CFI.co, Author at CFI.co Blog

As of 2022, the commercial banking market in the US is valued at $862.4 billion. As the world changes and technology advances, so does banking. There are several new trends that will affect the future of banking in the coming years. Keeping up with these changes is crucial to understanding how banks will continue to evolve.

For a rundown of the top banking trends in 2022, keep reading.

Embedded Banking

Embedded banking is a new type of banking that doesn’t use a bank, website, or mobile app. The most common example of this is buy now, pay later options presented by retailers.

Non-financial institutions can utilize financial services through APIs, giving consumers more options when it comes to transactions.

Another popular example is Shopify’s e-commerce software that merchants use. It contains payment services that would have previously been merchant-acquiring business for banks.

Embedded banking can be used by any company, and takes out the banks that act as a middle man between the business and the customer. This is also applicable for B2B activity.

Payments aren’t the only applications of embedded banking. Lending, insurance, and investment can all be processed this way.

As technology advances, so does the capabilities of embedded banking. Automation is more accessible and faster which is very appealing to customers.

Improved Personal Insights

One thing that customers regard very highly is personalization, which is likely to be one of the biggest baking trends in 2022. Banks are focussing on this in a number of ways to increase customer satisfaction.

Improved artificial intelligence and machine learning will make this easier moving forward. Banks will be able to use customers’ personal information to tailor experiences to peoples’ specific needs.

A typical example could be using data from previous transactions to give customers alerts if there is potential for shortfalls in their accounts.

This has already been implemented by some banks in the form of tips to help customers understand and improve their personal credit scores. Wells Fargo also has plans to add a virtual assistant to their app giving tailored insights to customers in real-time.

Facial Recognition

Security has always been one of the most important aspects of banking, and people are always happy if it can be combined with convenience. A lot of mobile devices and computers have facial recognition capabilities to unlock them, and this is starting to move over to banking.

A number of financial institutions in the US are already making use of facial recognition, along with document verification, for mobile and online banking services. Fingerprint scanning technology has also increased in use in recent years for similar applications.

One noted risk with this is the use of “deep fake” technology to make fraud attempts. This could allow fraudsters to create a false image of someone’s face to fool facial recognition systems or even other people.

This is one of the main reasons facial recognition still faces a lot of opposition, as well as the potential for certain biases such as race or sex to affect people.

Such opposition may slow the movement, but it is still currently happening, so it’s not something to ignore.

In-Person Digital Interactions

Virtual branches are a perfect example of how banking is changing. Communication tools are used to simulate a typical conversation that would take place in a physical bank. Some of these tools include:

Webchat
Mobile chat
Video chat
Co-browsing
Document sharing

Some banks across the US have already begun implementing this, helping people still bank efficiently as in-person branch visits have declined.

An example of an app that is already being used for this is Arvest Banker Connect. Customers can read banker profiles to find one that appeals to them and then message that banker directly. A running history of the communication is logged for reference.

Cryptocurrencies

Cryptocurrencies have exploded in recent years and they are unlikely to disappear anytime soon. Many banks have started to move towards cryptocurrencies, and more will do so in the near future.

Some banks already have functionality in their apps to allow their customers to buy and sell cryptocurrencies. A lot of people are still cautious as they are not very well understood, but as they grow in use so will people’s trust.

It is safe to say there will be a lot of growth in the use of cryptocurrencies in banking in 2022.

Matchmakers

The purpose of matchmakers is to form a connection between banks and fintechs. This is done by core-software providers, venture capital funds, and other entities, helping banks to improve their technological capabilities and enabling fintechs to adopt services used by banks.

This is of more interest to regional and community banks as well as credit unions as they often don’t have the resources to source these technologies themselves.

Banks that have formed relationships with fintechs have begun growing faster, which is encouraging other banks to quickly follow suit.

Hybrid-Work Technologies

Over the last couple of years, hybrid work has become significantly more common. As some employers work from home while others are in the office they must be able to communicate and collaborate effectively.

The consensus is that those working from home are at a bit of a disadvantage to those in the office, so banks (and other institutions) are constantly working on solutions to this.

Ally Financial finished a new building earlier this year that has “Zoom Rooms” specifically designed to improve video conferencing. These rooms have a touch panel for employees to sign in and a dedicated screen where participants will appear and can share content.

Keeping up With the Future of Banking

More trends are always appearing, so to best understand the future of banking you need to stay up to date.

CFI is always on top of the latest finance and banking trends, so if you have any questions feel free to contact us by clicking here.

If you want to stay up to date you can also subscribe to our newsletter at the bottom of this page.

Bonds

How to Invest in Bonds: A Beginner’s Guide

ByCFI.co

Investing in bonds provides low-risk cash flow for your portfolio. You can invest in various types of bonds.

Corporate bonds give you access to companies. These bonds come with higher risk but also higher interest rates.

Cities, states, and local governments issue municipal bonds. These bonds come with fewer risks and, therefore, lower rates.

The Federal Government also issues bonds. Their Treasury bonds come with the least risk.

This structure translates into the lowest interest rates.

Each of these bonds can bolster your portfolio. However, knowing the types of bonds only presents a starting point. Gaining additional insights will help you make smarter investing decisions.

Want to learn how to invest in bonds? This article will cover everything you need to know.

How to Invest in Bonds

You can either invest in bonds via a broker or ETF. Brokers let you buy individual bonds in increments of $1,000.

Brokers give you access to corporate, municipal, and treasury bonds. You can also purchase treasury bonds directly from the government’s website.

