All posts by Financial Independence Hub

How to set up a faster Payments system in your business

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(Sponsored Content)

In this fast-paced business environment, the ability to offer faster payments is what makes the difference between being an extremely efficient organisation focused on customer satisfaction and one that is potentially headed towards  disaster.

Faster payments significantly reduce the waiting time for transactions to take place, which means peace for both parties. Nowadays, with the world advancing rapidly every business is doing what it can to surpass others in its race towards dominance. Setting up a faster payments system for your own business will significantly boast the operations and the reputation of your firm.

With the right tools you can observe benefits you did not know your company could enjoy. Here is a brief guide to setting up a faster payment system in your UK-based business.

Learn how faster payments work                                                             

Faster payments offer customers the opportunity to make quicker electronic payments or even transfer revenues online or via phone. Instead of taking days for a transaction to complete, the task of a faster payment only takes a couple of hours. What’s more, those who have this feature in their business are free to conduct electronic transfers at any moment 24/7. The service is even available on official holidays including the days when banks are off.

Faster payments are made electronically within the duration of two hours, given that both the sender and receiver are part of the Faster Payments service. They are mainly used to make a significantly large number of small value payments that include expenses, bills, online transfers and supplier payments.

Whilst most Faster Payments are usually restricted to 250,000 pounds; many individual banks impose a lower limit to transactions. Since the Faster Payments was launched in 2008, more than five billion payments have been processed using this very scheme.

Analyse the benefits for your business

As the name implies, faster payments are payments that take less time to be processed and are delivered at a more rapid pace in comparison to a regular payment. Continue Reading…

Underinvested in China? How to invest in the “New China” Economy

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Highrises in Shanghai’s new Pudong financial district.

By Caroline Grimont

(Sponsor Content)

Investors are missing out on strong growth opportunities by being underinvested in China:  the world’s most populous country and second largest economy.

Since China slowed down from two decades of near double-digit growth, investors have become skeptical about investing in the country.

They worry about the country’s macro challenges; among them, a high leverage ratio resulting from a rapid buildup in debt over the past 10 years, excess capacity in industrial segments, an over-reliance on investment as a growth driver, and more recently, the risks of protectionism.[i]

In our view, these challenges are overstated. China has the capacity to overcome them and has taken a measured approach to sustain its growth, albeit at a slower pace.   The Chinese economy has grown almost ten-fold from US$ 1.2 trillion in 2000 to US$ 11.2 trillion in 2016, second in size only to the US.  Given the size of China’s economy now, a slower more sustainable rate of growth makes sense.

Our view is shared by Morgan Stanley, which states: “We expect China to avoid a financial shock and achieve high income status by 2027. Our view is that moving to higher value-added activities will propel the economy forward and drive the continued medium term outperformance of MSCI China versus MSCI EM, providing significant investment opportunities.”[ii]

China accounts for almost 50% of global economic growth

China remains one of the fastest growing economies in the world, with a forecasted growth rate of 6.5% in 2017 and 6% in 2018. On a global scale, China represents 15% of the world’s economy and accounts for close to 50% of global economic growth.

Continue Reading…

Is the Fixed Income Market buying what the Fed is Selling?

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Fed’s Balance Sheet Normalization Guidelines (in billions)

By Kevin Flanagan , WisdomTree Investments

Special to the Financial Independence Hub

In the post-Federal Reserve (Fed)-meeting world of the money and bond markets, there seems to be a disconnect between what market participants are thinking and the Fed policy decisions actually being made. It is a case of the market not buying what the Fed is selling.

In other words, the term “policy mistake” has begun to enter the discussion, as the U.S. Treasury (UST) arena appears to be operating under the assumption that the Fed should perhaps ease up on its tightening campaign because

(a) inflation has been slowing in recent months, and

(b) economic growth has been lackluster. This line of reasoning concludes that the policy makers will go too far with their rate hike and balance sheet normalization plans, to the detriment of the economic setting.

Based on the Fed’s actions at the June FOMC meeting, the policy makers do not seem to be deterred in their “full steam ahead” outlook, as they envision yet another rate hike this year and expect “to begin implementing a balance sheet normalization program this year” as well. (On Wednesday, July 27, the Fed kept interest rates unchanged — Editor.)

