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Solution Loans Personal Finance Blog

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  • Lisa Kleiman
  • July 27, 2016 07:56:58 PM

A Little About Us

Why are some people better at saving money? Could your pension be at risk? How to kick start your business with a guarantor loan? Find out the answers to these questions and more from the independent loan broker Solution Loans, with lots of money saving tips and expert financial advice on a range of issues, from family budget travel to cheap home improvements and more.

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    How to live a greener life to help reduce global warming

    From the first Conference of Parties (COP 1) held in Berlin Germany in 1995 to COP 26 held this year in Glasgow, Scotland, the rallying call has been for countries to do more for the planet. While there have been The post How to live a greener life to help reduce global warming appeared first on Solution...

    From the first Conference of Parties (COP 1) held in Berlin Germany in 1995 to COP 26 held this year in Glasgow, Scotland, the rallying call has been for countries to do more for the planet. While there have been ambitious targets set to reduce greenhouse gas emissions, it is the adequacy of initiatives put in place that have always been questioned.

    COP 26 was held against the Covid-19 backdrop where countries are still fighting to revive their economies, boost their employment figures, and keep inflation at the minimum. In the COP 21 held in Paris, France in 2015, the famous ‘Paris Agreement’ was reached. The 196 parties present agreed to limit global warming to levels below 2 degrees Celsius, preferably 1.5 degrees compared to pre-industrial levels.

    green lifestyle

    While climate change has largely been a fight and concern among countries at a macro level, it is time we brought it further down to the micro-level. The success in slowing down the rate of climate change lies in individual decisions and lifestyles. If humans can change then economies will change, and the planet will be spared. As the UK races towards net-zero carbon emissions by 2050, here is what you can do as a person to support this ambition.

    Adopt Greener Home Heating Solutions

    Tackling the way, we heat our homes is super important. With winter here with us, the amount of energy consumed per household per day can go up quickly. Switching from gas boilers to heat pumps is not only a cleaner option for the planet but their 400%+ efficiency will save you money over the long run.

    For every 1kW of electrical energy consumed, heat pumps produce about 4kW of renewable energy. Add to this the fact that they produce zero point of use carbon, and you have an environmental winner in heat pumps. In terms of lifespan, heat pumps can serve you up to 10 years longer than gas boilers.

    The only prohibitive aspect with heat pumps is the installation cost which can go upwards of £10,000. Of course, you could use a secured loan to pay for it but the Renewable Heat Incentive (RHI) government scheme can help to cover your costs over the lifespan of the heat pump.

    Consuming Less of Meat and Dairy Products

    Compared to plant-based foods, meat and dairy products emit at least twice as much greenhouse gases. Food production as a category is responsible for about 35% of global emissions with 57% of that coming from meat and dairy products.

    The most polluting meat product is beef, accounting for 25% of all animal-based emissions. Therefore, reducing the intake of meat and dairy products can have such a dramatic impact across the food system value chain.

    Switch To Greener Mobility Solutions

    Shared mobility solutions and switching to electric vehicles are some of the high impact individual mobility decisions to help reduce carbon emissions. In 2019, the transport sector in the UK produced a whopping 122 million metric tons of carbon dioxide. This scale of emissions positions the sector as one of most polluting, followed by the power sector.

    Think about this, if all cars were electric, carbon emissions in the UK would drop significantly hitting levels of up to 12%. Considering this, the UK government is looking at banning petrol cars by 2035 to pave way for the path to net-zero by 2050.

    On the other hand, car sharing reduces car ownership, and the number of kilometres people drive. In turn, this cuts emissions per person per kilogram of CO2 by about 175 to 265. Pooling cars, therefore, is an option Britons can choose when travelling to reduce their carbon footprints.

    Use Eco-Cleaning Products

    Believe it or not, perfumes, paints and household cleaners are among the top pollutants in urban settings. Household products, especially those containing refined petroleum ingredients, release significant levels of volatile organic compounds (VOCs) into the atmosphere.

    The VOCs react with other compounds to produce particulate matter that trigger breathing problems and cause lung diseases. Some of the chemicals causing the most harm to the planet are foaming agents, preservatives, and detergents. As a lifestyle choice, Britons can switch to cleaning products with little or no synthetic ingredients.

    Reuse and recycle

    Unless recycling rates improve, Britain may not achieve its net-zero target by 2050. To help in this regard, consumers should insist on products made from or packed using recyclable materials.

