What Are Fintech Developments in 2018?

Ajay NagpalFonta Guilliam developed a fintech company called Sou Sou to extend women and minorities lending opportunities outside of traditional banking, as explained by Samantha Harrington in a Forbes Magazine article. Sou Sou, named after the lending circle tradition practiced in Ghana, provides a platform where entrepreneurs can create their digital lending circles.

Lending circles provide loans to members, who all contribute a small sum each month. Each month, one member receives all the contributions, representing a loan, which they must repay by adding to the circle. The member’s contributions represent their loan payments. This practice mimics the banking system but saves members interest costs.

Technology continues to open financing opportunities, and 2018 is expected to usher in many more fintech developments, as explained by Sunhil Madhu in Forbes Magazine, Madhu predicts disruption for the biometrics industry, though many tech analysts see biometrics making gains. Madhu points to Apple’s decision to share facial recognition mapping data with app developers. Being able to source this data from Apple and possibly other device makers cut out biometrics companies. Before Apple’s decision to share the face mapping technology, developers relied on biometrics companies to provide it. That reliance may soon be a thing of the past.

Madhu also sees 2018 ushering in many AI-related changes. Online fraud detection may soon make tremendous gains through AI’s ability to adapt to online fraudster’s ever-changing tactics. Currently, fraud prevention systems rely on a human entered a system of rules. Hackers identify these rules and then get around them. AI promises to replace this increasingly inefficient defense system with machine learning that can react to hackers at a speed no human can match.

Fintech also promises to plug the hole in online user identification. For the past decade, users have been checking out as guests on e-commerce sites, using data readily obtainable by fraudsters. Biometric capabilities can now provide a solution. By requiring the authorized user to input their fingerprint into their device, ecommerce providers can finally offer 100-percent identity assurance.

Regtech involves using technology to comply with financial regulations. Biometrics and AI have the power to revolutionize reg tech. For example, AI’s data processing ability offers the potential to automate the data processing portion of money laundering investigations. AI can complete these data mining and organizing tasks at speeds previously beyond human imagination. This frees investigators to focus on more nuanced legal and investigative portions of the investigation process.

Blockchain technology has promise beyond cryptocurrencies. For example, technologists are exploring its potential for online identity verification. Many new blockchain technology applications may come onto the horizon.

Few deny that fintech’s impact on the economy of the future will be substantial. Increased ability to create financially beneficial connections promises opportunities. Increased security effectiveness may take a serious bite out of online crime.

Tips to Deal with Debt without Shame

Tips to Deal with Debt without Shame _ Ajay NagpalDebt is all too easy to accumulate and difficult to eliminate. The strain of debt can be financially and emotionally paralyzing. Obligations hinder progress toward financial security and often cause stress which leads to an overwhelming sense of hopelessness.

Whether debt results from adverse situations or unwise choices, many people feel guilt or shame about their situation. Guilt is remorse over behaviors, such as feeling sorry about overspending on junk food. Guilt can be helpful if utilized to avoid repeating missteps that lead to debt. Shame, however, is a negative feeling about oneself. It is self-blame, leading one to feel worthless, stupid, or hopeless. Shame makes it challenging to feel capable of positive change and often fuels the cycle of self-sabotaging habits that need to be discarded.

In rebuilding a financial foundation, assess the current situation and understand that debt is an issue worth addressing. Next, accept responsibility for the debt even if the circumstances that created the debt were uncontrollable. Realize that debt is quite common: neighbors, celebrities, and governments are facing money troubles all over. Formulate a plan to become debt-free as soon as possible. Here are a few ideas:

1. Take charge — stop charging.
Make a budget and set financial goals that include debt elimination with a financial planner or app. Make every financial decision in light of those goals: does that expenditure help toward financial stability? Is it for a legitimate need or a whim? Begin paying for purchases with cash or a debit card instead of a credit card. Pay off consumer debt now.