So, let’s assume economic and financial conditions do live up to the Fed’s expectations, what then will their plan look like for phasing out their reinvestment program.

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Cryptocurrencies 101: “So what the heck am I supposed to do?”

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By Tony Humble

Special to the Financial Independence Hub

If you are like 99.9% of Canadians, you are probably wondering what this crypto-thing is all about.  Your stream of consciousness likely goes something like this: What is Bitcoin?  And what the heck is Ether?  Will they change my life?  How can I make money on it? Could I lose money on it? What….?”

Allow me to open the secret door a crack for you.

At this moment in time, the early adopters are cleaning up.  They saw the potential of Bitcoin and Ether, and bought it when it was cheap.  Now they are sitting on a pile of value, much like Amazon investors who bought at the IPO price of  $16.00 in 1997 – except they have only seen a 64-times growth, to $1,010 today.  The cab driver in Calgary who took Bitcoin for a $5 fare a few years ago years ago is reportedly now a multimillionaire.

There is still money to be made, however, which is why you are seeing somewhat self-serving forecasts by service providers and pundits, of Bitcoin and Ether in particular hitting $20,000 and more.  That could happen, but so could Dow at 100,000, and as most of us know, the road to that particular Nirvana is full of potholes and unexpected dips and swerves.

Cryptocurrencies are not “securities”

Importantly, cryptocurrencies are not “securities” and do not appear to fall under the rules of most of the Western regulatory system that governs the sale of securities.  That of course would appear to free this new highly valuable (and growing) form of electronic money from the constraints faced by “unaccredited” investors.  Right now, if you want to buy a piece of a private company, you cannot buy their securities from a financial intermediary unless you meet the extremely high bar set by the regulators.

Continue Reading…

5 overlooked costs when Upsizing Homes

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

Planning to upgrade to a larger home? Trading in a petite Toronto condo for greater square footage is in the five-year plan for many homeowners. And the opportunities to trade up are better than they have been in years; recent provincial rules to calm the housing market have softened the pace of price growth and created frantic multiple offer situations, giving prospective home buyers some much-needed financial breathing room.

Whether buyers are looking to swap high-rise downtown living for options in other GTA markets —  such as a reasonably-priced detached home or condo in Hamilton,  for example —  the time is right to come off the sidelines and explore your real estate options.

However, upsizing your home can come with upsized expenses, which can take condo dwellers by surprise. Here’s what buyers should consider, beyond budgeting for a larger down payment and closing costs.

Blend A bigger Mortgage

Chances are moving to a larger property means taking on larger monthly mortgage payments. Just as you did with your starter home, it’s important to connect with a mortgage broker before starting the house hunt to determine your maximum budget, based on the down payment you’ve saved and the existing equity you’ve built up in your current home.

Depending on your existing mortgage, you may have a few options for new financing. If you have a fixed mortgage rate, the ability to port your mortgage, and are mid-term, you can simply move your mortgage over to your new home and get what lenders call a “blend and extend.” This approach combines your existing mortgage rate with what you’d qualify at for a new term, with your new interest rate the weighted average between the two.

For example, let’s say your existing mortgage has a remaining $250,000 balance, a fixed rate of 2.1 per cent, and two years left on a five-year term. Assuming interest rates have risen since signing up for your last mortgage and you now qualify at a rate of 2.69 per cent, your new, blended mortgage interest rate will be somewhere between those two rates.

However, while blending your mortgage can be a good way to take advantage of an existing lower rate and avoiding the fees associated with breaking a mortgage, it’s not an option that’s available to all borrowers. If your mortgage product doesn’t include the ability to port or transfer your mortgage (most variable-rate mortgages do not), you may be forced to refinance instead and pay the interest rate differential, or three months-worth of interest,  whichever is higher.

Ramp up your Reno Budget

Many larger, detached properties are considerably older than new condo stock, and you may need to shell out for a few upgrades. Be prepared for costs to add up quickly – older home renovations can range from cosmetic, like ripping up old carpeting, to important structural fixes. Some of the most common renovations in older homes include outdated electrical wiring — such as knob and tube, which is a fire hazard — and replacing old plumbing, like ki-tech or galvanized piping. Continue Reading…