Monday, August 3, 2020

article

Saving your money is one thing, and growing your savings is another. The savings can hold your back in difficult times and help in meeting unforeseen needs. If you grow your money, you’d never land in difficult financial situations. So, are you interested in multiplying your capital? Then, you should find a suitable way for you to invest your money. When investing is taken seriously, the returns can provide you a financially secure future. It may sound like cumbersome tasks to look at all investment methods, compare them, analyze them, and choose the most suitable one. Well, you don’t need to stress out as we are here to guide you. In this post, we’ve enlisted the best investments to make at any point in time. So, let’s get the ball rolling!

How to Choose the Best Investments: Complete Guide

Many individuals have this question in mind: “Why should I invest, and where should I invest?” Well, investing is a great method to put your money to work. It enables you to grow your savings, and it even serves as an additional source of income. It is very important for those who aren’t going to need a specific amount of money for a long time.

Let us consider these two hypothetical situations:

Both X and Y have $10,000 that they want to save, and they don’t need this $10,000 for 40 years. 

Situation 1: X saves money by keeping it safe in his home locker to protect this hard-earned money. 

Situation 2: Y invests his money in mutual funds. 

After 40 years, X is only left with $10,000 for his post-retirement life. In contrast, Y winds up by earning around $452,500 with an expected interest rate of 10% per year. 

In this example, you can see the difference when relying on investment options. Hence, it is always wise to let the saved money work for you and grow over time.

Now the question arises with so many options at disposal, how will you choose the most profitable investment method? Well, you need to consider some factors to make the right choice.

Factors to Emphasize Before Choosing an Investment Instrument

Here are the factors to consider for choosing the most suitable investment medium:

1. Financial Objectives

Before selecting an investment instrument, you should be aware of your financial goals. Are you investing for your children’s higher studies? For buying a dream property? Or, for your retirement? You should take into account your objectives; you will need it before you start calculating how much money you have to save to reach them.

For example, if you are planning to invest your retirement, you will probably have more time and amount than to buy a property.

2. Time Horizon

The time horizon is another important factor that depicts how long you would like to keep yourself invested or how many years to reach your financial goal. Various schemes ranging from long-term, short-term to medium-term investments are available according to your requirements.

3. Risk Tolerance 

It is always important to analyze your ability to have an enormous tolerance of any risk, whereas another may not bear the loss or risks related to the markets. Therefore, before investing in any scheme, increase your risk tolerance power.

4. Level of Growth

It is wasteful to invest in a scheme that is not going to give you satisfactory returns. Therefore, always check out how much growth your investment will witness over time.

Evaluate the previous performances, returns, and other various factors to grasp the knowledge of how your investment will grow and at what level it will expand in the future.

6 Best Investment Options

Let us now have a look at 6 best investments to make :

1. Exchange-Traded Funds (ETFs)

ETFs are always good choices for any type of investor, whether you are a novice in the stock market or an expert investor. The ETFs allow you to build a diversified portfolio with considerably low investments, making them suitable for newcomers in the stock market who have a little money to invest. ETFs are listed and traded on a stock exchange, which makes them liquid and cost-effective.

But you are wondering how to choose the top-preforming ETFs to buy, should you buy a few from different industries? You can spend a lot of time on research, but we recommend considering trusting professional financial institutions.

If you don’t have a big amount of money but want to create a diversified portfolio of ETFs, Robo- advisors like Wealthface can be smart and cost-effective.

2. High Dividend Stocks

Historically, equities have delivered impressive returns but also have a higher risk than other asset classes. Don’t let the bull market exaggerate your equity allocation. Consider adding some high dividend stocks in your portfolio. The dividends provide a kind of a cushion in a volatile market. In case the price of the underlying stock fall, you’re still earning steady dividend income. You can then decide what to do with it, either receive the cash or reinvest the dividend earned.

3. Importance of cash in your portfolio

Cash plays an important role in times of uncertainty. You can use cash and cash equivalents to provide a cushion against job losses, pay for contingencies, or have the ability to invest when the financial universe has clear signs of the settlement. However, cash is suitable only for the short term as it was one of the most underperforming asset classes over time.

