Business, Finance, Economics
Otaviano Canuto, Policy Center for the New South
Cross-border technological diffusion has contributed to rising domestic productivity levels in advanced and emerging economies and facilitated a partial reshaping of the global innovation landscape. However, there are local requisites to escalate the ladder of innovation capabilities.
Otaviano Canuto, Policy Center for the New South
The global trend towards increasing globalization since the 1990s seems to have had two different distributional consequences: income inequality between countries has declined, while economic inequality within countries has increased. However, technological progress has made the biggest contribution to rising income inequality over the past two decades. Domestic policies – fiscal policies, social protection – are the locus where inequality is to be tackled.
Otaviano Canuto, Policy Center for the New South
China’s growth trajectory in the second decade of the century has been one of a rebalancing toward a new growth pattern, one in which domestic consumption is to rise relative to investments and exports, while a drive toward consolidating local insertion up the ladder of value added in global value chains also takes place. Services should also keep rising relative to manufacturing. Declining GDP growth rates from two digits in previous decades to 6% in 2019 – and likely lower ahead – would be the counterpart to rising wages and domestic mass-consumption, and to the transition toward higher weights of services and high tech.
We point out two major challenges in the rebalancing. First, the transition toward a less investment- and export-dependent growth model has been taking place from a starting point of exceptionally low consumption-to-GDP ratios. Besides high profit-to-wages ratios, low levels of public social protection and spending lead to high household savings. An additional challenge comes from the lack of progress in rebalancing between private- and state-owned enterprises, something that is taking a toll on productivity.
Otaviano Canuto, Policy Center for the New South
In the 1990s and 2000s, the world manufacturing production to a substantial extent moved from advanced countries to some developing countries. This was the result of the combination of an increase of the labor supply in the global market economy, trade opening, and technological transformations that allowed for fragmentation of production processes. As a result, foreign trade expanded, and world poverty diminished. Such trade globalization process stabilized in the 2010s and tends to be partially reversed by the new wave of technological changes.
Did you know that one in three older people only begin to start retirement planning two years ahead of time? You can see how this can make planning for retirement stressful, confusing, and can leave a lot to be desired. However, this also means you’re not alone and that building wealth in your 40s isn’t impossible.
In fact, it’s never too late to begin building wealth and planning for retirement. However, it’s important that you begin with a strategy that makes sense so that you’re not throwing your hard-earned money away.
Read on to learn how to build wealth in your 40s with our straightforward guide!
Since retirement is still years away, it’s important that you start an emergency fund sooner rather than later. This is where you’ll set aside money that you’ll use only in times of emergency. For instance, if you lose your job and need to pay rent, experience a major health issue, or need to do immediate repairs on your car or home.
For emergency funds, it’s recommended to put aside enough money that will cover three to six months of living costs. How much you contribute is your own personal choice. If you have multiple streams of income, you may be able to set aside less.
You next need to deal with any debt. With high-interest rates and a tanking credit score, debt can put a hamper on future plans as well as hinder your ability to put money towards retirement if you’re only paying the minimum each month. High-interest debt such as credit cards, loans, and car payments should be dealt with as soon as possible.
Your mortgage payments may be able to remain the same if you’re near the final years of the mortgage. However, it may be helpful to make extra payments towards your mortgage in the early years in order to reduce your interest payments later on.
Once you have an ample emergency fund and you’ve handled your debt, it’s time to focus on your retirement plans. Regardless of how you plan to spend your retirement, it’s recommended to maximise your employer contributions. You may also want to consider voluntary contributions because you’ll be able to get tax relief on your contributions up to the limit of £40,000.
If you’ve already made the maximum allowable contributions and are still willing and able to pay more, you still have options with the carry forward allowance. This allows you to use any unused allowances from the previous three years in the current year, as long as you were part of a pension scheme during those years.
If you’re not able to contribute the maximum to your retirement plan currently, we still recommend using a retirement calculator. This helps you visualise your retirement in concrete terms. If you have trouble parting with your income, this may make it easier–you’ll be able to visualise how you’ll be living in 20 or so years!
Many people feel the need to take on some investment risk because they want to make up for the lost time. This is because the potential returns are higher, though those returns are far less guaranteed. However, it’s important to limit your risk, as you have far less time to recover from losses.
