Category: Money

How to bridge the gap between rich and poor

There is no denying that the gap between the rich and the poor keeps getting wider. It seems like ‘hardwork’ is no longer the path to wealth. Because let’s be honest, no one works harder than the poor. So is working ‘smart’ the remedy to this inequality? Or is there more to this gap than conventional layman knowledge? Let’s explore.

How did this gap happen

Ever since the 1990s, inequality has been on the rise in both developed and developing countries. As of 2020, about 71 percent of the world’s population were living in countries with increased inequality. While it is important to note that inequality between countries has reduced, inequality within countries has kept increasing.

It is also important to state that inequality is way more than income and purchasing power. Inequality exists in various forms like access to services like education, sanitation, healthcare and water.

What then has been the major cause of this gap in wealth between the rich and the poor?

  • Education Access

The variation of individual access to education has declined in recent years.

Those who received less access to high-quality education are the ones working with lower wages. There are a number of reasons why there has been inequality in educational institutions. A few reasons are accommodation fees, transport fees, tuition fees, lack of bursary, and diversity problem.

There can be no denying that a good educational background puts you in better stead to break out of the inequality barrier.

I am living proof of the advantages of getting a quality education. Don’t get me wrong, you can still break the inequality barrier even without having a proper education backing you. After all, this is the information age and there are millions of opportunities out there. But the advantages of proper education goes beyond the things you learn in class.

  • Gender and Race

Inequality exists everywhere, even in families. Did you know that income inequality within households contributes up to 30 percent of income inequality?

In many institutions, there are still gender inequalities in the workplace. Some data even show that employers refrain from hiring women employees because of maternity leave. I particularly find this unfair because I believe procreating shouldn’t be a crime.

It is however important to state that the gender pay gap has been reducing over the past few decades.

The same can be said about race. Groups considered as minorities like migrants, indigenous folks, refugees and the likes are especially affected.

Some studies also show that certain races get lower wages. It isn’t news that some races consider themselves superior to others. In the households of the supposedly lower race, it is not unusual to see them suffer from financial stability.

These minority groups continue to suffer from discrimination, marginalisation, and inadequate legal rights.

A report carried out by UNDESA observed that even with the progress made from the 1990s to the 2010s, it will still take at least four decades to significantly reduce the gap between ethnic groups.

  • Other factors:

One factor to note is that income and wealth remain concentrated at the top. According to an Oxford report, the number of billionaires has nearly doubled in the 10 years after the world financial crisis. As of 2018, the 26 richest people in the world were richer than half of the global population. To put that in context, they held as much wealth as 3.8 billion poorest people. The number was down from 43 in 2017.

Below are few other factors contributing to inequality;

  • Wealth concentration
  • Globalization
  • Growth of technology
  • Taxes and labour market

Some economists have suggested that this widening gap is inevitable because of the free capitalism market. Free capitalism market is where the return of capital is greater than the rate of growth of the economy.

Possible Solutions To Bridge The Gap Between The Poor and Rich

Break down the social barriers

One of the reasons the gap has been increasingly widened is because people don’t realize the gap. As humans, we tend to only see the effects of certain factors after they happen. The same can be said with this gap. Even after noticing the gaps we only tend to see and be with people who are economically like us.

It is not uncommon that the rich only live in neighbourhoods with fellow wealthy folks. Their children go to the best schools money can afford. The rich usually live separately from the poor.

So what is the solution? Breaking and getting away from the comfort zone we have created and addressing this by creating conversations that will end up supporting each other.

Improving the Education system

What better platform is there as a ticket out of poverty than education? Lately, high-quality schools are characterized as being expensive and are not equally distributed. This gap separates the rich kids from the poor. Some research shows that the poorer students are a step behind the rich kids.

A reason for the education system disparity is because most schools are supported by property taxes. This means those who pay more get into better facilities.

Public schools are mostly filled with those from a low economic background while the opposite is for private schools. This is where the government and community should invest; public schools.

If public schools can measure up to private schools then that will be a plus for folks from low-income backgrounds.

Progressive taxation

Progressive taxation means that higher-income individuals will pay more compared to lower-income individuals. This is different from the regressive tax system, which is a system where high-income individuals pay the same or less to lower-income individuals. So can you guess which taxation system is most common? Yes, regressive taxation.

This system should be converted to progressive taxation as it addresses each individual with regards to their economic status. Warren Buffett, the business tycoon and CEO of Berkshire Hathaway said in an interview that he pays less tax than his secretary. Remember his net worth is $103 billion as of 2020!

As mentioned above many school facilities are funded from property tax. If it isn’t for the tax system we have now, schools and colleges would be well funded. And we wouldn’t be discussing the economic gap and difference in income level in that regard.

Special funding programs

This should be exercised mostly by the wealthy because of the growing number of billionaires added every year to Forbes list. When Forbes released its annual billionaire list, there were 2755 individuals with a total net worth of $13.1 trillion. These wealthy figures have access to have or buy any assets. So, why aren’t they trying to help bridge this gap?

It is important to note that rich folks like ‘The Gates’ carry out a lot of charity and philanthropical projects.

Raise minimum wage

This isn’t limited only to developing countries. Its effects are also seen in developed countries. For instance, US citizens have complained that the current minimum wage is lower than what it was in the 60s. 60 years in the future and the past beat the present. I don’t know about you but this is the first for me.

