Browsed by
Author: Katie

Kate is a finance blogger and currently works for one of the big high street banks. In her spare time she likes to educate people on finance and business matters. Married with 3 children she enjoys travel and family time when not in the office.
With Low Interest Rates, Does It Make Sense To Pay Off Your Mortgage Early?

With Low Interest Rates, Does It Make Sense To Pay Off Your Mortgage Early?

For the past six to seven years, mortgage rates have averaged less than 5%. Many argued there’s no better time to pay off your mortgage than now, especially in an economy that is unpredictable.

It is an appealing proposition as you’re able to shave off significant amounts on your balance if you pay earlier than scheduled. That would after all, seem the goal of lenders: to encourage borrowers to reduce their monthly payments with lower balance payments.

For example, using your mortgage calculator, if you’re on a £150,000 repayment mortgage at a consistent rate of 3.5% spread over 40 years, but choose to pay a reduced payment period of, say 25 years, it will cost you £225,300, instead of £279,000. That means you’ll save a hefty £170 on monthly payment!

Really, no one wants to be indebted longer than necessary and watch it accumulate with interests over the years. But even if you have some free money lying around or got some financial windfall, paying off your mortgage early isn’t always a smart decision. Besides, it could leave you financially drained or left with limited liquidity.

So, if you’re considering offsetting your mortgage balances early, here are reasons why you should review the plan.

Pay off Your More Expensive Debts First

Mortgages are called ‘good debt’ for a reason. They are properly spaced out for convenience and ease of payment, very much unlike credit cards, store cards or unsecured loans with significantly higher interest rates that cost you an arm and a leg.

You should focus on offsetting your more expensive debts that costs you a lot to pay over a long time.

Invest Any Free Money into Your Pension Scheme

Rather than pay off your mortgage from any extra saving or free cash you’re fortunate to get, why not put it in a scheme that rewards you better and helps you save more in the long run? For example, the pension scheme is tax-efficient because the government contributes to your savings while also offering you tax relief.

If you don’t have a pension plan and have some money to spare, you should think of opening one or let your company set up one for you and then invest the money there. Your employer is also obligated to contribute to your pension. This way, your pension savings will double and you could guarantee a more secured future.

Check to See if There are Better Options on Savings Rates

Investing your money into a pension scheme is great idea. However, take your time to review your existing pension plan to see if it’s the smarter option or if it’s better to explore other savings options. That is if the savings offers you a better deal than what you’re paying on your mortgage. This is the time to do your math and make comparison, after factoring in tax deductions on savings.

Millennial? You Should Be Thinking About These Financial Investments Now

Millennial? You Should Be Thinking About These Financial Investments Now

Saving isn’t always attractive or accessible for young people because of the competitive job market and huge debts loans to be offset by graduates. But with good counsel from a trusted advisor and the prospects of investing early, a young person will find that securing their future happiness and comfort starts now.

Here are tips to guide you for your first investment steps.

Find a Trusted Financial Advisor and Start Investing Now

If there was one thing the global recession ever taught millennials, it is that they can no longer put off savings and that they should form a habit of investing for the future early.

But if it is your first time of dipping your toe in the world of savings and investments, it can be overwhelming deciding which choice to make from mutual funds to stocks and bonds or how to appropriately diversify your portfolio.

The natural temptation is to seek advice from your parents, friends, colleagues or older relatives, but their judgments may – unknowingly to both them and you – be clouded. Find a financial advisor you can trust and who can give you professional and unbiased counsel that fits best for your demographic and specific needs. The goal should be to secure your future, while insuring your financial health for today. For example, the investment strategy or priorities your trusted advisor will outline for your demographic will be different from the advice the give to an older, more established person.

Get Out of a Job that Leads to Nowhere

Does your job match your life or investment goals? Or do you feel trapped in a cul-de-sac that drains your time, energy and creative juices and leaves you high and dry every week without commensurate compensation, bonuses or raises? Then stop wasting your time, get out of the ditch and shop the market now for a better option that allows you to invest in your future.

Match any Income Raise with a Raise in Your Savings

If you do get a raise or bonus, don’t splurge on new luxuries or turn up the volume on your lifestyle. Rather, it is the perfect opportunity to better secure your future with an increase in your retirement savings, find out about funeral plan costs to prepare for unseen events or add contributions to your investment portfolios.

