Confused by the jungle of financial jargon out there? Then today’s post is for you.
The world of investments is littered with financial terms which can baffle the uninitiated. Words such as “risk” have a different meaning when used as a financial term and it is important that you fully understand all of your investments – including the small print. These are the basics that any would-be investor needs to know:
Simply put, an asset is anything tangible or intangible that has value and is capable of being owned. Types of assets include buildings, cars and financial instruments such as shares and bonds.
A group of financial asset investments held by an individual or institution is known collectively as an investment portfolio.
This generally refers to the risk of investors losing some or all of their investment in a particular asset. The general rule of thumb is the higher the risk, the greater the potential reward. There are a number of different categories of financial risk including:
- Credit risk – This type of risk, also known as default risk, refers to where a borrower fails to make payments as promised. This is of particular concern to those with bond investments and it is possible for an investor to lose his or her principal (initial investment capital) and interest.
- Market risk – This type of risk is also known as volatility. Market risk encompasses the constant fluctuations in foreign exchange rates, interest rates and stock and commodity prices. Volatility is essential in a market as, without this risk, there would be no profits (or losses) to be made.
- Country risk – This is the risk attaching to investments within a particular country. This has been in the news recently with Greece defaulting on its financial obligations. This will adversely affect all of the financial instruments and investments held in Greece.
- Operational risk – This encompasses the risk attached to the failure of an institution’s I.T. systems and legal or reputational risk. It is hardly possible to watch the news without seeing another financial institution in trouble, which leads to a corresponding dip in the company’s share price and a resultant loss to shareholders. These operational risks have included a number of huge fines on banks for money-laundering violations and catastrophic I.T. failures with payment systems.
The first question every would-be investor must ask is, “how much risk should I take on?” This doesn’t just refer to your personal attitude to risk, it also includes an assessment of your personal circumstances.
One of the most important factors in determining your risk tolerance (how much risk you are prepared to take on) is the number of years until your retirement. For those of you with a number of working years to come, it is considered wise to include a greater proportion of high risk assets in your portfolio. This is because there is potentially a greater return from high risk assets and you should have time to recoup any losses over the lifetime of your investments. As you near retirement you should hold a portfolio of lower risk investments as you have less time to make up any losses.
An “aggressive” investor will hold a portfolio consisting of a greater proportion of high risk investments whereas a “conservative” investor will favour lower risk investments. Click here to see how risk models can be used to achieve the desired risk exposure.
A wise investor should diversify his or her investment portfolio – don’t put all your eggs in one basket! You can diversify by spreading out your investments across asset classes, geographies and types of risk.
It is important to regularly review your assets and make any necessary changes to ensure your risk exposure still meets your requirements – this is known as portfolio optimisation. Professional asset managers use systems such as those provided by http://www.sungard.com/apt/ to help them to optimise their portfolios.
With a share purchase you are effectively buying part of the company itself and the value of your shares can go up or down depending on the risk factors discussed above. Some shares will also pay out a dividend, which is a share of the profits made by the company in proportion to your shareholding. Shares are considered to be a high risk investment, although this risk can be mitigated by buying shares in well-established companies in stable countries.
By buying a bond, you are effectively loaning money to an entity in return for a fixed interest rate, and repayment of the original capital investment on an agreed date. Bonds are considered a low risk investment as you should receive a fixed return.
A fund is an entity which manages a portfolio of investments held by a group of investors whose capital is pooled together. Funds benefit from professional management and can be made up of one or more asset classes, or they could include investments made in a particular geographical location or business sector. If you are considering investing in a fund then you will need to check the fund prospectus, which is the document setting out the fund’s investment strategy and aims.
If you ever find yourself on Koh Lanta, you’ll see and hear plenty about a ‘four islands’ tour. You should probably book yourself a spot on one. Trust me.
We set out on a sunny Saturday, packed onto a longtail boat with a quiet French couple and two families – one with three young boys, one with two. While we didn’t quite follow the order set out in the brochure, here’s what I think happened:
- A spot of snorkelling at Koh Ma
- A swim at Koh Mook
- More snorkelling at Koh Chuak
- Lunch and a dip at Koh Ngai
Except for Koh Ngai, which is a large, resorty, sandy type spot, these little islands consist of towering rock formations sprinkled with lashings of tropical greenery. After checking out the marine life – blue fish, striped fish, earthy fish, luminous, almost glowing fish – I was content to just lie back and float, staring up at the formidable rock faces.
