How Does the 2018 Federal Budget Affect You and Your Family?

If you sat down at 7:30 last night to watch the 2018 Federal Budget Announcement, you may have found yourself a little overwhelmed. With so many figures and areas of taxation to get your head around, we have sat down, dissected and summarized the answers to the question you may be asking – “What's in…

If you sat down at 7:30 last night to watch the 2018 Federal Budget Announcement, you may have found yourself a little overwhelmed. With so many figures and areas of taxation to get your head around, we have sat down, dissected and summarized the answers to the question you may be asking – “What's in it for me (and my family)?”

Personal income tax
The Treasurer announced plans for a three-step, seven-year plan:

  • Step One: Effective immediate, low and middle income earners are to benefit from tax savings of up to $ 530 per person (or $ 1,060 per couple).
  • Step Two: From 1 July this year, the threshold of the 32.5% tax bracket will increase from $ 87,000 to $ 90,000, then will again increase in July 2022 from $ 90,000 to $ 120,000.
  • Step Three: From 2024-25, there will be just two income tax brackets for people approaching over $ 41,000 per year: 32.5% for incomes between $ 41,001 and $ 200,000, and 45% for incomes exceeding $ 200,000.
  • The Medicare levy will remain at 2%.

Your superannuation
Have you ever considered changing your super fund, but found it cost-prohibitive because of high exit fees? Great news in these years budget – super funds will soon be banned from charging exit fees. But you'll need to wait until 1 July 2019 to make your move.

Other changes to superannuation include:

The balance-eroding practice of automatically adding life insurance to a superannuation policy, no matter what the age of the person, will end. (To date, super members under the age of 25 pay nearly $ 200 million a year in life insurance fees through superannuation). Those under 25 are now required to 'opt in' to buying life insurance.

Companies can no longer automatically deduct life insurance cover for all funds where no contributions have been made for 13 months.

According to the Association of Superannuation Funds of Australia, more than 60% of Australians have multiple super funds. So, the ATO will turn their eye to inactive super accounts and merge them with their owners' active funds.

  • Self-managed super funds (SMSFs) can now have 6 members, up from 4.
  • SMSFs with a history of good record keeping will be rewarded by reducing annual audits to 3 yearly audits.
  • People over 65 can put up to $ 300,000 into super from the proceeds of selling their home.
  • First home buyers who have made super contributions under the First Home Super Saver Scheme can access their money for eligible property purchases.

Education
Young people living in rural and remote communities will find it easier to get access to Youth Allowance payments while they are studying away from home (eligibility for these payments is based on parental income).

Traineeships
The Federal Government will match funding with the states and territories to provide traineeships and apprenticeships for “high-demand” areas over four years. However, there is one caveat: each of the states and territories needed to sign up for this to go ahead.

Ageing Australia
There are a number of changes in this years budget to benefit older Australians. They include:

  • $ 1.6 billion over four years has been set so so 14,000 seniors can stay in their homes rather than go into a nursing home.
  • $ 20 million for mental health nurses to support older people still living at home (the Government notes that men over 85 have the highest risk of suicide of all age groups).
  • $ 40 million has been budgeted for urgent building and maintenance work for agreed care facilities in regional and remote areas.
  • $ 33 million has been set aside to address a chronic shortage of palliative care in nursing homes.
  • A one-year exemption from the 'work test' will apply to recent retirees who have less than $ 300,000 in total super savings.
  • The Pension Loans Scheme will be available to all Australians over Age Pension age and the maximum payments will increase to 150% of the full Age Pension.
  • Pension Work Bonus increases to $ 7,800 pa from $ 6,000.
  • Finally, the Government has committed to make the agreed-care system easier for families to navigate, simplifying forms and providing relevant online educational facilities.

Access to more affordable medicine: Granted, you will need to wait years for this, but it's good to know the government will spend $ 302 million over four years to improve your access to generic and less expensive medicine.

Your health
There are plans to allocate $ 130 billion for public hospitals over five years. The government also proposed a crack down on unnecessary diagnostic tests.

Access to your own data. The government announced the establishment of a “consumer data right”. This will allow you to take control of your online personal data and safely share it with reliable service providers, starting with the banking, energy and telecommunications sectors.

Small business
No budget would be complete without something for small businesses. If you run your own business, the current deduction on spending on eligible assets of up to $ 20,000 has been extended to July 2019. Another win: streamlining of GST reporting which, in turn, will save money – a welcome change for around 2.7 million small businesses.

