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Tuesday, November 13, 2018

What is liquidity and why is it important?


Liquidity is the ability you have to convert any asset into cash quickly. Everyone likes money because everyone knows how much it’s worth. And money is easily transferable; hence it’s why liquidity is important. 

Because money is among the most liquid of assets, since you can use it to buy just about anything. Many stocks traded on the major exchanges are considered fairly liquid, since you can convert them into cash quickly and easily because there’s almost always another investor willing to buy your shares. 

And liquidity it’s also an ability to buy or sell a security without affecting the asset’s price. When you’re talking about investments, your liquidity is basically how easy it is to buy and sell shares. Among other things when an asset is liquid, it has cash value, or can be easily converted to money. 

Therefore liquidity can be important in cases of emergency of whether you’re able to pay your bills with the money in your pocket. Or sell assets quickly to raise the money. It’s vital that you’ve some of your wealth in assets that you can sell quickly if needed. 

Some of these assets can include government bonds, stocks, and money market instruments, money deposited into a savings or checking account, tax refunds, mortgages, court settlements, certificates of deposits, and trust fund monies. 

While items like real estate, jewelry, stamp and card collections, or cars don’t count as liquid assets for these items take time in being sold out. Liquid assets are readily available to be converted into cash and sold on short notice. These items will, however, not lose value on being sold at a short notice. On the contrary, if a card collection is sold online, it might lose value due to the speediness of the transaction.

Guidelines on creditworthiness assessment


Creditworthiness is a measure of the likelihood of an individual or business to repay their debts. It is an indicator of how much debt an individual or business currently has, credit scores and whether or not additional credit is viable. There are numerous ways in which creditworthiness can be assessed, such as by looking at employment status, level of income, risk factors and economic conditions.  

These factors are a key part of the assessment process because they offer further insight into financial standing. For example, if an individual is unemployed, the likelihood of them affording a debt repayment is low. If an individual has a particular amount of income, but their discretionary income is low, then their creditworthiness may be affected. This is also the case if an individual already has a range of debts to their name. In this case, then they are likely to be regarded as high risk, which means that they are not creditworthy. 

Risk factors are a key part of the process. By considering any risk that may affect the repayment process, a lender will be doing its due diligence. 

If a lender considers late payment behaviour as a risk, then this is a good way of assessing creditworthiness. It may be an indicator of future behaviour, which will affect repayments. 

Alternative data may become key for creditworthiness assessment. This may involve assessment of non-traditional assessment methods. It may include factors such as looking at cable TV payments, rent payments and bank account information. It may even involve assessing social media interactions. 

Using this form of assessment may lead to lower costs incurred overall, because it simplifies the process. 

The 5Cs remain an integral part of creditworthiness assessment. Character, capacity, collateral, capital and conditions are examined before granting credit. 

Qualitative and quantitative aspects of the credit application are considered.  

To improve the chances of a positive creditworthiness assessment: 

  • Be willing to bear some of the risk yourself 
  • Be transparent about what you will be using the credit for and indicate when you would need the funds 
  • Be fully transparent about how you will repay the loan

7 Roles of entrepreneurship in economic development


For economies to develop successfully, entrepreneurship must be at the forefront of plans. The fact that it contributes towards mobilising public wealth as well as creating more avenues for job creation should be a driving force in decision-making processes. 

What are some of the roles of entrepreneurship in economic development? 

It creates jobs. By facilitating job creation, this results in one less job seeker and eventually reduces the burden on the economy. 

It also improves the living standards. It doesn’t only have positive effects on the standard of living through job creation, but also by developing new innovations, making it easier to run the business. If a business can find ways to improve production processes without negatively impacting the physical health of employees, this has positive effects on how people live. If improved production processes also mean that employees can get to spend quality time with their families, then this improves standards of living. 

A key factor is the number of exports a country has. This type of stimulation can contribute towards increasing the exports, which leads to further currency inflows. Expansion to foreign markets is imperative for any entrepreneur. Increased exports are vital because they may lead to stability. 

It reduces the concentration of economic power by levelling the playing field considerably for citizens. This is one of the most important roles of entrepreneurship in economic development. 

It also stimulates distribution of wealth bringing advantages to more people. The establishment and growth of new markets can help grow an economy. 

By stimulating innovation, this leads to more opportunities being created.  

These types of business owners are future-oriented and optimistic, which means that they may find solutions, which benefits any economic development plan.

