4th most popular types of financial scams in the UK. The second most popular financial scam in the UK is the; Advance fee scam followed by spoof payment request scam. Holiday scams fall fifth place.

How to protect yourself from financial scams

Protecting yourself against “goods not received” scams
To avoid the most common type of financial scam online, you need to be very cautious about where you shop online. First and foremost, you need to shop in reputable online stores only. It’s also advisable to check item descriptions carefully. You should also read the dispute resolution policy of the online store or online marketplace in question carefully before paying. Payment should also be made via recognised official payment services like PayPal which have effective dispute resolution channels and never through direct bank transfers off-site.

Protecting your business against invoice scams

As a business owner, you should never settle an invoice without getting into contact with your trusted business partner first. This should be procedural especially when there are any changes made to your payment arrangements. Since fraudsters have to send you correspondence in invoice scams informing you of a new bank account among other payment changes, you should consider official communication channels only and get in touch with trusted partners to discuss any new changes.

Protecting yourself against advance fee scams

Advance fee scams are scams where you are expected to pay a fee before you take advantage of offers/opportunities. You should never pay to access any offers/benefits or loans such as payday loans. Advance fee scammers are usually after the advance fee which appears small compared to the goods, services, benefits or opportunities you are expected to enjoy. Career opportunity and loan scams are among the most common types of advance fee scams. In career opportunity scams, job seekers are required to pay some money to access great employment/job opportunities. Never pay to access job opportunities or other financial opportunities without assessing the validity of those fees.

Signs of financial scams in texts, calls, emails and websites and how you should protect yourself

Scammers have to get in touch with you to scam you. Here’s how to identify a scammer by their texts, emails or website.

Texts: Scammers love sending suspicious texts. For instance, you may receive a text informing you that your bank account has been blocked and the action you should take going forward i.e. call a certain number. Never text back or call the number on the text. Instead, contact your bank using the official phone number.

Calls: Financial scammers also love cold calling. To avoid cold calling scams, never answer calls from suspicious numbers. If you do, hang-up immediately. Never answer any questions from strangers to avoid giving out sensitive personal information.
Emails: Scammers also love emailing their victims. They pose as reputable website support staff and send emails requiring some action i.e. clicking on a link. If you don’t pay close attention to the emails you receive and open, you are at risk of falling for email scams. Pay attention to spelling mistakes in emails. Also, never click suspicious links, pop-ups or attachments to avoid downloading malware among other harmful software into your computer.

Use social media responsibly: You should also be careful about the information you post online on your social media profiles to avoid being scammed. You should avoid posting any personal information online for the public to see i.e. phone numbers, address, etc. If you have to post such information, make sure you secure your account accordingly. Ideally, you should never post anything that introduces privacy risks.
Install a good antivirus: Most financial scams today happen or are facilitated online over unprotected computers. Having a good antivirus can help you detect and get rid of malicious software used to steal personal data and launch scams.

Report scams: You also need to report scams to protect yourself from scams in the future. Most scammers don’t stop launching scams until they are caught, so it is important to report scams even if you haven’t suffered any loss. If you think you have been scammed or you are about to be scammed in the UK, get in touch with Action Fraud immediately by following this link: http://www.actionfraud.police.uk/report_fraud

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

What You Need To Know About Consumerism

What You Need To Know About Consumerism

Consumerism can be defined as an economic and social ideology and order that encourages consumption or acquisition of goods/services in a never-ending cycle. Consumerism encourages purchasing and consumption of goods and services in excess of a person’s basic needs.

In economics, the term consumerism is used to refer to economic policies which encourage consumption. In a consumerist society, people are bombarded by adverts, discounts, product launches, product giveaways among many other promotions meant to encourage constant and significant spending on goods and services. Consumerism encourages pursuit for the ”good life”. This may come at the expense of things like saving and investing.

History and rise of consumerism

Consumerism can be traced back to the onset of capitalism in the 16th century in Europe. Consumerism intensified in the eighteen century because of a growing middle class that embraced luxury consumption. The eighteen century also saw an increasing interest in fashion rather than necessity as a determinant for purchasing. The growth of consumerism can also be attributed to politics and economics. For countries to thrive politically and economically, capitalist competition for profits and markets had to be at the core of every country’s agenda. Colonialism has also been attributed as one of the major drivers of consumerism.

Colonialists had to look for markets for their goods by creating demand because there was supply. The industrial revolution also spurred consumerism as the number of consumer products increased in the market due to the increasing use of machines. Over many decades, buying goods/services became a way of life in Britain and many other parts of the world. The consumerist culture continues today. It encourages spending on consumer items like cars, clothes, shoes, and gadgets instead of saving and investing. Consumers buy goods and services to keep up with fashion/trends. The search for better goods is never-ending.