Craft Beer Brewers. There are around 350 craft brewers in Australia, so chances are you are not one of them. However, most consider the tax changes that put small craft beer brewers at a disadvantage to be a victory for common sense. Beer sold in kegs larger than 48 liters have been taxed at a lower rate than smaller kegs, which in effect has favored large producers. The change brings the lower tax level down to beer sold in kegs larger than the 8-liter size.

Finally
While not all of these changes are likely to affect you personally, you might give them your 'tick' of approval:

  • Multinational companies now to be policed ​​and stopped from shifting profits to lower-taxing countries (they do this by loading up local operations with debt).
  • Online hotel booking websites based outside of Australia will now be taxed at the same rate as Australian businesses, ending the inequality that currently occurs between international and local booking providers.
  • Companies that are currently 'pushing the boundaries' and taking advantage of the research and development tax incentive scheme will be stopped. This will ensure funding goes to genuinely innovative spending.
  • A $ 1.3 billion plan to support Australia as a 'global leader' in medical technology, biotechnology and pharmaceuticals.
  • The ATO will turn an eye to the 'Black Market Economy', with more audits, 'mobile strike teams' and a 'Black Economy Hotline' for the public to report suspicious activity of businesses trying to avoid paying tax.

Budget Questions?
If you have any questions, your mortgage broker is always ready to help.

Make Goal Based Investing to Realize Your Financial Goals

Life is all about setting different goals and achieving them one after another. As Tony Robbins said setting goals is the first step in turning the invisible into the visible. When each rupee you invest has a definite purpose behind it, is called Goal based investing. Goal based financial planning is done for long term,…

Life is all about setting different goals and achieving them one after another. As Tony Robbins said setting goals is the first step in turning the invisible into the visible. When each rupee you invest has a definite purpose behind it, is called Goal based investing.

Goal based financial planning is done for long term, midterm and short term gains. Long term plans typically yield more wealth comparing the other two. A midterm plan could be buying a home where a short term plan may be having a car.

How it is Different from the Traditional Approach
Unlike the traditional approach of investing, goal based investing does not only focus on your risk profile, rather its focus remains on achieving the target. The investment plans should be designed by keeping the goal at the center.

The focal point of the traditional approach remains in selecting areas that ensure safe returns. It finds a safe and sure path to grow money. Whereas, in Goal based investing, realization of the goals defines its ultimate success. Wealth generation is not the sole target.

Goal based investment plans get designed only after doing a detailed research of the investor's net worth, level of risk-tolerance and financial goals. In case of traditional approach, first the risk quotient is calculated and according to that a pre-designed investment plane gets selected.

Benefits of Goal Based Investing

In life, each rupee you spend is a type investment that yields certain results for you. If your goal based investments are planned, well thought out and work for achieving specific goals then they do not affect each other. The benefits of making goal based investments are-
It engages you in making systematic approach towards a better money management.
It is nothing but a good habit that restricts you from making spur of the moment purchases.
Channelizes your money towards building value assets and wealth through proper financial planning.
Increases the achievability of the financial goals of your life.
You can continuously monitor and make changes to your plan in order to reach close to your desired financial goals.

How to plan a Goal Based Investing

Planning a goal based investment requires-
You have to make a list of important life goals that you need to achieve. You should prioritize them according to their importance.
Analyze your money needs. It will help you in clustering your investments according to the upcoming life events.
Cluster your investments in three sections- 1) Short-term, 2) Mid-term and 3) Long-Term.
Now choose viable investment plans and start investing.

Short Term Goal based investments are made to fulfill prerequisites that are going to arise in next 2 years. You have to choose less volatile and low risk areas to invest as you need to turn them into liquid soon.

Mid-term Goal based investments are those where you need the return in next 3-10 years. Long-term goals may include retirement and child's higher education. To meet such kind of goals, you need to accumulate large corpus. For that, you have to give good effort to identify pre-determined asset class and make systematic investment over longer period of time. During the course of time, you should stay invested in your plan irrespective of the short-term market upheavals.

If you tie your financial investments around a time frame and specific life goals, it gets a lot easier to achieve.

Why Do More and More People Choose Online Payments?

Consumers are used to having instant connections with information, entertainment, other users through text message, social media and products that they want to purchase. Since people expect that almost all their needs can immediately be addressed with the help of technology, it is not surprising that they would rather go for online payments and the…

Consumers are used to having instant connections with information, entertainment, other users through text message, social media and products that they want to purchase. Since people expect that almost all their needs can immediately be addressed with the help of technology, it is not surprising that they would rather go for online payments and the businesses that accept them.

The top reasons why people choose online payments are as follows:

They get rid of geographical limits.

A person who travels to another country / continent has to adapt to the place and make do with what they have inside their wallet. This may mean changing foreign currency or using another credit card than what they would commonly use. Online payments get rid of the problems that keep them from joining in an international marketplace.