The absolute highlight? Island number two.
As we approached, we noticed that the other boats moored there were devoid of people, which was sort of creepy. What next?
Our guides spoke a little English, but on the whole, our communication was halting. We did manage to gather that we should don lifejackets and flippers, and that we’d be swimming through a little cave in the rocks. Awesome. Two of my worst fears combined: small dark spaces and deep water. It took me a few moments of sitting on the edge of the boat breathing deeply to take the plunge.
There really are no words to describe paddling through the ‘emerald cave‘. As soon as you enter, you’ll notice it. The water glistens green, almost glowing, in an other-worldly manner. Make your way through, marvelling at the sights, to a thunderous soundtrack of crashing waves and gasps from your fellow swimmers. Swim backwards for a little bit for a different perspective, then flip over before it narrows to just two or three abreast and turns pitch black. Try to follow the pinpoint of light from your guide’s torch. Do this without bumping into the long line of Asian tourists to the left, who seem to be making a collective noise that could either signal excitement or an attempt to spook us all with ghostly cries – all moored to a single rope, making their way out of the blackness as you plunge further in.
Eventually the pitch dark eases, and the cave opens out onto a tiny, pristine beach. It’s a picture-perfect scene that could have come straight out of The Beach. It’s fully enclosed with rocky cliffs encircling the majority of the inlet, reaching up almost as far as the eye can see, and inland, forest lurking beyond the shore. According to a sign on the beach, pirates used to hide treasures in the cave. Today, the area is part of a national park, being preserved for future generations.
My one piece of advice would be to bring a waterproof camera, or a camera in a waterproof bag – because you’ll want to take pictures, and lots of them. Or if you have a GoPro, this would be a prime time to make use of it. Not that I think anything could truly capture the essence of this untouched spot – but no harm trying.
What’s one thing you’ve done lately that’s scared you?
Tags: asia, thailand, travel
Working on getting your finances straight? Today’s post digs into the details of IVAs, for those in the UK.
If you’re struggling with debts and wondering which way to turn for help – you will probably have come across terminology you don’t understand, like IVA debt management or debt management plans – or maybe even bankruptcy.
Before you do anything, try to seek expert advice from a source with no vested interest or axe to grind in any way. The Citizen’s Advice Bureau is usually a good starting point – or a trusted friend who either knows about such matters or knows someone else who does.
First, the basics: An IVA (which stands for ‘Individual Voluntary Arrangement’) is stronger than a debt management plan but milder than bankruptcy. A debt management plan is an informal arrangement – whereas an IVA is a formal and legally-binding process for both you and your creditors, but your details don’t have to be published in any local paper and your assets remain intact.
It’s usually considered to be a good debt solution for people in work with debts larger than £15,000 owed to three or more different creditors.
An IVA is often a better solution than an informal debt management plan if you owe money to many different creditors, where a less formal arrangement simply isn’t practical.
An IVA can also reverse a bankruptcy procedure in certain circumstances as it has a number of advantages over bankruptcy. For example – if you’re running a small business which would be adversely affected if you were to be made bankrupt, or you’re in a profession where you could lose your job if you went bankrupt, then an IVA may be a better solution.
An IVA lasts for a five years at most and enables you to include debts to credit card companies, loan companies and banks as well as H.M. Customs & Excise or the Inland Revenue and loans from family members or friends. But an Individual Voluntary Arrangement’ cannot include hire purchase or mortgage debt, student loans, any maintenance or child support arrears or fines etc.
Some cheery apartments in Phra Ae Beach
When it started to drizzle one afternoon in Lanta, we welcomed the rain. It cooled the air a little, and made walking outside more bearable, since we’d just returned our tuktuk to the rental place.
Then it got serious. The sky turned ashen, it began pelting down in earnest, and we took shelter where we could find it. The roads ran orange with clay dirt. Thunder and lightning joined the party. And by the time we made it back home, it was almost dark. There we were stumbling our way through to our hut, only to find the power completely out when we got there.
Rainstorm + electricity outage = our first slightly unnerving experience.