You cannot spend $100 or $1,400 on individual bonds. You must invest $1,000 at the minimum.

Not everyone likes the high entry point for bonds. Bond ETFs offer a reliable solution. Instead of buying bonds, you buy a basket of bonds.

You can purchase fractional shares of an ETF instead of entire shares. You can get started with an ETF of bonds for as little as $1.

Can the Issuer Pay off the Bond?

When you buy bonds, you must consider an issuer’s ability to make interest payments. Higher risk translates into higher interest rates. This phenomenon explains why treasury yields are so low.

You can make more money with non-defaulting corporate bonds. Review a company’s balance sheet to see if it can cover interest payments. A company’s obligations and growth potential impact its ability to cover the debt.

Establish Your Risk Tolerance

Not every bondholder invests in corporate bonds. Some investors believe these bonds carry significant risks not worth the risks. These investors will focus on Treasury and municipal bonds.

Other investors believe T-bills and municipal bonds carry insufficient potential. They don’t want to park their money for years in exchange for a low return. These investors will take on riskier assets such as corporate bonds.

Before investing in bonds, assess your risk tolerance. Your risk tolerance determines how much risk your portfolio can bear.

Risk tolerance is personal for each investor. Your personal budget plays a critical role in determining which assets you select.

Younger investors often invest in riskier assets. They have more income potential and time to weather downturns.

Older investors tend to pick low-risk assets that produce minor gains. Growth is better than no growth for these investors. Some of them have their eyes on retirement and don’t want to rock the boat.

Bond Maturities

Bond maturities indicate how long a company has to pay off the principal fully. Bonds with higher maturities take longer to pay in full.

Issuers reward long-term bondholders with higher interest rates. A 5-year bond will have a higher interest rate than a 2-year bond.

Higher rates will increase your cash flow. However, it takes longer to receive your principal.

Bond investors should also review inflation rates. A bond yielding 2% will lose money because inflation outpaces the yield.

This issue always concerns bondholders. However, today’s inflation growth makes it more glaring.

You can get higher returns with corporate bonds and stretched-out maturities. Some investors buy into a combination of short-term and long-term bonds.

This strategy gives them access to some of their initial principal each year.

Bondholders often reinvest their principal proceeds into other bonds. They will do the same with interest payments.

If interest payments do not provide enough cash flow to buy a bond, you can buy Bond ETFs.

Selling Bonds to Realize Your Gain or Loss

You do not have to wait for the maturity date to cash out on your bond. Some investors prefer to sell their bonds before the maturity date.

They realize the gains or losses upon selling. Profits will increase your taxes, while losses count as tax deductions.

Bonds are highly liquid assets. You can quickly sell a bond, realize the proceeds, and shift to another asset. Some bondholders switch up their holdings to capitalize on better opportunities.

Why Some Investors Pick up Bond ETFs

Some bondholders prefer to own individual bonds. They want to pick the best bonds and outperform the market.

Other investors opt for bond ETFs. They don’t want to try and beat the bond market.

These investors prefer to mirror the market and reap average cash flow. Nothing is wrong with achieving average returns.

Exchange-traded funds require less work than researching individual bonds. You review an ETF’s holdings and invest if you like their assets.

You don’t have to monitor your bonds. The ETF will do that for you.

Funds buy and sell bonds based on risk tolerance and the fund’s stated objectives.

ETFs provide a passive approach to bond investing. You can contribute any amount you desire and automatically reinvest the proceeds.

Stay up to Date With Finances

Learning how to invest in bonds only represents the beginning of your journey. Strong financial habits will give you more proceeds to invest in vital assets.

Mastering your finances early in life helps with retirement in the future. Your savings will compound as you earn and save more money.

Staying on top of the best news and tricks will help with your goals. Our magazine provides expert commentary and articles to help you master your money. Read through our issues today.

Budgeting

5 Essential Budgeting Tips for Young Adults

ByCFI.co

Did you know that the overall cost of goods and services has risen, on average, about 3.5% in recent times? In many cities, the percentage is far greater. This is putting young people at a supreme disadvantage. It’s crucial for young people to start managing finances early on if they want to set themselves up for financial stability in the future, but many don’t know how to start. We’re here to help. Read on for a few budgeting tips for young people.

1. Track Spending First

Before you start writing down your budget, you need to track your spending. You can do this week-by-week, but we recommend tracking for an entire month if you want an accurate look at your current spending. After you get a good idea of how much you spend, you can start making changes.

Track every purchase, no matter how small. Because you’re tracking all of your purchases, we recommend not tracking during the holiday season. After all, it’s likely that your spending will be more significant until after the holidays are over (and that’s okay).

Write down the costs of all of your bills, reoccurring subscriptions, and anything else that’s going to stay static (or almost static) every month. Track how much you spend at the grocery store and how much you spend on other necessities like clothing and toiletries.

Track all of your excess or “luxury” spending as well. It’s likely that this changes month-to-month, but it’s a good idea to have a baseline. Add up everything and see what number you land on.

2. Create a Written Budget

After you know how much you’re spending, it’s time to create a written budget.

First: how much money does your household make each month? Take note of your net income and write it down at the top of your document. Subtract the money that you’ve spent during the last month and see how they compare.

If you’re happy with the result, you may not have to move forward. If you know that you need to be saving more money, however, move on to the next step.

Separate your budget into categories. Most people recommend starting with the 50/20/30 rule, but you can make changes to this after you start getting the hang of maintaining a budget.