A lot of payment processors supply businesses so they can accept a wide range of currencies, automatically compute the current exchange rate based on the currency, and also adjust to the language and info provided in checkout forms to take in the different languages ​​spoken by buyers, depending on the currency used.

They are more convenient than ever.

Payment technology is so advanced to the extent that consumers are able to make an online payment even though they did not bring their card or wallet with them. Beside the growing popularity of mobile wallets, studies reveal that online consumers continue to go for other simpler forms of funding. As a matter of fact, above 80% of respondents said that they made use of a card-free payment tool last year for online payment.

They let consumers save on time.

Aside from being convenient in terms of transaction speed, online payments get rid of the need for consumers to go to a physical store, spend their precious time, and wait for their turn to pay. Studies regarding the psychological effect of waiting in line show how time is precious to consumers. They have the tendency to exaggerate how much waiting consumes their time by almost 40%. Even if the length of time lost by a customer from waiting in line is true or just imagined, the perception is real. Online payments give a clear advantage just by providing the buyer with a choice of how to spend time.

They give more buyer protection.

When customers buy from a small business – whether online or from a physical store – they need to establish a certain amount of trust with the seller, since this is their first time to buy from this merchant. No matter how clear a business explains its policies on return, exchange, as well as customer satisfaction, consumers may still be a bit hesitant. Online payments can address this problem. When they use a credit card for online payment that gives a guarantee of the lowest price for a declared number of days, an extension of manufacture warranties and the right to dispute a purchase, they can have the peace of mind that they will be given protection , whatever the merchant's policy is.

They duplicate their present financial habits.

More than 50% of Americans depend on the online banking tool to pay bills, transfer funds and track their money. Online payments duplicate the financial habits that have been adapted by a lot of consumers.

Online Bill Pay and How It Works

Online bill pay is fast becoming a popular means of payment among people who want to practice good debt management skills, and save on both time and money in the process. What exactly is online bill pay? Generally, it is a payment method that lets an individual carry out payment instructions to creditors electronically through…

Online bill pay is fast becoming a popular means of payment among people who want to practice good debt management skills, and save on both time and money in the process.

What exactly is online bill pay?

Generally, it is a payment method that lets an individual carry out payment instructions to creditors electronically through a computer program. This can actually get rid of errors, making it easier to manage debt. In addition, it is faster than mailing checks.

Online bill payment methods come in two basic categories: those being offered via a bank, and those offered via a service provider- like a credit card or phone company.

In general, online bill pay is designed to be fast and simple to use. Majority of major banking institutions, as well as businesses, provide this service without any charge. Individuals can choose to manually enter their payments every month, or arrange for an automatic withdrawal from their account. Automatic withdrawal allows them to set up their payments before their due date without worrying about giving manual instructions to make a monthly payment. The creditor will transfer funds straight from the bank, and enter these funds into their account with no action needed whatever.

Advantages of Choosing Online Bill Pay

The following information will help you consider the different advantages of using online bill pay:

Hassle-free

Individuals can save on time when using the online bill pay platform. Instead of writing out checks, wetting stamps and filing lots of papers, they can set up an online account to get rid of all these steps. It will also be easier and faster to manage their debt.

When they need to go over past bills, they do not have to waste time in looking for them – because all of their account information can be seen in one centralized location.

Cost Efficient

They can save on the stamping costs, which can add up. The average household gets 15 bills every month, which could amount to $ 70 a year in just postage costs.

They can avoid late payment fees that are incurred every time a payment is received after the due date. Missed payments could lead to the following:

  • Increase in interest rates;
  • Late payment charges and over limit fees.

When the payment is past due, their account could probably go to collection status.

Convenient

What is a more convenient solution to managing debt? Individuals could create their own automatic online bill account, so they can set up recurring payments that are to be regularly withdrawn from their account. This decreases the chance of late / lost payments, saving time in the process.

When they find out that one of their bills is due for payment on the next day, the best way to make sure that their payment will be posted on time is through online bill pay.

Online Bill Pay and Its Benefits

For every one of us, there are several bills that are paid on a monthly basis. The list includes rent or mortgage, electricity, credit cards, cell phone, internet and cable, among others. Most people pay an amount in double digits. It is natural that at times, one of these bills slips their mind so they…

For every one of us, there are several bills that are paid on a monthly basis. The list includes rent or mortgage, electricity, credit cards, cell phone, internet and cable, among others.

Most people pay an amount in double digits. It is natural that at times, one of these bills slips their mind so they have to pay the late payment fee. A 2016 survey by a financial firm reveals that more than 1/3 of customers or 35% of respondents paid late in the past year, and 65% were charged with a late fee.

