Mitsui Targets Singapore’s Ailing but Lucrative Property Market

The Singapore property industry is facing a significant shakeup with the emergence of Proptech. But even as this happens, the market is on the verge of receiving a massive investment after Japan’s largest sogo shosha, Mitsui, and Co, revealed plans to join the fray.

The project is set to kick off before the end of this year as Mitsui & Co (Asia-Pacific) Pte roles out an ambitious effort to divest its, which has called for building new core businesses. The areas the Japanese giant targets include healthcare, nutrition, mobility, real estate and retail services as well as agriculture.

Turbulent Office Property Market

Singapore’s office market remains a turbulent one. The Singapore property market woes continue as oversupply, but lackluster demand continues. The market has already recorded a fifth consecutive quarter-on-quarter rental decline. However, in the third quarter, industrial properties landlords didn’t take much rent cuts as their domestic counterparts.

Landlords have been forced to cut rents by large margins, but those unwilling to do so have come up with creative ways offer their tenants more incentives including longer rent-free and fitting-out periods, subsidizing repairs, and covering alteration works.

The overall property market outlook projects the office rent to bottom in the last quarter of 2017. The completion of Marina One among other high-end office space has created a spike in the vacancy rates in the Downtown Core area, with many companies enticed to move to new modern offices. Vacancy rates in Islandwide and the core CBD areas increased by 6.6 and 5.9% in the second quarter.

The global economy is also to blame for the current undercurrent in the sector. The potential U.S. rate hikes, the repercussions of Brexit and the uncertainties around the Chinese economy are taking tall on the overall office space demands in Singapore.

The Impact of Proptech

Property management firms are also facing it rough as property technology take a swipe at the industry, leaving merger as the only viable salvo for such companies.

In July PropNex Realty and DWG’s merged to form Singapore’s single largest real estate company. As this happened, other players in the market slashed their sales force as the impacts of technology and innovations dug in.

According to Tan Tee Khoon, Knight Frank’s executive director and head of residential, consumers want to handle their property transactions, and thanks to technology they are becoming less dependent on human agents. He attributes this to education which has yielded to a more tech-savvy consumer base.

Digital friendly property management platforms make it for consumers to handle their businesses, and this has changed the marketing and negotiation approach in the industry.

Nonetheless, technology has enhanced professionalism, and only those agencies that are impeccably polished and professional can stand the test of time. They are also forced to invest heavily in automation and digital friendly platforms.

Path To Recovery

While the probable Mitsui investment is set to increase supply in an already oversupplied Singapore property market, the firm is adamant that the lucrative market will spring to life, thus offering a growth opportunity.

According to Mitsui’s regional chief executive officer Taku Morimoto, in the Singapore market, the company is seeking to invest in commercial and industrial buildings, including warehouses and data centers.

Last month, brokerage and research house Maybank King Eng predicted property market resurgence. In their September report, the Thailand based conglomerate foresaw monthly office rent costs rising to S$11 from the current S$ 8.95 per square feet by the year 2020.

Business Park rents are expected received a modest 1% – 2% for the year, thanks to higher rents with newer developments.

The entry of the Japanese giant in the sector is an expression of confidence in the sector’s outlook, giving the office property stocks a major boost.

Best Investment Options in The Current World Economic Position

Our world’s economic condition is profoundly affected by the political scenario, and with Trump’s election as the president of US which is the biggest power in the world in terms of business and trade, there is a global panic within the investors. Though it has settled a little, but with the rumor of the next World War (III) and the way the tension is growing between countries like China, India and Japan, the financial market is in great turmoil though it is not easily understandable at present. If you are an investor and worried about your investments during this worldwide economic and political situation, you need to find out the best investment options which five of them are listed below;