Make sure you have 3-6 months of your expenses on your savings account to be prepared for a time of uncertainty.

4. Real Estate

Despite a plethora of investment choices, real estate has proven to be one of the best investments. Properties can flourish their owners with a consistent source of income and low volatility.

However, this type of investment is good for large investors as it lacks  liquidity and diversification. For smaller investors who want to include properties to their portfolio can go for REITs (Real Estate Investment Trusts). A REIT owns and operates commercial or residential properties. Moreover, it pays out about 90% of their incomes to the investors in the form of dividends what makes them favorite for income-seeking investors. REITs are traded on a stock exchange as any shares to be sold at any time.

5. Commodities

Commodities are playing a very important role within your portfolio. Traditionally, the price of precious metals such as gold, rises in times of crisis.

One of the examples of how you can invest in gold is the Gold ETF.  SPDR Gold Shares is the largest physically-backed gold exchange-traded fund in the world.

Like buying or selling stocks of companies, ETFs are traded on the stock exchange during market hours as other stocks. And we already mentioned, it cost-effective compare.

6. Invest in Yourself

Investing in yourself is one of the best returns you will get on the investment, whether it’s investing in learning a new skill, personal or professional development, taking advancement in your creativity, or hiring a coach before you can give yourself a new skill. We must take the time to grow our strengths and abilities so that we can serve others better.

What are some of the steps you can take to invest in yourself?

1. Invest in skills that will enhance your strengths.

Improving your skills does not always mean investing in higher education, although this is certainly an option and perhaps a necessary one depending on your career field. Investing in your skills and training can take several forms.

2. Discover Your Creative Side

Most of us have a reservoir of creativity that has never been tapped or has certainly not been used to its highest potential. We may need to uncover and enhance our creativity. Creativity, in any form, helps us to grow personally and professionally, to see problems and solutions in different ways, and to make use of other parts of our minds that may have been previously untapped. It is important to keep in mind that creativity has many faces. It’s much wider than being a painter or a sculptor; it’s also about trying new things.

3. Nourish Your Mind and Body

Nourishing your mind and body allows you to have more to give now and in the future — more energy, knowledge, compassion, ideas, strength, physical and mental endurance.

Finally, investing in yourself emotionally, physically, spiritually, and financially will make it possible for you to become the best version of yourself. If you’re the best version of yourself, you’re going to be an attraction magnet for others!

Final Thoughts

There are plenty of investment options ranging from safer to riskier, and lower-returns to higher-returns.

To invest like a pro, you must have deep knowledge about the various investment options available. Consider various factors such as financial objectives, risk level, period, growth level, etc., to opt smartly for a suitable scheme.

Always remember that savings and investments are two different things. Therefore, Wealthface helps you to grow your wealth by using a smart scheme of investing.

 

As countries become more dependent on each other for trade and prosperity, the adverse effect of a crisis in one region quickly spreads around the world to affect the global economy. So, let’s find out what financial crises in the past taught us and the reasons and consequences of the following article.

What are the types of Financial crisis?

Unfortunately, financial crises are common in history and often cause economic recessions or even economic depressions. Usually, financial crises are triggered by a bank run, devaluation, and stock market crashes. Other factors to a financial crisis include systemic failures, unanticipated or uncontrollable human behavior, regulatory absence, failures, or contagions that amount to a virus-like spread of problems from one institution or country to the next.

Let’s look at the main types more closely:

It is not a secret that banks’ lending most of the money they receive in deposits; hence it is difficult for them to pay back all these deposits quickly if they are suddenly demanded. When a bank suffers from a sudden rush of withdrawals, a bank run takes place. You probably heard of such events in the United States in 1931, and the run on Northern Rock in 2007.  

You might remember the financial crisis that happened in Russia in 1998 and Brazil one year later, which resulted from a currency crisis. Mexico suffered such a fate in 1994. Currency crisis may be a nominal depreciation of a national currency due to the lack of reserves to maintain the country’s fixed exchange rate. 