2. Simplify — scale down.
This step requires humility: it may be necessary to downsize cars and houses or sell extra clothes and “toys.” In doing so, the reduced stress of simple living will override any embarrassment from scaling back. For encouragement, reflect on acquaintances who have embraced a frugal lifestyle, or think of famous literary characters such as Molly Weasley, Jack Reacher, Silas Marner or Katniss Everdeen as models to emulate.

3. Choose wise friends — support each other.
Achieving financial stability and freedom calls for determined focus. Having close associates who will support this goal will make the process easier. Wise friends will not take advantage of each other or persuade each other to make additional money choices in conflict with set goals. Their understanding, advice, and experience will make the path smoother as they share their financial victories.

5 Critical Books for Finance Professionals

5 Critical Books For Finance Professionals _ Ajay NagpalWhether it’s a movie like Wolf of Wall Street or a real-life drama like the 2008 financial crisis – finance has always been a backdrop for drama. This leaves writers who focus on finance with a long list of topics to choose from. Here are five books that every finance professional should be familiar with:

1) The Intelligent Investor

Ever wonder how Warren Buffett learned everything he knows about investing? Well, this is the book he recommends.

In this book, Benjamin Graham provides readers with a map to investing success by using a long-term, value-investment approach. Published in 1949, it’s been updated and remains relevant today.

 

2) Common Sense on Mutual Funds

This is a book written about 20 years ago by John Bogle. The book focuses on mutual fund investing.

Who’s John Bogle? The creator of the Vanguard Group, one of the most respected mutual fund investment firms in the world. There’s no better person to learn about mutual funds from.

 

3) A Random Walk Down Wall Street

This is a great book to gain insight into all possible investment strategies.

The author, Burton Malkiel, takes readers through all market fundamentals – from stock investments to mutual funds. It remains a great resource for someone new to finance, and for the experienced professional.

 

4) Liar’s Poker

By now, everyone’s familiar with the Wolf of Wall Street. Well, that wasn’t a one of story.

In this book, Michael Lewis recalls his experience at Salomon Brothers on Wall Street in the late 1980’s. Readers won’t just get insight into basic investment fundamentals, but the wild side of Wall Street, too.

 

5) The Alchemy of Finance

The author, George Soros, is known to have a great eye for market trends. He’s considered one of the best of all time at hedge fund managers. This book teaches readers how to use his unique approach, and highlights reacting to the market and its trends.

The financial world provides writers with an endless amount of topics to choose from. Whether it’s basic value-investing strategy as taught by Benjamin Graham, or the inside scoop of what Wall Street was like according to Michael Lewis, the information is out there for any reader who wants to expand their knowledge.

 

 

 

Budget Yourself & Make Smart Money Moves

calculatorWe can shop without leaving our homes. In fact, we can shop without lifting a finger, thanks to the development of high-functioning devices fit with the purchasing capabilities. In a time where purchasing can be as easy as breathing, let’s practice smart budgeting habits.

It has never been a better time to watch your spending and ensure that money being put to the side for future needs. Monitoring your budget and properly managing your wealth can be the difference between you putting the down payment on your new car or you riding the bus from here to Pasadena.

  1. Quick and Easy Dinners – Create one-pot-wonders that can last you for days. Get staple items, such as beans, onions, carrots, and a meat option to create hearty meals that can last for several days. Don’t know where to begin? Make a crockpot chili or the long-standing crowd-favorite, chicken noodle soup.
  2. Keep Cheap The Staples on Hand – Keep frozen items and dry goods on hand to build meals around them. These options are flexible for any meal.
  3. Track your Spending – Review your budget and see where you can scale back. There are a number of applications you can use to track the money that you spend as well as the money that you save.
  4. Hold the Drinks and Hold Your Liquor – Whenever possible, refrain from buying drinks out. A non-alcoholic drink tacks $3-$5 onto your bill, while alcoholic drinks can add a costly $5-$15, and likely more if you’re having wine or you’re dining at a high-end establishment. Several rounds of drinks can double or triple the bill. Instead, save some cash and go to a BYOB.
  5. Unit Pricing– Compare unit pricing on items in the store, so that you aren’t caught off-guard. Also, make sure to keep track of your spending while walking through the grocery store. Pick a budget and stick to it.
  6. Shop Smart – Stores have products that are soon to out-of-date that are discounted. Buy the items and use them right away. There are also companies, such as Imperfect Produce, which sells “ugly” produce at a bulk rate.