Most banks and credit companies that offer online bill payment make it easier to manage and pay bills to avoid extra fees. Beside paying bills from the convenience of their computer at any time, people can save on stamp costs and the trouble of traveling all the way to a mailbox.

It is not something new to pay bills online since it is done by a vast majority of Americans. However, most of them do it with the use of different websites and providers. So, there is a possibility of missing a payment.

As an alternative, would not it be better to receive and pay bills via the bank with just one list in one place? Think of how this could simplify matters.

How the System Works

This is just plain and simple. The individual logs in to his bank account, then goes to the online bill pay platform. He chooses the bill provider and keys in the account number corresponding to each bill, then authorizes his bank to send the payment for him.

The bank can send the payments electronically or by a paper check in order for the individual to pay bills online, even though the biller does not have such an arrangement. He may either select a one-time payment or arrange a recurring one. Usually, he can choose to pay the whole balance, the minimum due or just a certain amount.

Aside from paying companies like electricity or Internet providers online, the bank can also send payments to individuals – like, for example, a landlord, to eliminate the need for a checkbook.

Setting up

Thought the initial setup is not that fast, it can save time and problems later on. These are the things needed to be done:

  • Bring together all bills, account numbers and addresses to where payments will be delivered.
  • Key in the information of each company into the online bill play platform of the bank.
  • Choose the date when payment will be sent.
  • Choose between one-time payment or recycling.
  • Set reminders of each bill's due date.

Most service providers and sellers provide the option of getting an electronic bill. Whenever an e-bill is available, the bank will often alert the individual. He can then choose whether to let the statement be sent to his online bill pay center or inbox / mailbox. E-bills usually take effect in a number of billing cycles.

Reasons to Use it

Online bill payment helps people manage their bills and be reminded of due dates. It is easier for them to see the flow of their money, making sure that there are sufficient funds to cover every payment. This is difficult to do if paying through multiple websites.

How to Transfer Your SBI Savings Account From One Branch to Another Online

If you have a savings account with the State Bank of India (SBI) and want to transfer it to another branch, you can do so online within a week and that too too without any charges involved. You do not even need to visit your bank branch to perform formalities as through internet you can…

If you have a savings account with the State Bank of India (SBI) and want to transfer it to another branch, you can do so online within a week and that too too without any charges involved. You do not even need to visit your bank branch to perform formalities as through internet you can perform all formalities from anywhere in India.

If you want to transfer your SBI savings account to a different branch, below we have listed the process on how to do it online. But before that let's understand a few prerequisites that must be fulfilled to successfully transfer your account to another branch.

Things to know before you start with the transfer process

Below is the list of things that you must know before you proceed to transfer your SBI savings account online:

• The option to transfer your SBI bank account online is available only for savings accounts.
• The SBI accounts that are inoperative or KYC (know-your-customer) deficient do not qualify for this facility.
• Another important prerequisite to start with the SBI savings account transfer online process is that the account holder's mobile number must be registered with the bank.
• The account holder must also have the access to SBI Net Banking facility.
• Before starting the account transfer process online, be ready with the branch code to which you wish to transfer the SBI savings account to.
• You may even call SBI customer care to get the information.

Process to Transfer SBI Savings Account to another Branch Online

• Go to http://www.onlinesbi.com .
• Select 'Personal Banking'.
• Login to your Net Banking account with your username and password.
• On the top panel, select 'e-services' tab.
• Select 'Transfer of savings account'.

Now you'll be directed to another page, which will display your account details such bank account number and bank branch name. It will display all your SBI savings accounts (if you have more than one).

• Select the savings account that you wish to transfer to another branch.
• Enter the branch code where you wish to transfer your account.
• Verify the account transfer details using both existing and new branch codes.
• Click on the 'Confirm' button.
• An OTP will be generated and sent to your registered mobile number.
• Enter the OTP received on your mobile number
• Click on the 'Confirm' button.

The process completes with a message 'Your branch transfer request has been successfully registered'.

Note:

• If you have only one account or if you want to transfer all your accounts from one branch to another, the CIF (Customer Information File) must be necessarily transferred to the new branch. Your CIF includes details of all your bank accounts.

• After the process, your account number and CIF will remain the same but your bank's IFSC code will change as it is branch specific. Before the account transfer, if you have given your bank's the IFSC code to other financial institutions such as mutual funds or the Income Tax Department then you will have to update them of the new code once it has been changed. It is important to inform the concerned financial institutions about the branch code change so that they can revise their existing ECS ​​and other standing instructions.

