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.

4 Resources For Financial Educators

financial educationLikely, there are dozens upon dozens of organization and tools designed to help young people access essential knowledge about finances and securing budgetary success.

The problem, however, is identifying these resources, and knowing how you might put them to work.

Read on to find the names of four organizations/tools you can use to equip better young people who someday hope to be financially savvy:

National Endowment For Financial Education: The NEFE is a private nonprofit dedicated to empowering young people and families, helping to secure a legacy of financial success that will carry them into their futures. They do this by conducting research and commissioning consumer surveys. They utilize unique and practical training tools, putting them to use in the workplace and the classwork. Also, the provide adult and youth financial education tools and resources, fostering a better understanding of saving and spending.

MoneyTeach: MoneyTeach is an invaluable tool and curricula resource connection, matching financial educators with the valuable, instructional resources that they need. Visitors to the site can find quality instructional resources; suggested workshops and course guides; and they can engage with the educator community, collaborating with colleagues. The account is free, borrows lesson planning tips and activities from leading peers who ongoingly teach financial planning and financial smarts.

Smart About Money: Smart About Money is an online course that users can complete at their own pace. Educators can hone their skills by creating courses that focus on money basics, family planning, economic emergencies, transportation, spending, saving, investing, retirement, taxes, borrowing, and other topics. SAM is a customizable and free tool, providing timely tips and money management ideas.

Jump$tart Clearinghouse: Jump$tart is a leading financial education resource center, created with the purpose of helping students. They list featured information relating to financial literacy and provide practical money skills for life.

If you know the names of some other websites tasked with helping young people secure financial freedom, please share!

7 TED Talks That Will Instantly Improve Your Financial Literacy

7 Ted Talks That Will Instantly Improve Your Financial Literacy | Ajay NagpalWith information now readily available, many readers seek to improve their financial literacy. Below are seven TED talks that can help you go from being lost in the financial world, to crafting a personal finance plan.

1) How I Learned to Read – and Buy Stocks – in Prison

Curtis Carroll delivered this presentation from prison in 2016. The theme of his talk is that financial literacy is a lifestyle more so than a skill. He discusses various strategies focusing on personal finance. Curtis Carroll’s talk is a motivating introduction because if he can do it from prison, surely anyone has hope.

2) Why You Should Know How Much Your Co-Workers Get Paid

This TED Talk was given by David Burkus, who works in the management research industry. In this presentation, he claims that it is best for people in a company to exchange salary details with one another. His research proves that employee happiness increases and company discrimination decrease as a result of this.

3) Saving For Tomorrow, Tomorrow

This talk is given by Shlomo Benartzi, a respected economist. He goes over the importance of saving, and how many Americans continuously put it off. He presents dramatic statistics about the popularity of 401(k) accounts and American saving amounts.

4) The Battle Between Your Present and Future Self

In this TED Talk from Daniel Goldstein, another economist, he opts to use the distinction between our present and future selves as motivation to begin saving. He provides strategies for how we can prevent ourselves from harming our future selves by saving today.

5) Post-Crash, Investing in a Better World

This talk from social commentator Geoff Mulgan is simply focused on how to effectively invest after the most recent economic crash.

6) How to Buy Happiness

Michael Norton is a social science researcher who presents on how donating our money to charitable causes can result in more happiness.

7) The Future of Money

In this TED Talk, Neha Narula, who works at Digital Currency Initiative, presents on the power of using a digital currency system.

The information is surely out there and starting with these seven TED Talks, you can improve your financial literacy in no time.

Youth & Financial Education in 2018: Tips For Integrating Financial Literacy Into The Lives of Students

Youth & Financial Education in 2018_ Tips For Integrating Financial Literacy Into The Lives of Students | Ajay NagpalFinancial literacy is a vital area for students to concentrate on. Many students struggle with planning their finances for the future. However, many teachers feel like they do not have the tools to teach their students appropriately in this area.

One of the most significant issues with the modern school system is that teachers spend too much time worrying about standardized test scores. Instead, the teachers could spend time teaching children essential aspects of financial planning for the future.

Debt

Debt is a notable issue in our society today. Many people feel that high levels of debt trapped them. As a result, it is difficult for young people to purchase a new home or invest in a business. With the cost of college increasing rapidly, the average student leaves college with a high level of student loan debt. This is a subject that could easily be taught in school. In fact, there are several financial courses dedicated to this particular subject.

Budgeting

Another essential aspect of having financial success is budgeting. Many individuals struggle to budget appropriately. Budgeting is essentially just staying organized and disciplined with financial planning.

There are a ton of online programs to use to help with the budgeting process. There are some people who have trouble budgeting in the beginning. It usually takes several months to truly have success in this area.

Investing

Investing is the best way to build wealth over an extended period. Numerous people do not understand how to invest for the future. Investing is not complicated, but it can seem complicated for people who are never exposed to it. Teaching some investing basics to students is a great way to improve their financial literacy. Over a long period, this can make a huge difference in the lives of students.

Take Time to Teach

Schools need to focus on teaching critical principles to students. Financial literacy is one of the best ways to help students in the future. Many students are graduating from school without any exposure to financial literacy. Financial literacy courses will make the lives of students more comfortable in the future. Personal finance is not a complicated subject, but it can be difficult for students to understand without proper teaching.