See where you can save financially and be conservative. Remember that items, such as utilities and gasoline, will continue to rise. Keep a calendar of upcoming changes and expenses. Non-monthly expenses (i.e. insurance) should be put on a calendar so that the charges don’t catch you off guard.

Spectacular Financial Literacy Courses Available for FREE

Spectacular-Financial-Literacy-Courses-Available-for-FREE-compressorEducation centered around financial literacy and personal finance is just be a few keystrokes away.

Did you know that you could take FREE online classes, which could offer you a beginner’s and intermediate understanding of finances, whether that’s wealth management, financial, accounting, mutual funds, compound interest, debt, or savings, or wealth management? It seems that the options are endless.

There are countless resources on the web, offering users the valuable information they seek. While searching the vast internet, you sometimes happen upon a course that empowers you through the info shared during the program.  While many of these resources aren’t necessarily on par with fully developed college courses, some classes are very adept at providing keen insight on how to use financial literacy as an effort to foster a lifetime of economic well-being.

There can be a fee for graded work. However, all materials are available at no cost. For full financial literacy, it’s essential to examine behavior economics, competency about daily spending, and an understanding of stock movement. The variety of courses featured online can provide a clear, functional career path that can construct a healthier and more stable financial reality for many.

So you might be asking, ‘Where do you go to find these incredible, free classes, which could change my financial trajectory?” MOOCs.

If you venture over to Massive Open Online Courses (MOOCs) or  Coursera, you’d quickly learn that there are multiple courses that speak to a need for addressing finances. For instance, “Personal & Family Financial Planning,” “Organizational Behavior: How To Manage People,” “English for Media Literacy,” and “Finance for Non-Financial Professions” demonstrate the variety. The courses placed on MOOC are aimed at unlimited participation and open access via the web, which means that it’s designed to be utilized by anyone.

Read on to review a quick overview of some of the most acclaimed courses featured on the MOOCs’ website:


Behavioral Finance—Duke University

coursera.org/learn/duke-behavioral-finance

Understanding how decision-making errors impact your financial choices.

Review: “Generally it’s a fantastic online course, which gives me so much insight into an area I have previously unaware of. Behavioral Finance is meaningful because it takes human behavior factors into account of finance models, especially psychology factor. It offers me new insight into a study of interdisciplinary subjects. Class outlines and videos are well-organized and challenging. However, I think the test questions are sometimes a little bit difficult, and test2 and test3 should have answers and analysis like test1. It will always be better to review the knowledge you learned after making some mistakes and being eager to know the causes. I love the course!”


Financial Accounting: Foundations—University of Illinois, Champaign

coursera.org/learn/financial-accounting-basics

Discover accounting basics, which effectively teaches you to manage your finances as you would a business.

“The Course is very practical. I really appreciate the practice quizzes since they allow me time to have a greater understanding of each lectured session. A very good course that I would recommend to anyone who desires to improve or refresh their knowledge of the principles that were explained in all the modules.”


The Art of Negotiation—University of California, Irvine

coursera.org/learn/art-of-negotiation

Learn important negotiation strategy, which could lead to more significant earning and greater wealth.

Review: “Very informative and useful course.“


Financial Literacy—Macquarie University

open2study.com/courses/financial-literacy

Gain a fundamental understanding of the basics: managing debt, savings, avoiding investment scams, and more.