Under your “necessities” category, write out the amount that you have to spend on bills. This number isn’t going to change. Then, set a budget for food, clothing, and necessary items that is lower than your current spending.

Allocate 20% of your money to savings or paying off loans right away.

Keep your budget with you. At first, it’s helpful to continue tracking every purchase, so you’re more mindful about your spending. After a while, it will become second nature.

3. Spend Less on Food (Here’s How)

Many young people struggle to save money when it comes to food. Food costs are rising worldwide, but that doesn’t mean that you have to overspend.

Look for items that are “luxury” food items and remove them from your weekly spending. You can add them back later when you figure out how to budget. This includes things like name-brand foods and takeout.

Take advantage of loyalty programs at grocery stores. You can often get personalized coupons that allow you to save money on items that you need every week.

If they’re available, use bulk bins. You can often find simple necessities like pasta, rice, and dried beans for far cheaper than they would be if they were pre-packaged.

4. Cut Luxuries and “Extras”

Until you’ve gotten a handle on your finances, it will benefit you to cut out many of the extra things in your life that you don’t need. Your goal is to live within your means so you can reach financial security.

First: look at subscriptions. How many subscription services do you currently have? Between streaming services, game subscriptions, and subscription boxes, many people are spending far more money than they think because they aren’t tracking that money.

You don’t have to cut out all of them, but cut out the ones that you’re not using as often.

If you often go out for drinks or order takeout food, this is a good time to reevaluate that habit. There’s nothing wrong with having fun with friends, but don’t do it so often that you’re spending more than your 30% “extra” budget. Prioritize and consider spending that money on something that you want more in the future.

When it comes to clothing, don’t give in to the temptation to buy new clothing every season. Not only is this a bad financial decision, but it also contributes to the harm that comes from fast fashion.

5. Automatic Savings and Investment Deposits

You’re never too young to start saving and investing. Many young people struggle to save money because they don’t know how, or they aren’t good at remembering to set money aside. Set up automatic deposits so you can put that money away as soon as you get it.

You should have a basic savings account at a reliable bank so you can save money. A good bank can also help you with managing finances. That said, savings accounts don’t often offer great interest rates, so adding in some reliable investments is important as well.

Look for safe stock opportunities. Avoid volatile or “trendy” stocks. While they often have high yields in the short term, they’re “high risk, high reward,” and most young people aren’t able to risk that much money.

If you deposit this money automatically, you’ll start building wealth with no effort.

Start Using These Budgeting Tips Today

These budgeting tips can help you save money and hopefully reach financial security in the future. Saving money starts with creating a budget. Sticking with that budget is the hard part.

Are you always on the hunt for more information about business, banking, and finances? Subscribe to cfi.co today to get 4 issues of our print magazine sent right to your door every year.

Banking

7 Financial Planning Tips for Your Small Business

ByCFI.co

Small businesses are expansive. Small businesses are responsible for creating over 66% of net new jobs. Every business in America needs to have good business practices to reel in from last year’s losses. If you want to recover from the pandemic’s impact you need to adapt to the new standards. Coincidentally, you will also learn new effective methods to help your incoming customers. But, what exactly do you need to know to build your business? These 7 helpful financial planning tips will help reevaluate your business’s finances.

1. Controlling Your Invoices

When developing an invoice, you can attach your terms and conditions to the payment. Learn how to create a system that can streamline creating an invoice.

Understand how to negotiate these terms with clients. Make it clear that your invoice has a set due date and payment itemization.

Communicate these terms to your clients and business partners. If you complete the work, it’s not an issue to demand that clients comply with those terms.

When it comes to small business finances, a non-payment can make or break your workflow. It’s your responsibility to make sure payments are complete on-time.

In addition, if a company does not comply, a policy can allow you to add interest on late-payments. Sometimes, accidents happen. So, sometimes these circumstances aren’t malicious.

But, you deserve your money for the hard work you put into projects. Despite this, never feel insecure about demanding a client to comply with your invoice’s set terms and conditions.

2. VAT and Tax Accounts

International business transactions are implementing VAT and various tax accounts in their regions. Small businesses should separate their bank accounts, if possible.

This means having a tax account, a VAT account, and a current account. Make sure to verify whether you can move money between these accounts. This is a great tip for startups.

You should delineate a portion of each check you receive into a VAT account to manage your V8.0. This can allow you to pay the VAT bill with ease without mismanaging your funds.

You should implement the same method for taxable accounts. You want to make sure you always have enough set aside to take care of tax expenses.

3. Reviewing Bank Accounts

With that said, it’s also important to create a regular workflow when checking bank accounts. This includes reviewing bank statements to track your money management.

While managing money, accounts and transactions are prone to human error. It is vital to prevent vulnerabilities and understand your small business finances as a whole.

Build a routine when checking your savings account. It’s important to hold a rainy day fund for when things get hectic. You may depend on it when business is slow for a few months.

4. Cash Flow Management

Your business should allow a two-month buffer for easy cash flow. Many companies and clients can make it difficult to make on time payments.

Certain independent clients will implement a net-30 or even a net-60 into their payroll system. This is due to payments or fees implemented into their own invoice processing.

With this in mind, make sure you have a clear forecast of how you’ll complete upcoming invoices.

It’s never too late to plan for a delay or a disruption in the payment processing. A 60-day buffer is great to give yourself a future ground plan.

You can create these formulas in excel is An invoice needs time to work through different payment systems, so give a clean 60-days notice. Excel is a great application that can help manage these timetables.