The minimum wage they receive doesn’t even go with the working hours they have. For example, in the USA minimum wage is $7.25 per hour, in China ¥25 per hour or €8.36 per hour, in the UK £8.21 per hour.

In some countries, mostly Europe, minimum age differs with age.

When this rate is compared with the employee’s economic status, it’s little wonder they are always complaining. The government in each country should implement a better and improved wage system for its citizens.

Important points to remember

  • In the last three decades, the income inequality between countries has improved. This isn’t globally though. When comparing the average income of people living in North America and Sub-Saharan Africa, North America is found to be 16 times higher.
  • Even though the income inequality between countries has improved, the same can’t be said about income inequality within countries. In some countries like China and India, it has increased. In Latin America, there has been a considerable decline in income inequality.

Conclusion

In summary, success should not be a one-man journey, it should be inclusive; which is the opposite of what it is now. Inequality between the rich and the poor is not a conversation that we have often. We must have conversations like this for something to be done about it.

The opinions listed above are some of the ways I believe we can achieve that. There is a particular phrase I love; “Inequality is not inevitable, but a political choice.”

Every country and its government should adopt better systems that cater equally to the haves and have nots.

Categories:

How to invest in stock with little money

Investing in the stock market is an excellent way to grow your wealth. It means purchasing a part of a company and having a stake in the company’s ownership.

And you can do it with little money contrary to popular opinions. This opinion is why so many people have put off investing in a stock.

But it’s not all a bed of roses journey. Compared to other forms of investments, stock investment has more risks. But if it is exercised wisely, the rewards are highly satisfactory.

Statistics show that in these last decades, most stock investments return an annual average of 10%. And this is how those profits pile up after you invest in the stock market:

  • If the stocks you purchased go up during the time you own them, you can sell for more than you paid for.
  • This one is not accessible by all stocks, but a few companies give regular payments to their shareholder. These payments are called ‘Dividends’. Most dividends come in a quarterly term.

Some Information About The Stock Market

  • If you look into the history of stock markets and investments, you will find that in the past shareholders receive stock certificates in a paper called security. Nowadays share ownership are recorded electronically verifying the number of shares they hold and are held in brokerage firms.
  • There are two types of stocks for you to invest in. These are common stocks and preferred stocks. The former gives its shareholders voting rights but does not guarantee dividend payment. The latter works vice versa.

Let us get back to the main topic of this article. Is it possible to invest in stock with little money? Can your investment survive the ups and downs of the stock market? I am here to tell you that you can invest with as little as £25 a month. Once you have that little money to play with, it’s time for investing.

How? Well first bear in mind that we are living in the 21st century. This means there are many stock trading apps you can use to invest with little money and also learn how to at the same time. It is not a scary or risky choice. Since there are so many choices out there, it is more simple and straightforward than ever.

How To Invest In Stock With Little Money

Learn the basics of stock investment

The stock market is not as difficult to understand as it seems. Anyone can learn to trade or invest in stocks. If you put time and effort into learning, you will find that it is rocket science. You still don’t believe me?

Okay, then follow these easy steps and you will understand what I am saying.

  • Hit the books: Read books on related topics such as stock markets, investment strategies, and more.
  • Have a mentor: When you have a mentor lending you guidance, you will have access to experience and tricks of the trade. This person should be well experienced and must-know details about the stock market.
  • Take online courses: Nowadays online sites provide courses on stock trading and investments. Here you will be provided with two choices: be a trader or an investor. The difference between the two is how long you can hold on to your stocks. A trader holds for a short duration while an investor holds for a longer duration. There is a community in the UK that has integrity in teaching beginners about investing in stock and share. You can read join Financial Joy Academy if you want to have access to a lot of courses about stock market investing.
You can get 15% discount if you sign up to FJA using my referral link by clicking here.

 

  • Always analyse the market: Update yourself on the conditions as well as the history of the market. See and record the performance of the markets. When doing this, you will get to know what causes a change in stock markets.

  • Never invest more than you can afford to lose: This for those who believe in investing in large amounts because of greed. When you are investing in small amounts on regular basis, it will save you from the fluctuating stock market. When and if the market crashes, it won’t result in a big loss. This will save you from being in debt and lose your way.

  • Website is the cheapest way to invest: If you are looking for investment options, several online platforms provide them. Make sure to decide on which platforms to use then choose what investment to buy. Depending on the platform you choose, you might have to pay a fee to access the platform.

  • Start investing: Final step! In this technological era, you can start investing with little money because of online platforms. Gone are the days when the phrase “it takes money to make money” was a mandate. So what is the minimum amount for investing? How about £1 with no trade commission? You can also invest in fractional shares. This is only a fraction of the share of the company. 

You can start investing with Trading 212 which is one of the stock brokers that do n ot charge fees. You can get free share if you are new to Trading 212 by using the link below.

Start investing on Trading 212 and get free share.

Tips while investing with little money

  • Set long term goals: Know what your goals are clearly before diving into investing. It is important to consider your financial wealth when investing. Will you be needing money soon or you can afford to leave it for a long time. Usually, investing in long-term stocks yields good returns, so make sure to consider that.
  • Under Risk Tolerance: Greed is one of the easiest ways to lose money in any investment. You should never invest in any stock that you consider too risky even though it promises a larger yield.
  • Emotion control: As a beginner, it is normal to be emotional when investing. Especially the highs that come with profit returns and the lows that come with losses when the market is down. Profit and loss are all on paper. If the market is down, you have not lost anything until you sell so don’t worry when the market is down if you are investing for the long term. Emotional control is important so you don’t gamble with your investments.
  • Be realistic: Investment takes time to yield, as it should. Do not expect fast returns. Since most stock investments take time, you have to be patient while investing.
  • Investment Diversification: Never put all your eggs in one basket. This will protect your money if anything happens to the stock market. It is also the recommended advice by many money managers. This way you won’t lose all your money all at once if you invest in several assets.