Review: “This class is great for a very basic introduction to Financial Literacy. It gives you the framework from which to build a financial plan for your life including learning how to save, how to create a budget, and how to invest. It is not a very in-depth course, which is the only downfall to it, and it only takes probably an hour an a half for each week of work. But Professor Mordaunt is concise and at times entertaining.”


Securing Investment Returns in the Long Run—University of Geneva

coursera.org/learn/investment-returns-long-run

Identifying the difference between active and passive investing, and provide insights on ROI.

Review: “This course deals mainly with the topic of evaluating the performance of investments and uses the outcomes to discuss the benefits of active and passive funds. Measures are introduced to evaluate the risk-adjusted returns of investments. In addition, evaluation tools for the performance of active managers are presented. The videos are of great quality. The quizzes could be more challenging.”

If you’re interested in learning more? Please visit Coursera and Open2Study.com.

Second Careers: 5 Meaningful Financial Facts To Consider When Making A Career Move Over 40

SECOND CAREERS- 5 MEANINGFUL FINANCIAL FACTS TO CONSIDER WHEN MAKING A CAREER MOVE OVER 40 - Ajay NagpalDown-sizing is an unfortunate reality in the modern business world, even when you are over 40 years old. How can you regain traction in your financial life?

Here are five significant financial facts to consider when starting a second career after 40 years old.

Starting Second Career

You are no longer a “spring chicken” and starting over can be a challenge. If you adhere to these career tips, you can optimize your chances for success. You need to be realistic, but also energetic. Follow these five significant facts to get your second career, off the ground.

1. Accrued Benefits

While you work, you accrue benefits that could include stock options, a 401(k) plan or pension. You have many options for your 401(k) plan, including cashing it out or rolling it over. Remember, that these include both yours and your employer’s contributions.

If you cash out, you must pay 20% federal withholding taxes plus a 10% early withdrawal fee. The 401(k) rollover allows you to re-balance the investments in the portfolio. This makes sense because your life has changed – you want your assets to reflect your new life.

2. Rethink Mortgage

You set up your housing finance based on your employment expectations. When you are let go, you might want to change your housing loans, consider refinancing or even getting a HELOC.

3. Keeping Skills Relevant

You might have started your job, a decade ago. It pays to update your skills. Use downtime efficiently.

4. Prime Working Years

After graduating from college, you might only qualify for certain entry-level positions. If you figure that your prime working years are from 22 to 65, you are in your mid-life when fired at 40. But, you do have valuable experience that allows you to qualify for certain higher level positions.

5. Experience Pays

Do you know how many college graduates would love to have your experience? Now you can be eligible for a couple of these high-paying jobs: Financial Analyst, Fundraiser or Social Media Manager. You have paid your dues, now cash in with a higher paycheck.

Losing your job over 40 can be a shock, but take advantage of the situation to find a better job. You are mature and experienced. Find a second career that pays you top dollar for your valuable, accumulated experience.

Financial Mistakes That Even Experts Make

Financial Mistakes That Even Experts Make

For those just starting out on their own, money can be intimidating. In those first few years, mistakes are just as inevitable as the financial losses that follow a misstep – and as painful as those errors are, they serve as signposts on the road to financial stability.

Even experts who have built their careers around finance have made a few bad calls in their earlier years – and learned from their mistakes.

Here are a few of the errors that they made, along with a few tips for avoiding similar mishaps!  

Trusting Personal Relationships Over Logic

Financially successful individuals don’t cross friendship and business. While agreeing to invest in a close friend’s or even a family member’s business proposal can seem like a fun idea or even just a polite response to being asked, you should decline. More often than not, interpersonal feelings bias you against an objective view of the asker’s business plan, and leaves you poorer in time, money, and friends.

Expert Case Study: When Jacki Zehner, current CEO of Women Moving Millions invested time and energy in getting a friend’s recording studio off the ground, she lost her investment, her friendship, and most significantly – her time.