A conservative level of risk would be to invest a percentage equivalent to your age in bonds, while the rest goes into stock. However, it’s important to speak with financial planners or accountants before you even begin making investments. They’ll be able to help you decide on how much to invest as well as the risk you’re able to handle.
If you don’t have life insurance now, it’s important to get sooner rather than later, as the policies are more affordable the younger you are. Many people have life insurance policies with their workplaces, but if you started with your company years ago, it may be worth speaking with the human resource staff about upgrading your package or policy or add second life insurance.
It’s also important that you add any additional family members or children to your policy. Last but not least, if you don’t go to a doctor every year, you may want to consider no exam policies that aren’t as stringent when it comes to yearly check-ups.
When you start saving for retirement in your 40s, it may feel selfish if you have children or other dependent family members. As your retirement account begins to grow, you may feel the urge to take out some in order to send your children on vacation or help them more with college. However, it’s important to remember that your children still have their lives ahead of them.
As you get older, it’s important that you’re able to help yourself and your spouse. By saving for retirement and making the right financial decisions, your children won’t have to worry about you as you grow older!
It’s never too late to start building your wealth or plan for retirement, even when you’re in your 40s. When it comes to financial planning tips, the best takeaway is to start planning your strategy today. For instance, if you don’t have an emergency fund, we recommend starting with this first.
If you lose your job or you need to make sudden medical payments, you’ll be taken care of with an emergency fund to dip into. Next, we recommend taking care of any high-interest debt that impacts your ability to contribute towards your pension.
Maximise your contributions as much as possible, and try to visualise your retirement with the help of a calculator. Now that you know how to build wealth in your 40s, you’ll be well on your way to a comfortable retirement.
Ready to stay on top of the latest banking and finance developments in the world today? Keep reading our finance archive!
A lot of investors are looking to diversify their portfolios by investing in crypto. The main reason for that is the possibility of higher returns, especially since most cryptocurrencies are deemed volatile. In case you’re a beginner in this field, then it’s important to take the time and learn more about cryptocurrencies, blockchain technology, and online trading sites. In this guide, we cover essential information to help you make your first crypto investment.
A cryptocurrency is a digital or virtual currency that is used as a medium to transfer money on the internet. Bitcoin was the first cryptocurrency that was launched in 2009. Today, the competition is increasing as a lot of companies are developing their own digital currencies, and currently, there are over 4000 cryptocurrencies available on the crypto market. Even though there are some differences that make each cryptocurrency unique, what they have in common is the blockchain technology.
This underlying technology is what made cryptocurrencies successful, and it is one of the main reasons why the crypto market is thriving today. Blockchain technology is a decentralized and highly secure system of recording information that was created to enable crypto transactions without the supervision or control of a central institution. Some of the benefits of blockchain technology are irreversible transactions, short processing time, low transaction costs, anonymity, and other perks. Plus, by design, cryptocurrencies are deflationary currencies, and their supply is finite.
Before opening an account on an online trading site, you should take some time and research the cryptocurrency. A good starting point is to read the white paper of the cryptocurrency because you need to find out more about how it operates and what are the main advantages of using it. For example, Bitcoin is known as a safe-haven asset because it is widely used and is the largest cryptocurrency by market cap, while its total supply is restricted to 21 million.
When you have a good idea about the group consist you want to include in your portfolio, then you can find a reputable and trustworthy crypto exchange site that suits your preferences and main financial goals. A reliable platform that compares different exchange sites is https://buyshares.co.uk/cryptocurrency/exchanges/.
The detailed review includes top crypto exchange UK platforms, their main features, payment methods that are available on the site, commission fees, withdrawal fees, among other relevant information that will help you make your decision.
It doesn’t matter whether you’re looking to make long-term or short-term investments. Choosing the right and safe storage option for your cryptocurrencies is a vital step as a new investor. You can choose from different crypto wallets, including online, mobile, desktop, and hardware wallet. A suitable wallet for online trading is the web wallet because you can access the funds from a web browser.
But make sure to have a good understanding of how your private and public keys are stored. They can be more vulnerable when they are stored on third-party servers. Otherwise, mobile, desktop and hardware wallet are considered safer options, but it is more convenient to use a hot wallet when it comes to online trading such as web and mobile wallet.