Conclusion

Yes, you can invest in stocks with little money. All you need is to grasp the basics of stock investment and understand the dos and don’ts then you are on your way to growing your money.

With more experience, your investment journey gets easier with time. I hope this article was informative enough and answers your question. If so, what are you waiting for? Go ahead and invest!

You can read my article about ‘investing in stock for beginners’ next.

Categories:

How to Build a Better Relationship with Money

For many people, money is a thorny subject. It’s also one that’s surrounded by taboo and secrecy, with most people feeling uncomfortable talking to others about finances.

Unfortunately, because we’re not even taught about money in school, this makes it hard to start understanding how to control it better. 

Having a good relationship with money isn’t totally about how much you earn. It’s just as much about how you manage the money you have. When you’re in control, that’s when your relationship with money starts getting better.

Start a Personal Spending Record

Just like professional accounting, looking after your personal income is about keeping tabs on what’s coming in and what’s going out.

It’s pretty simple, taking just a few moments each day. All you need is a notebook or a spreadsheet if you like working digitally. Both methods are the same and give the same results.

In your notebook, have four columns. Name them ‘Date’, ‘Item’, ‘Cost’, and ‘Balance’.

Start by filling in the ‘balance’ column with how much money is currently in your bank account. This tells you what’s available for spending, and you’ll either add to or subtract from the amounts you enter in the other columns.

  • In the ‘Date’ column, write down the date any transaction happens. 
  • Under ‘Item’, write down what you bought (or for money coming in, write down where it came from, such as salary or wage).
  • in the ‘Cost’ column write down the amount of money involved.

Every time you buy something, fill in the columns and subtract what you spent from the ‘Balance’, so you keep a running total of money available.

One other point for the ‘Balance’ column, in to not forget your direct debits. When you start a new sheet at the beginning of the month, you can subtract all the direct debits straight away, regardless of when they’re leaving your bank account.

Making Money Work for You

When you’ve been keeping detailed spending and earning records like this for a couple of months, you’ll have enough data to start analysing your figures. This is where you see just how powerful this simple system is.

Look for patterns in your spending. Because you wrote down what you were spending money on, you’ll have built up a record of the types of things you often buy. Examples might include groceries, car fuel, taxes, internet and utilities, entertainment, clothes, gifts, subscriptions, medical expenses. The list is practically endless.

By adding up all you spend on different categories, you’ll soon get a picture of where most of your money is going. And once you know, you can choose whether to carry on as before or make some changes, such as paying off bad debt faster, or save for the luxury items you’d like.

What sort of changes? Maybe your grocery bill is a bit shocking. Areas to consider changing here might include how often you shop, whether you make a meal plan and shop from a list, where you shop and whether you can find a cheaper supermarket, or what type of food you buy and whether you can pay less for similar but unbranded items.

By controlling spending in this way, you’re making informed, intelligent decisions. It’s a far more sustainable way of cutting down on spending than stopping buying things you enjoy, which is the way most people go about spending less.

This simple system forms the basics of even professional accounting, where businesses need to keep detailed records for legal reasons. It’s easy, but it’s very powerful, and once you get into it can even be fun. If you find you enjoy tracking and recording money, it could even open the doors to a new and lucrative career in accounting.

Keep Your Receipts to Make it Simpler

These days, lots of shops don’t even offer a receipt for small purchases, especially if it’s not something you’re likely to want to return. If you’re not offered a receipt, ask for one.

Having a paper record of what you bought means you don’t have to carry your notebook around with you all the time. And if you’re keeping digital records, it also means you won’t risk forgetting a purchase when you sit down at the computer. 

You can gather all the receipts together and bring your records up to date whenever you have a few minutes. Even small expenses soon mount up, but with a receipt, you can stay in control of them.

If you feel like money runs away from you, or trickles through your fingers without you even noticing, give this easy method a try. You’ll soon find you’re building a better relationship with money because finally, you’re the one in control.

Categories:

How To Get Free Money

If you are thinking about how to get free money, you are in the right place. It is however important to understand what free money is.

What do I mean by free money? Free money here is any cash reward, redeemable points, or bonus you get for carrying out a specific task. It could be for signing up or using a service.

I must specify “task” because even though you won’t be doing any hard labor, you still need to do something.

In this article, I will show you 15 ways you can earn free money.

Cashback

Most people shop online these days but they are not aware they have been throwing money away. Instead of buying things directly online, you can shop via a cashback website. By going through a cashback website, you will get back a percentage of the amount you spend.

Popular cashback websites like Topcashback and Quidco will give you a percentage of what you spend online.

Say for example you want to buy a new running shoe from Sports Direct. Instead of going directly to Sports Direct website to buy the shoe, you can go to Sports Direct via the cashback website. If Topcashback offers 5% cashback for example you will earn £5. That might not sound like a lot of money. But, if you consider how much people spend online nowadays on various products and services. Over time it can add up to a lot of money.

As well you can earn free money if you refer someone to cashback websites.