• Transfer of a SBI savings account from one branch to another may take a week's time. Once the transfer has completed, you will be able to see the new branch name after entering in your Net Banking account.

Investment Strategy: The Investor’s Creed Revisited

Fascinating, are not they, these security markets of ours, with their unpredictability, promise, and unscripted daily drama. But individual investors themselves are even more interesting. We've become the product of a media driven culture that must have reasons, predictability, blame, scapegoats, and even that “four-letter” word, certainty. We are becoming a culture of speculators, where…

Fascinating, are not they, these security markets of ours, with their unpredictability, promise, and unscripted daily drama. But individual investors themselves are even more interesting. We've become the product of a media driven culture that must have reasons, predictability, blame, scapegoats, and even that “four-letter” word, certainty.

We are becoming a culture of speculators, where hindsight is replacing the reality-based foresight that once was flowing in our now real-time veins. Still, the markets have always been dynamic places where investors can consistently make reasonable returns on their capital. If one meets with the basic principles of the endeavor and does not measure progress too frequently with insignificant measuring devices, growth in working capital, market value, and spendable income are quite likely to happen … without undue risk taking.

The classic investment strategy is so simple and so trite that most investors dismiss it routinely and move on in their search for the holy investment grail (s): a stock market that only raises and a bond market capable of paying higher interest rates at stable or higher prices. This is mythology, not investing.

Investors who grasp the realities of these wonderful (speculation driven) marketplaces recognize the opportunities and relish them with an understanding that goes beyond the media hype and side show “performance enhancement” barkers. They have no problem with the “uncertainty”; they embrace it.

Simply put, in rising markets:

  • When investment grade equity securities approach the “reasonable” target prices you have set for them, realize your profits, because that's the “growth” purpose of investing in the stock market.
  • When your income purpose securities rise in market value the equivalent of one-year's-interest-in-advance, take your profits and reinvest it in similar securities; because compound interest is the safest and most powerful weapon we investors have in our arsenals.

On the flip side, and there has always been a flip side (more commonly dreaded as a “correction”), replenish your equity portfolio with now lower priced investment securities securities. Yes, even some that you may have just sold weeks or even months ago.

And, if the correction is occurring in the income purpose allocation of your portfolio, take advantage of the opportunity by adding to positions, increasing yield and reducing cost basis in one magical transaction.

  • Some of you may not know how to add to some somewhat illiquid bond, mortgage, loan, and preferred stock inventories quite so easily. It's time you learned about closed end funds (CEFs), the great “liquidators” of the bond market. Many high quality CEFs have 20 year dispute histories for you to salivate over.

This is much more than a “buy low, sell high” oversimplification. It is a long-term strategy that succeeds … cycle, after cycle, after cycle. Do you wonder why Wall Street does not spend more time pushing its managed tax free income, taxable income, and equity CEFs?

  • Unlike mutual funds, CEFs are actually separate investment companies with a fixed number of shares traded on the stock exchanges. The stock can trade (real time) above or below the net asset value of the fund. Both the fees and the net / net dividends are higher than any comparable mutual fund, but your advisor will probably tell you they are more risky due to “leakage”.
  • The leakage is short term borrowing and is absolutely not the same as a margin loan on the portfolio. It's more like a business line of credit or a receivables financing tool. A full explanation can be found here: https://www.cefconnect.com/closed-end-funds-what-is-leverage

I'm sure that most of you understand why your portfolio market values ​​rise and fall through time … the very nature of the securities markets. The day to day volatility will vary, but is generally most noticeable surrounding changes in the longer term direction of either market, income purpose or growth purpose.

  • Either your “working capital” nor your realized income need be affected by the gyrations of your market value; if they are, you are not building a “retirement ready” portfolio.

So rather than rejoicing through each new stock market rally or lamenting each inevitable correction, you should be taking actions that enhance both your working capital and its income productivity, while at the same time, pushing you forward towards long term goals and objectives.

  • Through the application of a few easy to assimilate processes, you can plot a course to an investment portfolio that regularly achieves higher market value highs and (much more importantly), higher market value lows while consistently growing both working capital and income … regardless of what is happening in the financial markets.

Left to its own devices, an unmanaged portfolio (think NASDAQ, DJIA, or S & P 500) is likely to have long periods of unproductive sideways motion. You can ill afford to travel eleven years at a break even pace (the Dow, from December 1999 through November 2010, for example), and it is foolish, even irresponsible, to expect any unmanaged approach to being in sync with your personal financial objectives .