Invest in Yourself

Take advantage of the stacks of useful resources and information available on the web and elsewhere and improve your knowledge to get ahead in the ever competitive market. You can learn new skills that will allow you to start a new business or add new streams of income to boost your financial muscles.

Avoid the Credit Card Temptation

When you graduate from the university, you’ll often be inundated with credit card offers. But it’s better to skip them, especially if you still have students loan to pay off. Otherwise you will get trapped in a dizzying cycle that holds you back from your financial goals.

6 Simple Solutions to Your Payment Problems

6 Simple Solutions to Your Payment Problems

If the title of this article caught your eye, you’ve probably experienced payment problems. As a business owner, you know that payments, whether coming or going, do not always take place easily. Small payment problems can give you a headache while larger ones make your life downright miserable. As you and your company continue working on payment improvement, here are six simple solutions to consider.

More Payment Options

Imagine if your business only accepted cash from customers. You are hopefully chuckling at the thought. Credit and debit cards have been a mainstay for years now but even more options are becoming common. Beyond cards and cash, customers have mobile devices with payment options like Apple Pay and Google Wallet. No-touch mobile payments and direct mobile billing are becoming popular as well. The more payment options you can offer your customers, the more convenient their experience with your company will be. That will fundamentally result in more business.

Automatic Invoicing

As your business grows, invoicing becomes increasingly difficult. A growing customer base and varying levels of services provided can make manual invoicing a nightmare. That is where automatic invoicing comes in. This not only helps your business, but also your customers. They are not left guessing how much they owe, when their payment is due or when their invoice will arrive. This results in a better customer experience and increases the likelihood that you will be paid on time.

Handling Human Error

Mistakes happen. Challenges that you are all too familiar with include missing payment deadlines, paying too much or not paying enough. Human error issues cannot be completely avoided. But, there is a way to help your business handle this problem with more efficiency and less frustration. One software that businesses are benefiting from is automated Bacs payment software. Bacs allows payments to be made and received automatically. It also notifies you of potential issues ahead of time so that you are not left with any unwanted surprises.

Automatic Messages

As you gain more customers, it becomes harder to contact them when there are payment problems. You need a secure and efficient way of reaching your customers in this case. It is important to find a recurring billing system that can notice errors in customer transactions and relay a message to the users. Your customers enjoy being brought up to speed quicker too.

Better Payment Security

The security of transactions for your customers and business is more of a concern now than it has ever been. Every day, new stories surface of security breaches when it comes to customers’ private payment information. Understandably, you do not want to experience something like that. Always make sure that there is a secure connection between your company’s web browser and that of your customers. It is also of vital importance that your process is PCI-compliant so that the credit cards of your customers are not compromised.

More Currencies and Languages

As the world continues to get smaller, transactions between different countries are becoming more common. Eventually, you may have to consider accepting different currencies and assisting your customers in a variety of languages. If you fail to adequately do this, you could lose customers. If you allow customers to pay in their own currency, they will be less apprehensive about using your services. Finding a system that can handle different languages and currencies will help your business continue to expand.

In Summary

The fact that you need more complex solutions to your company’s payment problems is a good sign. It means that you are experiencing the necessary growing pains in becoming more successful. You can have the confidence to know that, in time, you will find adequate solutions to your payment problems. Hopefully some of these solutions may help you work towards a more efficient payment system.

5 Lesser Known Money Saving Tips for Motorists

5 Lesser Known Money Saving Tips for Motorists

Owning a vehicle in today’s economy can be a major financial drain, forcing motorists to double up as thrifty experts as well as their duties as considerate drivers.

Whichever vehicle you drive, you have the chance to make excellent savings by turning to cost-effective techniques. In this article, I’ll highlight some of the lesser known pieces of advice which may help you make the most of your budget, as well as you save time, and allow you to learn more about how to make the most of your circumstances.

  1. Fuel Saving Advice

No matter how fantastic and expedient modern vehicles become, the reality is you will still have to intermittingly find a petrol station to fill up on fuel. To delay this inevitability, the trick is to use the right techniques to make sure you save on fuel and add more mileage.