 

Failing to Review the Fine Print

Contracts can be slippery, and end up costing you far more money in technicalities and rollover costs than you ever expected to pay when you signed. It can be easy to be lulled into complacency after months of regular payments – and costly! Read the fine print, and don’t forget to shop around for better bargains if you feel that you’re paying too much for the service you receive.

Relatedly, make sure to go over your credit card bills and account statements at least once a month to check for fraud. While reconciling bills and accounts can be a pain during busy months, a quick check will catch any unauthorized transactions and potentially save you thousands of dollars.

Expert Case Study:  Justin Modray, founder of Candid Financial Advice, got caught up in a stressful move to a new house and didn’t notice that he’d been swindled out of three thousand pounds until he checked his statement a few months later. He reached out to his bank and managed to get the stolen funds back – but he made sure to regularly reconcile his accounts after the scare!

 

Overspending

Purchases add up. Even a couple of nice dinners and a great deal at that store you love can launch you significantly over budget. Crunch the numbers! Work out how much you need to set aside for bills, savings, and living costs every month, and then decide how much you can afford to spend on fun.

Expert Case Study: Financial author Kate Northrup blew through far more money than she should have when she was in her twenties. She explains her rationale: “I had this idea that I needed to look a certain way and that I needed to look like I had it more together than I did. That, to me, meant spending more money than I actually had because I wanted to look more successful than I actually was.”

As Northrup suggests, real success comes more slowly, and requires patience and financial foresight. Looking well-off only goes so far when you don’t have money left at the end of the month.

Greedy Investments

If it looks too good to be true, it probably is. Stay away from investments that promise quick returns in short periods of time. Not only do such ventures normally crash, but sometimes they can have shady roots! You stand to lose all that you contribute – if not more – by buying into a greedy scheme. Instead, look into more stable, long-term investments.

Expert Case Study: Alex Davies, co-owner of WealthClub, made the mistake of investing almost £20,000 in a minerals company that went under within a year! The nearly double return he received initially slipped through his hands when the questionable firm fell apart. Don’t invest in deals that promise quick returns – they rarely last!

 

While it’s tempting to follow an impulse or make a decision based on emotion, biased or split-second choices will inevitably lead you into financial trouble. It’s vital to keep a level head and learn from your mistakes, regardless of whether you’re a beginner or financial expert!


Ajay Nagpal, the Chief Operating Officer at investment management firm Millennium. Ajay Nagpal supports social entrepreneurship through his work as a Board member of Echoing Green. Please visit his social entrepreneurship blog to learn more about that! Also, find him on Behance!

Finance Philanthropists Who’ve Shared Their Fortune

pexels-photo

There are finance experts who aren’t afraid to spread the wealth.

Wealth management, investments, and studying the dynamics of assets are important parts of economics. The science of money management can be raised to build a business, whether one is educated in public finance, corporate finance, or personal finance. More than that, it’s individuals with this important skill set who have to ability to use their savviness for the purpose of humanitarianism, charity, and altruism. It’s fortunate that many who’ve established themselves as successful in the financial sector turn to philanthropy as a way to demonstrate curiosity and to give back.

Finance philanthropists use donor-advised funds or offer direct gifts to organizations in need. Others sign the Giving Pledge, promising that they will dedicate a great deal of their wealth, approximately half, to that philanthropy.

As of March 2017, there were more than 100 self-made moguls and titans who’ve pledged to strengthen and support causes they deem necessary. Many among those who signed the pledge are financiers, who are incredibly generous. Read on to know the names of some of the most charitable financial philanthropists.

Carl Icahn

Carl Icahn is an investor and magnate who has a net worth of 15.7 billion, according to Forbes. Five years ago, he donated an estimated $200 million, with a significant amount of that money going to Mount Sinai School of Medicine. The various family foundations, hold a different number of assets, with the largest possessing about $30 million in assets. Most large gifts directly, including the $20 million to create the Carl C. Icahn Laboratory at Princeton’s Institute for Integrated Genomics. Also, $3 million to create the Icahn Medical Research Foundation.

