Browsed by
Category: Business

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.

What to Look For in a Broker

What to Look For in a Broker

If you’ve ever watched the Wolf of Wall Street, you might be forgiven for not placing any trust in brokers because they’re just out to make you move your money so that they can make commission, right? Well, while that is true to certain extent, it largely depends on which financial service you’re looking to purchase. Even if somebody cold-calls you offering you a “once-in-a-lifetime opportunity” to invest in some product you “simply can’t do without any longer,” it doesn’t necessarily mean they’re out to just get a chunk of your money while it changes hands.

Yes, brokers do essentially make money through commission, but believe it or not, you can get a good broker if you know what to look for.

Once-off Commission Structure

Brokers are generally supposed to be there to make your life easier in terms of any investments you may want to make, be it to buy medical insurance coverage, household or auto insurance or if you want to invest some of your money with the view of multiplying it through some passive earnings. Brokers are also there to make the lives of financial service providers they’re recruiting for easier, so they’re essentially middlemen who bring clients together with the financial service provider.

That’s precisely the place you need to look in order to ensure you’re dealing with a good broker – their remuneration structure in line with the financial service provider they’re representing. Generally, if it’s a once-off commission structure, the broker is likely to be a good one because their bread and butter is dependent upon them building up a reputation for themselves. So every new client will likely look at that broker’s track-record to make a decision on whether or not to act on the advice of said broker.

If the commission structure is more like what is discussed in the Wolf of Wall Street, where the broker earns a commission each time they complete the equivalent of “making a trade for you,” it’s very easy for that broker to shift over to the dark side and just push to have you making as many of those trades as possible. So this would likely be that type of broker who approaches you with the prospect of you investing your money.

It goes a little deeper than that however because if a broker operates on a perpetual commission based structure, they aren’t necessarily bad. You can always stop investing through them if it becomes clear that all they’re pushing for is for you to give the thumbs-up for your money moving from one investment to the other so that they can earn their commission. The distinction to make in this instance is whether or not the broker is independent of the financial service provider they’re representing or if they have a vested interest in the form of some or other ownership.

Otherwise some common sense should apply in choosing a broker, with your due diligence in selecting one perhaps including somewhat of a background check. What are other clients saying about this particular broker? You need to ask some specific questions, like whether or not the terms they negotiated with an insurer for a client worked out well for that client when they filed a claim, for example. If a broker wants to rush you into making an investment, it’s perhaps a sign that you should rather look elsewhere.

Shouldn’t ALL Economists Be Rich?

Shouldn’t ALL Economists Be Rich?

I remember back at Uni, during my first year when I’d actually enrolled for an engineering course before switching to commerce, a young lad quite rudely asked the calculus lecturer just what on earth we were being taught during a specific lesson would help us with in our application of that “knowledge.” That guy (who’s probably a fully qualified engineer by now) went on to shape my entire professional life as that’s perhaps the defining moment which made me question just what I was doing there, learning about integration and what not. Perhaps he’ll never know it, but he definitely contributed to me being in the financial industry.

I must say that that wasn’t my final encounter with calculus in some form or the other, because in the actuarial sciences (which form only part of my profession), we did indeed learn about integration and the likes, but with more of a theoretic feel to it so as to help develop and maintain the various financial systems used throughout the entire financial industry. If it’s all about making money, I really thought that the best way to do that was right in the middle of the financial industry, and so I said goodbye to what would have been my engineering degree.

Anyway, questions around the education we pay so much money for keep haunting me to this day and I often sympathise with people who ask questions like “Shouldn’t all economists be rich?” I mean they’re all experts in their field, which is the field of how the financial sector works. Economists have all the inside knowledge, don’t they, and so they should know how to take advantage of this knowledge to make themselves wealthy?

You see them featured on all those business and money shows, giving their expert opinion on what the market is going to do. Some are even willed to pick what they deem to be hot stocks or hot investments which they believe will be the next biggest movers of the market, as possible cases for the eager onlooker to make a bit of money for themselves. I can’t count how many times an economist has gotten their predictions horribly wrong however, which brings us back to the question of whether or not all economists should indeed be rich.

With a strong scientific background as well, I’ve often questioned the inner-workings of the financial system myself, wondering whether or not is should follow more of a scientific methodology. What I discovered though, through my ground-level experience working in the financial sector, is that economists and pretty much anyone else working in the financial industry gets equipped with fundamental knowledge of how the financial system works. Just like economists, we all study what is essentially the “science” which drives the operation of the financial system. What economists aren’t privy to is the type of information available to candidates for insider trading. Well they perhaps are, but they simply cannot make use of that information to enrich themselves, otherwise they’d be indicted for insider trading.

Financing a Courier Business

Financing a Courier Business

With online deliveries being popular, particularly at this time of year, a sound business option is the courier industry. As our lives become increasingly global, increasingly digital, we can order everything from groceries to books, some guaranteeing a one hour delivery slot. The industry continues to thrive, with big names being rivalled by independent companies. With companies such as Yodel and Deliveroo, the face of delivery across all strands is changing, as cyclists and every day drivers are drafted in to help get packages out there. Even the mighty Amazon announced Flex this year, which pays people in specific cities to deliver parcels.