There are simple tips such as ensuring your vehicle isn’t overloaded. Superfluous weight means your vehicle isn’t performing as well as it should be and you will be wasting fuel. Additionally, the higher the gear you’re driving in the better the fuel efficiency, so bear this in mind when out on the road.

A few other pragmatic tips will ensure you become fuel efficiency experts. Double check your tyres are at the right pressure (turn to your manufacturer’s booklet for details) for your vehicle model, and be aware anything which drains your vehicle’s battery (charging your smartphone, the radio, using your air conditioning) will lead to more wasted fuel.

You can learn more about this from industry experts such as Shell, who helpfully provided details about 10 Fuel Saving Tips.

  1. Compare Insurance Quotes for the Best Deal

There are many free online tools which will let you compare insurance quotes. This can help you find the right deal for your budget. As insurance is one of the main annual costs for any motorist, it’s important to ensure you’re with the right company. Experts claim by making a comparison 51% of motorists could save up to £256 annually, which is a strong impetus for anyone to head out and have an online check-up.

  1. Try Mobile Tyre Fitting

This highly convenient and time saving service is becoming an increasingly popular option for today’s motorists. Rather than having to find a garage and sit around waiting for your fitting, these services bring the garage straight to your front door.

As a result, mobile tyre fitting offers excellent value for money (as well as a great deal of saved time) as it often comes with a free fitting and in most cases you only have to pay once your vehicle is set up with new compounds. Add in to this other discounts (such as brand membership offers) and a complimentary balancing of your wheels, and this really is the future for all of your tyre changing needs.

  1. Pick the Right Tyres

Up to 20% of fuel consumption on cars due to tyres. Which makes it important to understand what you’re putting on your vehicle. Compounds and tread patterns are becoming increasingly advanced as the world’s leading manufacturers have developed technology which ensures your tyres become environmentally friendly and offer ever improving durability.

When you’re buying a new tyre, take the take to look into which ones offer enhanced durability and fuel efficiency. Longer lasting tyres typically decrease rolling resistance and ensure less fuel wastage. This offers excellent annual savings for motorists.

In addition, swapping to the right seasonal tyre can help you save extra money by having the optimal vehicle performance. For instance, winter tyres fitted during winter months will provide you have the best braking, grip, handling, and fuel efficiency.

Another option is to fit specialist tyres such as run-flats. “Changing a tyre at the roadside can be a thing of the past”, Continental claims, with its compound providing drivers with a quick repair option. You can then drive to your nearest garage at speeds up to 50mph to get a replacement, all with a tread pattern which has been manufactured to ensure fuel efficiency.

  1. Drive Efficiently

Finally, whilst it may be tempting to floor it in certain situations and pretend you’re an F1 driver, the best way to drive road cars, vans, and SUVs is with a smooth driving style. Being ragged and convincing yourself you’re the next Lewis Hamilton isn’t a good way to save you money on your annual budget.

To get from A to B, adopt a smooth driving style which doesn’t involve dramatic accelerating. Change gear steadily at around 2,500rpm and build your speed up gradually – with your tyres maintained at the right pressure, this will help ensure you keep fuel efficiency and your tread patterns in good shape for many financial benefits.

Finance Advice that Could Benefit You in Later Life

Finance Advice that Could Benefit You in Later Life

With the UK economy still in recovery and a volatile stock market, many people are more concerned than ever about securing their financial futures.

Whether you are just starting your career or looking to retire in a few years, there are steps you can take that may pay off down the road.

The following is essential financial advice that could benefit you in later life.

Know Where All Your Money Goes

This starts by making a detailed monthly budget and sticking to it.

There are all kinds of apps and programs available for organising your finances.

Simply making a budget and paying attention to it on a regular basis will cause most people to more carefully evaluate their spending habits.

Many people are amazed to see just how much they spend each month on non-essential items when everything is carefully tracked.

Spend Less Than You Earn

While this may seem obvious, it’s extremely difficult for many people to live by.

Living within your means will translate into avoiding most types of debt, not paying high interest rates, and being able to save consistently until retirement.

Spending less than you earn will be a lot easier after making a budget and knowing exactly how much income you’re bringing in and what expenditures must be paid each month.

Save for Retirement

Whether you’re 23 or 53, you should be considering saving for retirement.

It’s not too early to start, even if you’re in your twenties.

