Here Comes New Ideas for Investment In 2014

After the 2008 financial crisis, lawmakers began searching for new ways to regulate financial industries in hopes of preventing a future crisis. The first step taken to avoid the failings of the previous system was breaking up the Financial Services Authority (FSA) into the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). As a result, investment firms can expect to be more heavily regulated than ever before. Read on to learn about some of the changes expected to begin in 2014.

Investment Management Regulatory Updates for 2014

Firstly, the Office of Fair Trading’s (OFT) guidelines and licensing will be subsumed under the FCA. Any firms currently licensed by the OFT to conduct consumer credit-based business have to apply under the FCA by March 31st, 2014. Firms can apply for interim permission to legally conduct business, which allows them some breathing room for becoming fully compliant with the FCA and PRA. However, any firms that have not obtained interim permission by April 1st, 2014 must become fully authorized by the FCA. Full authorization requires full compliance with FCA and PRA regulations as of April 1st. Therefore, it would be prudent to meet the deadline for temporary permission if a firm is not prepared to comply fully.

Major issues to keep in mind during new investments

There are alternative ways to gain authorization and a couple of circumstances that can lead to exemption but, for the most part, all consumer credit business activities will be affected. Consumers should be aware of a company’s status so that they can make an informed decision about with whom they should be doing business. One commonly cited factor in such a decision is what fees a consumer should expect to pay.

Every business that obtains full FCA authorization as opposed to interim permission will have to pay a one-time authorization fee as well as an annual fee. The topbridgingfinance.co.uk provides full financial advice and provide loan on bridging finance. Addition, depending on what a particular company needs to do to become fully compliant, one can suspect that there will be further costs on the road to such compliancy. And although one cannot pigeonhole all businesses in the financial sector, it is likely that many which have to front the cost of authorization will pass some of the burden onto consumers.

Also, the FCA will begin dividing businesses into high-risk and low-risk categories. As expected, the FCA will monitor high-risk activities much more closely than low-risk activities. Sometime down the line, this could potentially put high-risk businesses in precarious financial and fiduciary constraints. For instance, high-risk businesses have capital requirements that they must meet in order to both continue with their current level of business and to expand it (particularly by gaining new clients).

Low-risk businesses, on the other hand, have no capital requirements and less stringent regulation overall. The following are some examples of high-risk and low-risk business activities:

High-Risk:

• For-profit credit information services
• Credit brokerage
• Peer-to-peer lending
• Debt collection
• For-profit debt adjusting and counseling
• Consumer credit lending with interest (such as credit cards) or fees (like overdrafts)

Low-Risk:

• Non-profit debt adjusting and counseling
• Non-profit credit information services
• Hiring goods such as cars
• Lending and credit brokering activities dealing with goods and non-financial services as the primary focus of the business.

New horizon for investing?

Consequently, very little will change for consumers deciding how to invest their money in 2014.As always, investments dealing with physical goods carry significantly lower risks than dealing with incorporeal debts and credits? Much will also remain unchanged for those choosing to dabble with intangible investments or to take out a new line of credit. These consumers should still be diligent in choosing who to do business with and should also remain up-to-date with what exactly is changing.

Fortunately for consumers, the FCA promises to be the “champion of the consumer.” If they can live up to this lofty goal, consumers can expect to be well-protected from the many investment pitfalls that lead us into a financial crisis in the first place.

Michele Duchet is a graduate of Economics. She has been working partly as a financial advisor for topbridgingfinance.co.uk which is a main bridging finance and loans advisory site.

10 Low Risk Investments Reaping High Returns

With the rising cost of living, it’s very crucial that we put our money in something that will benefit us in the future. One way to do that is to invest our hard-earned cash in financial plans that will reap the highest returns possible. But a common misconception is that if you want to generate a higher return, you should invest in higher risk investment. But this isn’t true all the time. The following are some of the low risk investments, which have potential high return value. 

Certificates of Deposits

A certificate of deposit (CD) is a savings certificate entitling you, the payee, to receive interest. With the CD, you give your money to a financial institution for a specific length of time. In exchange for this, you get a fixed set of interest rate over a specific term period. If you choose to withdraw your funds before the term of CD terminates, you will be charged a penalty fee, which usually equals to three month’s worth of interest. 

Treasury Inflation Protected Securities

Also known as TIPS, these types of bond investments are designed to protect the investors against the negative impact of inflation. With TIPS, you’re guaranteed that you get your principal back, along with the interest rate. TIPS can be purchased directly from the government, or through banks and financial brokers. The minimum investment is $100, with $100 increments. 

US Savings Bonds

US savings bonds are one of the safest and low risk investments available, since they are backed up by the federal government. They offer a fixed rate of interest over a certain period of time, and are not subject to income taxes. There are two types of US savings bonds: the Series I and the Series EE bonds. The Series I bond works similarly with TIPS – the fixed rate is never changed, but the inflation return rate is adjusted every six months. The Series EE, on the other hand, has a fixed interest rate that is automatically added to the bond at the end of each month. 