  1. Mutual Funds: There is tremendous volatility in the market of equities and share, but with mutual funds investment you can mitigate the risk to a certain extent. It has been observed for a while that even though the markets are in downside movement, the blue-chip companies are performing well in the situation. Therefore, investing in index-linked mutual funds can reap a good profit on the long-term Companies moreover, regulate mutual funds so that you don’t have to panic over each movement on the chart of the shares you have invested in. Since the world financial market is in turmoil due to political issues, mutual funds serve as haven for the equity investors.
  2. Mixed or Balanced Funds: These are funds which are comprised of both equity and debt financial instruments for the better financial leverage. If you are worried about the downside of the investments but wants to explore the upside, you need another financial instrument to stabilize the returns on your investment of which that instrument can be debt fund. As debt fund provides an almost consistent performance, it can mitigate the risk of the downfall of the equities to an extent. The weighted average of the fund will determine the performance of yours.
  3. Insurance: On one hand, the economic tussle is going on and on another, there is a risk of a world war. In such situations, what can ensure your financial stability more than a good deal of insurance policy? Insurance coverage investments are always safer than rest of the financial instruments as there is a fixed or variable amount which you can claim in an individual event or at the maturity of the policy. Additionally, insurance policies are least affected by the political and economic conditions of the country.
  4. Bonds: Government can print notes and pay the bondholders even if there is a political clash in the country or economic downturn. Government bonds are referred as the safest financial instrument and there is no risk associated with it as the government won’t default in paying the investors on maturity. If you are much aware of the markets and the companies that issue bond (corporate bond) you can also invest in them. The return on the corporate bond is higher than the government bond on the cost of risk you are taking by investing in them, yet, investing in blue-chip bonds is safer as they more or less pay the investors without any default.
  5. Alternative Investments: Alternative investment is a part of finance that deals with investments in real assets and commodities which are correlated with the market. If you want to secure your financial position in the present economic condition, this can be the key to success. Investment in real estate, gold and silver can be profitable as the market value of these financial instruments is increasing with time. If you are looking to invest in foreign countries, then investing in the developing world’s infrastructure can reap you a good amount of profit as there is massive growth in that sector.

Growth of Investments in Virtual Currencies/Crypto Currencies in Singapore

Virtual or the Crypto Currency is one of the major topics that analysts and investors are talking about for last few years. In last 5-6 years, the rise of the crypto currencies has been dramatic with lots of ups and downs, some of which were even not expected by any investors across the globe. Singapore is one of the major nations outside the US which has incorporated virtual currencies in its business for payment or transaction purpose. Being one of the most influential and vast financial markets, Singapore has investors who are investing huge amounts in these currencies which even made the Inland Revenue Authority of Singapore (IRAS) to regulate and build a separate set of tax guidelines for the businesses which are using these currencies for transaction and investment purposes.

Things to know about these digital currencies

Bitcoin is the most popular name in this world of crypto currencies, but there are similar currencies which the investors are buying, trading or using for making transactions as well. If you look at the graph of rising and fall of the price for Bitcoin, you might be taken aback with the grievance of not investing in it five years back. It has grown from $0.05 to even $4668.50 in only seven years, but the market is volatile. It can rise to 500% in 2 days and drop down by 1000% in the next three days; it is that unstable. But the good news is, Singapore has adapted to this volatility and there are major financial institutes and even individual investors who are investing, buying, storing these currencies and reaping huge profits.

Virtual currencies, crypto currencies and digital currencies are referred as same by most of the people, but in reality, there are differences between these three. If you are interested in investing in these currencies in Singapore, you need to understand the differences.

While virtual currencies are the unregulated and mostly controlled by its developers with a close knit of people who are using the same virtual platform, digital currencies differ from this virtual one. The digital currencies are created by the medium of block-chain technology which is an electronic process and stored electronically as well. These are similar to the traditional currencies but not recognized as legal tender. Crypto currencies are subsets of digital currencies and for security reasons, it uses cryptography. Though these are not issues by any central authority, it is highly difficult to counterfeit these coins.

In Singapore, Bitcoin is the dominant player in this world of digital currencies and as it is a global one, it is accepted by most of the businesses, investors. The second one in the list is Litecoin which is also a globally used crypto. People are buying, selling and making transactions with these coins in real in Singapore as well as around the world.

Regulation in Singapore

In the year 2014, the Monetary Authority of Singapore (MAS) started working on the management of these currencies to reduce the risks of money laundering and financing of the terrorist activities. Singapore is the first country in the world to regulate these currencies without putting any barrier in its growth.