Start an IRA and contribute the maximum amount. Once you’re past 50 the amount you can contribute increases.

It’s important to think about taking advantage of every financial opportunity, especially taking a look at the pension options available in your workplace.

The advice is often to contribute as much as you can to these types of employee based retirement programs – but be sure to be well informed before making a commitment.

Pay off Debt

It should go without saying that it’s smart to carry as little debt as possible.

So which should be a priority, saving or paying off debt?

Mathematically it almost always makes sense to pay off debt before adding to your savings.

This is especially true of high interest debt that can’t be deducted on your taxes. On the other hand, paying a traditional mortgage loan early will only reduce the outstanding principal and the interest.

Paying extra won’t lower your overall monthly payments, which is what happens with most credit cards when you pay down the overall amount.

You should also pay off private student loans before government loans.

Diversifying Investments Can Be Safer

Not having all your eggs in one basket often means your money is safer.

It’s usually recommended to have a variety of assets that includes cash investments, stocks, and bonds. But even within these primary groups diversity can help.

For example, you could include both corporate and government bonds in your portfolio.

There could also be bonds with different maturities and ratings.

Diversifying can also mean investing in real estate or even a hobby such as collecting art.

It’s sometimes a good idea to have tangible investments that don’t rely on the volatility of the stock market.

Make an Appointment with a Financial Advisor

This is often the first step many people take when getting their finances in order.

Knowing what types of debt to carry and which investment plans are right for each individual isn’t always easy to determine.

It’s important to choose an advisor with extensive experience working with a variety of clients, but equally looking for a company that clearly cares about its customers is important.

Social media can be a great way to find financial advisors so look for companies that regularly post useful information and have a big, engaged following. A quick look on Facebook returned Fisher Investments in the UK, a finance company who has over 10,000 followers and post commentary on current economic conditions. You can also look to financial publications, like the Financial Times, who post their top-rated advisor list and timely news articles. It’s information like this that can help finding information when looking for an advisor that fits your financial needs and goals.

You can also look to financial publications, like the Financial Times, who often post top-rated advisor lists and timely news articles. It’s information like this that can help finding information when trying to find a suitable advisor.

Appropriately managing your income can allow you to remove the stresses of debt and pension concerns when you retire, so start making a plan and apply the advice that is most suitable to you, your work and your lifestyle as soon as possible.

Alternative Funding Options for Your Business Venture

Alternative Funding Options for Your Business Venture

You probably guessed it – the option to which business venture funding alternatives are most sought is getting a bank loan. While making for a seriously bitter pill for entrepreneurs with a bright idea to swallow, the bottom line is that in order to get financed by a bank, especially for something like a business venture, you pretty much just have to prove to them that you don’t need the money you’re trying to borrow from them. That’s perhaps a huge contributing factor to the failure of many businesses which showed a lot of early promise. It’s perhaps also the main reason why many entrepreneurs take their potentially world-changing bright ideas to the grave.

There are however some alternative options for funding your business venture, most of which are actually much better than anything the bank would offer you in any case. Sadly though, entrepreneurs tend to turn to these alternatives only when they’ve been shot down by their favourite traditional bank.

Angel Investors

I’d personally say that angel investors are the best choice for seeking funding for a business venture or for the development of a new idea. This is because angel investors can sympathise with the up-and-coming entrepreneur, qualifying as angel investors by virtue of having been up-and-coming entrepreneurs or founders themselves. Still, if an angel investor doesn’t go on to give your idea or business the thumbs-up, it doesn’t necessarily mean it’s a bad idea which won’t work. There are many angel investors who just get sick at the thought of having turned down an opportunity to invest in a start-up which has since blown up beyond their wildest imagination.

Angel investors will generally point you down other avenues of getting funding if they themselves aren’t in a position to invest as well, so never pass up on an opportunity to solicit funding from an angel investor.

Crowdfunding Platforms

Crowd-sourcing start-up capital for your business venture is perhaps right on par with getting an angel investment, with the only area in which I think it falls short being that of an angel investment effectively coming with the mentorship of the angel investor, someone who is likely an experienced entrepreneur themselves with lots of insight to share and an established network to help grow your business through. Otherwise crowdfunding as a means through which to source capital for your business is a very popular way for new businesses to get up-and-running. Contributors come in various shapes, forms and sizes, some of which will just contribute outright without expecting any form of ownership or return on investment.