It is also important to learn as much as you can about the crypto market and to keep up with the latest trends and news. For this purpose, it is beneficial to choose a platform that has a mobile app because you can easily access your account from your smartphone and make changes according to the latest developments in the market.
Also, make sure to learn more about trading and pick a strategy that works for your budget and for your portfolio. One good example is the Elliott Wave Theory , which is based on long-term price patterns and repetitive patterns to predict future price movement.
Your credit score can have a major impact on what you can and can’t achieve in your life. In these modern times, your credit score rating can determine whether or not you get a car loan, a mortgage, an apartment, or even a job.
If you’ve got a less than perfect credit score, you don’t have to fret. While rebuilding your credit won’t happen overnight, you can take steps that will help increase your score over time.
Are you wondering what you can do to boost your score so it stops limiting you?
Let’s take a look at eight tips for improving your credit score rating.
There are a number of different factors that determine what your credit score is. 30% of your score reflects your credit utilization ratio. This ratio signifies the total amount of credit you have access to and how much of that credit you are using.
Basically, if your total credit limit is $10,000 and you have charged $2000 to your credit cards, you have a 20% credit utilization ratio.
In general, it is recommended to not use more than 30% of your credit card limit. Some experts even suggest keeping your utilization ratio under 10%.
Are you trying to learn more about credit in general? Check out the different types of credit here.
Occasionally, credit report errors can occur that can hurt your credit score. This means that even if you are doing everything right, you should review your credit report periodically.
If you do find any errors on your credit report, you will need to contact the credit bureau and file a dispute.
It is a good idea to periodically request a credit limit increase. Different credit card companies will have methods for this process, but it is usually a quick and easy thing. In fact, most companies will allow you to request an increase online.
The reason that this can help to improve your credit score rating is that it lowers your utilization rate.
There are a couple of things that you will want to keep in mind when you do this, though. For one, don’t request an increase on a new credit card, as many companies won’t give increased credit limits for new cards.
Secondly, you want to make sure your request does not require a hard inquiry on your credit report. Relatively small increases can typically be approved automatically. If the company asks for more information, declined the request, as they will likely do a hard inquiry which can negatively impact your credit score.
The most influential factor that determines your credit score is your payment history. This means that it should be your highest priority to make your payments on time.
One of the best ways to ensure that you are never missing payments is by setting up automatic bill payments. This way, the money is withdrawn from your bank account on a specific day every month to ensure that you never have late payments.
Do you have a family member that has a higher credit score and you? If so, they can add you as an authorized user to their credit card. This can help to boost your credit score if they have made on-time payments, have a low credit utilization ratio, and the account history is long.
Over time, as you build your credit history, you will be able to qualify for cards that have better interest rates and better rewards. However, it is not usually a good idea to close your first credit card. Instead, make occasional purchases with that in order to keep it active.
If you completely stop using a credit card, the bank might close the card or reduce the credit limit. If you receive a credit line decrease than your credit utilization ratio will also go down.
It can also hurt your score to close an old credit card account. The only reason you might want to close an old credit card that you no longer you as if it has an annual fee. Even so, though, you might be able to downgrade the card to want without an annual fee without closing the account.
It can be beneficial to your credit score to have a number of different credit accounts. Of course, you should only borrow money when it is necessary. However, it can demonstrate to lenders that you can manage credit responsibly when you have a variety of credit accounts.
This might mean having a home mortgage, a credit card, and a car loan.
Paying off debt will help to lower your credit utilization ratio. However, if you have been missing payments than your credit score can be negatively affected. You can often negotiate with credit card companies to have the negative hit removed from your credit report in exchange for paying off your debt in full.
If you go this route, remember to get the agreement in writing.
Boosting your credit score rating takes time, organization, and commitment. That being said, you can help to increase your number over time in a way that can offer serious benefits to many aspects of your life.
Are you looking for more resources to help you navigate the complicated world of finances? If so, check out the rest of our blog for more informative articles!
