Appraising Different Financial Products – Are They Really Necessary?

Financial marketFor the best part of the last decade, the UK economy has been defined by rising consumer borrowing, which has continued to drive growth while the private sector has recovered from the impact of the Great Recession.

However, the consumer credit boom may be coming to an end, with growth in loans and credit card debt having slowed to its weakest pace in more than three years.

Having fallen below 8%, consumer credit is also growing below its average price for the last 20 years, with banks and lenders clamping down on borrowing and rising interest rates deterring customers. The demand for alternative and specialist financial products continues to boom, however, but is this a fad or does it offer genuine value to customers?

The Value of a Diversified Financial Market

Interestingly, the rising demand for specialist financial products has increased as traditional lending has declined. Many experts believe that these two developments are connected, with niche and targeted loans offering greater accessibility to customers as banks continue to tighten their belts.

This highlights the underlying value of a diversified financial market, which offers flexibility to borrowers and enables them to seek out alternative lenders that view their application in a favourable light.

This taps into another primary benefit of diverse financial products, particularly those that are tailored to suit specific demographics. One lender that embodies this is Smart-pig, which is a short-term lender that has been established to provide an affordable line of credit to students.

Unlike most short-term lenders, Smart-pig does not charge late payment fees, while it also offers a 10-day grace period to allow for delays in the advancement of student finance.

With a 50% interest cap, the company also minimises the amount repayable by students, who typically have low levels of disposable income and no regular source of income.

This type of targeted loan package offers immense value to students, who can seek out a viable and transparent line of credit that has been designed to suit their unique circumstances. Most importantly, it tailors the cost of the loan to suit the applicants’ means, increasing the chances of a successful application and timely repayment in the process.

The Last Word

To some people, all financial products have been created equal, and so-called ‘alternative’ loans or credit cards represent little more than innovative marketing gimmicks.

This is far from the truth, however, as the diversification of the lending market has created a host of different products to suit variable demographics and customer needs.

In this respect, the development of different financial products is crucial to the future of the market, particularly in an age where traditional lenders are turning their back on customers.

The One Skill You Can Learn To Make Money From Anywhere In The World

Have you recently been bitten by the travel bug?

Are you soon required to relocate in order to accommodate a new job position?

Whether you consider yourself a citizen of the world or you are simply looking for a change, travelling is a great way to expand your horizons.

Still, money can and will represent an ongoing concern. This is why it is a good idea to appreciate the sheer potential of online investing. Perhaps even more importantly, is there any one “key” to financial independence when trading?

Let’s see what the best in the business have to say as well as how you can put your best foot forward from the start.

Know Your Trade

Many investors want to take on the world in regards to profitable positions. Although diversification is a good thing, it should never be mistaken for spreading yourself too thin.

One principle which has served countless traders well is what Warren Buffett refers to as the “circle of competence“. This concept will represent the focus of the article.

What is meant by a circle of confidence?

Simply stated, this signifies that traders should only become involved with positions associated with an innate sense of familiarity.

For example, the chances are high that a commodities expert would fare poorly if he or she suddenly became immersed in the Forex markets. The same holds true for other sectors. It is much more prudent to focus upon one or two underlying asset classes if you hope to maximise your returns over time. Still, this principle can be extended far beyond typical stocks and shares.

Informed Positions: The Strategic Edge

Some methods are better than others if you hope to make money while abroad.

CFD positions are perfect examples due to their liquid nature as well as the possibility to turn a profit even if the value of the asset itself begins to fall.

Furthermore, the upside to CFD trading is the fact that you can access the markets anywhere in the world. This sense of on-the-spot flexibility might not always be possible with other ventures.

Practice, Practice and Practice Some More

If we once again refer to the previous maxim coined by Warren Buffett, your skill set is very important. Try to hone one specific talent (such as your proclivity towards short-term positions) and capitalise upon this trait through practice. Let’s look at this approach in another way.

The traditional Japanese would spend years at a time perfecting a certain action or task (such as learning the art of pouring tea, or simply The Way of Tea).

As a result of such dedication, they would become experts in a specific trait. This very same approach should be taken in regards to investing. However, keep in mind that you can still diversify within a single asset class in order to achieve greater diversification.

Regardless of your choice of investment or the ultimate goal, this strategy could very well represent the most effective mindset to possess if you hope to make money with consistency while travelling abroad.