CSI (Corporate Social Investments)

Corporate Social Investments make for another great banking alternative to getting some funding for your venture. Their only drawback is that a legitimate CS Investment is extremely hard to come by. Essentially, companies which would otherwise be subjected to hefty taxes look to off-set paying such high taxes by giving away money to fund the development of other businesses, companies, start-ups, communities, etc. With this particular method of getting funding for your business, the hard work entails building up networks and then getting identified as a possible candidate for a CSI. You’ll probably have to wait a very long time to get any indication that you may possibly be in for such an investment, which would probably put the brakes on the development of your idea or the growth of your business while you wait.

R&D Tax Breaks and Rebates

If your idea or core operational structure of your business falls in line with anything the government has earmarked as a targeted area of development, perhaps the funding you so desire can come in the form of a Research and Development (R&D) tax break. What happens is as a result of the outcome of your idea or business possibly solving a problem the government has or one which will address the needs of a very large number of people, the government provides the funding for the research which goes into the development of that idea.

R&D tax breaks are also quite hard to come by, something which is attested to by the fact that you probably have to go through a traditional financial institution like a bank to apply for R&D tax breaks and rebates.

Exploring the Financial Lifecycle of a Cash-Cow Industry

Exploring the Financial Lifecycle of a Cash-Cow Industry

In every generation there’s at least one event or one product which changes things around completely, making a few people extremely wealthy while spawning a lot of secondary markets which run parallel to whatever that major paradigm shift is. It happens in just about every area of our lives, from solving a problem which is associated with our basic needs to even something like entertainment.

Major events, discoveries, inventions etc. such as oil, the VCR machine, the internet etc. are perfect examples of such paradigm shifts. The development of a major cash-cow industry often takes place within another major paradigm shift, such as social networking as one way in which the internet developed, or fuel to power our cars as a way in which the discovery of oil was developed. With regards to the financial lifecycle of these major cash-cow industries, an understanding thereof could perhaps help you become a better investor if you have some money set aside to perhaps take a chance on industries falling outside of your regular way of earning a living.

Stage One – The Initial Boom

The initial boom stage of a major cash-cow industry is often just a precursor to what will effectively be a second boom, where all the real money will change hands. Let’s take the internet as an example – when the internet first really took shape, it was nothing more than a network of connected computers and the very idea fascinated only a few geeky people in the entire world. No serious money really changed hands during the initial growth phase of the internet and investors weren’t exactly queuing up to “invest in the internet.” The only money which can be directly associated with this stage is that of early adopters who sort of see the new paradigm as something which they just enjoy exploring, entertaining and developing, or indeed something which they can develop into something really useful in future. This leads us to the next stage.

Stage Two – The Explosion

When someone finally makes use of the discovery, paradigm or invention to create something really useful, a financial explosion of sorts takes place. This leveraging of the original paradigm to create something that explodes into popularity can take any form, but the most common form is if it solves some sort of problem. Sticking with our example of the internet, you can think of the Google search engine (now part of the parent company called Alphabet) as a great example of someone (or two guys) taking the original invention of the World Wide Web and creating something which solves a problem and goes on to become a runaway success.

This is when the true power of the original invention or original idea / discovery / paradigm comes into focus as something which can be really useful – something which has some real power, during which time a lot of investment comes pouring into this and other similar developments. It essentially becomes a race against time and a competition to see who will ultimately “get it right” and explode into prominence. This is when to place investment bets because you can make some serious cash if the development you bet on eventually goes on to list or perhaps gets acquired.

Stage Three – The Derivative Phase

Operating within patent laws, the main paradigm which proves to be popular naturally sparks some competition, in the form of developers trying to develop a better product which does the same job, but one which will be in direct competition with the most popular product. Think Yahoo and Bing which tried to take on Google to dominate the search engine market. There were many other search engines as well, but I mean we can only declare one clear winner.

Stage Four – The Peak

At this stage it’s perhaps too late to look towards investing because the only real way you can do that is through buying stocks, which are already expensive and have already made a lot of people rich. Some cash-cow industries die out at this stage, while others like Google diversify and explore other avenues through which to reinvent the cash-cow and keep the profits flowing in. If you’re lucky, you can still make a lot of money through these diversifications.