Luckily, the power came on maybe an hour later (partway through the movie we started watching on the laptop). Cue an almost-warm shower and a much more comfortable sleep.
The view from inside our tuktuk. We ran out of gas at one point (the gauge, unsurprisingly, wasn’t working) but fortunately, we puttered to a stop right outside a petrol station. Here, you pay the attendants at the pump!
Out and about at Palm Beach resort – the second place we stayed (a bit of a downgrade from the Nakara Longbeach resort, but still nice).
Over on the east side of the island is Old Lanta town. Check out the low lying fog.
Next stop, Bangkok. Trying to organise this myself online was thoroughly flustering, but Lanta is packed with travel agents who make the whole process pretty painless. And while this might not be the case elsewhere in Thailand, they don’t seem to be out to gouge you – the prices were on par with what I’d seen on the web.
Tags: asia, thailand, travel
How did we end up at a luxury beachfront resort on Koh Lanta?
Well, we winged it basically all the way from Malaysia. We booked our sleeper train tickets on the same day, and arrived the next morning in Hat Yai, but T wasn’t feeling up to any more journeying that day.
So instead of hopping on a van to Krabi, as originally planned, we spent the night at the first guesthouse we found. The next day we made the 4-hour trip to Krabi, followed by another 2 hours to Lanta … and found ourselves a little lost. Initially, I wasn’t sure we’d be able to make it to Lanta on the same day, and thought we might have to stay overnight in Krabi. But since my international data sim card wasn’t working, once we DID know we’d be reaching the island that afternoon, there was no easy way to book a place.
The ride to Lanta was a confusing one, but a fun one, as we were seated next to a gregarious American, which helped pass the time. It ended rather abruptly, though. The driver (who spoke very little English and seemed to be laughing at us half the time, which amused us and our new bud Catalina to no end) basically booted us out at one point. This turned out to be in the middle of Phra Ae (Long Beach), which was actually a pretty good part of Lanta to be in.
May marks the start of the quietest season of the year, so finding a place wasn’t difficult. The first one we encountered – the Nakara Longbeach resort – was a little pricey, but T’s eyes lit up as we walked in. At a mere 1200 baht (about $50), much lower than the printed rate of 1900, I didn’t have the heart to say no. So for one night, we basked in luxury.
The resort was absolutely deserted, and aside from one other couple that we briefly saw, we had the entire place to ourselves. Our little villa was just steps away from the two enormous pools, and a minute away from the beach. You could step straight off the deck onto the beach, which was itself practically a private beach at that time.
The sea itself? Like stepping into a warm bath. The two pools were just as comfortable, and you can bet we jumped in immediately after unpacking and blissed out.
Set down a long, wide, private driveway, the Nakara really is a prime piece of property. As I understand, it was recently refurbished, and the villas are absolutely luxurious. Spotless wooden floors, bathrobe and lockable safe, a luxurious bathroom with pebbled floor and both a wall and rooftop shower head … there really is nothing more you could ask for. It also seems to be staffed by perpetually smiley workers – the girl who came out to help us figure out how to work the air con was literally skipping and singing to herself.
A good start to our Koh Lanta adventures, all around.
Tags: asia, thailand, travel
I’d hoped to be spending a lot less per day right now (like $50 or under a day). But a couple of things are making this difficult:
I’m loving the fact that I can breathe freely in the Asian heat. Clear airways are a wonderful thing. (My skin doesn’t like the temperatures quite as much, though.) On the other hand, the heat here is making my poor husband a bit of a sad sack. I’d be fine in a fan room (and we stayed in a fan room on our first night in Thailand) but for his sake we’re seeking out rooms with air conditioning – which basically doubles the price.
Again, I’m in my element here. Him? Not so much. He’s not used to the food (we eat a lot of Asian at home, but not for breakfast, lunch, and dinner) and is wary of street stalls (sigh). He misses steak and burgers and dairy products. And while at home he swings between eating hardly anything at all (most days) or eating everything in sight, while in Asia it’s been a case of the latter constantly. Nothing keeps him full. That said, I’m glad he’s getting into some sort of regular eating routine.
Everything is still crazy cheap by Western standards, but we’re on a tight budget.
Tags: money, travel
I definitely knew we weren’t in
Kansas/Auckland any more when I was woken by the early morning Muslim prayer call.
