How Do I Find the Right Ethical Investments?

Ethical investments have been possible in the UK since the launch of the first ethical fund way back in 1974 – but to date, only 8% of us have actually taken the plunge and put our money where our principles are.

The problem with ethical investment is that it is on a sliding scale – from light green investments to the more strict dark green investments, and all shades in between.

Ask yourself the question – how ethical am I?

The first step is to find out how ethical you personally want to be. Some investors wishing to make ethical investments still like to see an element of the oil and gas industry in their portfolios, as this is a driver of growth. They accept a fund which has an ethical flavour to it, but is at the mainstream end of ethical – and so the light green ethical funds sector was born.

If you accept nuclear power as less pollutant than fossil fuels, and you accept the claims that the oil and gas companies spend fortunes researching renewable energies, your personal ethical criteria may be less strict than other investors.

It is simply a matter of defining where you stand, on that sliding scale from light to dark green.

What are the choices at the dark green end?

Down at the dark green end of ethical, there are funds which very strictly invest only in companies providing products or services in the areas of water and natural resources, waste management, alternative energy, or fair trade.

In addition, some funds expect their holdings to go even further by demonstrating that they put something back into the communities in which they operate. This may involve providing housing for workers, free healthcare, even building schools and improving the social infrastructure of developing communities.

Where is the information I need to find the right ethical investments for me?

With nearly 100 ethical investments now available in the UK, provided by over 40 investment companies, there is more information to be sifted than any single investor can manage on their own.

The best first step is to take quality advice from an independent financial adviser, who can ‘lift the lid’ on any ethical fund, and rummage around inside, to check on the holdings it contains. This is the best way to find where the various ethical investments stand, on the light – dark green scale.

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3 Careers for the Future in Finance

Impacted by the digital revolution, the world of finance has deeply evolved these past 20 years and is changing faster than ever before. Reduction of storage costs and the explosion of computing power have made possible finance applications that a decade ago, people only dreamed about. In this fast and complex environment, banks are in strategic need of recruiting young talents with skills that were not necessarily associated with finance in the past. Choosing to prepare for some of the key positions of tomorrow means you will be sought after by top banks when entering the professional world at the end of your studies.

Here are 3 career paths that will be key for employment with the banks of tomorrow:

Blockchain Specialist

Blockchain is the technology that was introduced by the Bitcoin. It was originally designed as a decentralized digital currency. The key behind blockchain technology is that it allows reliable transactions of value between several parties without the need for a central authority. The potential applications to the banking industry are still uncertain. We could see it replace the current system for transferring money between local and global banking entities. The strengths of such a peer-to-peer system could also be used to propagate, between financial institutions, details on each economic agent.That would allow a bank to know very quickly if a particular client can be trusted, and thus greatly reducing compliance costs.

One thing is certain however, this technology will have a huge impact on the industry in the decades to come. Most major banks have invested in research on this technology. As Simon McNamara from RBS has said “I don’t know what’s going to succeed. What I’m certain of is that we are going to see blockchain solutions and peer-to-peer solutions emerging in our industry and we want to be close to that development.” Blockchain specialists will have a strong interest in both computer science and economy.

Data Scientist

This one may be the most obvious. Banks are already recruiting loads of data scientists, and giving them some of the best paid positions in the industry. However, this is only the beginning of the revolution. As the algorithms get more and more sophisticated, the mission of computers will slowly move from applying a strategy to finding strategies by surfing huge amount of data.

Data scientists will design systems that will explore huge databases containing all kinds of data; historical prices, news, and even personal information on clients.; All of which will uncover invisible correlations and unknown relations between objects. It will then be able to run a strategy based on these new findings.

Ultimately, banks will have computers that will learn on their own how to make money from a huge compilation of diverse data. The focus of the competition will be to attain the best data and input it into these computers. This will be the application of machine learning to finance.

A data scientist is a specialist in statistics that also has an interest in computer science.

Financial Psychologist

The most experienced bankers will tell you, short term moves in price are explained in part by human psychology. In order to improve their decision-making process, banks will have to take these human parameters into account.Technical analysis can be seen as a precursor of this discipline, its goal being to capture some human behaviors by spotting recurring pattern in historical prices.

However, more recently, academics have taken a more scientific approach to these questions and interest is growing among bankers.

In the near future, banks will most likely be looking for people able to apply psychology and sociology, among other techniques, to the financial markets. Such “financial psychologists” will need to be specialists in human science and economy.