6 forms of entrepreneurship


Becoming an entrepreneur is not only about identifying gaps in a particular market that need to be filled, but also about figuring out one’s strengths and weaknesses in the process.

As an entrepreneur, it’s important to know how one can improve upon the ways in which they are operating. By gaining better insight into the different forms of entrepreneurship, this could potentially lead to more individuals having more understanding of what may be driving their decisions. 

The World Changer is typically the type of entrepreneur that will create a company in order to make a positive impact on the world. This type of individual is likely to believe that their success is measured by impact. 

As an Innovator, the importance of creating the product or service supersedes any other goal. Improving upon old ideas or coming up with new ones comes easily to this type of entrepreneur. 

The Opportunist entrepreneur is highly adept at identifying the right locations at the right time to initiate business opportunities. Even though this is generally a trait that is common to entrepreneurs, this type of individual is skilled at this and finding the best ways to make it work. Being able to perfectly time the right opportunities to introduce new or improved products or services onto the market is a unique skill. 

Being known as a Jack of All Trades generally means that an individual has multiple skills or talents. This type of entrepreneur thrives on risk, while also being scared by it at the same time. A self-starter, this type of entrepreneur may have more success by partnering with the right investors or partners. 

The Social Entrepreneur is always looking for the next big thing and pursues various ideas. 

The Wantrepreneur is typically known to have a lot of ideas. This individual envisions becoming an entrepreneur, although a lot of groundwork has to be done in order to get them beyond the ideas phase. 

The different forms of entrepreneurship may not always be clear-cut, but it’s vital to know how to maximise on what you know.

Latina sensations

2018 has been dubbed as the year of the female but it would seem it’s also the year of the international Latin American female musician.

Well Selena Gomez has been the newbie for some time now. But just looking at Cardi B the Dominican American rapper has turned into a star in her own right. Almost everybody wants her on their music track. And like she said it herself in her song titled “I like it.”

They call me Cardi Bardi, banging body, Spicy mami, hot tamale.

I guess the people do like it like that.

Then there’s Camila Cabello, the Cuban American singer. She made a name for herself away from the girl group that gave her prominence Fifth Harmony. Through her single “Havana” that stays true to her Cuban roots. The music video is cute and sexy and just screams Salsa, that salsa that makes you want to one, two step.

Then of course there’s the Puerto Rican American singer. Let me sing you in an intro from one of her many songs and see if you know her.

Don’t be fooled by the rocks that I got I’m still; I’m still Jenny from the block. Used to have a little, now I have a lot. No matter where I go, I know where I came from.

Yes, it’s Jennifer Lopez. She and the late Selena who was one of the most celebrated Mexican-American entertainers of the late 20th century trail blazed it for the female Latina musicians. Then of course there’s been Christina Aguilera and Shakira we can’t knock their hustle.

Jennifer is still making moves in the music industry and even doing so with the newbies like Cardi B through Jennifer Lopez’s song “Dinero” which features the rapper. Latin female musicians are on a roll and it’s indeed their time in the spotlight.

This was proven at the 2018 MTV Video Music Awards Camilla, Jennifer and Cardi were big winners of that night. Camila winning two awards, Cardi B winning the most awards three and opening the awards show, while Jennifer received the Michael Jackson Video Vanguard Award and performed.

Also at the 2018 American Music Awards Jennifer performed, Camila won the most awards four; Cardi B gave a performance, won two awards and had the most nominations eight. Then yet again, at the 2018 BET Hip Hop Music Award Cardi B was the big winner scooping four awards and performing.

To infinity and beyond

We’re living in a time where we realise we can no longer do what we’ve always done because life, as we know, is changing.

We’re in transition. From the known traditions of the norm to the age where speed, accessibility and convenience driven by technology are prime influencers of everything we do.

Let’s have a look at what some of those things are.


Online retail shopping of adding items to a digital cart to smart use of technology in stores of mobile payment options, loyalty applications and facial recognition.


Digital is the ‘future’ and ‘print is dead’ this is what’s been said. But if you look at some publications, which have proven their endurance in print they’re then balanced by immediacy of online platforms. It’s about understanding the relevant spaces to tell your stories.


Today Emoji’s translate our thoughts and people don’t have the time or attention span to read long-form content. Snackable content is what’s getting the most engagement, hence there’s Twitter. Also video sharing apps like Snapchat and YouTube through visuals cut out the clutter and delay of text.