In Singapore, virtual currency exchanges are not authorized as they don’t need any license to execute their operation in the country but the GST is applicable on the transactions done with these currencies. It is Singapore, which got the first ATM for Bitcoin where one can change Bitcoins for real coins and cash.

Though there are also various cases of theft and money laundering with these coins, with proper regulation, Singapore has become one of the most sought out places for investing and dealing in virtual currencies. With sound knowledge and analytical skills, investment in these currencies can be worthy provided you can manage and keep them safe.

How Does Brexit Affect The World Economy And Financial Markets?

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Brexit which separated the UK from EU came as a shock to the whole world and the financial markets across the globe. Not only in EU or UK was taken away by the decision, it took few weeks for it to get back on the track. The financial market was surprised and became violent for covering up their losses or the potential losses which could arise from this Brexit. The nations across the globe which are an active participant in the globalization and global market got affected in various ways. The geopolitical uncertainty had taken on every country and financial market during those months.

The macroeconomic situation soon after Brexit was terrible, but it smoothened with time. The sharp fall in the EU and UK currencies against US dollars affected the nations in the sector of export and import.

Brexit along with Trump’s election was a blow to the head of the world economies. The US market faced several issues regarding the manufacturing sector as the USD grew stronger against US pounds and EU currencies.

After the EU and UK separation, there is no road map which they are following, or other nations are navigating through. There is a chaotic situation as the major two countries, US and UK have the most troubled geopolitical situation.

Since the EU and the UK markets are volatile at the moment, the investors are looking for a safe-haven. That safety has been provided by the US markets especially the treasury markets, and thus there is a continuous decrease in the interest rates in the US markets as well as their currency value is increasing against UK currencies which are in turn putting further pressure.

Not only US but a major portion of the investments from the UK and EU investors are getting diverted to the Japanese markets as they are providing real interest rates on the investments. Moreover, the higher value of the dollar and the yen have an adverse impact on the export sector of their economies only which in turn is affecting the world economy at large. This negative consequence is changing the difference between the steady inflation and sharp deflation in the service sector and goods sector respectively.

The Chinese market is stuck between these two super powers – EU and the US, thus it is getting pressurized by the US to lower its value of the Yuan so that the US can take the benefit.

Coming back to the financial markets across the globe, the effect of Brexit was huge as $2 trillion of money was lost on the day of the vote for Brexit, 23rd June 2016. On the whole, 2016 faced various issues and the markets were sluggish. Since this blow was massive, the markets are still recovering from it.

The British pound fell sharply to 31 years low in just a day as the money was getting withdrawn and investors were putting them in the government bonds to be on the safer haven. Due to the fear of the British vote, the market shifted to safe regions all of a sudden making massive losses for the world economy.

The IMF after Brexit cut down the growth forecast by 0.1% and the global growth forecast now stands at 3.4% for October 2017. For the upcoming year, 2018, the forecast is at 3.6% provided everything goes smooth and there are no significant geopolitical events like this.

The strength of the global economy will be the emerging markets for the coming years and the growth of the emerging markets will grow the world economy as a whole. The trades and manufacturing sectors will grow stronger in the emerging market adding to the potential of the global platform which is going to smoothen the world economic condition.

Why China’s Growth Is Slowing Down?

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China is the second largest economy in the world that plays a vital role in overall growth prospects and slowing down of the growth in this economy is affecting the whole world. The GDP growth in last year, 2016, was 6.7% which was earlier in the brackets of 7%-8%. This year, the analysts and the economists are predicting it to drop further. One of the think-tanks of the government in China predicted that 6.5% growth could be witnessed this year making it a further blow to the nation. Though this growth rate is anyway higher than the rest of the world except a few countries like India which is now growing at 7%-8% per annum, but comparing China’s previous year’s growth, this is a cause of worry for the whole economy as well as the global traders and the entrepreneurs.

Though the technology innovations and the developments are going to increase the growth due to other economic factors, the rate of growth is still going to slow down as predicted by the forecasting department of SIC.