A heady mix of the familiar and the new would be the best way to sum up KL. Sights and sounds long forgotten, but instantly recalled. Navigating the footpaths, cracked tiles, grates over open drains, and all. The underlying scent of sewage. Solid retro fire hydrants. The curious juxtaposition of all this against the high tech digital billboards, endless shopping (malls after malls after malls!) and other trappings of a cosmopolitan city on a whole different scale than what we’re used to. I veered between feeling like a total hick (e.g. attempting to figure out the monorail) and marvelling at the lack of certain basics (no GPS in taxis? Whaaaat?).
It’s been more of a shock for T, bless, who’s soldiering on despite:
- The heat. Our first order upon arrival was to seek refuge inside an air-conditioned mall, but as we learned, things don’t open till 10 or later, and finding your way out of the currently-being-refurbished Sungei Wang plaza is a hell of a lot harder than it might seem.
- The unfamiliar food. He’s reasonably used to Malaysian, but not for 3 meals a day. I would happily wander around at length, eating only street food, but comfort/hygiene concerns on his part are curtailing me a little bit. Where he sees a disease-ridden hawker stall, I see good, real, cheap food. Having been here before, that kind of thing is not that jarring for me.
“Is that a prison?” he asked of the first big building we passed. “Erm, that’s a school,” I said. True story.
Our four days passed in a bit of a whirlwind, meeting up with an old friend, a fellow blogger (again, thank you for showing us Putrajaya – see above – it was fantastic), some family, and my godmother/former neighbour. The latter was probably the most emotional. Physically, somehow the terraced row of houses looked smaller than I remembered; the entire street itself felt somewhat cramped. While some of the roads were familiar (I sometimes dream about those streets) the area, like any other, keeps getting built up further and expanding.
One common thread that comes through very strongly is the importance of politics. Elections were held just a week before we arrived, and is still the topic on everyone’s lips. Friends and family all brought up the fact that my parents emigrated to give us a “better life”, but speak of hope for the future, a more equal, democratic, peaceful one.
Aside from a couple of monorail trips, we mainly got around on foot, with rides from others (in particular from my friend, who deftly navigated the cavernous carparks and chaotic traffic like a pro – driving on these roads would probably send me into a catatonic state in no time) and via taxi. Oh, the taxis. Cabbies in KL are meant to be among the worst in the world. While I still have a tiny bit of Malay, my knowledge extends to, say, counting to 10, or simple words like hot/cold (panas/sejuk), which, combined with my NZ accent, made us prime targets for taxi rip-offs. As long as you get either a) prepaid taxi coupons or b) a taxi that uses its meter, you’ll be okay.
Next stop: Thailand. We haven’t been vigilant about avoiding ice while in KL, but we will from now. (I seriously hate paying for bottled water, but it’s a necessary evil.)
One other thing we haven’t been vigilant about? Tracking money. It’s been a little wacky as we’ve bought a couple of things and what with the meeting up with so many people (I feel sorry for T, being dragged around to meet all of them, which isn’t the most relaxing) but from now it’ll be about sticking to a budget (this is where blogging should help!) and taking things a bit slower as we (hopefully) settle into a little bit of a routine.
Tags: asia, malaysia, travel
Sometimes our dreams change; sometimes the goal remains the same but never seems to get any closer. And as today’s post points out, success is also pretty subjective.
How do you know when you’ve “made it? Everyone works through life – hoping to be successful, to meet their goals, to be wealthy – but not everyone can tell when they’ve met their goals and are successful. Oftentimes, new goals arise and a person never quite feels like they’ve made it. Knowing whether or not you’ve made is really determined by your definition of success.
Dollars and Common Sense
If you define success by a bank account, you’ll know you’ve made it when you’ve increased your wealth enough that you, and possibly even your grandchildren, won’t ever have to worry about money. Because only the top 2% are wealthy, this may turn out to be a pipe dream. You could end up only comfortable and not totally rich, but this should be okay too, especially if you never give up on your goal.
Common sense should tell you that measuring your success by impossible dreams is a surefire way to find yourself very dissatisfied. Most people just want the kind of income that affords them financial freedom, a life free from living paycheck to paycheck and worrying about bills constantly. Most people define wealth by the quality of their lives, not the amount in their bank account.
What’s Your Passion?