Switch a bank account

Loyalty doesn’t pay, you can earn free money by switching your bank account to another bank. Banks compete with one another so they offer free money to customers to switch to them. 

Gone are the days when it used to be difficult to switch. With the ‘7 days Switch Guaranteed‘, it’s now very easy to switch to another bank and earn free money.

Switch your energy to Bulb

If you switch your energy to Bulb, you can earn free money. Bulb is an energy company that pays new customers up to £50 for switching to them.

The good thing with Bulb is that they are a renewable energy company. You have nothing to lose by switching to Bulb and you also get more money if you recommend them to family and friends.

You can switch to Bulb and earn £50 free by clicking here.

Get free share from Trading212

Trading 212 is an online stock broker that gives new customers free shares worth up to $100.

If you open a new brokerage account, fund your account and buy a share minimum of $1, they will give you a free share.

In addition to the free share you get, if you refer family and friends you will also get a free share for each person who signs up.

Investing in share is a good thing. If you are new to the stock market you can read my article about ‘investing in stock for beginners’.

Start investing on Trading 212 and get free share.

Research

We all have research skills. We utilize this skill in our day-to-day activities without even realizing it.

A quick visit to a search engine to search for things like new recipes, fact-checking, information surfing is research. Even something like searching for information on social media is online research.

You can put your research skills to the test if you are a fan of working from home. If you’re not a fan, there can still get paid to carry out research online.

Three platforms that come to mind for this are experts123, justanswer and checkoutsmart.

Earn money from survey

Earning money through a survey is really easy. You simply need to answer questions on a variety of topics. For surveys, only your opinion is needed.

You will then get rewarded for every survey you take.

Surveys about services, Advertising effectiveness surveys, Product appeal surveys, and Brand recognition surveys are some type of paid online surveys you can take.

Please keep in mind that there are several scam survey sites out there. Survey sites like Toluna is the real deal. They pay you for your time.

Sell a digital product (photo and video)

Websites like Shutterstock will allow you to be a contributor on their website. Basically, you can upload your photos or video and get paid if people purchase your photo or video.

Clickasnap will pay you if your photo is viewed. Do you have nice photos you think people will find interesting or useful? You can upload them on clickasnap and get paid. Think about this, you upload your photos on social media sites like Facebook then friends and family view them and you get nothing other than clicks and likes.

With these platforms, you get paid for your creativity.

Sign up to Airtime Rewards, receipt hog

Airtime Rewards app is really cool. With this app, your favorite retailers get to pay your phone bill. Cool right?

So how does it work? You simply need to install the app and link your credit and debit cards to it. Upon doing this, you simply need to make payments through one of your linked cards at retailers connected to the app. You will then get a cashback which can be forwarded towards your phone bill once you reach £10.

The average person throws away receipts as soon as they get them. What if I tell you that is wasteful? With a platform like Receipt Hog, you can actually get paid free money for those receipts.

Receipt Hog pays you tokens or coins for every receipt you upload. Once you have enough coins, you can then get your money either as a voucher through Amazon or cash through PayPal.

Swagbucks

Swagbucks is quite popular around the world. It is one of the easiest and legitimate ways to get free money online. It is quite popular in the UK too. The amount you can make on Swagbucks is entirely up to you and how much time you can invest. Your points are accumulated as SB’s and you will need 650SB to get $5. Your points can be redeemed as Paypal cash or gift cards at thousands of retailers like Amazon and Walmart.

How to earn with Swagbucks

  • Use as search engine
  • Use as cash-back website
  • Watch videos
  • Carry out daily surveys

You can also earn free money by referring friends and family through your referral code.

UpVoice

You can earn money through gift cards by browsing websites. UpVoice is a browser extension that monitors your ads once a day on your computer. It works on multiple sites especially social media sites like Facebook.

Below is a statement on the UpVoice website

Join the UpVoice research community and start earning gift cards just by visiting your social feeds on your desktop computer

Plum

Plum is a chatbox tasked with helping you automatically grow your savings while reducing unnecessary bills.

You can get free money on Plum when you sign up. All you have to do is click on the ‘GET FREEBIE’ button then sign up. Once this is done, it’ll link to your Facebook Messenger. Follow the next few prompts to finish signing up. Once that is complete and you are connected with your bank you’ll get £5 for free.

Curve Card

With a Curve card, you can manage all your bank cards on a single app and card. You get free £5 when you sign up with them. All you have to do is choose the ‘free Curve card plan’. You also get to earn £5 every time friends and family sign up using your referral code.

MobileXpression

MobileXpression pride itself as a survey panel that focuses on improving the internet. Over 3.7 billion people used mobile internet according to research carried out in 2018. This makes gaining valuable insight into mobile internet important for companies in the market research industry.

The surveys you will be tasked with will include things like surfing websites and watching advertisements. It has to be done from your mobile device though.

Once you are through with a task, you simply report your feedback through a survey.

Panel app

With Panel App you can take location-based surveys and also by sharing your location. The accumulated points can be redeemed through rewards, sweepstakes, gift cards, and more.

How to earn

  • Carry out location-based surveys
  • Share location
  • Refer friends and family

Panel App boasts of having paid out over $2 Million in cash prizes to date.

Tax refunds

A lot of people are owed money by the government but they do not realize it. Perhaps you are one of those people who paid too much tax.

If you file a tax return you might just realize the government will pay you some money back if you have paid too much in tax.

Why tax returns can look like free money is simply because when you receive money you are not expecting it really feels like you just received free money.