Are you dreading tax time and don’t know where to start? You’re not alone. According to the Federation of Small Businesses (FSB), it takes small business three weeks every year in order to comply with tax rules. You’ll find that preparing ahead of time by doing research and budgeting will help you pay self-employment taxes easily without the stress. The confusion comes from how much you have to pay depending on different percentages of your earnings. We’re here to help cut down on the time and smooth away some of the confusion. Read on for our top six self-employment tax tips so you’ll know how to do taxes correctly once the time comes!
If you were working on a side-hustle and didn’t earn over £1000 throughout the year, you’ll be happy to know that you don’t have to tell the HMRC that you’re self-employed. You also don’t have to pay taxes for the first £12,500 you earned.
If you make more than this, however, it’s important that you plan ahead and budget for taxes. According to UK tax laws, you’ll need to pay 20% for income between £12,500 and £50,000. This bumps up to 40% for income between £50,001 and £150,000.
Lastly, it increases to 45% for income of over £150,000. This also includes your income if you rent out properties.
We recommend setting some money aside in a separate savings account every time you’re paid. This will help you keep track of what you owe and also help you remember that not all the money you earn is yours–even if it feels like it!
It’s also important that you budget for the National Insurance payments that need to be made. If your profits from self-employment are greater than £6,475, you have the pay a rate of £3.05 a week for Class 2 National Insurance. This is paid through direct debit to HMRC.
If you’re making between £9,500 and £50,270, you’ll also need to pay 9% of your income for Class 4 National Insurance as well. For profits greater than £50,270, you’ll have to pay 2% of your profits. What you have to pay for National Insurance will also show up in your Self Assessment tax return.
Even if you budget ahead of time, you may find that the HMRC is asking for a task bill that’s higher than you predicted. One reason could be because they’re asking to collect taxes that are due in the current year as well. They calculate this based on your earnings from the last year.
You’ll need to make your payments on account in two instalments: before midnight on 31 January and 31 July. Budgeting ahead of time will help for your first payment, as this is where you’ll find that for your first year, you’ll need to pay 1.5x more.
It’s important to remember that you don’t have to pay based on your entire profits. You can claim expenses that you used for business in order to cut down on what you owe come tax time. If you use a vehicle for business, this is one of the easiest ways to claim some expenses.
Here are the mileage rates that you need to remember:
The easiest way to keep track of these miles is to use an app that can automatically log your route and do the mileage calculations for you throughout the year. Many of them allow you to name and categorize your trips.
If you take frequent trips to the same location, you can even have the app automatically categorize the trip based on the route so that you don’t have to always manually input the information.
If you work from home frequently, it’s also important that you also make note of this on your Self Assessment. If you’re a sole trader or partnership, the easiest way to do this is through the simplified expenses rules.
Depending on the hours you work from home, you’ll be able to claim a flat rate. For instance, if you work for 25 to 50 hours, you’ll be able to claim £10 per month. If you work 101 or more hours, you’ll be able to claim £26 per month.
It’s important to remember that you don’t have to suffer through taxes alone. As your business begins to grow, there’s no shame in finding the help of a bookkeeper as well as an accountant. A bookkeeper will help keep all of your records organized and up-to-date so that they’re easier to compile during tax time.
An accountant can help you through the process of doing your taxes. Even better, throughout the year they can help you make smart business decisions. They’ll analyze the data and help you find ways to maximize profits and minimize expenses.
When it comes to self-employment tax tips, our best piece of advice is to begin preparing as soon as you begin your small business. Keep track of your income and expenses so that you can predict how much you need to pay and how much you can deduct.
Then, create a separate savings account so that you can funnel a percentage of your earnings away. That way, you won’t become attached to the income you earn that still belongs to the government.
There’s also no shame in asking for help–bookkeepers and accountants are professionals that work with small and large businesses each day. They’ll help you explain the tax rules and procedures better as well as provide ways to keep your income organized. Even if you’re not looking for tax advice, accountants can help you make better business decisions.
Ready to stay in-the-know when it comes to financial news for SMEs? Take a look at our finance archives to stay on top of the latest developments throughout the world!
Creating a budget is one of the best things you can do for your financial health. Budgets are like road maps giving you direction. To help you manage it all, we’ve rounded up the ultimate budgeting for beginners guide.
We’ll go over how to make a budget, where to start, and budgeting tips to help keep you on track. Here’s your go-to guide to creating a budget.
