1 Report on financial advice on savings and mortgage clients
This context contains the information and recommendations on two clients; savings and mortgage clients. The essay as well has given the financial products for each client to help in solving and further ease of task in solving their financial constraints. The report has detailed financial, legal advice that has been surveyed and proof to aid the two clients considering their term of financial reliance and their expected gain. The report, however, has adopted personal knowledge on logics in the advice which are incorporated together to realize the expected set objectives by the clients.
The first client is a graduate from university and age of 21 years and has started work as an accountant assistant and earning$24000 per annum. On her intention to save $200 monthly, this report gives calculations on the better go on the rate of interest and final financial gain. The most crucial considerations that ought to be taken by the client are:
Financial product
The report advises the client to choose a personal account from a bank as a financial product. This account from the bank assures the security of long term investment. The savings are guaranteed security as it also enhances more profitability in interest gain. This personal business account is easy to manage and to access help fro the bank finance professionals. The savings client is prompt of instant service than most of the group accounts which require detailed information when cross-checking the accounts gain and other transaction services
Term of savings
The client as well has to go for a saving term that is vital in earning profit at large and loosening the hardships of making for a saving. The client is also advised to go for a term of savings that earns a better interest at a higher rate after the end of the term. The best interest rate for the savings client is that which coincides with the principal. The client as well has been advised to go for a compound interest rather than the simple interest. Compound interest earns a lot of profit as compared to the simple interest, which is only calculated on the amount of principal available. The compound interest terms suit a client who intends to save longer as the agreed term of the rate will yield a lot of profit to the client. On the basis of calculation both on simple interest and compound interest, the compound interest gives a huge realization of profit to the client as compared to the simple interest base on the amount t of
money intended by the client to have
for a saving
The essay has also advised the client on the mortgage who intends to buy a new house. The client has saved $20000 deposit and intending to pay for the flat for over 25 years. The client having enough sufficient monthly income to afford other financial needs can withstand any financial crisis that may occur during the term of payment of the flat. This report advises the client for a shorter term as this would reduce the time at a predicted convenient rate. The security of the long term payment of the flat may be affected by any pandemic that may lead to failure of the agreed interest earnings after the end of the term.
2 Sharing of prices of shares and bonds
Shares are indivisible units of capital that shows the relationship between the ownership of the company and the shareholder. A shareholder is a person who is entitled to part of the com[any through buying of shares from the company. The shareholder earns interest from the company through annual profits made. The number of shares owned by the shareholder depicts the amount of interest reaped. The sharing of dividends ploughed back as the profit made the company are shared according to the number of shares to the shareholders. Sharing of dividends amongst the shareholders may be impacted by the loses and implicit factors that may be encountered by the company. Bonds are fixed-income interests paid to the investors by the companies. The bondholders are secured of their interests by the companies after the maturity time. The bondholders as well are assured of the earnings in case the company enters into annual loses. The money invested on the company will be used in running f the company’s projections and market strategies, and after a maturity period, the bondholder is assigned the interest from the company. Theoretical means of calculating the prices of shares and bonds may be illogical to market value and prediction. Some of the factors may affect shares and bonds. Factors affecting shares and bonds may affect the company’s efforts and plans in sharing as losses may be encountered. These factors include:
Demand and supply of stock
Demand refers to the potential customers who are willing to buy products and other specific commodities at a given price. Demand always varies with time, thus affecting the market prediction and prices of goods. The change in demand affects the sharing of shares and the time of maturity of bonds. Supply is the potential suppliers willing to avail the required goods and commodities in the market at a given price over a specific period of time. Lack of goods and commodities affects the supply potentials and thus increasing the market demand and price. Demand and supply affect the prices and sharing of bonds and shares by the holders. The investors they should not use their theoretical methods of calculating the expected price of both bonds and shares. The demand in the market may be low, thus affecting the price of sales and services. This decline in prices of goods and services renders the company to loses. Due to loses, most of the companies may fail to pay for the dividends and interests to the shareholders. Bondholders as well may fail to receive their coupons on time as the period of maturity may lengthen due to loses experienced in the company. This unpredicted changes in demand and supply must earn financial plans and lessons to investors in giving of prices to shares and bonds.