In last year, the industrial growth was expected to rise at 6.1%, but it has been revised down to 5.9% because of the slow economy. It is slowing down because of the decrease in the exports of the company. Few of the major importers of China have been developing their manufacturing units and trying to be self sufficient which is adding on to the pressure of the economy as export is the primary source of revenue for the nation.

Another factor which is playing an important role in the economic slowdown of the country is currency devaluation. In 2015, it was devalued by 2% which was a shock to the global market and last year it fell almost 7% which is the deepest fall against Dollars after 1994. It is like a vicious circle which is pulling down the currency and thus affecting the growth of the economy by slowing down trades.

The capital outflow of the economy is another thing to worry about for the government and global traders as it decreased to $3.052 trillion in Nov 2016 which is the lowest in the past six years. As because of the idea of keeping the currency stable and without using the reserve; the capital outflow fell so drastically.

Chinese economy in last ten years attempted to become consumption based economy from its prior status; investment based economy which increased their debt to 247% of the GDP which was earlier 164%. This increasing debt is neither going to slow down in the recent future which is again affecting the overall growth of the economy adversely. In last year, the debt rose to another 58% on a YOY basis and it was 7.5 trillion Yuan, which made it a big concern.

The real estate market has been falling and lost more than $3.2 trillion in the year 2015 when the stock market crash happened in China. This was a big blow to the economic development, though the government is doing away with it and trying to expand this sector again.

The Chinese economy has become bleak, but it cannot be anticipated or analyzed how weak it has become from inside. As the forecasts and the predictions are based on assumptions but the underlying causes are much bigger as it seems with the passing time. The economy is developing its financial sector to be more transparent so that it can attract foreign investments which help in the growth of the economy. There are various avenues too where the economy needs to work upon to bring back its growth and some of these are retail industry, infrastructure, financial market and the money market.

Investment And Economic Freedom In Singapore – A Boom For The Economy!

Singapore ranks as the top economy in the world for the ease of doing business, by World Bank. It has remained in this position for the last one decade which is phenomenal in its own. According to the survey done in the year 2016, Singapore followed by New Zealand and Denmark are the top three countries where doing business is hassle free.

There are various factors which enhance the freedom of doing business in Singapore, and some of the most important factors are the setup/legalities of stating a new business, exemptions provided by the IT or government, etc.

Singapore is a place where any commercial disputes are solved within only 150 days of filing the complaint which is the shortest period taken by any nation for doing the same. This also eases the entrepreneur’s life as well as the clients and customers.

Lets us dig a little deeper in the factors which influence the investment and trading environment in Singapore in such a positive way.

4 Major Factors

The first and the natural factor which benefits this economy is its location. The geographical position of this country is so brilliant that intrigues many nations to trade via this country. It has one of the most popular and busiest ports in the world shipping various goods to different countries and being the heart of the south eastern part of the largest continent, Asia; the customer base becomes automatically huge. Singapore is also regarded as the entry point to the Asian market which has billion of clients, and thus this country attracts various foreign investments as well.

The second reason might be a little off track but the airport of this country serves 20 million of passengers in a year, and this is marked as the top airport in the world for last twenty years. The connection of this point with the ease of doing businesses is that the connectivity of Singapore with rest of the world is very smooth especially when it is on the Asian continent. This facilitates the businesses and trades in Singapore as well.

Thirdly, the government regulation of business enterprises is very friendly, and it is the most important reason behind the enormous growth of business and trade in Singapore. The Singapore government doesn’t impose too much legality to start a business. This in turn influences the new entrepreneurs and the people with new business ideas to develop their business without must restrictions of the law and intervention from the government.

The next which tops the list is the tax system of the country. The tax system followed in Singapore is one of the best in the world as the corporate tax is 17% which is one of the lowest in the world. There is moreover no capital gain tax which invests in the people worthy. Singapore has entered into double tax treaty within many nations to facilitate the trading and investment environment in the country. This agreement helps in the avoidance of paying tax twice and thus influences the investments.

More Reasons To Do Businesses In Singapore

Singapore has a very liberal immigration policy which helps to recruit the best of the talents across the world, and that adds to the development of the business in Singapore.

The laws of copyright, patents, and trademark are stringent in the country which makes the companies protect their individuality and thus in turn in helps in the growth of the businesses.