Annuities

An annuity is a trade investment, wherein the insurance company pays you a guaranteed income at your retirement in exchange of your large sum of money. It works almost similar with CD. However in annuities, the interest rate is tax-deferred. There are many types of annuities, each of which has varying benefits and disadvantages. Talk to your financial advisor to know more about them. 

Money Market Accounts

Money market account is a type of savings account that offers competitive interest rate in exchange for a larger sum of deposits. This is a great investment option for those who want to gain higher returns. However, you may be required to maintain a certain balance to qualify for higher interest value, which is usually $1000. 

Cash Value Life Insurance

This is a type of life insurance that pays out the policy holder once a certain amount of premium has been paid to it. In addition, the amount contributed to the policy can also be used as a cash value that can be borrowed by the policy holder. In the event of death of the policy holder, the accrued value is transferred to his or her heirs, tax-free. Whole life, universal life, and variable life are all types of cash value life insurance. 

Municipal Bonds

Municipal bonds, also known as munis, are a debt security issued by a state or locality to finance its investment projects, such as schools, bridges, hospitals, and highways. The issuer of the bond receives cash from investors, like you, to fund its projects and gives it back on the agreed period of time. Municipal bonds carry interest, which is paid either in a fixed or variable rate, depending on the agreement. What makes this bond a better deal is aside from the higher interest rate, you also yield tax-free earnings. 

Preferred Stock

Preferred stock is a type of stock issued by corporations that has both equity (stock) and a debt (bond) instrument. Preferred stockholders have a larger distribution portion to company’s assets and earnings compared to common stockholders. If you want to own a share in a company, while getting dividends, then buy a preferred stock. 

Dividend Paying Stocks

Dividends are a distribution of portion of a company’s earnings to its stockholders. When you buy a share from a corporation, you are entitled to receive a dividend. If you’re looking for a way to increase your investment but worried where to put your money, then dividend paying stocks are a great choice. They are usually considered safe, especially if you choose to buy stocks from solid companies. 

Peer to Peer Lending

In P2P, instead of buying shares from a company or paying a financial institution, you lend your money to someone in the hope of gaining income. This type of investment can be a little risky, especially if don’t screen the person or company well. But with thorough screening, you can guarantee higher return value.

The truth is every type of investment is risky. But if you’re too worried that you might lose all your money in the end, then consider the medium to low risk investments mentioned above.

Michelle Mitch is a blogger who really likes to write about crocktock.com to get more information and updated.

Investing in Your Future

A great way to boost your bank balance in the build up to your retirement is to invest your money. The advice for mature investors remained the same for many years; focus on assets that will guarantee a safe return, rather than those that offer the biggest capital or growth potential. In recent years however, people have been taking note of the fact that people are living longer; therefore opening up a whole load of other exciting investment opportunities for retired people, as longer investment times mean a better chance of risks eventually paying off. Whether you want to play it safe or take a chance, there are a number of different ways you can invest your money later in life besides just placing it in a savings account. 

Bonds

Purchasing a bond involves the lending of money to a business or government which they will pay back with interest. This is definitely an option for the safety conscious as investing with a well-established, reputable company or official organisation more or less guarantees a return on your money. Profits may be limited but the stability of your money and often quick return times make it a great asset for a mature investor’s portfolio. 

Stocks

Buying stocks (also known as equities) essentially gets you part ownership of a business. You gain the right to vote in shareholders’ meetings and you benefit from shared profits that are distributed amongst owners – referred to as dividends. This is a great option for the more adventurous investor, as stocks are high risk assets with the potential for great rewards. Nothing is guaranteed with the purchase of a stock; its value can fluctuate daily, meaning your investment could flourish and soar just as easily as it could plummet. 

Gold

The value of gold is more stable than most currencies and even increases as the US dollar decreases in purchasing power; acting as a great remedy against inflation. There is a growing level of supply and demand for this precious metal and so your purchase will never be wasted. There are also a number of different ways to buy and sell it, from online brokers to jewellers and government mints, with many others in between. With growing interest and value guaranteed, investing in gold – and digging out any old family heirlooms – can be a great financial opportunity to utilise upon your retirement. 

Online Investments

The internet has made finding suitable investments a much less daunting task. Sites like Nutmeg allow people to invest anything from £1000 upwards and a team of professionals will split your money between assets to reduce risk. This is a great investment opportunity for those who want an easy retirement with a bit of extra cash, as the Nutmeg team monitor and move your money to capitalise on the success of certain areas and avoid weaknesses in others. You can be as distant or involved as you want and there are no fixed terms; your money is yours to withdraw whenever you want.

Gone are the days when the only way for a retired person to boost their money was to stash it away in a savings account. The world of investments has truly opened up and can finally be accessed and utilised easily, regardless of age.

Julie runs financegirl.co.uk, a finance blog which aims to bring the best online finance news into one place as well as offering money advice and tips for savvy consumers. A regular contributor on finance blogs, she can also be found @financegirluk.