New company projections
Company projections are the set of projects and policies by the companies. These projections may require huge capitals, thus depleting the companies’ of its funds. This constraint may affect the prices and share of bonds and shares to the holders. The investors should use their own knowledge and ways of sharing of the bonds and shares as the logic means given by the company may be affected by the company expansion in new projects. The theoretical means than have to be untruthful as the expected prices and from shares and bonds may be affected.
Market value
Market value refers to the value and price at which the commodities are sold. Market value may change with time and the book stock in the market. When the market is high, the company yields more profits, and thus the investors are assured of the increase in the price of shares and bonds. The market value is the unpredicted factor in the market. Thus the investors should not use their theories of sharing from the companies. With low market value, the company may get to a loss, and thus shareholders may fail to earn their dividends from the companies. Bondholders as well may take longer periods of time to earn their coupons due to a long time of maturity. This trend then should take investors into critical means of calculating of prices of shares and bonds than the normal expectations from the theoretical means.
Book and stock value
This refers to the number of goods, assets, and commodities owned by the company. The sales may be low, thus affecting the profit gained by the companies. This, in turn, will affect the price and the sharing of shares and bonds by the company and the investors. Investors then should be able to predict the future market changes which may prevail. This will help in making calculations and expectations out of their shares and bonds in the company. Sudden changes in their expectations may affect the investors negatively, and thus many may withdraw from investing from the companies.
Growth patterns of the company
Some of the companies are still developing. These companies are looking for many investors to harness more funds in growth and development. With huge capital required in expansion, changes and policy adoptions, these companies may run into a shortage of funds required. They tend to loan for more capital from the money lenders. After annual access of gains by the company, more crucial is given to paying off of loans borrowed from the money lenders. This may be depleted, and thus the bondholders may have to wait for their coupons as the shareholders miss their dividends. This then calls for the investors to use their own knowledge of calculating for the price of their shares and the expected amount of the coupons from the number of bonds invested in the company
From the above factors affecting the price of shares and bonds, investors should use their own knowledge in the future prediction of the earnings. Logical and theoretical means may affect the investors psychologically and thus making many to withdraw from the companies. This move will affect the companies as huge funds and support will be required in the expansion of the projects and amending their policies. Financial advisors should widely educate the investors on the trends and the factors affecting the sharing of bonds and shares. This will help the investors in developing personal ways of calculating the price of shares and bonds, which always doesn’t appear constant in the market and the companies.
Three personal journals on new items that occurred over the module affecting personal finance
Coronavirus pandemic
A coronavirus is a group of viruses that affects the respiratory organs of humans’ body. The disease can be spread or transmitted from one person to another. The virus has totally mauled the economy globally. This has impacted the trade and businesses both internationally and locally. The virus affects the decisions of the persons who are willing and capable to save .there is a great challenge for the savers because the country economy experiences a downturn. The person who needs to save the money would yield no profit. There is significantly rising in government expenditure rate due to the high demand for money to be used to handle the epidemic disease. The savings may take a long period of time to gain more profits. So for the saver, they would have risks on savings the current situations as the country undergoes crucial moments. Furthermore, most institutions do not have professionals who can guide and give advice on terms and conditions. There is a great challenge for people who need to invest in some companies and businesses .corona virus has led to closure on many businesses. Currently, many people work at their homesteads, and hence the investors do not have a conducive environment to consult and seek assistance by people who are experts. Also, there is a reduction in capital flow in the entire country. The investments rate would be low in that there are few lenders who can lend money to customers. The virus has impacted many who wish to borrow money from the lenders. At the current t moment, the lenders do not encourage the giving out loans. The lenders normally work at homes due to the issue of lockdown. So the borrowers could not get the proper advice from the professionals on terms and conditions on the interest rates. Coronavirus has negatively impacted the entire economy.
This has totally affected the decision of all the people who have the potential to save invest and borrow money. Due to this occurrence of pandemic disease, people should not risk to invest and save. This could be a great loss to them in one way or another.
