By Jaco Prinsloo, Certified Financial Planner at Alexander Forbes
Use the new year as a chance to improve your financial health by adopting some resolutions around your finances. We’d all like to be healthier and wealthier, so cutting back on unnecessary expenses and saving or investing more are goals we should all be aiming for. Here are some steps on how to relook your finances:
- Start the year with the end in mind.
Decide what you want to achieve personally, physically and financially in 2020 and set daily, weekly and monthly goals aimed at your end goals.
- Make a smart investment
A book can be the most entertaining investment you make. Pick up one of the several great books available from local authors packed with great financial advice, tips, and tricks for South Africans and enjoy some holiday reading with a purpose.
- Have “the talk”
Financial problems can cause stress for you and your loved ones. Make time to discuss your financial situation, fears, and hopes and get everyone in your family with you on the journey to financial freedom.
- A goal without a plan is just a wish
Set up a budget to serve as the plan on how you are going to spend and save your money. A budget is a great way to keep track of your expenses and determine how much you have for expenses, savings and discretionary spending.
- Check your credit score
Once a year you can check your credit score online for free. See how creditworthy you are and look for ways to improve your credit score. A better credit score helps you get lower interest rates on loans.
- Inspect your insurance
With another year gone, you and your assets are a little older. Review your short term insurance to make sure you are not overpaying based on last year’s asset values and adjust your risk cover policies to make sure you are sufficiently covered against life’s surprises.
- Reward yourself
Reward programmes are an easy way to get “free money” from savings on purchases and free goodies for positive behavior. Just double-check that the price you pay for the reward programme does not exceed the benefits you receive.
- Compare your fees
Request, confirm and review your banking and investment fees to make sure you are getting the most value for money.
- Schedule a meeting with your financial planner
Meet with your financial planner to go over your investments, update him or her on what has changed in your life – marriages, birth of a child or death of a spouse – and ensure your current investment plans are still in line with your financial goals.
- Don’t forget about your tax-free savings account
You have until February 29 to invest up to R33 000 into your tax-free savings account for the current tax year. Don’t miss out on this opportunity as once it has passed, the opportunity to use this investment vehicle in the tax year is gone.
If saving is not already a habit make 2020 the year you go from being a spender to a saver. Just start by spending less and saving more – it is always good to put money away at the beginning of the month rather than at the end when you’ve spent it.
- Go shopping
Get the most bang for your buck by using the internet to shop around for the lowest prices, saving you time and money.
- Review your investments
Review and rebalance your investments according to personal and economic changes and make sure your investments are still suitable for your investor risk profile and investment goals.
- Make 2020 the year you become debt-free.
Calculate your total debt and decide how and by when you are going to pay it off. Start working towards eliminating your debt by paying as much as you can on the debt with the highest interest rate.
- Update your will
If you don’t have a will you need to create one as soon as possible. If you have a will you should review it to make sure it contains your current wishes. Don’t forget to update your beneficiaries on retirement funds and life policies as these are not covered by your will.
- Increase your value
An easy way to increase your value and save some money is to learn a new skill. Learn to cut hair, build a website or become a public speaker. All these skills can increase your value and your potential earning power and help you save some money.
- Use the six month rule
We all have electronics and furniture or even clothes we no longer use. If you have not used the items in the last 6 months, go online and sell it. You will be surprised by what people will pay for your preloved stuff.
- Spend less and save more
Audit your bank statement to eliminate all those unnecessary expenses for stuff you don’t use or need, like the good-intentioned gym membership or the book subscription from a previous hobby.
- Be your boss
Find a second or even third income stream. Like to bake? Sell muffins to your colleagues. Good at playing golf? Become a golf coach. A side hustle is a great way to increase your income and meet new people.
- Fill up your piggy bank
Collect all the loose change you receive through the year in a piggy bank. At the end of the year use the savings to reward yourself – or even better do something good for someone else.
HOW ENTERPRISE INFORMATION MANAGEMENT, CLOUD AND ANALYTICS WILL IMPACT FINANCIAL SERVICES IN 2020
Richard Mill, director at Business Systems (UK) Ltd
Business Systems’ Will Davenport on which drivers of change will most affect the financial services sector in 2020
Recent multi-million pound fines levied on financial services firms such as Tullet Prebon have acted as a wake-up call to City CIOs. That’s because the FCA now includes Voice as a record medium, and is no longer prepared to tolerate delays in locating conversations it is examining.
As a direct result, we will witness the formal incorporation of Voice as a peer form of information storage to email, text or internal documentation. That’s not happened to date as it’s historically been an unstructured and fairly unwieldy medium, but modern technology is completely changing that picture.
City firms are starting to manage all their various data assets by using an EIM (Enterprise Information Management) approach. This is a discipline centred on being able to integrate all your data into one structure and applying the right archiving and retrieval workflows across everything you do: we therefore anticipate a great deal of interest in audio-enabled EIM project work in 2020.
Cloud sweeps all before it
In 2020, the cloud tide will be unstoppable. That’s partly because people are used to accessing applications in the cloud or storing data there, but there’s now going to be a push to use cloud as a way to centralise the bank’s IT systems. The argument as to whether the cloud is insecure has long been settled with City CIOs judging cloud as often safer than their existing on-premise solution.