Mike Bloomberg

Mike Bloomberg is a businessman, author, politician, and philanthropist with a net worth of $49.1 billion. As of May 2017, he was named the eighth richest person in the country, and the tenth in the world. The former mayor of New York signed the Giving Pledge, built up the excess of Bloomberg Philanthropies to $4.2 billion. He’s also given dollars to John Hopkins and his top causes (climate change and global public health). Also, his foundations give money to diverse issues.

Warren Buffett

Warren Buffett, with his $74.9 billion fortune, is a business magnate, investor, and philanthropist. He’s pledged to give away 99 percent of his wealth and has already cumulatively given away billions to his family fortune, the Bill and Melinda Gates Foundation, and the Nuclear Threat Initiative.

George Soros

George Soros is an Hungarian-American investor, business magnate, philanthropist, and author worth $25.2 billion. His umbrella organization, the Open Society Foundation, has gifted $11 billion over the last thirty years. He’s also given to the Central European University in Budapest, donating nearly $1 billion.

Julian Robertson

Julian Robertson is an investor, hedge fund manager, and philanthropist who has a net worth of $3.8 billion. Since he launched the Robertson Foundation in 1996, he’s donated more than $1 billion to charitable causes. Robertson put money toward The Tiger Foundation, Memorial Sloan-Kettering, Environmental Defense Fund, Teach for America, and some other organizations, amounting to hundreds of millions more. He’s also a Giving Pledge signatory.

Some other incredibly charitable individuals include David Rubenstein, Bill Ackman, Charles Munger, George Kaiser, John Arnold, Lowell Milken, Pete Peterson, Sandy Weill, Denny Sanford, Herbert Sandler, Michael Milken, and Stanley Druckenmiller.

An honorable mention is David Rockefeller who was an American banker, the chief executive of Chase Manhattan, and the oldest living member of the famous Rockefeller family until his death in March 2017. His net worth was $3.3 million at the time of his death, and throughout his life, he gave at least $1 billion to organizations and establishments, including the Museum of Modern Art and Rockefeller University.


Ajay Nagpal, the Chief Operating Officer at investment management firm Millennium. Ajay Nagpal supports social entrepreneurship through his work as a Board member of Echoing Green. Please visit his social entrepreneurship blog to learn more about that! Also, find him on Behance!

Simple Tips for Beginning Investors

Simple-Tips-for-Beginning-ajay-nagpalYou’re never too young or too old to budget, save, or practice debt control, and the same can be said for investing dollars.

Being a financier isn’t as easy or as glamorous as the film “The Wolf of Wall Street” suggests, but that doesn’t mean that it’s complicated. Of course, investment is intimidating to those new to the investment game, particularly to those who’ve never allocated funds and other resources to benefit from a ‘return’ –but there is help. Read on to learn some fundamentals about investment and capital gains.

Novice investors are frequently adopt investment diversification and strategy. A return may be in the form of investment income (dividends, interest, rental income) and/or capital gain. There is a range of financial assets, whether discussing low-risk investments, low-return investments, high-risk investments, and higher expected commensurate rewards.

The most evolved investment portfolios are those that are diversified in investment strategy. Below, please find five investment tips for beginner investors.

Know Someone With Knowledge: If you chat with an investment advisor who can educate you on your options. Through this advisor, you’ll learn if you’re able to invest in your registered retirement savings plan and tax-free savings account. Recognize the pros and cons of different account tips, and act decisively.

Shop Where You Buy: Rather than look to businesses and organizations that you don’t know much about, you may want to look to companies to endorse when seeking to invest. Find companies that you enjoy and patronize. If you enjoy eating Fuji Apple Salad with Chicken for lunch or you love snacking on a Lemon Drop Cookie, you may want to consider buying Panera Bread Co shares. Likewise, if you identify other brands and trends that others enjoy, you’ve figured out a great opportunity for investment. Of course, this differs a bit from serious investing. If you’ve set a lofty financial goal, you may want to consider long-term investments that focus on a well-researched industry.