The rise of consumerism today is evident in both developing and developed countries. This can be seen in the mass production of luxury goods. The media is also saturated with advertisements. Personal debt levels are also rising globally which is an indication of more people buying goods excessively on impulse or without proper financial planning. Other evident signs of consumerism include product innovation.

Benefits of consumerism

1. Economic growth:

Consumerism drives economic growth. When people spend more on goods/services produced in a never-ending cycle, the economy grows. There is increased production and employment which leads to more consumption. The living standards of people are also bound to improve because of consumerism.

2. Boosts innovation and creativity:

Since consumers are actively looking for the next-best products/services to buy, producers/manufacturers are under constant pressure to innovate. As consumers access better goods/services, living standards improve.

Cons of consumerism

1. Environmental degradation:

Increasing demand for goods put extensive pressure on natural resources such as water and raw materials. Consumerism also results in the excessive use of energy. Consumerism also encourages the use of chemicals which are known to degrade the environment. In a nutshell, consumerism does more harm than good to the environment.

2. Moral degradation:

Increasing consumerism tends to shift away societies from important values such as integrity. Instead, there is a strong focus on materialism and competition. People tend to buy goods and services they don’t need so that they can be at par or at a higher level than everyone else.

3. Higher debt levels:

Consumerism also increases debt levels in a society. The number of people taking short term loans such as payday loans to buy luxury goods has increased drastically. Many short-term loans aren’t channeled into constructive use today.

4. Mental health problems:

Consumerism increases debt levels which in turn results in mental health problems like stress and depression. Trying to follow the latest trends when you have limited resources can be very exhausting to the mind and body. Consumerism forces people to work harder, borrow more and spend less time with loved ones. Consumerism gets in the way of fruitful relationships. It affects the overall well-being of people negatively in the long run since research has proven that people don’t get valuable and long-lasting fulfilment from materialism.

Summary

Consumerism has a good and bad side. Although consumerism drives economic growth and boosts innovation, it comes with a fair share of problems ranging from environmental and moral degradation to higher debt levels and mental health problems. Since we are already in a consumerist society, it is advisable to strike a healthy balance. A person’s love for the finer things in life should not come at the expense of his/her mental health and financial stability.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Consumer Spending Statistics in the UK: What Does the Average British Family Spend Their Money On?

Consumer Spending Statistics in the UK: What Does the Average British Family Spend Their Money On?

If you care to get accurate insights on what British families spend their money on, look no further. Below is a summary from the ONS (Office for National Statistics) in the UK. The information highlights family spending as of 2016.

Overview

According to the latest ONS statistics, the average weekly household spending remains at £528.90 for the year ending 2016. Most low-income households in the UK continue to spend a higher portion of their income on food and energy bills compared to high-income households.

Mobile communication costs have risen significantly. Over 50% of all the money spent by UK households on communication is spent on mobile phone related costs. Expenditure on tobacco, alcohol, and narcotics has fallen below £12 for the first time. Expenditure on restaurants and hotels has however risen by over £45 a week. This is the 1st time this has happened in 5 years. Below are important background spending statistics.

Total spending

Average spending remains at £528.90. However, when adjusted for inflation, spending appears to have increased but is not yet at the levels experienced before the 2007 economic turndown.

When you compare expenditure against other economic indicators like the GDP (Gross Domestic Product), output has grown steadily. The employment rate has also increased. The average earnings and median disposable income has also increased (after being adjusted for inflation). However, disposable income grew at a slower pace for the richest 1/5th households. The median income for UK’s richest households has fallen since the 2007/2008 economic downturn.

Inflation

The prices of goods and services affect spending patterns. Inflation shows the rate at which the prices of goods/services rise or fall. During the financial year 2015/2016, inflation as per the consumer prices index was significantly lower compared to the previous financial year. In fact, the UK entered a deflation period which simply means the cost of goods/services remained the same or became cheaper in 2015/2016.

Consumer confidence

Consumer confidence increased during the last financial year. The UK has been on an upward trend in regards to consumer spending since the 2007/2008 economic downturn. Consumer confidence has increased significantly since 2013.

Household expenditure according to category

The average British household spends the most on transport, housing, fuel and power bills. The average amount of money spent per week on transport in the financial year 2015/2016 was £72.70. The highest expenditure was on fuel costs i.e. petrol and diesel costs. Compared to the previous financial year, the average expenditure on transport remains unchanged. The overall spending on motor fuels decreased this financial year due to the drop in crude oil prices globally. Also, more Britons bought new and second-hand cars this year compared to last year. There was an increase in uptake of loans for buying new vehicles.