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Running a Cash Only Business? Think Twice

Cash is definitely handy but not when your customer has a better and a more convenient option of payment. Walk in to any retail store and you will see that most customers prefer paying by credit/debit card. So what does that mean? Losing customers to the competitors and tedious paperwork are some major problems ‘cash only’ businesses face. Here are some more to help you understand that what it is like to accept only cash and the profitable advantages of accepting debit/credit from customers.

Disadvantages of ‘ Cash Only’ businesses

Limiting Business Growth

Most customers prefer using cards as a convenient method of payment. If you have tagged your business as ‘cash only’ you are sure to lose most of your customers including potential ones, to the competitor who accepts ATM cards. Most people use debit /credit for their daily purchases and cash is a secondary option or is used only during emergency situations. You are limiting your business growth if you make it difficult for those majority of people who prefer paying by credit card most of the times.

Losing Heavy Buyers

Not accepting cards is also a problem for those businesses that sell large items or one time investment products and limit themselves to accept only cash for payment. Most consumers who buy these large items pay through credit card, which is safer way of transferring cash than carrying the money in hand. Businesses selling large items lose their customers who are willing to pay the big price, but are denied purchase due to the company’s policy of not of credit cards. This system may incur heavy loses for businesses who sell these goods as their daily bread and butter.

More Chances of Fraud

A merchant that does not use the electronic system of accepting payments is open to allow frauds in his business. Keeping a large amount of money is an alluring spot for robbers. Also, a merchant will rarely get to know that the cash is missing when he depends on his employees to collect money on the counter. It is difficult to maintain a check and balance system for cash funds and counterfeit the cashier’s records under the cash only model. Using credit card processing machines automates business transactions and gives clear evidence of all records.

Tedious Paper Work

Receiving cash immediately for any business transaction is fast and convenient. What follows suit is the burdensome and endless paper work that may take considerable time. You need to record all transactions on paper and spend a large amount of time and money to convert this from physical work to automated records. Calculating cash, error free recording and safe storage is challenging. The most disappointing moment is when you lose all your records in a mishap.

Advantages of accepting credit card

Boost Sales – Most customers use ATM cards as this eliminates the need of carrying cash. Advance technology facilitates the use of ATM cards on smart phones for cashless transactions. Accepting credits can help businesses retain customers; attract more buyers that pay only by card hence boost sales.

Safe Transactions – ATM merchant services provide quick solutions to ensure safe credit card processing for all businesses. Instead of risking your business by keeping a large amount of money in your store it is safer to accept cards that are processed through secured software system.

Quick Services – Accepting cash is surely quicker, but not when your fall prey to fraudulent acts of fake currency or are unable to match records with the actual cash in hand. With the credit cards processors you receive funds within 24 hours from the time of transaction in the most secured manner. Accepting credit card also makes it convenient for customers to make quick payment especially if it’s an item of big purchase.

Flexible transactions – By accepting ATM cards you give an option to customers to make payments by cash or card. If you’re processing machine fails by any chance, your customers still have an option to use ATM services nearby your store and pay by cash. With the a credit card facility you can also expand business online and give a viable payment option to customers spread far and wide.

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Gold Befuddles Bernanke As Central Banks’ Lose $545 Billion on the Precious Metal

Gold has been going down quite a bit this year with the precious metal trading in the mid 12 hundreds down from about $1.900 an ounce last year.

But investors aren’t the only ones to be losing money. As a matter of fact, Central banks across the world own about 18% of all mined or above ground gold in the world, and collectively bought 535 tons of gold bullion in 2012… with Russia, the biggest buyer in 2012, expanding reserves by 20%. But at about $1,300, gold prices are down 31% from their $1,895 level in October 2011 and central banks have lost about $545 billion in book value on their gold investments.

By the way, I picked up some of this data from an article titled Gold Befuddles Bernanke as Central Banks’ on

While central banks were busily adding gold to their vaults, investors were losing faith in gold… as a safe haven, as a hedge against inflation and as a store of value. As a result, 2013 became a rather dark year for gold with gold ETFs losing about $60 billion or about 43% in value, severely impacting many well known hedge funds. This year, we’ve seen the biggest drop in gold prices since 1981, of course after rallying for 12 successive years through 2012… so I guess something had to give.