In some cases, the government through the tax authority might send you the tax you overpaid without you filing a tax return.

Final Thought

Making free money online is quite possible. But before you embark on the journey, you must first decide on your definition of free. You must also decide how much time you are willing to invest because most are more straightforward than others.

Categories:

How to invest in the stock market for beginners

Investing in stock and shares for beginners can be a bit daunting. This is because of various terminologies that beginners find confusing.

I started investing in stocks and shares during my undergraduate degree program at the university. At that time I was 20 years old.

I bought my first share when a financial institution launched an initial public offer (IPO). More about IPO later in this article.

In this post, I want to give you a beginner’s guide to investing in stock and share. Stay with me.

Why invest in the stock market

The main reason why it is important to invest in the stock market is the opportunity to grow your money.

Over a long period of time, if your money is left in a savings account, it will lose value because of inflation.

As well, investing in the stock market gives you the opportunity to be part of exciting projects happening worldwide. The majority of companies producing products and services we use on daily basis are listed on stock exchanges worldwide. Every human has the opportunity to own a piece of the biggest companies in the world.

Think about the number of people using social media platforms like Twitter, Facebook, etc. these social media companies are listed on the stock exchange.

Amazon is one of the biggest companies in the world. Many people use the Amazon marketplace to buy their everyday items. Amazon is on the stock market.

Apple and Microsoft who make computers and mobile phones, Johnson and Johnson who produce consumable products, automobile companies like Tesla are all on the stock market. I can go on and on to give you names of companies across the world who are valuable companies.

To learn more about why you need to invest in the stock market, please read an article I wrote specifically about this topic by clicking here or below.

 

What you need to get started

It is important to first go through what you need to be able to start investing in the stock market.

Brokerage Account

A brokerage account is different from a normal bank account. In other to buy a share of any company, you need to go through a stockbroker. Stockbrokers are like middlemen between the company you want to own their share and yourself. Without stock brokers, you cannot buy a share of any company.

There are stockbrokers in every country. Some stockbrokers will charge you some fees for using their platform while some do not charge any fee. The most popular stockbrokers in the UK are

Stockbroker NameChargesStock & Share ISAIndividual SharesIndex Funds and ETFs
Trading 212NoYesYesYes
FreetradeNoYesYesYes
VanguardYesYesNoYes
Hargreaves LansdownYesYesYesYes
AJ BellsYesYesYesYes
FidelityYesYesNoYes
IG IndexYesYesYesYes
eToroYesNoYesYes

ISA Account

For people in the UK, it is important to consider a Stock and Share Individual Saving Account (ISA) when you open a brokerage account.

A Stock and Share ISA is also called an Investment ISA. It is a tax-efficient account that enables you to invest in a wide range of shares, funds, investment trusts, and bonds.

The major advantage of investing using Stock and Share ISA Account is that your investment is exempted from capital gains tax (CGT) whenever you decide to sell. 

As well, you will be exempted from tax on dividend income.

How to own share in a company

There are two major ways to own a piece of a company you are interested in.

Initial public offering (IPO)

An initial public offering (IPO) refers to when a private company makes its shares available to the public for the first time on a stock exchange. Private companies go public mostly to raise capital that will enable them to grow bigger.

You can choose to buy shares in a company when they go public for the first time. There are advantages and disadvantages to this.

Existing shares in the stock market

The second way to buy a share of course is to buy shares of companies that are already available in the stock market.

The stock market is open all year round and they have opening hours depending on the country. You can buy shares through a stockbroker.

How much should you invest in the stock market?

You can get started investing in the stock market with as little as £1. However, £100 and above might be the ideal amount to start with.

You can invest as much money as you want in the stock market but it is important to diversify by buying a variety of asset classes.

Some stockbrokers will allow you to do regular investing if you choose to. Regular investing enables you to set up a standing order whereby a certain amount of money leaves your bank account every month into your brokerage account.

This enables you to be disciplined with your investing.

Investing in the stock market should be approached as a long-term investment. Adopting a long-term investing strategy will help you to regularly set a certain amount of money aside monthly to put in your investment portfolio.

What are the asset class in the stock market?

Asset class simply refers to the type of investment. The three major asset class are;

Stock and Share

A share of a company or shares of multiple companies. These have sometimes also been referred to as equity.

Bond

In plain English, a Bond is a way of lending money to a government or a company, and by doing that you get interested.

Fund

This is a type of asset class where shares of a variety of companies are put together to become a product called a fund. It could be Index Fund or Exchange Traded Fund (ETF).

What is the cost of investing through stockbrokers

There is a cost to investing in stock and shares which comes from the stockbrokers. It is important to know stockbrokers are businesses that also need to make a profit.

They have a number of charges depend on the broker. Some of them do not charge any fees while the majority of them will charge you fees to manage your stocks and funds.

Below is a table that shows the brokers who charge fees.

Stockbroker NameAccount feeDealing fee
Hargreaves LansdownYesYes
AJ BellsYesYes
VanguardYesNo
FidelityYesYes
Trading 212NoNo
FreetradeNoNo
eToroNoNo

 

Individual Shares vs Funds

There are two major ways to invest in the stock market. You can either buy individual shares of companies or buy funds. For experienced investors, you can diversify by having both funds and individual shares in your portfolio.

Individual shares

This is when you buy a share of a particular company. For example, you can invest in Apple by buying one or more shares of Apple. When you have more money to invest in the stock market, you can buy more shares of Apple or look for another company listed on the stock exchange and buy its share.