Cashless transactions
Cashless transactions are automated operation that takes place between two or more personal or business organization. This is a situation where people purchases goods through websites and signing of business contracts are done online .cashless transactions have negatively impacted many small businesses, especially in the rural areas. This requires modern types of equipment like the use of a phone for one to complete the transaction. The uneducated people do not have sufficient knowledge and understanding of how to use and operate the digital equipment. This could be a great challenge to people who engage themselves in small business activities .the transaction for a small amount of money would be a problem for the business person. The businessperson would have to be charged a lot during withdrawal of money. Therefore people who like to invest in such a small business would encounter many challenges. This could be a great loss for the person who needs to invest in such a small business. Lack of internet facilities would affect the transaction and withdrawal of money. A mobile transaction requires power for completion of the transaction . This issue is a big problem in the developing countries and in rural areas that cannot access the power. There is high risks of theft while operating under cashless transactions . Online hacking becomes a great source of loss of potential investors. The government encounters many challenges on handling such online fraud. This is problem would diminish the morel of the investors. Also, most of the rural area is still lacking behind In terms of infrastructure. In rural areas there are no mobile banks due to poor connection of roads to such areas. This is one of the problems that would affect the decision of the person who is willing to save and invest in the business. The cashless transaction would be a challenge to people who wants to take loans from banks. Digital transaction would not favor the uneducated citizens. There is a high discount rates especially on people online loans . this could discourage the person who is need of taking loans to meet basic needs or the capital required
start a business.
Decline in exports and imports.
This is a situation where the country restricts the imports and exports of goods from one region to another. Reductions in the transportation of goods have impacted the production and processing of goods. This issue has influenced the decision of the individuals who like to invest and save in production and selling of goods. The lockdown has ruined the production of goods. People are encouraged to work at their homes so as to avoid the large crowd in working places. Cancellation of flights to and from other countries has become a great problem, especially in the transport sector. This has been witnessed due to low production of goods. The countries basically produce goods basically for direct consumption .this has influenced the people who need to save and invest as they fear of great losses which may occur globally. Due to a reduction in exports and imports, there is a lot of wastages in the production of goods leading to great losses. Also, the borrowers have been experiencing uneasy access to loans from money lenders as the fear of the financial product of repaying due to affected financial businesses. This great challenge has brought business operations to stand still as normalcy is awaited globally. Most governments are swaying the set funds to health care systems in the fight against the pandemic. With this move, money lenders, banks, and other financial institutions are depleting cash and funds out of their accounts, thus fearing future losses problems which may bring industries to great menace. This has resulted in inaccessibility of money from the financial institutions to bar the great negative impact awaited.
4 Reflective account on the module’s financial constraints.
With the crisis of the current pandemic coronavirus, most of the financial activities have been affected. Financial plans and monetary activities have been affected thus affecting the economy globally. Most of the investments have been hindered with the same outbreak being a disaster to both investors and the fund lenders. With the occurrence of the pandemic, these are personal reflective measures to help gap the situation, should there be a future recurrence. These accounts are personally researched and can help harbour any further financial constraints. The current move to cashless transactions should be taken into account by all the financial products. Banks and other monetary accounts should adopt the same. The public to be educated of the go and the importance of the take. This move should be undertaken through educative means by the financial professionals to the ground level. People should be given free access to their accounts through their digital gadgets such as mobile phones and laptops. This free activation of the accounts will ensure massive registration to the mode of transaction. Businesses, investments, Small businesses, and other money-related enterprises should take to account the same and encourage their subscribers to adopt the same. The global markets should adopt a common currency to help in monitoring the change in the markets and the strategies that enhance proper measures towards coping with the pandemic that may occur in the future. Banks and other financial institutions should instigate measures that fully support the small business enterprises, thus enabling to raise the business standards in the upcoming personnel. Enough capital should be invested in these small businesses as they ensure liquidity and constant profits at a short time. Investors should adopt insurance covers to help in covering up loses that may be encountered during a crisis or a pandemic, remove the bad assets from the banks that realize low profits over a long period of time. Investors as well should recapitalize assets that enhance proper and appropriate profits over a short period of time. This great move will enable the escape of the pandemic crisis related to finance. People should also be advised on the importance of dealing with short term businesses and insuring these businesses. This will help in overcoming the financial constraints that may come their way of business run. These policies will help in curbing and barring the challenges that may be experienced in the financial sectors in case of any pandemic globally. These measures as well will help prevent the economic problems that may be witnessed globally. The pandemic and disaster management should be approved enough money by the government annually to prevent in overreliance on other government and financial accounts as it will leading to a changing economy. If these policies and regulations are adopted, the financial businesses and institutions will not be affected, and thus the world economy and global market will always be a balance. Financial professionals should educate the public on adoption on the new measures and policies towards curbing the losses which may be encountered in case of a pandemic. Education by the professionals should involve the new measures undertaken by the money financial products and business such as cashless transactions and digital access to financial accounts.