Investing Vs. Trading

Investing Vs. Trading

Due in large part to the booming online trading market, people often get confused about whether what they’re doing via their online platform of choice is in fact trading or investing. The lines become blurred a bit when brokers operating an online trading platform offer both of these financial instruments with which to buy and sell securities.

The lines are blurred further when one takes into account the fact that someone using these financial instruments can indeed be both a trader and an investor at the same time, with a single transaction effectively doubling-up as being a trade and an investment at the same time. Fundamentally however, there is a difference between trading and investing and there is a difference between a trader and an investor.

Investing

It’s perhaps pertinent to start off with investing because trading is essentially a spin-off of investing. An investor is fundamentally someone who takes a long term view on putting their money into something from which they expect or predict some growth – growth which will hopefully result in some financial success in the future. So even if you make use of an online brokerage platform from the point of view of an investor, your outlook is generally a long term one, which means you would buy shares in listed companies (stocks), commodities or some sort of stake in a company or venture with plans to only really cash-in properly once some growth has taken place.

Trading

Trading generally takes more of a short-term outlook in that a trader essentially seeks to take advantage of the immediate movement in the markets. The typical instrument offered to traders online is that of Contracts For Differences (CFDs). CFDs are precisely what is written on the tin – a contract you enter into as a result of your prediction of whether or not one or more share prices you’ve selected to bet on are going to increase in value or decrease. CFDs are precisely why there’s been a recent explosion in online trading platforms, quite simply because the brokerage sites don’t really own anything and they don’t produce anything either. So it’s just a matter of going through the requisite compliance processes to qualify as a broker and then make some insane money charging people commission for each trade they make.

Intraday traders are perhaps the most common types of traders, who are naturally drawn to volatile stocks so that they can take advantage of the constant movements of the values of those stocks.

So Which is Better – Investing or Trading?

In my expert opinion as someone who works in the financial industry, I’d honestly proclaim investing to be a better option, but only if it was a question of either-or. Investing is better in my opinion because if you look at the All Share Index of any stock exchange in the world, generally such a portfolio of shares increases in value over time. Your earnings would naturally be slow in this way, but they’d also generally be steady earnings which can be as good as beating inflation at times.

So even if you seek the thrill of the intraday trader and you have a preference for making (or losing) money quickly, your trading efforts should be complemented with a good portfolio of investments. That way, you can benefit from investor-advantages such as earning dividends on certain stocks you hold, while your trading efforts could play off on your investment portfolio to hedge against what would otherwise be serious, fast losses while you’re chasing your next short-term trade.

Ultimately, mixing things up is the way to go, but I seriously wouldn’t recommend for anyone to put all their eggs in the trader’s nest.

Is it Worth Getting into Cryptocurrencies?

Is it Worth Getting into Cryptocurrencies?

If you had invested in perhaps the most popular cryptocurreny, Bitcoin, a mere three years ago or so, you’d be smiling right about now because Bitcoin has indeed grown quite nicely in its valuation against fiat currencies. There are many other cryptocurrencies which are fighting for their share of the market, all making use of what appears to be a revolutionary way of making use of the rather simple concept of a publically available ledger, otherwise known as the blockchain.

There was indeed a recent blip in the otherwise upward trend depicted by the valuation placed on Bitcoin specifically, but otherwise this seems to be the future of finance – well certainly in the minds of a lot of people who complete a lot of their trades and transactions online. The main idea is for there to be some sort of independence from the central banking system which largely governs the entire world’s financial system, so if for instance you want to buy something from someone or you want to sell something to them, there is no involvement of the banks and other financial institutions, which means there are no service fees.

What it also means is that there’s no one on the other side who could possibly delay or completely block a transaction between two parties who agree on the terms of the transaction, so naturally one would generally see a future for such technology. I’ll let you in on a little secret too – the blockchain’s use for payment channels such as Bitcoin and other cryptocurrencies has the big players in the financial industry losing some sleep over what appears to be a monopoly on the procurement of money. Cryptocurrencies are definitely seen as a bit of threat to the institutionalised financial sector establishments, but since the value of digital currencies such as Bitcoin is measured against fiat currencies, for now these institutions can rest easy.