Buy buying individual shares, your portfolio will grow over time and you will have multiple shares and companies in your portfolio.

Advantage – The benefit of individual shares comes with an opportunity to buy shares of companies that have the potential to grow. When their share price increase in the future, you make a lot of profit if you decide to sell.

Disadvantage – The major disadvantage can be if the company or companies you own their share are not doing well or go bankrupt. In this case, your investment can significantly reduce in value.

Funds

Fund is almost the opposite of individual shares. The simple way to explain ‘fund’ is this. If you want to buy fruits, you can decide to buy only apples or bananas or grapes.

If there is an option to buy a basket of fruits that contains a variety of fruits inside the basket, it might be better to buy the basket of fruit instead of going about choosing various types of fruits.

With the example of individual share above, so instead of buying a share of Apple and Amazon separately. You can buy a fund that has Apple, Amazon, and other shares of various companies inside it.

Funds generally are diverse and hold a variety of companies shares. A fund can have shares of companies in various sectors like consumer goods, utility, energy, automobile, Technology, etc.

Advantage – Fund has less risk than an individual stock. If any company in the fund goes bust and out of business, in most cases, the fund will still be there as the impact of that company going out of business might not be greatly felt.

Disadvantage – Funds are not without disadvantages. The main disadvantage comes from the inability to control it. If you go for a passive fund, It mainly tracks an index and the performance of the index is what determines how it performs. If the overall market is down, the value of your investment will be down and on the other side, if the overall market is up your investment will be up.

Final thoughts on Individual Shares vs Funds

As someone who has been investing in the stock market for a long time, funds are what I think is better for a beginner to invest in. There are passive index funds and ETFs that help you to reduce the risk of investing in the stock market if you are a beginner. 

Investing in the stock market can be overwhelming, by investing in index funds and ETFs you will save yourself from buying individual shares that might not perform well.

This does not mean you cannot buy individual shares. You can surely invest in individual shares but you need to research properly on any company you want to invest in if an individual share is a route you want to go.

When you get to a stage that you have properly educated yourself about the stock market, it is important to diversify and have a variety of asset classes in your portfolio. 

By this, I mean invest in bonds, index funds, ETFs, and individual shares.

Should you invest in shares?

Investing in shares is the right thing to do for various reasons. Investing in shares is one of the investment types that has lasted for hundreds of years and has been tried and tested by the richest people in the world.

There are times when the stock market might be volatile. However, if you invest for the long term, it will be very hard to lose money in the stock market.

These are the reasons why you should consider investing in the stock market.

  • Investing in shares help you to own a company. It might be just a tiny piece but you are part owner when you invest in a share.
  • Opportunity to increase your wealth. Money saved in the bank will worth less over time because of inflation.
  • Historically, over time the stock market goes up if you invest for the long term.
  • The stock market can help you earn tax-free income if you invest in shares through a tax-efficient brokerage account.
  • Through investing in share, you become a producer and not just a consumer. As a shareholder, you join companies that are providing valuable products and services in the world economy.
  • Buying a share can help you to keep the money for retirement.
  • If you invest in dividend stocks, you can earn passive income.

What should you invest in?

The choice of investment usually depends on your stage in life. To reduce risk, people that are close to retirement are better off not having too many growth stocks in their portfolio. Bonds, Index fund and ETFs are good options for people close to retirement.

For young people who are just starting their career and people perhaps before age 40 can consider individual stocks that have the potential growth in value over time.

As a beginner, it is wise to consider Index Fund and ETFs as the choice of stock market investing. If you choose to invest in individual stocks, you can consider the following.

Growth Stock

There are companies that have a bright future ahead of them. These companies might be new in the stock market or they might just be scaling up their business. It can be risky to invest in such companies but if you are able to choose the right company, your investment can increase significantly.

Amazon was once a growth company. When it was first listed on the stock market in 1997, each share was sold for $18. As of the time of writing this article, each share of amazon is over $3000, which is a 3000% increase over 10 years.

Dividend stock

If you are thinking about earning passive income from your investment. You can consider investing in shares of companies that are on the list of dividend aristocrats.

Dividend aristocrats are companies that have consistently paid a dividend over a long period of time.

Sectors to consider

The common-sense approach to choosing companies to invest in is to consider the various sectors of the economy. It is important to do due diligence and research before buying any shares. In some cases, a financial adviser might be required before you make a decision.

The logic I use is to consider companies that are producing products and services we use regularly. In some case products are service that we almost cannot do without.

Below are examples

Consumable – A company in this category is Johnson and Johnson. This company produce consumable packaged products. There are other companies like Unilever, PZ and some other ones that produce consumable products like detergents, beverages and other food items. These are products that we cannot do without. As long as there are human beings these companies will continue to strive as long as they are innovating.

Medical and Pharmaceutical – We all need medical care at one point or the order in our life. Companies that are manufacturing medical equipment and medicines do well over time. The likes of Pfizer and AstraZeneca can be a good company to invest in because they’ve been around for a very long time.

Renewable energy – In recent time, renewable energy has been a hot topic. A lot of companies are investing heavily in this sector.

Utility – We all need to use water and electricity on daily basis. Some of the companies who provide these services for us are in the stock market.