Such a thriving industry that seems set to continue growing is something that investors can do well on, as we head toward even more online shopping. Some considerations for investing in or financing a delivery business are covered below:

Delivering on Time

The most important thing is for a delivery company to ensure that deliveries arrive on time. Check how the company you are considering financing intend to do this, what their history looks like concerning this and what compensation procedures they have in place. Delivery is largely based on word of mouth, particularly in the beginning, and that relies on timely arrival.

Delivering a Happy

One of the most important parts of being a delivery person is friendliness, since it is a customer facing role. This is how reputation is built, and as such, you should be sure that the people being used for delivery fit the criteria! A successful delivery business delivers on time and goes the extra mile. Find out how the delivery service you’re looking at investing in intends to vet their drivers.

Delivering Tech

There is nothing more frustrating than awaiting a delivery which gets missed and then having to wait two days before you can even access it. Opting for good communication with drivers, and good tech to allow tracking reduces the likelihood of this. You will need to provide finance for this key area.

Delivering Locally or Globally

Deciding where to deliver to will involve some market research. Companies such as InXpress are aggregators, which help consumers decide which delivery option is best, and as such have a wealth of information about shipping and delivery in the UK and beyond. Use resources and experts’ knowledge to help you gain a better understanding of the shipping and delivery industry.

The Magic of Compounded Interest

The Magic of Compounded Interest

I often find myself thinking back to my high school days and feeling a bit sorry for those kids who elected not to do maths as a subject. These are the people to whom it’s very hard to explain concepts such as compounded interest and the magic behind what is essentially the best instrument one can use to steadily grow money which they otherwise don’t plan to touch for a long time to come. We all know that merely putting money in the bank via something like a savings account is nothing short of shooting yourself in the foot, quite simply because the interest you earn on money stored in this way falls far behind inflation and, together with the banking fees you’ll be subjected to, it ultimately works exactly the same as spending some of that money each month.

That’s why there’s some magic to compounded interest, but naturally the magic only works if you are indeed planning to leave that money in the bank for a considerable amount of time to come. For this compounded interest magic to work, you’d have to leave your money in the bank without touching it, otherwise the exponential formula used to work out the compounding interest you earn basically resets to your starting point.

Exponential Catalyst

I simply cannot emphasise this enough – if you have some money lying around which you don’t know what to do with, talk to your bank about the options you have for a savings pocket which offers compounded interest. As insiders working in the financial industry, we’re often prohibited from engaging in investments which allow us to profit from what is deemed to be an unfair advantage over regular consumers, but I think they missed one investment avenue in compiling the list of what is prohibited. We’re fully allowed to take advantage of compounding interest and that’s exactly what I’ve chosen to do myself.

The terms (and the exponential formula) used naturally differ from bank to bank, but basically if you understand the basic principles of an exponent, you’d be crazy not to want to take advantage of compounding interest. Basically if you just look at an exponent in its simplest form, you’ll realise that at some point along the way, each monthly (or annual) iteration of the formula means that your money grows at an ever increasing rate.

Think of it as a dam into which you decide to throw a certain volume of water. Based on this initial amount of water you’ve decided to pour into the dam, for as long as you don’t draw any water, someone comes with a little bit more water to pour into that dam. Each time they come with more water, the amount increases incrementally, with the new amount to be added calculated according to the amount of water currently in the dam and not the amount of water you originally poured in when you started out.

Essentially, an exponent grows infinitely as it gets closer and closer to infinity, but infinity is well infinite, so basically your money grows forever by an ever growing percentage each time, until you decide it’s time to draw on it of course.

The best living example of the power and magic of compounded interest is its very widely touted ability to double your initially invested money in no more than a period of seven years. Judging by how quickly time tends to fly that’s not a long time at all to double your money and there’s perhaps no other way of achieving the same effect with the limited risk associated with compounded interested.

What to Consider Before You Go International With Your Business

What to Consider Before You Go International With Your Business

The decision to start working overseas is almost a no-brainer. The wider global markets give you access to more customers, more opportunities and more chances to make a profit. If you do this right, you could turn your small business into an international empire and while you’ll probably be eager to get going there are still some pitfalls, of which you need to be aware.

To help you in your business endeavours, here are some of these issues that you should consider before you start to work with other nations.

The Market Gaps

You first need to treat the international markets in the same way you would your local ones – it may just take a little longer. Research and look at the situation and demographics in the areas of the countries you want to work with, to fully assess whether or not there are any gaps you can fill or provide for.

Language and Cultural Barriers

Different countries also have different languages and ways of doing business – and the last thing you want to do is offend any future partners. The simple step here is to either employ someone who speaks the language or knows the culture of the country, or at least carry out your own research into business etiquette and expectations when you’re pitching to clients.

Trade Restrictions

For those businesses wanting to set up supplier routes or work with imports and exports, there are certain restrictions on goods that you should research first. If your main base is within the EU, the trade agreements in place makes moving goods more straightforward, with fewer restrictions. However, going outside of the EU can be more problematic, plus certain nations have stricter regulations than others, such as the China and the Middle East.

There are plenty of online guides to advise you with this, but also you can outsource shipping goods to external companies with international expertise, like Parcel2Go, who can help you overcome any trade barriers.

How Involved you will Be

Another big consideration is how much you will be involved in the whole process – as you’ll have your main business to think about as well. The workload can be quite demanding – especially for smaller firms – as such, you shouldn’t be afraid to invest in extra help or hand responsibilities to your trusted staff.

So, make sure you take note of the above when you’re planning your international business moves and you should put your company on the right path to overseas success. Good luck!