Financial Education: I Am Definitely Agreeing With Webb on This One

Merryn Somerset Webb’s post about financial education in The Financial Times is where I would declare “touché” because of its precision. Webb made it clear that financial education would only level up the confusion that banks and lenders have already begun. These educated children may even develop new financial concepts and financing that would leave out the rest of the world, causing grave troubles for financiers.

A financial arms race. How about that. Webb’s opinion is quite elaborate but highly feasible. But it is not likely to pass because she also said that High School education or even College General Subjects are often forgotten right after students have graduated. I mean, do you even remember your final score on your home economics class in High School and the things they taught you there?

Aside from pointing out the unnecessary subjects in High School and College, I would also point out that before one can teach financial education, they should first learn accounting, algebra and mathematics involved in finance. Unless you are in industrial design, math theoretical science or astrophysics, math is usually used in daily finance.

Webb is right to point out that math is the key, not the understanding of deals. Although I would say understanding the basic financial concepts introduced in most terms and conditions is a good way to educate the young, it wouldn’t be a good idea to teach them how products work. Remember, these kids will also become future salesmen, who Webb describes as “clever” and “psychopathic.”

Three Compelling Reasons Consider Small-Income Earners In Financing

No banks will communicate with them. Their credit scores are low. But low-income earners are more than what they appear to be. In a sense, mainstream financial services are only applicable to those that financial institutions deem capable of earning and repaying their dues effectively. Here are three compelling reasons why you should consider small-income earners in your community as an investor or lender.

1.    They Lack Education

Poverty is not about the earning capability and the lack of opportunities in a country; it is about the mis-education of the majority regarding finances, which limit their capability to spend. Consumer activity is highly important in raising the economy. Educating them about the opportunities of proper financial management can boost the local economy and encourage them to spend or ask for financial assistance.

2.    Flexibility

Small-income earners only save a little or even none of their monthly income. This makes them high risk clients. However, if you clearly know their motives in procuring a financing and you could see the high profit they and you could gain from providing assistance, flexible options must always be welcome. Studies show small-income earners are capable of repaying their dues effectively with proper guidance.

3.    Credit Score

These people are more personal in their relationship with you as a financial institution, which improves their earning capabilities as you help develop their financial capabilities and knowledge. They will soon earn their credit scores, which would help develop the local community, and in turn, the value of the investments you have deposited in the area.

The Different Kinds of Thinking in the Head of a Novice Investor

Money is objective because when people spend it, it circulates all over the city and the country. Stock markets facilitate the movement of this money based on critical decisions and analysis. For novice and young investors, the perspective can be different than that of experienced investors, as the latter have more experience in terms of investment consequences.

1.    Fearful

The stock market is a new world for a new or young investor, and often they would go for minimal risks. Being fearful, the new blood of the money jungle easily falls prey to taking sporadic action all at once. When other investors, especially the experienced ones, are starting to sell their stocks, the novice investor will follow suit, thinking it as a proper decision.

2.    Excessive

With great money comes a great lust for materialistic intent, and when a novice sees his or her stock grow great profit, this temptation becomes stronger. Remember, you are investing for your future and for possible financial emergencies, and the stock market can help you in that situation. Even if the stock does well today that you could sell half your shares to buy things you want, it does not guarantee to have the similar values in the future.

3.    Insufficiently Systematic

Novices tend to adopt systems from experienced investors who had found the methods effective, but often, novices fail to notice that certain parameters exist to make such financial methods work. Typically, an investor’s situation is different from another investor. A systematic investor is an effective investor, but taking note of the smallest detail there is could greatly help.

Modern Banking and Lending, and the Unfairness of It All

Reading David Moyal’s fate after his bank, a subsidiary of the People’s United Bank in the United States, had withdrawn its funding for his business’ equipment I could not help but think how unfair banks have become. 

David Moyal is an owner of Color-Web, a printing company. He ordered new machinery from Mitsubishi Lithographic Presses (MLP). However, when regulators and shareholders pressured banks to clean up their act, many small business who received financing they erased from their papers by withdrawing their financing.

Moyal’s case had him lose hundreds of thousands of dollars for equipment and had to lay off some employees because of the losses.