5. Bank Management Relationships

Building a repertoire with your bank management staff will prove beneficial for while you manage finances. A personal relationship with a bank manager can help in a difficult time.

They can help you beyond dileneating numbers and figures. They can notify you of changes within the branch and give you financial advice.

Bank managers can help you navigate and organize and manage finances. They can also give you advice on which savings accounts are most beneficial for your small business.

6. Setting Up Direct Deposit & More

An extra trip to the bank to cash a check or manage payments can take time. Building up a series of direct deposits or standing orders in other countries can streamline this process.

The influx of digital banking is allowing this to become an easier process. This can also prevent the added human error of paper transactions.

When you’re working with troublesome clients, they can use any excuse to not pay.

Setting up an automatic online transaction can help secure these payments. Banks and corporations work through a series of verification processes to break down the payments.

At times, interconnectivity between clients and direct deposits is a precarious process. This might become an issue for certain businesses that don’t have access to these accounts.

But, if you can, routing payments to your account on the first of the month can manage finances and bills.

7. Spreading Your Payments

When your business is dealing with large projects with several profiles, payments may turn tricky. If a project is requiring thousands of dollars to complete, try to even out the payments.

This can consist of scheduling payments across a number of months. These deadlines will hit faster than you expect.

Collect your budget and review the point of sale terminals. You must also account for surcharges of banking fees when predicting these payments.

Financial Planning Tips

If you have the initiative and management skills to run a small business, then start today! These effective financial planning tips can help manage your business and keep you on track.

It’s all about money management and making sure your business is in a good position. Understanding how to have a good grasp on money management can ensure your business is stable.

Click here for more information on how to build your business and manage your finances.

Banking

How to Choose a Bank for Your Small Business

ByCFI.co

600,000 businesses close each year. One of the main reasons why businesses struggle is that they are unable to stay on top of their finances or they have a lack of funding.

One thing that can help your business stay on top of changes and meet financial goals is by choosing the right small business banking company.

Do you want to learn more about company banking options? Keep reading these top tips to choose a bank for your small business.

Evaluate Your Needs & Business Goals

The first step to finding the best bank for your small business is evaluating your business needs and goals. Because each company requires different types of financing and services, you must find a bank that can help you meet your goals.

For example, if your main goal is to grow your business, you may need access to different types of funding from your bank. In this case, you should choose a bank that has a variety of lending options for businesses.

Consider both your short-term and long-term needs and make sure you find the right bank to help your business operate.

What Types of Financial Products and Services Are Offered?

Each bank typically offers the same services. However, there may be some banks that offer specialized financial products that would benefit your business. Before you choose a bank, you must ask them about their financial products and services for small businesses.

Some common products include business checking accounts, business insurance. loan option, and more.

Consider Bank Availability & Convenience

When it comes to services for your business, you need to find options that are easily accessible and convenient. For banking, you may want to find a bank that offers online or mobile banking services.

This makes it easier to pay bills, monitor business activity, and more. Something else to consider is whether or not your bank has multiple locations. While smaller banks may be able to provide you with great service, you may prefer to have a bank with several locations.

This way, you will have easy access to your business funds when you are travelling, no matter where you are.

Ask About Rates and Fees

Different banks have different fee structures, so you must ask your bank representative about their rates and fees.

For example, some accounts may provide you with more interest on your deposits. Choosing a bank with the best interest rates will give you more money from your savings. Other banks may charge you monthly fees, fees for transactions, and charge you for other transactions.

To avoid these annoying fees, you may want to find a company that will help you maximize your savings without increasing your costs.

Small Bank vs. Big Bank

Next, you should consider the network size of your bank. Most banks and credit unions offer the same services, so it may be down to your personal preferences when you choose between a small bank or a big bank.

If you are a local business, it may be best to choose a small bank that has local expertise. These smaller banks will be more likely to cater to your business and focus on good customer service.

However, big banks have more funds and account options, so this may be a big advantage for your company. As was mentioned before, big banks have more branches, so it will be easy to access your accounts while you are travelling. Big banks also often have digital banking services to make it even easier to access your funds.

Similarly, you need to find a bank that can provide scalability for your future needs. While your business starts small, you may grow exponentially in the coming years. You must find a bank that will accommodate your growth and will be able to work with your growing business.

This scalability is important when it comes to loan options as well. If your business is growing significantly, you need a bank that will be able to offer you enough funding in the future.

Look For Industry Experience

When you are looking for a bank for your small business, it is not a one-size-fits-all solution. Different companies have different needs, so you must choose a bank that has experience in our industry.

Banks with industry experience will have specialized products and services that are meant to help your specific pain points as a business owner in the industry. For example, banks that specialize in the real estate industry can help a real estate agent manage real estate finances and offer investment property loans.

Do They Provide Lending?

Finally, you must learn whether your bank provides lending options. As was mentioned before, many companies close due to a lack of funding or capital. To help your business stay afloat during tough times, you need to choose a bank that offers lending options.

Learn more about a bank’s requirements for securing funding and make sure they offer good interest rates for business loans. You can also find a bank that participates in a preferred lender program if you want to apply for a Small Business Administration loan at some point.

Learn More About How To Choose a Bank Today

Choosing a bank for your company banking is vital to meeting your financial goals and getting the lending that you need to grow. To find a bank that fits all of your needs, you must take each of these factors into consideration!

Do you want help learning how to choose a bank? CFI.co can help! Our website features articles about business, finance, and more.

Check out our articles today for more financial tips for your business!