A financial crisis is always difficult to predict, and especially if it happened due to the market crash in case, there was a bubble. It can occur when some classes of assets are overpriced because of a buyer who buys an asset based on the expectation that he can resell it at a higher price instead of calculating if an asset’s price is equal to its fundamental value. When many decide to sell, the prices will fall. Well, known examples of bubbles and crashes in the stock market are: the 17th century Dutch Tulip mania, the 18th century South Sea Bubble, the Wall Street crash in 1929, the crash of the dot- com bubble in 2000-2001 and the most serious one was 2008 market crash, which brings us to the famous global financial crisis of 2008. 

What are the reasons for the 2008 market crash?

Back in 2008, the financial crisis shook the world’s economy. That crisis has been the most serious since the Great Depression. It saw banks that were too big to fail to do exactly that. The banking system was losing the trust of both financial institutions and customers.  

So, you are wondering what caused the 2008 financial crisis? Who to blame? 

It was triggered by overheating in the housing markets. The U.S citizens were buying expensive houses, although they did not have enough money for it.

Lenders made it easier to get a loan and approved mortgages even to borrowers with poor credit scoring. Altogether, this was driving up home prices to an astronomical level. 

Meanwhile, investment banks were given the freedom to build up their businesses and in which sector they want to focus on. They established exclusive financial products for the market to trade these mortgages. To gain these profits, U.S banks sold these mortgages known as mortgage back securities to other Banks and investors not only in the U.S but also around the world. The demand for these new financial products increased heavily due to the AAA” ratings; soon, banks were not able to stimulate the high demands on the market. The prime mortgage takers reached its maximum capacity. 

This resulted in banks to start issuing subprime mortgages to borrowers with no income or employment proof to create more mortgages for the market. Banks pledged low and flexible interest rates reducing down payments, which allowed low- and middle-class citizens to borrow more money for bigger houses they normally couldn’t afford. 

This led to an economic bubble and a rising level of default rates on sub-prime mortgages. Warnings about this by respected international organizations were ignored, though.  

 Large financial institutions like Lehman Brothers, Merrill Lynch, and Morgan Stanley all became lenders of mortgages. According to a 2018 paper published by the University of California Berkeley, by the summer of 2007, UBS held onto $50 billion of high-risk mortgage-backed securities, Citigroup $43 billion, Merrill Lynch $32 billion and Morgan Stanley $11 billion.

As a result of a glut of new homes on the market, housing prices across the country began to plummet, meaning that millions of homeowners and their mortgage lenders were suddenly “underwater,” which means they owed more on the mortgage than the estimated value of the property. Owners defaulted on their mortgage payments and lost their homes, and banks that held the securities were pushed toward bankruptcy.

What did we learn from the 2008 market crash? What has had changed since then? And how we can be sure that the same mistakes will not be repeated? 

It’s been a transformative journey over the past 12 years. As companies have worked to rebuild their losses and set goals for the next decade – a journey that raises a lot of questions like what lessons have we learned? Did the government put all the measures to try and prevent a repeat of the crash? How can companies be prepared for future crises? Let’s have a close look at the lessons from the 2008 market crash and actions taken. 

– Central banks of the most advanced countries started to work together more closely to solve global economic problems;

– Banks have become warier of lending money and Central banks have increased the requirements of reserves that need to be held;

– Regulatory changes restricted the ability of investments bank to provide all types of services; now, they can concentrate on only a few product lines.

 The lessons from the 2008 market crash were painful and profound. But such events helped us to get more regulatory supervision and more confidence in the market.

Though the value of investments can fall as well as rise as a reaction to the news, but be careful and do not make decisions sometimes, it’s not related to the real economic situation.

For investors, the best thing to do is to stay diversified, spend less than you make, and adjust your risk tolerance accordingly; diversification has its limits in reducing risk. It is important to see how well a fund manager performs in times of falling. Wealthface strategy was back-tested since 2007, if you check our graphs, you will see that we outperformed the market at all times. Our portfolio rebalancing every quarter due to the market situation. So, you don’t have to worry, check the news and your investments every day.

To avoid the spread of the latest coronavirus, the UAE government directed its residents last month to start working from home. Wealthface offices were empty. Wealth management employees who handle clients’ money in many countries as private individuals were already working remotely for their protection.