We’re at the height of the Fourth Industrial Revolution, which promises to be the most globally impactful revolution to date. The age where we create more value using less effort with more reliance on technology, it’s a mesh of the virtual, social and the physical worlds.


In the year 2021, it’s said that the car of tomorrow will be self-driving. And many of the capabilities and breakthroughs like assistive” technologies are already being built into the cars of today. Giving a glimpse of what’s to come.

How we communicate

Interaction is on smartphones, which allow us access to the world on our palms through the internet. Your phone can guide you from one address to another through Google Maps. We chat via various Social media. Also integration of the smartphone with the car is a way to interact with a vehicle.

How we connect

There are more opportunities today to connect with others than ever before. Social media, instant messaging and even online gaming allow people to share messages and experiences without being in the same place at the same time.


Not so much watched on traditional TV sets. These days televised content is watched on devices like mobile phones, iPad and laptops to rely on the likes of YouTube and Netflix for home entertainment.

Digital has clearly made nearly everything boundless.

5 Easy Ways to Improve Your Creditworthiness

Improve Your Credit Score

Rebecca is a young professional who has had a number of credit accounts for a few years. She is looking for ways to improve her creditworthiness because she wants to buy her first home.

She need implement some changes into her financial behaviour, so that her credit score reflects this. Her credit report should detail how she pays on time and in full. It should also show that she doesn’t have too much debt to her name. For a favourable rating, she should find ways of bettering her score.

Paying everything back on time

By paying all of her creditors back on time, she puts herself in a much better position.  This is an easy way to improve your creditworthiness. She should make an effort of avoiding spending so much that she exceeds her credit limits.

Pay in excess of the required monthly balance

Rebecca should make concerted efforts to pay more than what is required.

Avoid applying for loans simultaneously

Even though she is looking for ways to improve, she should be wary of applying for too many loans at the same time.

Rid yourself of accounts no longer needed

Having fewer well-maintained accounts is better than multiple ones which you don’t need. By closing accounts she doesn’t need, technically, she’ll have less debt to her name.

Review credit scores

Credit bureaus do make mistakes too, so Rebecca should check her credit score regularly for accuracy. Eliminating any errors means that you can maximise on it.

Keep in mind that there are ways to improve your creditworthiness. With a clear and effective plan, this is something that can be achieved quickly too. Rebecca can do this and qualify for the home loan, making it easier for her to get the home of her dreams.

A Millennial’s Guide to Managing Your Finances

Save on a budget

How to Plan Your Finances

Financial planning has always been a tough cookie to crack, not just by the present generations but also by those who came before them. However, millennial’s in particular are at more of disadvantage, having to contend with student loans as well as a higher cost of living.

Most millennials also have no idea how to save and manage their money properly, leaving them vulnerable to further hardships down the road. Here’s a handy guide on the best way to handle your finances according to advice from leading financial experts.

Avoid Falling into Bad Debt

Student loans are quite unavoidable for the modern millennial, affecting your purchasing power when it comes to taking vacations or buying your future home. Hence why it’s so important to deal with them straight off the bat to avoid spending the rest of your life paying them off. Additionally, some people also manage to accumulate other forms of debt such as credit card payments or car loans, which further add to their financial burden.

Get Clued Up on Your Taxes

Most people don’t really understand the way taxes work but getting a basic understanding of how much you’re supposed to be paying may help you save money in the long term and avoid paying more than you’re actually meant to.

Remember that all income needs to be declared on tax forms, even that obtained from part-time jobs.

Draw Up a Retirement Plan

Retirement planning should be taken seriously, especially by millennial’s. The way things are looking, you’ll be receiving lower social security payments than your parents as well as become eligible for pensions at a later age. This is why it’s essential to set aside an amount of money each month that should contribute towards your retirement plan.

Plan a Budget and Stick to It

A mistake many millennial’s make is their failure to stick to any kind of budget whatsoever. Moreover, most enjoy living in the present and collecting experiences rather than investments, which is fine, but it may also hinder their ability to save for the a rainy day. That $5 dollar mocha soy latte every morning could be as Instagrammable as ever but it could also be making you broke, along with $15 avocado toasts and your last ‘backpacking’ trip around Europe.

Eliminating wasteful spending and reducing expenses such as eating out regularly are tried and tested ways to stick to your budget. Cutting down on going out and enjoying low budget activities such as house dinner parties with friends or engaging in online gaming are other smart ways to save your pennies while still enjoying the simple pleasures life has to offer.