The Investor's Creed

The original “Investor's Creed” was written at a time when money market funds were paying above 4%, so holding uninvested equity bucket “smart cash” was, in effect, a compounding of profits while waiting for lower equity prices. Income bucket cash is always reinvested ASAP. Since money market rates have become minimal, equity “smart cash” has been placed in tradeable equity CEFs with yields averaging over 6% as a replacement … not as safe, but the compounding makes up for the increased risk over money funds.

It sums up several basic asset allocation, investment strategy, and investment psychology principles into a fairly clear, personal portfolio management direction statement:

  • My intent is to be fully invested in accordance with my planned equity / fixed income, cost based, asset allocation.
  • Every security I own is for sale at a reasonable target price, while generating some form of cash flow for reinvestment.
  • I am pleased when my equity bucket cash position is low, signaling that my assets are working hard to meet my objectives.
  • I am more pleased when my equity bucket cash is growing steadily, showing that I've been capitalizing all reasonable profits.
  • I am confident that I'm always in position to take advantage of new equity opportunities that fit my selected selection criteria.

If you're managing your portfolio properly, your cash + equity CEF position (the “smart cash”) should be rising during rallies, as you take profits on the securities you clearly purchased when prices were falling. And, you could be chock full of this “smart cash” well before the investment gods blow the whistle on the stock market advance.

Yes, if you are going about the investment process with an understanding of market cycles, you will be building liquidity while Wall Street is encouraging higher equity weightings, while numerous IPOs are taking advantage of euphoric speculative greed, and while driving drive radio hosts and personal friends are celebrating about their ETF and Mutual Fund successes.

While they grow their hat sizes, you will be growing your income production by holding your income purpose allocation on target and salting away the growth purpose portion of your profits, dividends, and interest in an equity based alternative to “de minimis” money fund rates .

This “smart cash”, consisting of realized profits, interest, and dividends, is just taking a breath on the bench after a screening drive. As the gains compound at equity CEF rates, the disciplined coach looks for sure signs of investor greed in the market place:

  • Fixed income prices falling as speculators abandon their long term goals and reach for the new investment stars that are sure to propel equity prices forever higher.
  • Boring investment grade equities falling in price as well because it is now clear that the market will never fall sharply again … specifically NASDAQ, simply ignoring the fact that it is still less than 25% above where it was nearly twenty years ago (FANG included).

And the beat goes on, cycle after cycle, generation after generation. Will today's managers and gurus be any smarter than those of the late nineties? Will they ever learn that it is the very strength of rising markets that, historically, proves to be their greatest weakness.

Is not it great to be able to say “Frankly Scarlett, I just do not care about market directional changes. My working capital and income will continue to grow regardless, possibly even better when income purpose security prices are falling.”

What Causes Volatility in the Pakistan Stock Market

For a long time, Pakistan's Stock Market was performing exceptionally well. Over the years of continued stable political and improved security indicator further strengthened the economic activity in the country. All of a sudden, political turmoil gripped the country in wake of Panama Leaks accusing head of the ruling party. Here are the reasons why…

For a long time, Pakistan's Stock Market was performing exceptionally well. Over the years of continued stable political and improved security indicator further strengthened the economic activity in the country. All of a sudden, political turmoil gripped the country in wake of Panama Leaks accusing head of the ruling party.

Here are the reasons why the Pakistan stock market has been experiencing major volatility.

Political ripple effect:

Pakistan's largest party and PM accused in Panama Gates and ousted after marathon hearings in the country's highest court. As a result, PSX – largest stock market of Pakistan invariably had a ripple effect all over. When the KSE100 index fell after marking historic high of around 53,000 folded more than 30% despite venturing into MSCI regime.

Risk of fiscal gaffe:

Persistent rise in the current account deficit due to a higher trade gap led by a significant increase in imports as compared to exports. Pakistan's trade deficit rose 24.18% to over $ 9.2 billion in the first seven months of the current fiscal, while foreign currency reserves were declining at a rapid pace. The markets are worried the way the local Rupee devolution in recent past, higher trade deficiency may pose extra pressure on Pak Rupee.

The total liquid foreign reserves held by the country stand at $ 18.413 billion on end of February, 2018 including $ 12.34 held by the SBP and remaining $ 6.067 billion by the commercial banks.

Foreign Remittances:

According to figures released by the State Bank of Pakistan for the period July-Feb increased by 3.41% to $ 12,833.64 Million compared to $ 12,410.54 Million for the corresponding period from last year.

Foreign direct investment (FDI) remained wiped up in the seven months of FY18, as FDI inflows came to $ 1.487 billion during July-January FY18, compared with $ 1.532 billion a year ago.