But working from home doesn’t secure someone a job. The fear of the unknown caused by this pandemic is on the minds of millions around the world.

Bilal Majbour, the CEO of Wealthface, realized that he could solve one of many concerns. So, he emailed his employees and promised them that nothing would change; they will keep on receiving their salaries despite the COVID-19. He added, “I want everyone to feel safe and focus on serving the clients’ needs.”

The number of infected and deaths has risen dramatically worldwide, and millions have lost their jobs as a result of the battered economy. The consensus is that the crisis has already begun.

Majbour calls his employees daily as a kind gesture to make sure that everything is fine and to remind them that he is here supporting them to overcome this crisis together as one team.

In case there is any cut in salaries, he prefers to start by himself before cutting any employee. The promise is not a reflection of any prognosis; he added that he is “as hesitant as everyone else.”

Wealthface has kept the cash until the end of the year to cover operating expenses. Moreover, we will adjust our strategy as a startup to concentrate on generating cash flow in the short-term to cover our operational costs and employees’ wages.

“I am not working for the money, but to serve people because this is what we do best,” Majbour said.

During the pandemic, our wealth management team is spending more hours and more time to make sure that our clients are being served and supported when they need us.

“We support the decision taken by the UAE government; therefore, we decided to stay at home to ensure that the situation is under control,” Majbour said.

He added, “We are beside the UAE government. We will guarantee to offer all the support to contribute to the society.”

We agreed to serve any client for free during the pandemic, as we have different investment experts that speak different languages to serve different nationalities.

Besides, Majbour assures the launching of a new trading product called Wealthface trade. It helps traders and investors to trade on international markets like the USA, Canada, and the U.K. As it will include the Saudi, Dubai, and Abu Dhabi stock markets for the first time.

Finally, Majbour claims a call to action to all other Fintech and startups.

Bilal Majbour, born and raised in Beirut, always saw his grandfather offer help to people in every way imaginable. No matter the issue, from helping people find jobs, to settling family disputes, Bilal’s grandfather was always there. What struck Bilal the most about that, was the humility with which his grandfather carried out his philanthropic endeavors. He didn’t do it for praise, he did it because he genuinely wanted to help people. As they say, “blood is thicker than water”, Bilal Majbour also inherited his grandfather’s penchant for helping people. After moving to Canada and completing his university degree, Bilal Majbour worked for several renowned Canadian Banks. His firsthand experience with clients fueled his entrepreneurial fire and he founded Wealthface in July 2018. Today, with offices across three continents and a large number of happy and satisfied customers, Wealthface is changing the landscape of automated financial advising. While Wealthface currently operates its “Invest” product, The robo-advisor service is going to launch “Trade” soon.

The Secret Origins of a Fintech Entrepreneur

Maybe it was destiny, or maybe he was born with it. A young and ambitious Bilal moved to Canada to complete his education. He landed his first job at the National Bank of Canada. Bilal had an eye-opening experience during the time of the financial crisis. The frustrations of all the customers who had lost their money really had an impact on him. He channeled his grandfather’s helpful spirit and decided that he must do something to help these people. “I should take the initiative to become a financial advisor”, Bilal said to himself.  

Bilal continued working and learning at big Canadian banks and insurance firms such as Sunlife Financial. Eventually he joined Saxo Bank and moved to the Middle East’s crown jewel, Dubai. Even after Bilal travelled across continents and started working in Dubai, he noticed that most investors faced similar issues, no matter their geographical location. Bilal kept hearing complaints, investors did not know what to do or where to go. They lost their direction and were unable to identify the right tools, they were looking for a solution and they wanted a lot more than just trading tips. As passionately as Bilal wanted to help those people, he knew that he faced an uphill task. He thought to himself “If you go out there and tell people you want to open an investment bank, they would laugh at you”. However, Bilal refused to give up, and decided that it was better late than never and founded Wealthface in July 2018. The foundation for Wealthface’s groundbreaking approach was based on diversification as a remedy to risk, using a Nobel Prize Winning Academic Research.