It’s important to define your passions, in order to determine if you’ve made it, or at the very least are close to making it. Do you want to collect vintage cars, rise to the top ranks of your company, or simply raise healthy children? No matter what your passion, it’s likely going to require some money to fulfill. Having the funds to follow your passion is one of the best ways we can define “making it.”
If you’re simply trying to lead a life, wherein you have a really rewarding family experience, you don’t have to be rich. This is the kind of wealth that comes from something deep inside. It’s a richness that can’t be defined by dollars. Instead, it’s defined by the pride in a mother’s and father’s hearts as they watch their daughter step off the porch of her southern North Carolina home, in a beautiful all-white gown. Greenville Limo Service pulls up to take her to the church, where she’ll be starting a family of her own. This emotional scene may have parents feeling like they really made it, because their goals as parents have been met.
What if There is No Making It?
What if a person never makes it? Instead, the person just adds to their list of goals, constantly working toward a better life. Marlee, from http://www.marleeward.com, says that, “I do think that once you decide to rest on your laurels in that you’ve reached the pinnacle of success and there’s nothing else for you to do, then you probably are going to stop growing as a person, and ultimately you’re going to start to be very unhappy.” According to Marlee, when you know you’ve made it, you haven’t actually made it – because, making it means you’re happy, not unhappy and sedentary.
Like Miley Cyrus would say, “It’s the climb.” Life isn’t about attaining ultimate wealth, but instead achieving happiness. Having a life that’s brings joy to yourself and others is a good life. It’s important to just keep moving forward and always try to meet the goals you set for yourself. Certainly a purposeful life is better than just “making it,” because it’s a life that makes you feel fulfilled.
Why hello there!
Things have been a little nuts over the past few days. We’re in Kuala Lumpur and will be until at least tomorrow.
Consider this a wee check-in to assure we’re alive, that we haven’t killed each other yet, and that a meatier post will be forthcoming.
Gosh, time flies. At this rate, six months will be over in a flash. As T just pointed out, we’ve been married a week today. Speaking of which, I’m finally able to share a couple of photos. Here you go.
I’ve always thought engagement rings were tricky territory – most of us want to be surprised, yet going ring shopping together prior to a proposal can be kind of unromantic. While I’m away, enjoy today’s guest post about picking out your own ring.
When it comes to selecting engagement rings, there is a historic tradition of the groom-to-be picking out a ring to surprise his fiancé with. However, while this way of doing things is still very popular and somewhat traditional, it has become a bit more common for women to pick out their own engagement rings upon engagement. The simple fact is, most women would love some input over the ring they’re to wear for the rest of their lives! So, if you’re a woman considering picking out your own engagement ring, here are a few tips for how to find the perfect one.
Trying to conjure up an image of the perfect ring out of nowhere can be tricky to say the least. So, to give yourself a few ideas and inspirations, research engagement ring trends at popular wedding information sources like The Knot online. Currently, some of the main trends in engagement rings are vintage designs, coloured gemstones, and multi-diamond rings. It certainly doesn’t mean that these are your only choices, but again, they may provide just the inspiration you need to narrow down your own preferences.
While many focus only on jewellery boutiques and chain jewellers at local malls, there are a few benefits to shopping for a ring online. For example, the vast selection of engagement and wedding rings at 77-Diamonds can give you plenty to choose from, and also offers customization options. Shopping online can be preferable because it is easier to compare options, prices, and designs, whereas shopping in person can be confusing and overwhelming (not to mention annoying, with jewellers hawking over you).
Choose A Stone
Choosing a stone has become a bit more complicated, thanks to the aforementioned trend of coloured gemstones in engagement rings. Still, choosing your stone can be a fun place to start. Deciding on gemstone vs. diamond, and then picking your actual stone (in terms of cut, colour, carat, shape, etc.) will help you to define the main feature of your engagement ring, and the one that will undoubtedly attract the most attention.
Narrow Down Styles
Narrowing down style may sound like a particularly vague step in selecting a ring. However, when you actually look into the styles for engagement ring – settings for stones, designs and metals used in bands, etc. – there are plenty of small, individual decisions to be made here. Do you prefer a single stone, or a number of smaller ones? Do you prefer white gold or yellow gold, or something else entirely? These individual choices can help you to narrow down your options until you land on that perfect design.