Tech – Think about the number of people who use Facebook for business or just social media. Amazon is not just an eCommerce company, Amazon is also a technology company that provide a lot of tech services. Apple and Microsoft are giants in computing. These are few examples in the tech sector and there are a lot more. Think about millions of people who use these technologies these companies provide. This is the reason why it is difficult to go when you consider companies producing services or products you use.

Final Thoughts

Investing in the stock market can be overwhelming for beginners. Especially due to various numbers of terminologies and technicalities involved. But what I have come to realize over time is that there is nothing in life that doesn’t seem complicated to a beginner, it only gets easier with practice.

Another factor to consider when considering investing in stock is that most usually require a long-term mindset. If you want an investment that will make you significant profit in a month or two then do not think about the stock market. Whether it is stock, shares or funds, it is best to have a long term mindset.

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How to save money for your kids

Should I save money for my kids? To be honest, it doesn’t sound like such a big deal at first. But even though this topic isn’t much discussed, it is very important.

Surely, you must have heard stories about kids inheriting massive trust funds or real estate that set them up for life. Recently, a lady took to Twitter to talk about how her mum still pays her monthly even though she died in the nineties. She was talking about the investments her mum made back then that she is now enjoying the benefits today.

So should you save money for your kids? I believe the answer is yes. You will be contributing a more secure and productive future for them. But how do you do save for your child’s future? Continue reading as I shed more light on this.

Tips to start saving money for your kids

Keep things tidy and separate

It is easy to get confused when money from too many sources gets piled up in your personal account. To avoid confusion it is important to keep your kids money separate from yours. It also helps with accountability. Apart from this, there are several savings account out there that offer various incentives. We’ll be highlighting some of them briefly.

Children’s Easy-Access Savings Account

There isn’t much difference between a children’s savings account and an ordinary savings account. The only difference is the maximum age range which is between 15 to 20 years old.

Like your ordinary savings account, you can make withdrawals at any time so far as it follows the account terms. Easy-access savings account help teach kids about money.

There are even some accounts that give you passbooks. With the passbook, children along with a parent can visit any branch to withdraw money. This is a great way for children to learn about handling their own finances.

A disadvantage of this type of savings account is that it doesn’t offer as much interest as regular or fixed-rate accounts. Also, you will have to pay tax on the savings interest. This comes into play when the interest exceeds £100, the interest will be added to your tax bill.

NS&I Premium Bonds For Children

Premium bonds are offered by National Savings & Investments (NS&I) and is a very popular investment opportunity. It is possible to buy between £25 and £50,000 worth of bond. Every month, each £1 bond is entered into a prize draw with the opportunity to win £1 million. The premium bond can be signed over when the child turns 16.

Another way premium bonds differ from a savings account is that both parents and grandparents can buy them. Every month, two lucky winners will win £1 million and several others can win a minimum of £25. All winnings are tax-free.

A disadvantage of the premium bonds for children is that you have a 24,500 to 1 chance of winning anything. Also, there’s no savings interest for this investment option even though NS&I say there’s an equivalent 1.4% interest on premium bonds.

Get a Junior ISA

The Junior Isa account is another long term oriented savings account. It is for children under the age of 18. Once the child turns 18, the account is automatically converted into an adult cash Isa and will get full ownership of the funds.

An advantage of the junior Isa is that it is tax-free so you do not have to worry about the £100 rule. The interest rate is also higher than adult ISA.

Also, unlike the easy-access savings account, children aren’t allowed to withdraw the cash. Although, that can be a disadvantage in some cases.

You are allowed to choose between cash and stocks & shares ISA or split your money between both.

Junior ISA also has its disadvantages. A disadvantage is the annual deposit limit of £9,000. Also, the Junior ISA doesn’t enjoy government contributions unlike the Child Trust Fund (CTF) which enjoys a £500 contribution. It is important to mention that Child Trust Fund is now closed.

Children’s Regular Savings Account

The regular savings account is a very convenient option for low-income households. Not only are you able to make monthly contributions, you can also enjoy generous interest rates as high as 4.5%. It is however important to note that the maximum monthly deposit limit is £100.

Just as there is a deposit limit, there are also withdrawal limits or penalty. Also, missing a payment or exceeding the withdrawal limit can invalidate your interest. Sometimes, you face losing interest for withdrawing. Also, it is not tax-free, the £100 rule applies.

Sell things as they grow

Kids tend to be very expensive. They are very expensive because they keep outgrowing what you buy for them.

A child’s growth is in various stages and every stage comes with new financial implications. Before you know it the expensive toys you bought last summer are no longer needed. It’s like children junk just keeps piling up in the house.

But they don’t necessarily have to go to waste. Just like you can sell unused stuff around the house, you can also sell things your kids have outgrown.

Although, it’ll be best if you’re sure you no longer want to have more children before doing this.

There are various platforms that allow parents to sell gently used items that their kids have outgrown.

In the UK you can sell used items on the Vinted app. You can also sell used items at a car boot sales, it can be a fun activity for your kids to participate and help out at car boot sales.

Teach them the act of saving

An easy way to save money for your kids is by teaching them how to save. When your kids have a savings mentality and understand the value, they automatically want to save every penny they can. This way, you’re not only teaching them good savings habits but also preparing them for the future.

Final Thoughts

There are various reasons why you save money for your children and it is unique to every individual. But you must endeavour to protect and secure their future by saving money for them. It isn’t enough to save money for your kids future, you must also teach them good saving habits.

You can read this article next.

How to teach your children about money.