Wealthface was conceived as a client-oriented and user-friendly wealth management company. Seeing the potential in Wealthface, Yacoub Nuseibeh, previous Senior Executive at the Abu Dhabi Investment Fund and the President of CFA Emirates, joined as a co-founder in 2019.

The Roots of Wealthface

One of the most important problems that Bilal wanted to solve was that most of the existing companies in the wealth management field required hefty minimum fees and there was always a probability of human error, vested interests and the lack of unbiased professional advisors who would put their clients’ interests before their own. Bilal knew that the solution lay in offering efficient, cost-effective and customer-centric services. The real challenge was changing the status quo and helping potential investors overcome the fear of changing how things are done. Bilal met the challenge head on. He decided to create a new kind of wealth management platform that combines brain power and modern technology. A technology that is based on innovative algorithms and user-friendly interfaces on a platform that gives clients unfettered, 24/7 access to their investments from the comfort of their homes.

With a clear purpose in mind, it was time to develop the strategy and execute the idea. Teaming up with colleagues and friends who had worked for years in some of the most prestigious institutions in finance and investment, Bilal had firmly planted the roots of Wealthface.

Story of the Exotic Indian Spice Behind Wealthface

An essential step towards the creation of Wealthface was Bilal Majbour’s 2017 trip to India’s Silicon Valley, Bangalore. He spent a significant amount of time in the IT capital of the World’s second most populous country. India has lots of people, and lots of people mean lots of experiences to get inspired by and learn from. Bilal stayed at a hotel near the offices of global tech giants IBM and Microsoft and interacted with a lot of people who worked there. His rendezvous with numerous millennials who had a great affinity towards modern technological tools and a fast evolving, global and borderless economy, taught him a lot of the impact of technology is revolutionizing human communication and shrinking geographical boundaries. Bilal also met with the students of the Indian Institute of Information Technology in Bangalore. His experience with the energetic and young minds really invigorated him. He didn’t just work with them, he also had fun with them, going out for dinner with a Ph.D class on an occasion. The enriching experiences from India acted as the final injection of inspirational fuel that started moving the pistons of the Wealthface engine a year later.

Bilal describes himself as a global entrepreneur, a Canadian businessman in terms of ethics, a Phoenician in terms of commerce where they have 3000 years of history, an Arabic man in terms of culture and a true believer in the American dream.That’s why he went to New York City, the financial capital of the world and signed the first deal for his firm with Drivewalth, one of the most innovative technology brokers in the world.

What Wealthface Offers

Driven by the vision to make the world of investing available to everyone, everywhere, Wealthface doesn’t shy away from doing things differently. Bilal and his firm are committed to providing investment management services that have evolved from the traditional methods into the new, forward-thinking and effective methods. Wealthface strongly believes in getting rid of the high fees and account minimums and embracing a smarter, more efficient way to invest your money. Unlike many of its competitors, Wealthface allows you to open an account with no balance. On top of that, there are no trading fees as well. These are Wealthface’s three different tiers of account services, along with their features and fees:

Basic Accounts ($0 – $100k deposit)

Fee – 0.75%

What you get:

  • Customized portfolio
  • Fractional investing
  • Automatic rebalancing
  • Expert Advice
  • Free portfolio check up
  • Systemic deposits

Platinum Accounts ($100k-$500k deposit)

Fee – 0.65%

What you get:

  • All Basic features
  • Tax efficiency guarantee
  • Annual financial planning sessions

Infinite Accounts ($500k+ deposit)

Fee – 0.5%

What you get:

  • All Platinum features
  • In depth financial planning
  • Asset allocation
  • Dedicated financial advisors

An ETF fee of 0.1% is charged in addition to the above-mentioned fees. 

Wealthface allows you to invest your funds in globally diversified portfolios of low-cost index funds, in a way that is used by savvy, successful investors. Thanks to its cutting-edge technology and years of experience, Wealthface specializes in minimizing risk and maximizing returns. Wealthface is driven to eliminate complicated, time-consuming tasks of managing wealth and offer simple, straightforward access through automatic rebalancing, dividend reinvesting, and always seeking out the best options for a customer’s funds. “Wealthface is always at your reach and ready to make your financial life a brighter and wealthier one”, Bilal signed off on that note.