Banking

How to Start Investing Money for the First Time

ByCFI.co

Did you know that about 145 million Americans own stock? That means that 56% of American adults are invested in the stock market.

Whether you’ve been planning on investing for a while or you’ve gotten swept up in some of the recent meme-stock crazes, learning how to start investing money is an exciting juncture in life.

If you’re looking for information about investing for beginners, you’ve come to the right place.

Let’s take a look at the steps you need to take to come up with a solid investing plan.

Determine Your Style

In the world of investing, there are two primary camps of how to invest your money. These are passive investing and active investing. Both of these have their advantages so long as you are interested in the long term rather than hoping for wins in the short term.

Depending on your personal situation, one of these types of investing might be more appropriate for you.

Active investing is when you do the work to research investments and build and maintain your portfolio. Basically, if you’re planning on signing up with an online broker and buying and selling individual stocks, then you’re thinking about being an active investor.

There are three things you need to ensure that you are successful as an active investor. These include time, knowledge, and desire.

Basically, you’ll need to do a lot of research and homework to be an active investor. You’ll also need to become quite knowledgeable about the stock market and the individual stocks you’re trading. Lastly, you’ll need to want to spend time this way as it’s a big time commitment.

Passive investing, on the other hand, involves putting your money in investment vehicles and letting someone else do all of the hard work. Investing in mutual funds is one type of passive investing, for example. With this type of investing, you can get good returns in the long run and you don’t have to put in nearly as much effort.

Some people choose to go a hybrid route such as using a robo-advisor or hiring a financial advisor.

Determine Your Budget

The next step is to figure out how much money you want to budget for investing. You actually don’t need as much money as you think to start investing, and can start a portfolio with as little as $100.

You will want to make sure that you are ready to invest before you take the plunge. Having an emergency fund is key before you start putting your money into investments. An emergency fund is cash that you have in an accessible account so that you can withdraw it quickly if necessary.

There is some level of risk when it comes to all investments and you want to avoid having to sell your investments out of necessity at an unideal time. Having an emergency fund can help avoid this outcome.

Six months worth of expenses is generally considered a good emergency fund. However, you don’t necessarily need to have that much money before you start a portfolio.

It’s also advised that you take care of any high-interest debt before you start investing. Basically, if you invest in the stock market while you have high-interest debt, you will typically lose money over the long run because of the amount of interest you owe.

Determine Your Risk Tolerance

The last piece of the puzzle is how risk tolerant you are. There is a risk to all investments, but some are riskier than others. Typically, the higher profit you stand to make the more you are at risk of losing. The less risk-tolerant you are, on the other hand, the less profit you will typically make in returns.

You will want to find the balance point that works for you between a risk level you’re comfortable with and maximizing the returns on your money. For example, the whole stock market returns almost 10% a year on average while bonds offer returns around 2-3%. However, bonds are much lower risk than stocks.

There can be huge differences in risk with the broad categories of stocks and bonds, too. You’ll want to understand what you’re getting into whenever you are thinking about making investments whether it’s stocks, bonds, real estate, silver, or something else entirely.

Some advisors suggest that beginners can start with robo-advisors to help them make a plan that works with their goals and risk tolerance. Basically, a robo-advisor is a brokerage service that builds and maintains a portfolio for you with the goal of maximizing your potential for returns and staying within your range of risk tolerance.

Are you looking to learn about different stock investment strategies? If so, check out this article.

How to Start Investing Money: Knowledge Is Power!

It’s easy to get swept up in the latest meme-stock when you’re making investments for the first time. However, it’s a really good idea to step back and look at all of your options with a more sober perspective. Sure, there are opportunities to make money in the stock market, but there is also the risk of losing a lot if you aren’t careful.

If you want to learn how to start investing, there is no substitute for doing a lot of fairly dry research about the market. However, passive investing is definitely a better choice if you aren’t interested in reading financial books or blogs.

Are you looking for more information on all things financial? If so, be sure to check out the rest of our blogs for more articles on investing and finance!

Finance

Real Estate Investing For Beginners: Expert Tips and Tricks on How to Get Started

ByCFI.co

Are you looking to get into real estate investing? Investing in real estate can give you some of the best returns on the market. But can also be one of the most stressful ways to spend your capital. Whether you want to flip real estate or get a portfolio of rental incomes, there’s a lot to think about. And if you’re new to it, property investment can seem like a daunting challenge. Don’t worry, we’re here to help! Keep reading for our guide to real estate investing for beginners for some top tips and tricks.

Have Patience

When you’re starting, you’re not going to become a millionaire in a week. You’re going to need patience for your first real estate investment. Of course, there are the lucky few who strike it rich fast, but that’s not the general experience.

The first property might not be successful, and you should expect to make mistakes along the way. What makes or breaks the success of a real estate investor is how you adapt and overcome the challenges and using the right tools to to help manage your property.

Do Your Research

One of the benefits of investing in real estate is that you can take your time to do your research. Get stuck in and spend a good chunk of time researching the market before you jump into your first deal.

A big mistake people can make is jumping into the deep end without doing any research at all. This can lead to massive financial heartache and ruin. There are many real estate niches to explore, so find the one that interests you and hone in on it in detail.

Carry Out Local Networking

Get involved with local real estate investing groups. This will put you in touch with people on a similar journey to you, or who have been where you are before when starting.

You can start with a Google search that should connect you with investors in your area, looking to help. They can help explain how to invest in real estate and why you should invest in real estate.