When creating a budget, you’ll want to start with your goals. Your goals could be anything from building up your emergency fund to saving for a home. Thinking about your goals will help you better understand where you should put your money.
If your goal is to retire early, for example, a good portion of your budget will go towards retirement savings. If your goal is to pay down debt, you’ll focus your efforts on reducing your credit card bills.
One helpful tip is to set small, attainable goals that will help you reach your larger goal. Let’s say your end goal is to pay off your debt.
Start with the low-hanging fruit and pay off your smallest or highest interest debt first. Paying off a small credit card, for example, will leave you with a few hundred extra pounds each month to pay off a larger card.
After you’ve set your goals, you’ll want to write out your income and expenses. You can’t make a plan for what’s coming out if you don’t really know what’s coming in. Write out any income sources you have.
Next, you’ll need to write out all your expenses. Separate your fixed expenses as well. Fixed expenses are expenses you have to have or pay such as rent and electricity.
Non-essential expenses include gym memberships, music subscriptions, and the money you spend on clothes. These are all expenses you can trim if the money in your budget becomes tight.
Check your bank statements for anything you may have missed. Go back a few months so you can see anything that’s paid quarterly. The more detailed you are, the more accurate your budget will be.
Once you see how much you have coming in versus what you’re spending, it’s time to make some cuts. Be realistic here. If you cut too much, you won’t be able to stick to your new budget.
Look at anything that’s non-essential. If it isn’t being used, cancel it. You may be surprised by all the subscription services you have that you aren’t using.
If you have three group fitness class memberships, for example. Choose your favourite and stick to one.
If you’re spending more than you’re bringing in, cutting items will help you get back on track. Keep your goals in mind here. If it isn’t helping you reach your goals, cut it.
To start writing out your budget, begin with your fixed expenses. Rent, student loan, and your car payment are examples of fixed expenses. You need to pay for these each month.
Next, look at your utility payments, cell phone, and grocery bills. Groceries are one you can be flexible with if you need to. If you’re eating out for three meals a day, cut this down and increase your grocery budget to save money.
When you’re assigning items a budget, be realistic. If you’re used to spending £500 a week on groceries for a family of six, start by cutting that down to £300. If you try to live off £50, you’ll probably end up ordering takeaway and blowing your budget.
The next part of your budget should include reaching your goals. Remember to work on small goals to help you reach your larger one.
Carve off any disposable income towards reaching your goals. If these aren’t included in your goals, make room for saving for emergencies as well as retirement.
Your budget can go on anything from a piece of paper to an online app. A spreadsheet that you can access online and from your phone is also helpful. You want to be able to see your budget whenever you need to.
There are a number of helpful budgeting apps as well. These often synch with your bank accounts, so your income and spending are tracked.
Fixed expenses are harder to cut down. Rent, for example, has to be paid. If rent is too expensive, this is where getting a flatmate is helpful. You can split the rent, utilities, and even some groceries. You two can also share a car.
If you live in an area that’s walkable, you can also sell your car. You’ll use less petrol, save on car payments, and insurance.
The more you save and pay down, the less fixed expenses you’ll have. With budgeting, you can go from paying three credit cards to one.
Once your budget is in place, you’ll want to make sure you’re staying on track. Host weekly or monthly meetings with yourself to make sure you’re staying on budget. It’s so rewarding to see yourself meeting your goals.
If a goal is to pay down debt. Pull up all your accounts online and check on your progress. When you see that debt number go down, put that money towards your emergency fund or another goal.
Budgeting for beginners starts with accountability. You need to hold yourself accountable for your spending.
The only way a budget works is if you keep it realistic and set small, attainable goals. For more money advice, check out the finance section.
The average household in Britain has over £15,000 in debt. You may think to yourself, well I’m not out £15,000. There’s no way I’d ever accumulate that much debt.
Debt is often connected to large purchases like homes, automobiles, or student loans. We know about that debt. We are prepared for it.
But the debt that creeps up over time is the trickiest. A little bit here, a little bit there seems fine. Before you know it, though, you’ve matched that £15,000 and then some.
Don’t let small mistakes in your financial planning lead to big debt. Check your habits against the following seven mistakes that we see most often. Read through for tips on how to avoid them and what habits to adopt instead.