Expand And Diversify: Inexperienced and budding investors without many assets may find exchange-traded funds and mutual funds are a good product for portfolio diversification. Mutual funds allow young people an opportunity to work with others, and an investment is facilitated by a mutual fund manager. Exchange-traded funds are similar, but function without the guidance of a manager.

Begin Investing Today: Know your limits by putting money away each month, so then you’ll have money to invest personally. Understand that the longer you invest, the more money you’ll make, gaining a compounding rate of return.

Do Your Research: Learn what opportunities your bank has available to you, and find out if you can open your account. Through your bank, you can learn if there is a discount broker program. While high return, these programs you’ll have to go it alone –there will be no one offer insight about when or how to trade or buy.

What’s also important is that you keep yourself informed. Read the newspaper each day, and learn about market vulnerabilities. Do research on the habits of successful investors, and perhaps seek out a mentor.


Ajay Nagpal, the Chief Operating Officer at investment management firm Millennium. Ajay Nagpal supports social entrepreneurship through his work as a Board member of Echoing Green. Please visit his social entrepreneurship blog to learn more about that! Also, find him on Behance!

The Importance Of Financial Literacy In Today’s Society

The Importance Of Financial Literacy In Today’s Society | Ajay NagpalFinancial literacy is a term used to describe financial, credit and debt management and the knowledge necessary to make financial decisions responsibly. This includes anything from how to avoid debt to how a checking account works. The daily decisions made by an average family when trying to buy a home, balance a budget, save for retirement or fund their children’s education are reliant upon financial literacy.

Lack of financial literacy is a global problem, occurring both in developing economies and in developed or advanced economies. Here are a few trends that show the importance of making thoughtful decisions about finances:

  1. There are complex options

Recently, consumers are being asked to choose between a number of investments and savings products. The products are more complex than in past. Consumers are asked to choose amongst product options that offer various interest rates and maturities. Many people aren’t adequately educated to make these decisions. Choosing complex financial instruments that have a wide range of options can impact a consumer’s ability to finance an education, buy a home, or save for retirement.

2) Consumers are responsible for more of the financial decisions

In past generations, people could depend on pension funds to provide more of their retirement funding. Pension funds are managed by professionals, so the financial burden was placed on companies or governments that sponsored them. Consumers were not a part of that decision-making process and usually did not even contribute their own funds. It was rare for consumers to be made aware of the funding status or investments held by the pension. Now, the responsibility for retirement planning has shifted to the consumers. Pensions are now a rarity, especially among new workers. Employees are instead being offered the ability to participate in 401K savings plans. In these plans, they need to make investment decisions and contribute to the plans.

3) The marketplace is changing

The financial landscape is constantly changing. Because the marketplace is now global, there are many more participants in the market than there used to be, and many more factors that can affect it. Technological advances such as electronic trading have caused the financial markets to be even more volatile. These factors lead to conflicting views. As a result, it can be difficult to set up, implement and follow a financial roadmap.

4) Lack of government aid

One of the biggest courses of retirement income in the past was Social Security. However, the amount paid by Social Security currently is not enough, and Social Security may become completely unavailable in the future. According to the Social Security Board of Trustees, the Social Security Trust fund may be depleted by 2033. At this point, Social Security serves more as a potential safety net that may or may not provides the amount necessary for basic survival.

5) Longer life spans

The last reason is a bit more simple: we’re living longer. As time progresses, the average lifespan is increasing. As a result, we need more retirement savings than prior generations do.

Financial literacy has always been instrumental in helping consumers make smart financial decisions, but now, it’s more important than ever. Make sure you stay informed so that you know what to do when posed with a series of financial options that can drastically affect your life.


Ajay Nagpal, the Chief Operating Officer at investment management firm Millennium. Ajay Nagpal supports social entrepreneurship through his work as a Board member of Echoing Green. Please visit his social entrepreneurship blog to learn more about that! Also, find him on Behance!