Whether you do your networking online or in person, make it a priority. The tips, insights, and experiences you’ll learn will be invaluable for your journey. You’ll also gain contacts that could help you out along the way.

Start Small

One of the best ways to invest in real estate early on is to start small. Most people want to jump into the biggest deal they can as it will make the biggest profit. But it can make the biggest loss too and could become overwhelming fast.

Starting smaller protects your assets and gets experience under your belt. It’s the more secure investment route to take. Everyone starts somewhere, and starting small is nothing to feel bad about. A small family home or partnered venture is a great place to begin.

Make Use of Investing Tools

There are some great investment tools now for new and seasoned investors. These tools vary from networking platforms to sites to buy property online. Don’t be shy, get stuck in and test some out for yourself.

Successful investors embrace new methods and tools. They use them to drive their investments forward. But it’s trial and error, you’ll need to test a few things out to find out what works best for you.

It’s All About Location

If you’ve been a renter or a buyer at some stage, you’ll know it’s all about the location. The same is true when it comes to finding properties as an investment rather than a home.

Where a property has as much of an impact on its investment value as the actual property features. If you spot a deal that seems like it’s too good to be true, step back a moment.

Take a look into the location and research the local area. The property might tick all the right boxes and that’s great. But if it’s not in a desirable location, you might struggle to resell or rent it out.

Location can make or break the success of your investment. It’s important when you’re researching the market you look at locations then. Find ones you’re interested in, in your budget, and focus your search there.

Never Buy a Property at Market Value

An age-old rule of any investment is to buy low and sell high, the same goes for property investment. For most investors, you’ll want to rely on the MLS (Multiple Listing Service) to find properties to buy.

Many new investors don’t know of this and end up treating it like buying their own home. They end up paying market value, which has a huge impact on squeezing the margin for profit.

Not only does it cut into the profits of a resale, but it could cost you in rental too. It will take longer for the rental income to recover the cost of the home and take you into pure passive income.

So jump in and make that offer well below market value. Being flexible with sellers’ needs can also help. Can you offer a quick sale if they accept your lower offer? You won’t get accepted every time, but you must know how buying and selling works.

Think With Your Head Not Your Heart

One of the biggest tips we could give is to keep your emotions out of the equation. Your first investment can feel emotional, it’s important to let your head rule, not your heart.

If you make a decision based on emotion, not logic, you set yourself up for costly mistakes. The biggest traps are getting too attached to a property or thinking that there is no way you can fail.

Know When It’s Time to Walk Away

Never start the buying process without first working out many ways you can get out of that deal. It’s an essential tactic, called exit strategies. Your contract should always have many allowances that let you walk away if you need to.

Without exit strategies, you could get trapped into buying a bad property. One that costs more than you’ll make on it, putting you at a loss which is never a comfortable position to end up in.

Real Estate Investing For Beginners: Know What You’re Signing Up For

So, there you have it! Now you’ve read our guide on real estate investing for beginners, you know what to expect.

Always do your research and thorough due diligence. It’s better to wait for the right property to get started with, than rush into a bad deal. Take your time, network, and always keep your logical business head-on. Don’t get swept up in the emotion of it all.

If you’re looking for more advice on real estate investing check out our blog. We’ve got expert tips and tricks to suit all your real estate needs.

Banking

Credit Card vs Debit Card: The Key Differences, Explained

ByCFI.co

While a credit card and a debit card look almost identical on the surface, there is a big difference between a credit and debit card. If you’re looking for which card to use when we’ve rounded up a handy credit card vs debit card guide.

From the differences between the two to how to use each card, we’ve rounded up everything you need to know about credit and debit. Let’s jump in and see which card is right for you and when to use them.

What is a Credit Card?

A credit card is a form of payment issued by a bank or financial institution to lend you money. Unlike a loan, a credit card doesn’t come with loan terms or fixed payment plans. Instead, you’re approved for a certain amount, also known as a line of credit or credit limit.

You can use your credit card as a form of payment online, in-person, through apps, or even on your cell phone in a digital wallet. You’re given a unique credit card number, a card expiration date, as well as a security code for verification purposes. This card is then linked to your credit account.

Whenever you pay for something using your credit card, your account is charged. Every month you don’t pay off your credit card balance, you’re typically charged an interest fee. You can charge an amount up to your available credit limit. A credit card payment is typically due each month.

When your monthly payment is due, there will often be a minimum payment that’s required. Any money over your minimum payment you don’t pay off gets rolled over to the next month, plus interest. To save money, it’s recommended you pay off your credit card balance each month.

What is a Debit Card?

A debit card looks almost identical to a credit card. You’ll have a unique debit card number, an expiration date, and a security code. This card number is then tied to your checking account. Unlike a credit card, you can only spend the cash you have available in your checking account.

A debit card doesn’t come with a line of credit or a credit limit. Whatever balance you have in your checking account is what you can withdrawal from your account using your debit cards. Some savings accounts will also come with a debit card.

You can also use your debit card to take cash out of your bank account. This is done at a Cash Machine, an Automated Teller Machine (ATM) or at a retailer that allows cash-back during a transaction. The money you spend using a debit card comes right out of your bank account almost immediately.

When to Use a Debit or Credit Card?

When it comes to when to use a debit card and when to use a credit card, there’s no right or wrong answer for anyone. Some people prefer to use their credit cards and then pay off the balance in order to accumulate rewards points. Many credit card companies and banks offer points for purchases to be used as cash, for travel, or for additional purchases.