 

Millennials vs. Baby Boomers: Financial Advice Across Generations

Millennials vs. Baby Boomers Header

Millennials are impulsive and want instant gratification instead of long-term financial gains.

Baby Boomers are behind the times and don’t realize how the financial landscape has changed.

Sometimes it seems like the generational conflict over finances never ends; lectures start with Grandpa at the family dinner table and end with his twenty-something grandson’s angry rebuttals over dessert. Neither party is flexible in their assertion that their financial philosophy is the correct one, and someone else inevitably has to change the subject when a heated intergenerational conversation turns to awkward silence.

The main issue with these conversations is that both parties are advancing incomplete positions. In all likelihood, the grandson’s approach to finances works – for his situation. The same is likely true for the grandfather. The intergenerational argument is an unwinnable one because financial strategies are dependent on a person’s stage of life and their individual financial situation.

Moreover, the current economic landscape must be taken into account when devising tactics for all generations, as strategies that may have served even twenty years prior might now fall flat. The buying power of the dollar has tanked in the last few decades; Business Insider reports that inflation has boosted prices by 784% over the past sixty years. Understandably, this makes it more difficult for younger consumers to buy homes, cars, or even get married.

Financial priorities change according to the economic landscape – and usually, that means shifts occur on a generational basis.

The following outlines a few financial approaches for each generational category.

 

Generations Y & Z (Millennials)

Teens to late twenties:

Millennials are only just beginning to learn how to manage their finances; they may be working their first jobs or finishing school. More often than not, they have a significant number of loans; in fact, the average debt burden for students graduating in 2016 was $37,172!  As such, Millennials may need to put more of the money they do earn towards paying off debt and day-to-day expenses.

However, members of this generational bracket should also focus on making and sticking to a reasonable budget. They would benefit from setting up a savings account and depositing a set amount of money into it each month. Building credit history is vital during the teens and twenties, so Millennials would further benefit from making monthly payments and establishing a good credit score.

 

Generation X

Thirties to forties

Members of Generation X typically have jobs, and often young families as well. Their priorities differ from Millennials because, as a contributor to TheWealthAdvisor notes: “Boomers and Gen X are further advanced in their careers and lives, they tend to have fewer concerns about day-to-day living.”

However, these individuals typically have greater investment obligations such as mortgages, college funds for their children, and their own retirement funds. As such, they should allocate their funds reasonably. Saving for a child’s college is wonderful – but not if it leaves the parent without a means to support themselves in retirement! Members of Generation X should be careful to observe their own financial needs by putting money away for retirement and medical and personal emergencies.

 

Baby Boomers

Fifties to sixties

Baby Boomers tend to save a little more than millennials, but often have more significant financial obligations, such as providing for elderly relatives or helping grown children. Additionally, this group needs to start planning for retirement in earnest by saving and settling on the kind of lifestyle they intend to pursue in their later years. Baby Boomers should also consider enlisting a financial advisor to help balance conflicting financial needs and plans. This strategic work shouldn’t be put off!

There’s no doubt that the generations have varying priorities and require different strategies as a result – so the next time that awkward generation argument picks up, put a stop to it!


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!

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!

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!

5 Money Tips You Shouldn’t Ignore

5 Money Tips You Shouldn't Ignore | Ajay NagpalEveryone wants to be wise with money. However, not everybody knows how to do that, even if they aren’t spendthrifts. If you receive certain tips about personal finance from a pro or from someone who knows personally how to manage their finances, you should really listen. Here are five money tips you should never ignore.

Never Go Into Debt

One of the most obvious tips regarding your finances is to never go into debt. That means that if you have a credit card, be smart when you make purchases on it. The best thing to do is to never outspend beyond your means and always pay your credit card bills on time. It will ensure that you are paying off your debt in a timely manner and that you will have a good credit score. It is also helpful to have a credit card with a low introductory APR and initial zero percent interest rate.

Invest in Stocks

Many people make the mistake of putting their money in the bank and only in the bank. Although you will earn interest on whatever you have in your savings account, anything in checking gets zero interest. The best option, especially in the long term, is to invest your finances in the market. You will get the most out of your finances when you invest in stocks that are at least medium risk as the market fluctuates. In addition, investing ensures that your amount will increase over time. You may also want to sell stocks when they go high and stop investing when the market is down.

Invest in a Home

Investing in a home is always a good idea. Buying your own place to call home is better for your long term financial life and your life in general. In comparison, renting can end up becoming a considerably more costly venture because landlords can raise the rent if you aren’t lucky enough to get a place that is rent controlled. You can also increase the value of your home when you own it by making repairs and improvements over the years. Additionally, you can legally rent to tenants for some extra cash as well.

College is a Must

If you really want to earn a good salary, having a college education and degree is an absolute necessity. The majority of employers require a degree before they will consider hiring a new employee. However, keep in mind that you must be dedicated when you go to college. The worst thing to do is enter college, garner tons of student loans and then drop out.

Retire Mortgage Free

Avoid going into retirement with a mortgage. The last thing you want to do is to dip into your retirement funds early, because it results in big penalties later on. It can make retiring more of a burden than anything else because you will find that your retirement finances are depleted when you really need them.

With these helpful money tips, you will certainly become a personal finance master and can enjoy your money in the long term.


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!