While there’s definitely a future for cryptocurrencies, the burning question is indeed whether or not it’s worth getting into the game at what seems to be such a late stage.

Well, the short answer is yes, definitely, you just have to be a little bit clever about it. Mining is definitely out of the question, unless you’re targeting emerging cryptocurrencies. Even if you team up with other miners to better your collective chances of discovering some new Bitcoins, it’s really getting harder and harder to uncover new cryptocurrencies and the hardware you have to purchase (miner) to start mining is expensive to buy and expensive to operate. It consumes a lot of power and will plough through your data, while you’ll honestly hardly see any success in mining new cryptocurrency units. If you want to take a bet on emerging cryptocurrencies through mining, that alone isn’t enough to justify the cost of running a cryptocurrency miner all by yourself.

The good thing about cryptocurrency miners, if you get the right one that is, is that you can use it for many other purposes related to the fundamentals of blockchain technology. These uses are beyond the scope of this particular post, but all I’ll say is that it has a lot to do with validating “stuff” like transactions and records by way of a public ledger.

At this stage it can still be worth getting into cryptocurrencies however, but either by direct investment or trading, or by pooling your money with investing clubs that specialise in cryptocurrencies. Bitcoin itself is forecast to reach figures of over $1000 per coin unit in the near future, so it’s perhaps worth a punt if you are indeed looking for some short term gains, otherwise it’s still worth a punt if you’re looking towards long-term gains.

Just keep in mind that there is an originally intended purpose for the development of cryptocurrencies and the blockchain technology they use, which is to decentralise the financial service involved with buying and selling.

Online Trading – Who Makes the Real Money?

Online Trading – Who Makes the Real Money?

Have you noticed how over the last couple of years or so, there seems to have been a serious spike in the number of online trading platforms? In addition, more airtime on business channels seems to be allocated to shows about trading and investing, particularly trading and investing in the stock markets, whether directly (buying shares) or indirectly (trading derivatives). It’s not just a coincidence and good on you if you have indeed noticed what seems to be a serious drive to get people to invest their money in the Stock Exchange.

The truth is you’re still effectively taking a chance if you invest in the financial markets, whether as an investor who’s buying stocks outright or if you’re a trader seeking to take advantage of the liquidity of the markets (the short-term movement of the value of shares). While a lot of people make a lot of money playing the markets in this way, a whole lot more lose a lot of their money.

It’s perhaps a bit of an overly simplistic way of putting it, but it’s true that for every winner there has to be a loser. In the case of Contracts For Differences (CFDs) which are essentially derivatives, and I suppose in the case of outright shares investing as well, this view tends to be markedly skewed against the majority. For every big winner there are effectively a lot of losers, many of whom only lose a little bit of their money at a time and so don’t really feel the losses in the grander scheme of things.

The biggest winner however is the house and I refer to it as being the “house” because quite frankly, online trading is not unlike gambling. Nobody can ever say with absolute certainty whether or not a particular stock is going to go up or down. The only people who have this type of information are those operating on the inside and they’re not allowed to make use of it to trade as that would equate to insider trading, which is a criminal offence.

But yes, the biggest winner is indeed the trading platform over which everybody is chasing their own personal profits – the broker. It’s as simple as this – for every trade that is executed by each trader, whether buying or selling, the online trading platform (broker) charges a fee, so they are the ones who make the real money.

Imagine a scenario where just a modest total of 2,000 trades are made in just one hour, which is not uncommon. Say the broker charges what appears to be a very low service fee of $2 per trade. That would equate to $4,000 made in just one hour, better yet (for the brokers) if those were derivative trades such as CFDs.

The broker holds on to the value of the real shares they own, while derivatives traders slug it out over whether or not the price of those shares is going up or going down.

I’m in no way trying to discourage anyone from chasing their personal fortune through trading, but perhaps investing in brokerage companies themselves (getting a share of the ownership of an online trading platform) is a better avenue to pursue if you want a little bit more of a predictable manner in which to build up some good earnings. So I’d encourage investing in an actual start-up brokerage over the act of trading itself, although I must add that it is indeed possible to make some good money as a trader or an investor in shares. For many people, trading is just a convenient way of catering to the high risk portion of diversifying their investment portfolios.