Recuperating Exports:

The exports achieving the highest monthly growth yet in the fiscal year by posting 16% increase in dollar terms exports in February 2017. However, the current year of export has already contributed additional inflows of around USD 1.5 bn during the first eight months and is expected to reach the figure of additional USD 2.5 bn, during 2017-18. This increase in economic activity in external sector reflects an increase of 0.8% of GDP.

Keep Check on Macroeconomic trends:

Economic manager needs to keep CHECK on current macroeconomic trends to sustain the achieved growth and huge catch up in the financial years ahead provided with controlled and fiscal discipline. Here are the encouraging signs to buildup.

Timely completion of Energy Projects and low output cost would bring down cost of production.

Inflation Rate around 4%.

CPEC projects on track.

Senate Elections clearing the political vague.

Attractive Valuations.

Potential growth in FDI's.

What Is Emotional Spending and Saving?

How you use your money is a reflection of your thoughts and emotions. Another way to say this is that you handle your money according to how you think and how you feel. When your thoughts and emotions are unbalanced or unhealthy, this will show up as unbalanced spending, addictive behavior or irrational decision making.…

How you use your money is a reflection of your thoughts and emotions. Another way to say this is that you handle your money according to how you think and how you feel. When your thoughts and emotions are unbalanced or unhealthy, this will show up as unbalanced spending, addictive behavior or irrational decision making.

How Does This Work?

If you have an emotional issue or a negative thought form, and you do not know to resolve it, money will be used to “paper over” the issue until it goes into your subconscious mind – or you are not thinking or feeling it any more. An example is if you believe you are unworthy of having a good job, you will struggle along in your present job. You may be technically making enough money to make ends meet and to enjoy some of your time, but this thinking makes you feel off. You want to feel better at a given moment in time, so you buy yourself a “treat”. There is nothing wrong with doing this as long as the intentions are clear. If you buy yourself a treat all of the time instead of “fixing” the negative emotion, you will get into the habit of buying things all of the time. It may get to the point that you are not even enjoying the things you are buying – you are simply using the shopping as pain relief. If this happens often, you will start to run out of money and this will cause other issues.

What Is This Addictive Behavior?

I use the word “addictive” to describe this situation because the pattern is similar to a drug or alcohol addiction. A trauma happens resulting in a negative emotion that can not be resolved. The emotion stays in the body and resurfaces later on, causing negative feelings. Alcohol is consumed to soothe anger. Since the alcohol makes you feel better, it is consumed whenever the negative emotion comes up. This becomes a habit, and the alcohol is consumed regularly – and it becomes an association like “I am angry and I want to feel better.” The alcohol starts to make you ill because too much alcohol stresses your body and you become “an alcoholic” when you do not have another way to feel better. Meanwhile, the original trauma and anger are still staying in the body.

For the alcoholic, the booze is the “hit” that makes you feel better. For money, buying things that gratifies represent the “hit”. You will know it is a hit because the euphoria wears off quickly and the problem is still there the next day. It may even look worse because you feel guilty at having gotten drunk, stoned or broke, and still the bad feelings persist.

How Do I Resolve this?

Money is often spent unconsciously – this means that money is spent in reaction to a feeling or thought rather than a conscious decision. The solution involves bringing the unconscious into the conscious so you can change the reaction. How do you do this?

When you buy things, write down what you purchase so you can see it. For frequent and small purchases, as well as for infrequent purchases, recording the transactions will allow you to see how much you spend over a period of time and whether it is reasonable or not. You will likely forget how many times you made frequent or rare purchases.

Pay in cash. The act of taking cash out of your bank account, counting it at that time, holding the money in your hand and counting it when you buy something forces you to ask yourself why you are doing a transaction. Since it is now conscious, the cold light of reason or observation may change your decision. Paying with a debit card, credit card or other electronic means does not register in your conscious mind the same way and the “check and balance” of your mind is typically bypassed.

Ask yourself how you are feeling when you decide to buy something. If you are craving something, are moody, irritated, frustrated or angry, you are likely to buy more. I speculate that you are forced to line up and wait for purchases or are put on hold when buying on the telephone to get you frustrated for this reason.

Do not shop hungry, thirsty, distracted or emotional. If you are not happy or satisfied when you enter a store or web site, you are bound to want to feel good instantly, and this means buying things you really do not need.

Man Versus Society

Unfortunately, handling money wisely and shopping because it is the best decision to make is discouraged. Consuming at all costs and for all reasons is encouraged. You are never asked if you need the item you are buying, whenever you can afford it, whenever you have better things to do with your money, either you should maybe not shop at all or whether you should buy at a later time. The siren call of shopping as much as you can right now with debt if necessary is what you will constantly face from society. Since nobody will ask the questions, you will have to ask them yourself and provide your own balance to the insanity of spending blindly.