I couldn’t help but empathise with him. Banks in the UK have done the same. We’re actually facing the biggest financial scandal in history, and yet banks have the nerve to use regulatory provisions and even reduce the refund of consumers by forgetting to refund penalties incurred because of the policy.

In the end, regardless of how flowery the words of financial leaders are in the world, they are still companies looking to gain profit. But they will still gang up on you in the end. Moyal is still fighting his case against a bank who had kept a secret deal with the MLP, who had returned his bank’s down payment, but still demanded it from him.

Bad Timing for the EU FTT I Guess

Seeing the news today, I could not help but share the fury BoE Chancellor George Osborne is feeling regarding the Financial Transactions Tax. It seems that 11 EU countries had decided to go secret and developed the FTT without the knowledge of the United Kingdom and several other EU countries.

According to Osborne, “it’s not a tax on bankers; it’s a tax on jobs, on investment, on people’s pensions.” The UK government threatened legal challenge against the EU’s new policies, which was rejected by its court. Osborne said in fury that the FTT was clearly vague because it lacked the details that indicate which shares and derivatives will have the imposed taxes.

The UK is seeing great economic progress, with manufacturing growing stronger in support for the economic increases the services sector had provided the country. If the FTT’s vague new taxes come into play, it may scare off investors, which may also cause panic in different sectors and affecting UK’s economic growth.

The FTT came in at a bad time for the United Kingdom. Its case is growing stronger and stronger despite warnings from different industries. Business Europe even wrote to the EU finance ministers that even narrowing down the terms of the FTT will still impact Europe negatively.

Source

Place Your Bets on the Self-Driving Cars After Half a Decade

Self-driving cars might just be the perfect companion for those long, traffic hours without the need to have your feet active on the gas and the brake. I mean, I would love it. I can spend my time napping on the back seat of my car as the vehicle drives me home. I could even dress up and have my automatic chauffer handle the driving duties, even optimizing the gas and energy usage of the vehicle. 

IHS Automotive predicts that the self-driving car’s first generation will be sold in 2020, and today, many manufacturers are further developing existing technologies. The first generation of vehicles, like the first generation of smart devices, will cost a great fortune. However, many people, including those in the Generation Y, will want to own one, even if it may cost £300,000.

Imagine all the units sold during the first few years. Costing as much as a new house, the prices will drive down as the technology improves. New businesses will be born to customise and bring out the efficiency of these vehicles for owners. Such a tempting offer at investment, right?

Think again. I don’t believe that the market will be quite lively in 2020 in anticipation of self-

driving cars. As a driver myself, despite the tests, most of these vehicles can still have live errors, and consumers can be split in half in deciding to own a new self-driving vehicle. It is a situation wherein you have to see and learn from the lessons of others before you plunge in, yourself.

If you’re planning to invest with manufacturers making self-driving cars, anticipate many bugs and fixes, which are costly. But then again, if you can endure it, or at least wait half a decade (anticipate a 25% rise in the company stock market value), you can be sure your money grows. Let your money cover the risk instead of paying for much more than that covered risk.

Will Averting The Housing Crisis Only Be the Way for UK’s Economic Growth?

According to the UK government, the UK’s unemployment rate has fallen down to 7% while wages are still stagnant or minimal in its increase. The Bank of England announced that it will retain its interest rates despite the UK reaching its unemployment target. The best thing about it, for most people, is that the Help to Buy Scheme, which lower the mortgage rates to 5%, will be extended until 2020.

The extension may mean the increase of property values until the real estate bubble bursts. Homebuilders may benefit with activity, but this can mean trouble for the environment. Building activities could reduce the forests and natural earth resources in the UK.

The housing crisis is indeed a major trouble, even for me, but I’m thinking of sustainability instead of dealing with economic troubles by selling a house for a higher, or better price. Obviously, the trouble is with the greed of many, which may stimulate good competition, but at the expense of the environment and the future of the planet.

With increasing properties, the early values of labour and resources are downplayed once the housing bubble bursts as the country’s spending capability reduces. The UK’s economy may be recovering, but its foundations are quite weak in my opinion.

We will need more than just increasing our property’s value to completely recover our economy.