The government not only allows an exemption on the new business and the FDIs but also work along with the new enterprises to develop the country in every aspect. Industrialization is one of the top most concerns for this government which is one of the most vital driving forces behind such a liberal trade and economic policy.

Last, but not the least, is the attitude of the professionals working here. The highly skilled and knowledgeable work force is in Singapore which is driving the growth of the businesses in the country. The work-life balance promoted by the companies are also facilitating and influencing the best minds in the business to put in more effort.

 

Why Is Singapore A Safe Haven For Investments From Neighboring Countries?

When there is a currency crunch or devaluation of the currency, every economy looks for a haven where they can keep their cash safe without decreasing its value. Singapore, in the recent years, has been observed to be one of the most financially expanding economies, which is giving it’s all to gain the foreign direct invests from the rest of the economies in the world. It is a country where the environment for trade is free. Businesses can grow independently, and that’s what attract the foreign countries especially the adjacent ones to invest in Singapore.

In 2013, Singapore became the 3rd largest economy in Asia to receive the most amounts of FDI and also 8th amongst the rest of the world economies. Singapore is a market where USA, Japan and also Netherlands take much interest and have the major FDI shares.

For the Asian countries, Singapore is like the USA where one can put their investments and money during the time of trouble. Though China is the world’s largest market and it should be the first choice for the neighboring countries to invest in its market share but due to the recent crash in the Chinese market, Singapore now is one of the safest markets to invest because of its high currency stability. The reasons which make this economy so attractive for investments are as follow:

  • Loads of financial back up for the Foreign Investors: One of the most important factors which influence the foreign investment in any country and so in Singapore is the financial support that it can provide to its investors. The ability to finance the investments of the investors attracts more investors in the long run and Singapore made it beneficial for its foreign direct investors. There are loads of business loans which the FDI can avail for making investments in Singapore.
  • Tax benefits: The next benefit you would get investing in Singapore is the advantage of double tax treaties which Singapore has entered with more than 70 other countries across the globe. So, investment in Singapore means you can use these investments for tax savings.
  • Free Trading Environment: The most important factor influencing the business and trade in Singapore is its free entry-exit option. Most of the businesses are free to enter to market without much legislation, and thus there is a great scope for the FDIs to invest freely and exploring the Singaporean market.
  • Currency and Financial Stability: Singapore is one of the most financially stable markets in the whole world which gives the investors assurance of not losing out on their money. If you check last five years chart, the SG currency has always been In 2013, it was 0.8 US dollar per SG whereas in 2017 it is near $0.72 per SG. It has dropped a little which is almost insignificant compared to the decline in its neighboring countries currencies.
  • Incentives: To attract FDI, Singapore has gone all its way and provides loads of incentives for investing in specific sectors like the financial sector, health sector, tourism, digital and telecommunication sector.

Recent Scenario

With the tough times in the market and the sudden blow from the US president, China is suffering a lot in their business front. Singapore is remaining firm and expanding at its own pace. Malaysia, on the other hand, is facing a fall in their currency since 2012-13. Indonesian Rupiah has fallen sharply over two years against US dollar.

With this current trend of dropping currencies and troubled markets, investors who are wise should grab the incentives in the Singaporean market and grow their wealth. Moreover, Singapore has one of the largest and stable stock market or financial market where one can invest to keep their money safe. The returns are overwhelming because of the growth of businesses.

 

 

Investment-Linked Policies VS Stocks & Shares

When we talk about investments, generally the first things that come to our mind are stocks and shares of companies but not insurance products. We  often think insurance as a separate financial instrument which is only for providing financial security in the time of need. But if you are a little aware of the term called ILP or Investment Linked Insurance Policies, then you must know that insurance can be combined with shares or stocks of companies or other investment instruments for better returns. And who won’t want such a better option for investing in insurances?

What is ILP?

Investments linked (insurance) policies or ILPs are a financial instrument or insurance product which its underlying asset is share/stock of companies. This product has both the benefit of protection as well as of investments elements. Usually, the insured person doesn’t have any idea about where his premiums are getting invested but in ILPs, you can choose your own underlying asset on which you want to invest your premium.