Don’t be Too Big a Risk Taker

While it’s true that a lucky few managed to make their fortune by taking huge risks that paid off, these cases are more the exception than the rule. In fact, most millionaires and billionaires have amassed their wealth by being cautious and taking well thought out decisions when it came to their finances. Smart investments such as property for example is a safe bet if you’ve got some extra cash saved up but anything else (fluctuating stocks) isn’t worth the big financial risk.

Make Use of Technology

There’s an app for literally everything under the sun nowadays and fortunately for millenials that includes money management. Apps like “ Clarity Money ”, “Digit” and “Stash” are all apps which analyse your spending patterns and recommend ways in which you can save more money each

How Much Do You Need To Retire?

How much do you need to retire?

Most South Africans who retire from work are facing problems as they don’t have enough money to use after retirement. It is ideal for any worker to have a savings account where he/she can put his savings which they will use when they retire. This has enabled some companies to conduct workshops that are designed to assist such people. Some banks have gone as far as opening accounts that are tailor made for such people.

At an investor road show, Richard Carter, head of product development at Allan Gray, provided some figures to illustrate how much one should already have saved for retirement, based on your current age.

Carter worked on the assumption that to retire with 75% of your current salary in retirement, you need to have saved 17 times your salary by the age of 65. To be on track to reach that figure, after ten years of working, say around age 35, you should have saved twice your total annual salary. After 20 years of working, around the age of 45, you need to have five times your annual salary put away for retirement. For example, if by the age of 45 you are earning R400 000 a year, you should have R2 million in your retirement fund.

Important numbers to keep in mind

For those of you who have just recently started working, these are important numbers to keep in mind. The only way you are going to meet your required retirement target is to invest at least 15% of your income towards retirement and to never cash it in when changing jobs.

In fact, the main reason most 30-plus individuals find themselves under-funded for retirement is that they cashed in their retirement funds in their early 30s. Carter illustrated that over a 40-year working life, if you start your retirement savings ten years later, at the age of 35, your final lump sum in retirement will be half that of someone who started saving from the age of 25. That is not just because you had ten extra years of contributions, but because those ten years have had a longer time to benefit from compound growth.

But what about those who cashed in their retirement funds when they shouldn’t have? All is not lost, if you follow these tips:

  • Start using salary increases to boost your retirement provision rather than your lifestyle. You can invest up to 27.5% of your salary tax-free.
  • Adjust your lifestyle so that your living expenses are more manageable in retirement. If you only need to live off 50% of your current salary, then you could survive on a lower retirement lump sum. Keep in mind when doing these calculations that you need to double your current medical costs, as these rise significantly as we age.
  • Think about ways to extend your working life. If you can earn an income until the age of 70, even if it is just enough to supplement your retirement income, you can make your retirement funds last longer.
  • Ensure you invest in growth assets that deliver returns above inflation.

Unnecessary Spending – Millennial Behaviour

Unnecessary spending -millennial behaviour

As the behaviour of the South African economy is diving, South Africans are fast increasing their annual spending behaviour and below are some unnecessary spending behaviours.

  1. Convenient snacks and drinks: Try to adjust on your spending behaviour when it comes to spending money on snacks and drinks as they finish off your money. Foods and drinks at events and nearby shops are very tempting, you end up spending more money in a week.
  2. Beauty products: It’s best to spend money on health products that maintain your beauty than buying mysterious chemicals with an inexplicably high price tag. Some of these fragments are harmful to your body, it’s better to buy soaps and personal hygiene products first and avoid cosmetics altogether.
  3. New clothes: Buying clothes for cash is the worst thing to do. It’s better to do a lay bye or buy cheap second hand clothes at charity thrift shops and other used clothing stores.
  4. Staying in overpriced hotels: Nowadays no one needs to stay in expensive hotels. If you have travelled to a place far from home, it’s best to stay at a friend’s or relatives’ place. If you don’t know anyone in that are, do a quick research about cheap, safe and affordable lodges before you travel. Doing that will save your money in a big way.
  5. Entertainment: Buying books, going to the cinema, watching football at a stadium can negatively impact on your financial life. To easy yourself out from this is by going at a local library to read books, watch soccer from your TV at home and borrow movies from your friend to avoid the hussle of going to the cinemas.
  6. Apps: Some unnecessary apps on your phone chews away your bandwidth/bundles. Only leave apps that are useful to you. Most importantly you should turn off your data bundles if you are not using them. Failure to do that keeps you on a data spending spree.


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