As a result, there’s no reason to continue paying for expensive hardware that requires tending, patching and upgrading. In 2020, look for cloud trading turrets with the back-end being remote and offering porting of voice records into the cloud. That latter step may be a challenge for financial services firms with multiple and legacy voice recording platforms in place, so the cloud move may lead to overdue rationalisation and integration projects.
Ultimately, the cloud represents a whole new approach to consuming IT and building apps in the Square Mile. Financial services firms are frustrated with devoting too much resource to old mainframe systems when they would like the modern technology infrastructure in place to support them to be more agile. Cloud will be very liberating for the sector.
Strong analytics user cases emerge
Analytics technology has evolved and what used to be referred to as dumb data is now a source of business intelligence. Useful data hidden in audio files that used to be discoverable through hours of transcription can now be processed in modern speech analytics systems — making what was originally inert, unstructured data become structured data, which can be easily queried in order to spot patterns and find interesting anomalies.
I predict that in the new decade using speech analytics financial services firms will finally gain a richer understanding of what their customers ask for and find problematic, as data mining probes can be run over a vast set of customer interactions.
It will mean trading floor managers will have even better detection and forensic tools at their disposal to understand what’s happening, which will be a win-win for customer and regulator alike.
In 2020, Voice will be seen an important strategic asset for the financial services firm CIO.
WILL BLOCKCHAIN REVOLUTIONIZE FINANCE?
By Ken Timsit, ConsenSys
Over the last 10 years, researchers, software developers, start-ups, and large companies have been conducting experiments aimed at determining whether networks based on blockchain technology can ultimately – in whole or in part – replace the infrastructure on which financial institutions and capital markets are built.
In today’s electronic databases, any information can theoretically be replicated at will. This is why most governments allow only regulated actors to keep records of digitized assets (banks, depositories), to avoid pitfalls such as the execution of misleading transactions or the creation of artificial assets. With blockchain, these pitfalls can be avoided at the source code of the technology, which is available to all members of the network. The creation of Ethereum enabled a more robust blockchain network capable of “smart contracts”, which once programmed, can run automatically without the results being modified or manipulated.
Contrary to what some critics argue, the potential of the blockchain is not the creation of a free and unregulated space in which everyone can invent new financial instruments. Rather, the potential lies in creating a much more efficient and globalized commercial and financial infrastructure, in which many layers of control and intermediation are no longer needed as they are replaced by transparent and immutable IT rules that ensure the same risk management functions.
For example, bonds are essential financial instruments on which a large part of our economy and savings are based. The issue and exchange of a bond requires the intervention of several dozen financial institutions (issuers, intermediaries and investors). Some regulated players in this intermediary chain exist mainly to ensure that it is possible to know, at any time, who holds each bond, in order to guarantee their rights to its bearers.
It is theoretically possible to simplify these stacks of operators by linking them to a global blockchain network, open to all stakeholders in the industry. The blockchain network can thus ensure at any time that the number of outstanding bonds corresponds exactly to the number of bonds issued, and that each exchange transaction is carried out without the risk of default.
The blockchain revolution is first and foremost the reduction of costs and delays caused by the current financial infrastructure. The blockchain revolution also creates innovation opportunities for consumers, savers, and investors.
The Web3 revolution, often used to refer to the blockchain revolution, will be driven by the reduction in transaction costs, allowing the emergence of new peer-to-peer business models that we are not yet able to accurately predict, but which will probably participate in a rebalancing of the relationships between financial institutions and their clients. Some international peer-to-peer payment and loan-to-peer savings investment models are already attracting increasing interest from the most sophisticated consumers.
Where are we in 2020?
Today, the blockchain revolution is still in its infancy. Transaction volumes through blockchain networks, public and private, are low compared to those of existing systems. The fixed costs of the technology are still relatively high, and the user experience leaves something to be desired.
However, innovations abound. It is already possible for me, from my smartphone, to buy digital assets whose value is equal to about one US dollar, and to lend them in three clicks to other users who will pay me between 1% and 10% per year for this service, depending on the type of platform.
The number of large operational business projects is still small, but very promising. Numerous international commodity trading players have joined forces to create Vakt and komgo, two platforms that contribute to a significant simplification of trade and oil financing. Similar and competing projects, Voltron and Marco Polo, are being launched. On the corporate side, the Capbridge 1x platform (Singapore) already allows shares to be traded on an Ethereum blockchain network. Other important projects such as LiquidShare (France), SIX Digital Exchange (Switzerland), Daura (with Deutsche Borse and Swisscom in Switzerland), Synapse (Hong Kong Stock Exchange) are in preparation. The World Bank, Société Générale and Santander have issued bonds on an Ethereum blockchain network. These initiatives are still experimental but have attracted significant interest from financial institutions around the world.
And of course, many projects aim to revolutionize global payments by creating digital assets on blockchain networks that are fixed in Euros, U.S. Dollars or other currencies, such as those of the Monetary Authority of Singapore, the South African Reserve Bank, and Union Bank of the Philippines. Since the announcement of the Facebook-initiated Libra project, many governments have expressed concern about the possibility of private companies controlling global payment flows, and have asked their domestic financial institutions to redouble their efforts to explore competing initiatives.
All of this is to say that adoption is happening, albeit gradually. The middlemen and intermediaries of the financial world will not be replaced overnight. Moreover, the exact formation or architecture of the new financial system is impossible to predict with accuracy. However, it’s safe to say that blockchain will enable a financial system that is more efficient and yields more value-add to consumers, users, and investors.
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