The chairman of our central bank, Ben Bernanke, openly admits that he does not understand movements in the price of gold… this from a man who holds economics degrees from Harvard and MIT and has led the Federal Reserve Bank through its biggest financial disaster in recent years.

And Warren Buffett sees no utility in gold because it moves to vaults once it’s mined and has no tangible producing power, unlike say steel.

Yet, our government holds about 8,100 tons of gold valued at about $344 billion with most of this gold stored at Fort Knox in Kentucky. And since 1973, America’s gold holdings have only contracted by 5%… so despite Bernanke’s befuddlement with gold price movements, we continue to hold large reserves of bullion… because it continues to hold value in human minds and the U.S. is better off holding this precious metal than having none at all. I guess it’s also sort of a doomsday backup.

So what is it about gold that makes it such a favorite???

I believe it is gold’s allure as a lasting store of value. While policymakers such as Fed Chairman Bernanke may not completely understand gold price volatility, they still find value in preemptively holding it to shield their economies from inflation and continue to buy it despite a history of buying high and selling low. For example, central bankers reduced their holdings when the bullion reached a 20-year low in 1999 but became net buyers just before prices peaked in 2011… but these guys aren’t stupid… their gold buying and selling decisions are based less on price but more on gold’s strategic value in helping them manage the economy – so their purchases ignore near-term price volatility and focus on significantly long-term holding horizons, and these spurts of buying by central banks significantly impact gold supply and prices in the near term.

For example, the U.S., Germany and Italy hold about 44% of all central bank gold and have only changed their reserves by less than 3% since 1999. So they are long-term holders of gold and near-term prices matter little to them.

Gold investors see it as a hedge against inflation. So gold rose 70% from December 2008 to June 2011… because the Federal Reserve went wild printing money for its various bailout and quantitative easing programs… and spooked investors who thought this excessive money printing would weaken the dollar, increase money supply and trigger runaway inflation… But, fortunately, that inflation never came and consumer prices rose only 1.7% annually from 2008 through 2013, well below historical inflation of about 4.3%. So when various gloom-and-doom scenarios did not play out as expected, gold started losing its allure and prices started to correct, with gold down 22% in 2013 alone.

But gold bulls fervently believe gold is still undervalued… partly because current gold price levels are almost half of what they were in 1980 when you adjust for inflation. Gold was at $850 in 1980 after the financial and political turmoil in the late 1970s… but adjusted for inflation, today’s price is merely $464 in 1980 dollars according to the Federal Reserve Bank of Minneapolis.

Gold bulls argue that while gold is below its 1980 level after adjusting for inflation, it has still outperformed the U.S. dollar in purchasing power. For example, a dollar bought about 3 quarts of milk in 1970 while an ounce of gold bought 28 gallons. At the end of 2011, a dollar bought just about one quart while an ounce of gold bought 420 gallons. So on a purchasing parity basis gold has handily outperformed the dollar. And this is partly why many think that holding gold is a reasonable and prudent strategy.

On the flip side, analysts who have been relatively correct about predicting gold prices see a deepening bear market in gold and believe prices could drop to the $1,100 level in about 12 months, down from their current levels of around $1,300.

For all of gold’s opponents, there are many who fiercely believe in its value. In fact, frustrated with the uncontrolled printing of dollars, many are pushing to get the U.S. back on the gold standard – and pegging dollars in circulation to a fixed % of the amount of gold we hold. Utah already recognizes precious metals as currency and lawmakers in six other states are looking at accepting bullion coins as legal tender.

But one of the challenges with tying our currency to gold is the volatility of gold on geopolitical events and global supply and demand – and this volatility could really bog down exports and imports with currency uncertainties. Other problems with the gold standard are that there just isn’t enough gold available to meet expanding global economies and a dependence on gold would make it very difficult to use financial tools such as quantitative leasing to manage the economy. So the real question is why would we peg our incredibly dynamic economy to the amount of some metal that we sitting in our vaults, it just doesn’t make sense. I said this to Congressman Rand Paul on this show a few years back. He said that if we couldn’t print dollars, we wouldn’t have the money to wage war. I responded by saying that it never stopped countries from waging war before and they would just go to war over the gold.

So for the foreseeable future, I don’t see our dollar getting pegged to gold but I think central bankers will continue to add to their reserves as their own form of insurance, partly to also prevent gold from getting into the wrong hands, and will continue to hold it for the long run while investment and commercial supply and demand will continue to dictate near-term gold prices.

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