Britons spent the least on education i.e. £7 per week (1% of the total expenditure). Transport costs were the highest at £72.70 per week followed by housing, fuel and power costs at £72.50 (both 14%). The third highest expenditure was on recreation and culture at £68 per week followed by food and nonalcoholic drinks (£56.8), restaurant and hotels (£45.1), miscellaneous goods/service (£39.7), household goods and services (£35.5), clothing and footwear (£23.5) and communication (£16). British households spend £11.4 on alcohol, tobacco and narcotics and £7.2 on health.

Household expenditure according to region

London households have the highest average expenditure at £652.40 per week. The North East region has the lowest household expenditure at £423.50 primarily because of lower housing costs. The highest expenditure category for most regions is transport, housing, fuel, and power. As a result, it doesn’t really matter when you live in Britain. Most Britons spend most of their money on transport, housing, fuel, and power. There are however a few exceptions. In the North East, North West as well as Yorkshire & the Humber for instance, families spend the most on recreation and culture.

Other important spending statistics/information

The latest spending statistics indicate that low-income households spend more on food and non-alcoholic drinks. Most of the money spent on food goes to milk, bread, and groceries. While low-income households spend most of their food budget on basic groceries, higher-income households spend most of their food money on vegetables. In general, households with less income have less money to spend on nonessentials.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Top 5 Strategies For Reducing Investment Risks

Top 5 Strategies For Reducing Investment Risks

Most investments fail because people take in too much risk. So, what should you do to reduce risk when investing? Below are proven strategies regular investors can use to manage risk.

Strategy 1: Invest in financial education

Most people make investment mistakes because they don’t take time to invest in financial education. You can’t be a successful investor if you don’t know anything about investing. You can hire an investment professional to invest for you. However, you’ll need to a lot of money for such an approach to work. Financial education is very important. You need to know why investing is important in the first place. You should also know the different types of investments available to you among other basics. Financial education helps you make informed investment decisions. You may not become an investment expert yourself by studying basics, however, you will be able to avoid common investment mistakes made by most people if you are financially literate.

Strategy 2: Choose investments you are familiar with/passionate about

Another great way of reducing investment risks is to invest in opportunities you are already familiar with or passionate about. Sometimes it may take a lot of time, effort and money to get adequate financial education. If so, invest in an opportunity you are familiar with or passionate about. It could be anything really. It’s easier to set up a business revolving around your passion or something you know a lot about rather than attempting to learn something new from scratch. Remember, risks emerge mostly from the unknown so, choose investments that you know much about or have an unmatched interest in.

Strategy 3: Take the relevant insurance

One of the best ways of managing/avoiding risk is taking insurance. The insurance industry in the UK as well as globally has countless insurance covers that take care of all types of risks imaginable. If you are investing in rental housing, for instance, you can take loss of income insurance to cover you when you don’t have tenants. Such a cover eliminates risks associated with having empty rental units especially when you are servicing a loan. Before you start investing, shop for relevant insurance products that can help you reduce risk.

Strategy 4: Start small

You can also reduce investment risks by starting small. This strategy is perfect when you don’t know much about the investment opportunity you want to pursue. When you start small, your risks are also small. Your financial stability stays intact regardless of the outcome. You can then grow your investment when you can handle more risk.

Strategy 5: Focus on organic growth

This strategy is perfect when the investment in question is a business. Most people make the mistake of growing ahead of the actual business. According to most investment experts, you should allow your business to grow organically if you are keen on avoiding risks such as lack of customers. For instance, you should take a loan to expand your business when you have already started your business and noticed the demand for whatever you are selling is increasing. Taking a loan to expand a business when there is no demand for your products/services exposes you to a lot of risks.

Strategy 6: Reinvest profits

It’s less risky to reinvest profits instead of borrowing a loan to invest. When you take out any loan, there is always the possibility of being unable to repay the loan for reasons that may be beyond your control. To avoid such risks when investing, consider reinvesting investment profits first before you think of investing using a loan.

Strategy 7: Diversify

Diversifying is one of the best ways of reducing investment risks although it might reduce your ROI. Concentrating on one investment opportunity is bound to increase your profits. However, it comes with immense risk. Considering anything can happen, your financial future should not be at the mercy of one investment avenue. You should invest in many markets to reduce risk in case one market crashes.

Summary

Incorporate the above strategies when investing and watch your exposure to risk decrease drastically. Many people expose themselves to investments risks by being financially illiterate. Many people also land into investment problems because they fail to start small, take insurance, focus on organic growth and diversify. It’s also advisable to consider reinvesting profits before you take out an investment loan.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.