There are so many underlying assets like shares/stocks, debentures etc, on which a part of your premium will be invested. The charges for the insurance product will also be recovered from the earning of the investment and the remaining will be invested again.

The value of the ILPs will vary according to the price of the underlying asset in the market and you cannot claim any particular amount from this insurance. When the policy matures or if you want to withdraw it earlier, you will be paid according to the current market price of the underlying asset.

What are stocks and shares?

Shares or Stocks of companies are the units of their capital. The whole capital is divided into individual units and sold to the owners as stocks, against which the company receives the money to invest in the business. But this is a primary market thing when the company calls out for IPO. In the secondary market, the shares are traded on a daily basis or on a long-term basis to make a profit out of the trade.

There are exchanges where the stocks of different companies are listed and daily trading occurs over these exchanges. The risk and return ratio is highest in stock trading than in any other financial instrument.

How is ILP different from Stocks and share market investments?

Now, as you have a basic idea of what ILPs and share investments are, we can talk about how they are different from each other.

Firstly, the ILPs are insurance products and you need to pay monthly premium or single time premium for having them. On the contrary, shares are a financial instrument which you might purchase as a whole during IPO or can trade them over the exchange.

Secondly, a part of your premium is invested in the units of underlying asset when you purchase ILPs whereas the whole amount that you want to invest can be invested in purchasing shares.

Thirdly, as ILPs are insurance products, there is a life insurance component attached to them. ILPs might also have death benefit and other beneficial components along with them. On the other hand, shares don’t have such benefit, investing in shares of a company would get you the voting right of the company and if you own a bulk of share you might get into the board members of that company. Other than that, the monetary benefit only comes when your shares do well in the secondary market.

Fourthly, your insurance company will take care of the investments in ILPs whereas you or your broker has to track the investments in shares.

Finally, the risk and return are higher in the case of shares compared to the ILPs.

Which one you should buy and why?

Both ILPs and stocks have the potential to provide huge earnings provided that the assets perform well in the market. If you are looking for an insurance which will provide better earnings than regular insurance products, you can go for ILPs but you should be aware of the fact that there is no guaranteed payout of a certain sum. ILPs are good for Singaporean market as this market is fetching new investments every day and blooming with time.

If you are a risk taker and have knowledge about the share market, then for more earning potential, you can invest in shares. Singapore is one of the most efficient financial markets in the world; share investments can reap great profits in shorter time duration.

So, choose wisely while making your investment decisions as every penny matters.

Will Our Next Generation Get To See Money?

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What are the drawbacks of a cashless society?

Singapore is one of the most affluent and attractive markets in Asia, and it understands how to keep track with the global markets. When the western world is changing their whole currency system into electronic, tap payments, Singapore is no way behind them. According to a report produced by the MasterCard (GLOBAL), Singapore’s spending via electronic mode is 69% which is more than the average of the global electronic payment which is around 66%. The new age technology is paving way for Singapore to become more powerful in terms of trade and business as payments can be easily made from one part of the world to another.

Like everything else in the universe has some good and some bad features, a cashless society is no exception to that rule. Singapore is on a ride to become one of the top cashless economies in Asia, but there are certain drawbacks which will come with it.

A Cashless Economy might overspend

As per various reports from countries across the world, it is evident that a cashless society seems to spend a lot more than society or economy with tradition cash in hand. The reason given by most of the consumers is that it is difficult to keep a track of the spending while paying via electronic mode. One is more cautious about the money when they hand it over in cash because you count in on your own and you know how much you have and how much you can spend. But if you go cashless, then you just check the bill and the slip after paying the amount which leads to an excess of spending.

A cashless society is a threat during disaster

It may be a financial crisis or any natural disaster, but without cash, it becomes worst than the rarest nightmare. For example, if there is an earthquake and the electronic grid is down for few days or even a week or more, how will you pay for your daily food and other requirements?

In the case of turmoil in the financial sector, the stock market, cash is the safe haven for many. It is witnessed during the financial crisis of 2008 when not only the US but the whole world suffered. At that point of time, various economies witnessed extraordinary demand for their cash as investors were trying to keep their asset safe and locked in cash.