Other people don’t want to run the risk of accumulating a high credit card balance. This is where using a debit card can help keep you out of debt. With a debit card, you’re only spending what you have in the bank.

At an ATM, you’ll often want to use a debit card in order to pull the cash directly from your bank account. You can sometimes withdraw cash from a credit card at an ATM, but this money is added to your credit card balance.

Credit Tips

When using a credit card, it can be difficult to keep your credit balances in check. Because this money doesn’t come out of your checking account directly, it can be easy to slip into a cycle of overspending. This can cause a high amount of debt that you have trouble paying off. This can also significantly lower your credit score.

To keep your credit card debt manageable, make paying off your credit card each month a priority. Use your debit card for as much as possible and use your credit card for larger purchases or for places that require a credit card.

Most banks have an automated payment feature where you can choose to pay off your credit card balances or minimum payments each month. Doing this will help make sure you can keep up with the amount of debt you’re accumulating. Credit shouldn’t be used if you can’t afford to pay it back.

Debit Card Tips

When using your debit card, you want to be mindful of the balance in your bank account. If your balance is low and you’re using your debit card without checking, you may overdraw on your account. This means you’ve spent more than you actually have.

To help you stay on track, most banks have an alert system that tells you when your account is below a certain number. This will help alert you that your balance is low. If you’re constantly getting down to a low balance in your account or using your credit card as a way to pay for things you don’t have enough money for, this could lead to a dangerous cycle of debt. You may also be unable to pay important expenses such as your rent, mortgage, or car payment.

For security reasons, it’s recommended you use a credit card, however, so that if a fraud has occurred, your credit card company can cancel the charges and issue you a new card. With a debit card, your bank account information could fall into the hands of someone fraudulent giving them access to your assets.

Credit Card vs Debit Card

When choosing between a credit card vs debit card, it’s important to consider what you’re buying. Paying a utility bill or taking out cash from an ATM is usually done with a debit card. A hotel stay, however, is often done using a credit card.

If you’re looking for more great financial content, check out the banking section here. We have financial resources on everything from credit cards to home loans, wealth management, and more.

Finance

Everything You Need to Know About Opening a Cash ISA

ByCFI.co

The ISA was introduced to the UK in 1999 as a way to get Britain’s population saving. Originally, it was branded a colossal failure by the media and many politicians. But did you know that over twenty years on, the ISA is now one of the best ways to make interest on your money? If not, then you should know what an ISA does and give it careful consideration. Read on as we discuss the benefits of a Cash ISA.

What Is an ISA?

An individual savings account (ISA) is a type of saving account in which you do not pay tax on the interest you make. It works on the principle that all people in the UK on the basic rate of tax can now earn £1000 of savings interest per year without taxation. This amount decreases the higher your tax band goes.

What Are the Requirements?

To open an ISA, you must be a UK resident over the age of 16. You can have as many ISA accounts as you like, though you can only open one each year.

Younger children can benefit from junior ISA accounts. If accounts are a gift from parents, these may still be liable for tax so make sure to check the requirements.

How Do They Work?

The limit on cash ISA contributions for the 2021/22 tax year is £20,000. While you may not be able to open an account more than once a year, you can transfer them during the tax year. There are two main types known as a cash ISA and a stocks and shares ISA.

Your annual limit does not roll over to the next tax year if you make a withdrawal. For example, if you reached the limit you could not take out £2000 and then replace it. The only time this can be done is with a flexible ISA.

Types of ISA

Flexible ISA accounts operate in a slightly different way. They allow you to withdraw and replace money without reducing the current year’s allowance. This has to be done within the same tax year.

Fixed-rate ISA accounts will provide the highest rates of interest. In return, you will have to specify a time period in which your money will be locked away. If you do need to access it, then you will have to pay a penalty.

Some ISA accounts may offer a fixed rate for a given time period. For example, you may get a certain interest rate for three or five years. There are also a few more very specific types of ISA you should know about.

Stocks and Shares ISA

Your ISA can also be used to invest in stock, shares and bonds. Many people take out ISA accounts for the safety and guaranteed return, but this is one way your money can go up as well as down. As such, stocks and shares ISAs are better for long-term investment.

These accounts will charge a number of fees for services. Platform changing, trading fees, cashing out fees, and management charges can all add up. use them if you want to keep adding to the ISA over a long period of time.

Lifetime ISA

Lifetime ISA accounts are a bit of an anomaly, as they only allow you a £4000 limit each tax year. They can also be broken down into cash or stock and share versions.

The yearly £4000 limit can be put in with one lump sum or in instalments. After each month that you have saved, the state will add 25% to the total. As that is quite a substantial amount, there are a few caveats involved.

Firstly, you have to be between the age of 18 to 39 to open one. Secondly, you can only withdraw money if you are buying your first home or retiring. Thus, they can only be used to save for retirement or for buying a property.

Junior ISA

A Junior ISA lets you have tax free savings on behalf of a child. This can be for saving, investment or a mix and match approach. They operate in very much the same way as any other ISA account.

Up to $9000 a year can get deposited into a Junior ISA. The caveat is the child takes control of the account at 16 but can not get the money until they are 18. The money is then legally theirs, to do what they want with.

Tips on Opening an ISA

When opting for an ISA, the best rates are fixed rates. The longer you are willing to lock away your cash, the better the rewards will be. Fixed rates with fixed periods will give the best value, which will increase the longer you keep your money tucked away.

Many ISA accounts also remain open. For example, if you find a provider you have banked with in the past, they may let you pay into an old ISA account. You won’t have to go through the same setup process, but you will need to reactivate the account.