Emotional Saving

Is spending money bad? No, spending and saving are decisions that can be made for good or bad reasons. Can someone save too much money? The answer is a resounding yes. The frugal person may have their own demons to deal with which are: I do not have enough money, I may need the money tomorrow, I want to make sure I survive etc. This person may never spend when they should be buying things. This person can also be hungry, thirsty, distracted or emotional and can make decisions to never shop because keeping their money makes them feel better.

Balance

The key is all about balance. If you can balance your thought patterns and emotional states, your bank account will also be balanced. If you are buying things because they are valuable to you and you are getting a lot of joy from them, than these things are reasonably worthwhile. You will also have to dig deeply into where the feelings of lack, guilt, shame, rage and frustration come from. Once you realize that you are loveable, adequate, powerful and worthy, many of these addictions simply will not exist.

The Power of Thrift

“Thrift” comes from the verb “to thrive”. To thrive means to flourish, grow vigorously, to gain in wealth or possessions, to progress towards or to realize a goal in spite of or because of circumstances … “(Mirriam-Webster dictionary) In other words, thrift is not so much as cutting down or not spending money. It's about…

“Thrift” comes from the verb “to thrive”. To thrive means to flourish, grow vigorously, to gain in wealth or possessions, to progress towards or to realize a goal in spite of or because of circumstances … “(Mirriam-Webster dictionary) In other words, thrift is not so much as cutting down or not spending money. It's about being careful in your behavior so you can reach your goals, be happy, successful and prosperous and live your best life without unnecessary financial stress.

The three scarce resources

In life, there are three scarce resources which need thrift management to achieve your goals, objectives and dreams. And no, money is not one of these scarce resources, at least not directly.

Time, Health and Energy

These are the three resources that are finite in this life. You can only use them once. They are non-renewable. So be careful how you spend them!

The thing about time, health and energy is that you do not know how much of each of these scarce resources you have left to you. It's impossible to know how long you'll live, how healthy you'll be in your later years and how much energy you'll have. And all of these factors have a direct effect on how much money you're going to be able to generate during your lifetime.

Money is time

People often say that time is money, but, in reality, the reverse is true. You trade your time, your health and your energy to generate money that many people then squander unnecessarily on things they do not really need and often do not even bring them much enjoyment. Every time you make a spending decision, you're committing yourself to working more days, months and years in a job that sometimes you do not even like to get your bank balance back to where it was before or to move forward financially.

Selective spending

Given this, when you spend money on non-essentials, make sure that the enjoyment of those things bring you more than offsets that extra time that you'll have to dedicate giving away at that day job! When you spend money, you're really spending your finite resources of time, health, and energy which are in diminishing supply. Just because paycheck comes in at the end of every month does not mean it's going to last for ever. Jobs come and go, you get old, sick and tired. And there will be a time when you'll have to live only on what you have not spent and have saved up instead of just spending next month's paycheck. State pensions are unreliable at best and they're kicking in at an ever more advanced age – 65, 67 years old or even more by the time you get there.

Work ethic

Thrift is closely linked with work ethic. Some historians tell us that Protestants in Northern Europe in the sixteenth century developed an ethical of hard work as benefitting both yourself and society as a whole. The concept of thrift went hand-in-hand with this. After all, if you're working hard for your money, it makes no sense to squander it. There have been various counter-arguments as to where and when all this really started, but for our purposes it's unimportant. The concept is still just as valid, where it came from.

Entitlement

The mentality of entitlement is almost the exact opposite of thrift. Entitlement is where we absorb we deserve things but without having to work too hard to get them. In reality, just because we went to university or did well at school does not mean we're entitled to a comfortable way of life with all the luxuries and conveniences of the 21st century. You could even say there's no such thing as rights if you do not accept the responsibility to work hard to get them. Of course, I'm talking in the sense of material possessions, not clean affordable drinking water or free education to the age of 18 which I regard as basic human rights.

Bad habits

Every time you put a cigarette in your mouth, drink too much, even exercise too strenuously you're squandering your health. Every time you spend a whole evening watching rubbish on the television or even sleeping too much, you're wasting time that you could use in a better way. And every time you waste energy on things that do not bring you real enjoyment, you're throwing away the chance to use that energy on more important things.

Conclusion

Richard Quest in his financial program on CNN always finishes with the words, “And whatever you do, make sure it's profitable.”

Enjoy yourself but be thrifty with your finite resources. Be selective in how you spend them, get the largest bang for your buck and make them last you as long as possible for the rainy day that's bound to come along at some time or another.