Everyone is not equipped for being a right fit in the Cashless Society

The cashless economy demands every individual be well equipped with electronic devices which are cashless transaction enabled. It demands everyone to be knowledgeable about the latest technologies and gadgets for using the cashless transaction mode. But in reality, everyone cannot be equally equipped with the knowledge and devices of a cashless society. It makes hard for them to transact and most of the time, due to lack of access/knowledge they lose money. A society must have equal opportunities for every person and that is why cash transactions hold similar importance as its counterpart.

Security Theft

It has been normally witnessed that carrying a lump sum amount of cash is risky. The cash might get stolen or you might misplace it somewhere etc. But, is cashless transaction completely safe? Not at all! There is a huge risk of security theft, digital hacking of your bank accounts and cards which can lead to ugly situations. You might lose all the money you have in your banks and nothing can be worse than that.

What about our future generation? Won’t they have any cash in hand?

This is a question which some parents might be asking themselves when they make their first cashless transaction. Cash has its own importance and nothing can beat that tangibility where we can feel and see the physical notes. The future generation might not be able to understand the value of cash or money if everything can be done with the cashless transaction. This trend will result in high spending; probably overspending, thus the following generations might have issues with financial planning and savings.

So parents, do you think you should educate your child about financial planning and balancing the usage of cash and cards so to let them understand the importance of it? Let’s do it so they can continue to cultivate their next generations too.

About Financial Planning

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Investments and Financial Planning

Investment needs to be a planned affair, and if the investment plans are not well analyzed, the investor might run into major losses. Investing in insurance products or into real estate or in any kind of financial platforms which helps generate some form of revenue should be thoroughly assessed. Financial Planning is the series of plans that the investor wants to implement over a certain period of time to achieve his target in the financial aspect.

Aspects of Financial Plan

In a financial plan, an investor enumerates the goals of his or her life. He lists down the factors which he or she needs to take extra care of and the amount required for important life events.

An investor’s financial plan must include:

  • Investment plan: This includes the risks and the return of the investments made by the investor in certain asset classes or the ones he wants to invest into. If the investor wants to diversify his investment, then the plan will take into account the correlation between those asset’s classes and will gauge the return and the risks associated with each of the asset class and accordingly analyze the final risk-return figure. It is important to know the investor’s preference, risk appetite, and the risk tolerance level when choosing the asset classes. It is also important to take into account the net worth of the person or the investor to properly determine the financial aspirations.
  • Risk Management and Protection against Financial Loss: One of the key elements of the financial planning is to provide protection to the family members during difficult situations. Risk management covers a range of insurance products which are necessary for an investor’s family. It includes life insurance or death coverage, disability coverage, property and personal liability coverage etc.
  • Investments for Long Term: Keeping in mind the higher education of your child or their marriage or might be buying a property, you can invest for a longer Keep track of your investments by make periodical review on their performance.
  • Cash Flow and Tax Plan: This is important as it provides the knowledge of the income that is earned by the investor and about the amount of tax he or she needs to pay every year.
  • Planning for Retirement: People wants a secure retired life and that’s why most of the people saves a portion of their remuneration and earning at regular intervals by using various financial instruments and other assets. It is important to incorporate retirement goals in the financial plan otherwise the financial planning would be incomplete.

Why is financial Planning important to an investor?

Planning is the first step towards achieving one’s goal irrespective of the nature of the goal. So, when an investor invests, he or she has the goal of reaping profits out of the investment. But if he or she is unaware of the purpose for which they will require the money or when they will require the money, they might end up investing in the wrong asset class. Financial Planning helps the investor in:

  • Investing in the right direction with clear knowledge of the investment.
  • Measuring the risk appetite of the investors and analyze investments suitable for him or her so that they don’t end up losing all their savings.
  • Investing in a systemic manner which can accumulate capital over the years to come.
  • Planning for the secure
  • An emergency situation can be handled with ease if the profits of the investments can be reaped at that point of time.

Financial Planning is the basic requirement of right investments and helps in reaping profit at the right place and at the right time when the investor needs it the most. When it comes to helping an investor to plan his/her investment, there is no one better than a Financial Consultant.