Another tip is to always use your allowance when possible. Even if you are not happy with the rates on offer, the money still has tax free status. You can move it in the coming years and add to it which will pay long term, especially when interest rates go up.

Finding a Provider

Now you know the benefits of a cash ISA, you should start to look for one. Shop around, as rates can differ wherever you go. You may find the most competitive rates are not your normal provider.

For all of your wealth management, CFI is here to help. With advice on everything from economics to wealth finance, we can help you get the most from your money in the coming year. Click here to read all our blog articles on private banking.

Finance

How to Save More Money Each Month: 13 Actionable Tips for Building Your Wealth

ByCFI.co

Looking to improve your financial situation? Whether you are struggling to make ends meet, you have a savings goal or you simply want a little extra in your pocket each month, there are a few money-saving tips that can transform your finances and life.

Many people wonder how to save more money and it can certainly be difficult when you have many outgoings. There are both big and small changes that you can make as part of a money-saving strategy that will deliver results. So, if you are looking for ways to save money each month then read on for the best budgeting tips.

1. Track Spending

First, you should track your spending. Keep track of every single expense that your household has for an entire month and list these in a spreadsheet. You should also subtract this from your total household income to see how much money you are saving each month. This will help you to see where your money is going and help you to feel in control of your spending.

2. Scrutinize Every Outgoing

Following on from this, you should then go through each of these expenses to see if they can be eliminated or if there are savings that can be made. Even making a minor adjustment to a small regular expense can make a big difference over the course of the year, such as bringing your own coffee in a flask instead of buying coffee each day.

3. Set Savings Goals

Many people spend frivolously because they see any leftover money as a bonus. Instead of throwing money away at things that you do not need, you should set yourself a savings goal. This will encourage you to tuck away any excess money and reduce your spending. You can keep this money in a high-interest savings account to grow your wealth over time.

4. Buy Cheaper Food

Food is a major – yet essential – cost to cover each month. There are always ways that you can make savings when it comes to food while still enjoying a delicious and healthy diet. A few of the best money-saving tips include:

Shopping at a cheaper supermarket
Buying non-brand products
Avoiding fast food/instant meals
Buying in bulk

5. Use Meal Prep

Following on from this, one of the best ways to save money each month on food is to use meal prep. Preparing dinners and lunches for the week in one cooking session allows you to cook meals from scratch, which makes it easier to maintain a cheap and healthy diet. Additionally, meal prep will save time and prevent you from buying expensive lunches and dinners throughout the week.

6. Buy Second-Hand

Before making a purchase, you should always ask yourself if you can get it second-hand first. These days, it is easy to buy clothes, technology, furniture and entertainment second-hand online. Additionally, consider selling items that you no longer need online for some extra cash in your pocket (and less clutter in the home).

7. Lower Your Energy Bill

Energy is another major cost, especially for family/large households. Fortunately, this is another area where there are lots of ways to save money each month. Additionally, this can also help you to reduce your environmental impact. A few money-saving tips include:

Solar panel installation
Using a smart thermostat
Turn down thermostat
LED lightbulbs
Use energy-efficient equipment
Turn off equipment when not in use
Home insulation

8. Shop Around

One of the best budgeting tips when shopping online is to shop around. Before buying a product, spend some time searching online to see if you could get the same product cheaper somewhere else (factoring in shipping costs). Alternatively, you might be able to find a cheaper alternative that is just as good (if not better).

9. Read Personal Finance Blogs

Part of a money-saving strategy should include reading personal finance blogs. Not only is this a great way to learn about ways to save money each month, grow your wealth and earn more, but it will also make personal finance part of your life. When you are thinking about personal finance, you are much more likely to make smarter spending decisions.

10. Find Cheap/Free Social Entertainment

It is unrealistic to eliminate unnecessary spending, but there are tips for saving more money on entertainment and socializing:

Dinner parties instead of going out to eat
Finding free community events
Spending time in the park/nature
Having drinks at home before going out

11. Try a Spending Freeze

If you find that you are cutting it fine each month and don’t have much cash in an emergency fund, a spending freeze could be smart as a way to relieve pressure. This involves eliminating any unnecessary spending for a period, such as a week, which should free up cash. You don’t want to do these too often as they can infringe on your life, but a few times a year they could make a big difference.

12. Reduce Driving

Instead of grabbing the keys when leaving the house, you should always ask yourself if you could walk or cycle instead. This can reduce your motoring costs and you might even find that you could manage without a car – this would make a huge difference to your finances. Additionally, walking/cycling is a great way to improve your health.

13. Automate Savings

Automating your savings is another smart money-saving strategy. When your income is automatically diverted to where it needs to go each month, it will prevent you from spending money that you should be saving. In addition to this, automating your savings will stop you from missing any payments and could help to improve your credit score.

Saving money in today’s economy is certainly not an easy feat as the inflation rate keeps increasing. It would certainly take a lot of hard work and paychecks until your retirement to build a massive retirement fund. Be sure to store and maintain your pay stubs regularly because you might need them some day as proof of income. If you need to create pay stubs and browse for editable pay stubs templates, try the paystub generator available on this post.

How to Save More Money Made Easy With These Tips

If you want to know how to save more money each month, these are a few of the best budgeting tips to try. Combining these could be transformative for your finances, which could improve your life in many ways in the long term.

Check out our blog today to learn more about personal finance and the steps that you can take to develop a strong money-saving strategy.