One of the most common financial planning mistakes is not having an emergency fund. This is enough money to cover your basic expenses for at least three to six months.
Maybe you’re in school or working your minimum-wage first job out of university. Saving what you can, even if it’s £20 a month, makes a difference.
But over the course of a four-year degree, that £20 a month grows to nearly £1,000. And that doesn’t include interest earned from your bank!
You may be out of school and established in your career. If you do not have an emergency fund, you need to start one as soon as possible.
Begin by sorting out how much money would cover six months of expenses (Netflix or Amazon do not count). Divide that number by how many months you can take saving up for it.
Once you have a plan, get your first payment into a bank account with a decent APY.
You may not have an emergency fund because you’re paying off student loans. You aren’t alone! In fact, in England, 1.3 million students receive financial aid each year.
But it’s imperative to keep saving even as you pay off your debt.
Loans often come with steeper interest rates. So your best course of action is to make larger payments against your debt upfront. In tandem, make smaller payments toward your savings.
Once you’re debt-free, you can save faster. Consider saving the same amount you were using to pay off your debt each month. After all, you’ve already practised not using that money for other things.
Smart financial planning accounts for every expense, and that includes taxes! You try to think of everything: the mortgage, the kids’ education, daycare, pet care, investments, retirement. It’s easier to forget about taxes while planning your finances because they come up only once a year.
When you do get your tax return, you don’t want to find yourself pulling from your savings account. Average the taxes you paid over the last five years and divide that by 12. That’s the minimum amount you should be putting away each month for your taxes.
If you are in Australia, take a look at Sydney’s dedicated SMSF advisers for advice.
Alright, so you’ve made an emergency fund, you’ve paid off your debt and you’ve budgeted for taxes. Well done, you! Next, we’re going to consider the other annual, one-time expenses you may not be considering.
For example, one annual event, in particular, comes around the same time every year in December. You may recall a lot of expenses associated with it: ribbon, wrapping, gifts and cards. We’re talking, of course, about Christmas.
It could be Christmas, Hanukkah or your child’s birthday party. Either way, make sure you add these one-off expenses to your budget. Think of it this way: a budget is also a great way to keep from overspending during the next holiday season.
Speaking of overspending, that’s one of the easiest financial planning mistakes to make. Here’s where your consumer debt can creep up on you over time.
It starts with one handbag that’s just a little over your price range. Or a fantastic deal on that new teapot online even though you really don’t need a new teapot. It could even be buying your morning coffee at the cafe instead of making it at home.
These £5, £10, £15 splurges here and there may not seem like much, and they aren’t if they’re one-time-only purchases. But over days, weeks and months, you’re subtracting hundreds of pounds from your budget.
If you want to be able to splurge now and then, add it to your budget. Put away a few pounds a week and treat yourself to a fancy cafe treat once a month. Save up for that nice handbag or decide whether you can live with the teapot you already have.
If you’re not investing (and you don’t have heaps of debt to pay down), you should start. It’s the best way to see your money grow over the long run.
But one mistake we see with new investors is not diversifying their investments. What this means is putting all your money into one kind of industry. For example, investing everything you can into real estate investments.
This isn’t a wise way to invest because it leaves you at a higher risk. If the real estate market drops, you’ll suffer a greater loss than if you’d diversified. If you’d invested in real estate as well as lumber, technology and food, for instance.
If you’re not sure whether you’ve diversified your accounts, speak with your bank or an advisor. They’ll be able to offer suggestions on ways to improve your profile.
And while we’re on investments, let’s talk about saving for retirement. Even if you’re in your twenties or thirties, you should be contributing to a retirement plan.
And while we’re on investments, let’s talk about saving for retirement. Even if you’re in your twenties or thirties, you should be contributing to a retirement plan.
Thankfully, many companies offer retirement savings plans to their employees. These plans usually take a portion of your paycheck and put it into your retirement account. Sometimes, companies will even match your contributions up to a certain number.
Either way, it’s worth looking into! It saves you from spending that extra money and gives you an added incentive to save.
Organizing your finances may not be the most glamorous undertaking, but it is a critical one. Use these financial planning tips to help you navigate your finances with confidence.
And if you’re curious about getting started with a financial advisor, check out this article.