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How to save money on low income for a house deposit

How to save money for a house on a low income

One of the biggest spending you will make in your life is buying a house. It requires a lot of planning and a high level of discipline to be able to save money for a house especially on a low income.

As someone who has been able to save money for a mortgage deposit, I know how challenging it can be.

Here are some top tips for saving money for a house for people on a low income.

Increase your income

If you are on low income and want to save money as a deposit for a mortgage, I think the first thing to consider is opportunities to increase your income.

There are various ways to increase your income which include negotiating for a pay increase, start a side hustle, or consider freelancing work by exploiting your existing skills.

I have written a few articles on lists of side hustles you can consider. Make sure you finish reading this article and then check out the list. I even have an article on 101 Side Hustle ideas.

Consider investing your money

You can invest the little money you have. One of the safest ways to invest your money is to leverage the stock market. It is important to note that there is no guarantee that you will make money by simply investing in stock and shares.

Because you aim to save money for a house deposit, it is worth mentioning that how soon you want to buy a house should influence the type of asset you buy in the stock market.

The simple rule is this, if you want to buy a house in the next 5 years it good to invest your money in a low-risk Index Fund or ETF. If you are considering buying a house in the next 2 years instead, it is better to just look for a high yield savings account and put your money there.

Money-Saving Expert is an amazing resource for everything that has to do with money and they have a page where you can find useful information about savings account that pays good interest.

Automate Your Savings and Investing

Whether you are considering investing in stock and shares or a high yield savings account, you must be consistent and discipline in putting money away regularly.

Most of the time we tell ourselves that we will do something and we end up not doing it. Relying only on willpower is a recipe for failure in achieving your goal of saving for a house deposit. 

Something that will help you in meeting your savings goal is to leverage the power of automation.

This is how automation works when it comes to saving money;

You set an amount you want to put in your stock and share brokerage account or a savings account every month. The next step is to set up a standing order on your savings bank account which will send the money to the brokerage account or savings account every month you get paid.

Obviously, you should know the date of the month you get paid, so set a date after your payday. By doing this, you will not have to go through the process of manually sending money to your savings account every month.

Reduce your spending

Reducing spending doesn’t mean you compromise on your quality of life. To reduce spending means to cut down on unnecessary spending and purchases.

A typical example is a subscription you are paying for which you are not making use of. It might be a software subscription, it might be a gym, it could be a magazine or an app on your phone.

You just need to take some time to go through your bank account and credit card statements and look for things you subscribed for a long time ago that you no longer use but still pay for.

Use Government Incentives

The government comes up with various incentives from time to time. You can make use of government incentives to help you either save money on house purchases or meet mortgage affordability criteria.

One of the most common government incentives is the one where Government contributes a percentage of your mortgage deposit and in most cases, it is interest-free for a certain number of years.

For UK residents, as at the time of writing this article, one of the UK government’s incentives is an account called Lifetime ISA.

For every amount you deposit in that account, the UK government adds 20 percent for you. But the account is only available for people under 40 years. It is a way to boost your house purchase initial deposit.

Sell items you no longer need

It’s unbelievable the number of items we buy that we end up not using. There are two major benefits to selling items in your house you no longer need. The first benefit is that you can add the profit you make to your savings for a house deposit.

The second benefit is also important. This helps you to declutter your house and when the time comes for you to move house after buying a house you have fewer stuffs to carry with you.

There are now lots of platforms available where you can sell items you no longer need.

The most popular for used items is eBay. You can also try Amazon.

You can sell used clothes on the Vinted app.

Consider moving house

Your main aim of saving money is so you can buy a house and move house. Why not consider moving house now to reduce the cost of your current housing.

You can move to a cheaper house or apartment which by doing this you will save some money.

I know you are probably wondering, why should I move to a new house when I’m trying to buy one?

Think about it, it makes sense. To quickly meet up with your mortgage requirements, you can downgrade from your existing house.

By moving to a new house where your rent is less expensive, you easily get to save more for your dream house. This way you even get to acquire it faster.

It is only a temporary inconvenience not permanent.

If that is too extreme a solution for you, you can also rent out one of the rooms in your house.

Make use of discounts and cashback

Cashback has been around for a long time but there are still a lot of people who don’t know about cashback. There are various types of cashback you can make use of.

The best and most popular cashback is the cashback website. Cashback websites are available in many countries around the world.

I live in the UK and the two of the most popular cashback websites are TopCashback and Quidco. Some of the ones available in the US are ShopAtHome, Coupon Cactus, Ebates, BeFrugal, Extrabux, Swagbucks, and TopCashback.

Cashback websites are just middlemen between you and merchants. For example, if you want to buy a train ticket. Instead of buying the train ticket directly from Trainline or other train providers, you can buy via the cashback website.

By buying through the cashback website, you will get a percentage of the money you spend back. The percentage you get back might not be a lot but it all adds up when you consider the way people spend online these days.

You can get cashback on a lot of things you won’t think about.

I remember getting cashback on our Haven Perran Sand Holiday because I booked the holiday via a cashback website.

From insurance to everyday commodity and consumable items you buy online, you can get cashback.

Final Thoughts

Saving money for your dream house on a low income isn’t going to be easy but it is achievable. The easiest way to do this would be to find ways to increase your income. But if you are unable to do that, there are still several ways to cut back your spending and even patch your income.

We all want to be homeowners. The craze for home buying is even more in the UK and if this is the route you want to go, it is very achievable. Do not be discouraged by low income.

 

 

 

 

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