    For instance, when buying gifts over the festive season, we should go for items packaged using recyclable paper. This would mean fewer trees being cut for paper and cardboard production.

    Instead of single-use plastic straws go for bamboo or metal straws that are reusable. Thanks to the UK government’s 25 Year Environment Plan, single-use plastic straws will soon be a thing of the past.

    Only Print When It Is Necessary

    Manufacturing industries contribute 29% of global greenhouse gas emissions. Pulp, paper, and print accounts for 1% of that. While this may not seem much, it is slightly above 20% of the emissions from iron & steel production which is at 4.8%.

    In both home and commercial offices, paper is one of the supplies that gets used fast. There is a lot of printing that goes on, some of which may not be necessary. Some documents could be resized and printed on less paper or better still read directly from the screen or saved on devices.

    Instead of sending a physical document, you could send it off as a soft copy in an email. This will reduce the carbon footprint along the entire value chain from paper production to logistics and waste management.

    Conclusion

    With the resources available today gradually getting depleted and the planet heating up, we must take decisive actions to slow down or stop this trajectory. Governments are warming up to the challenge while businesses are increasingly adopting Environmental Social and Governance (ESG) standards in their operations. As individuals, we also have a major role to play in ensuring that our voices and actions count. What’s discussed here are just some of the choices you can make, there are many more things to do.

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    What to do When Interest Rates Start to Rise

    If you want to know the pulse of an economy, the best place to start is to look at the trends in interest rates and inflation rates. After the 2008 financial crisis, the Bank of England (BOE) has closely monitored The post What to do When Interest Rates Start to Rise appeared first on Solution...

    If you want to know the pulse of an economy, the best place to start is to look at the trends in interest rates and inflation rates. After the 2008 financial crisis, the Bank of England (BOE) has closely monitored the movements in interest rates. Except for the period between August 2018 and March 2020 when the BOE hiked the base rate to 0.75%, the rest of the period from March 2009 to date, the rate hasn’t gone beyond 0.5%.

    As a policy response to the covid-19 pandemic, BOE lowered the base rate further to 0.1% to support consumer spending and job growth. However, this move has pushed price levels in the UK well above the 2% inflation target, mainly driven by factors like transport, housing and household services, and supply chain pressures.
    Rising interest rates

    How Are Interest Rates Determined?

    In the UK, the Monetary Policy Committee (MPC) holds a series of meetings and once every six weeks makes public announcements on the Bank Rate and publishes the MPC minutes.

    The Bank Rate, also known as the Bank of England base rate, is UK’s most significant and closely watched interest rate. It is the rate at which the BOE lends commercial banks in the UK. Considering the state of the economy, particularly inflation and unemployment numbers, the MPC can either raise, lower, or leave the base rate unchanged.

    Impact Of Rising Interest Rates on Homebuyers

    UK Commercial banks are not obliged to follow the Bank Rate movement. However, an actual or expected rise in the base rate often leads to an upward review in the cost of mortgages though in varying proportions. For instance, lenders have started taking cheap mortgage deals off the market following expectations the BOE might increase interest rates in a bid to cool off the economy.

    According to data collected by the Financial Conduct Authority (FCA), the value of outstanding residential mortgages as of 2021 Q2 stood at £1,584.1 billion. Compared to 2020 Q2, new mortgage commitments increased by almost 2.5 times to stand at £85.6 billion. Of the gross mortgage advances, slightly over half (56.6%) were made at interest rates less than 2% above the base rate. A typical two-year fixed mortgage will have interest rates of between 2.45% and 2.69%.

    Planning Your Mortgage Repayments as Interest Rates Rise

    There is nothing you can do to stop banks from raising interest rates, but there are several steps you can take to minimise the impact that has on your repayments. Here are a few tips to start you off.

    Understand The Structure of Your Mortgage Contract

    Whether or not an increase in interest rates will affect your mortgage repayments depends on the type of contract you have. Here is a brief overview of the different interest rates charged on mortgage debt.

    • Fixed rates: The rate of interest you pay will remain the same throughout the deal irrespective of market interest rate movements in the intervening period. For instance, a ‘five-year fix’ mortgage will see you pay the same interest rate for five years, after which it will revert to a standard variable rate (SVR).
    • Standard variable rate (SVR): Borrowers with SVR mortgages will see their payments change depending on the movement of the Bank of England base rate. If the Bank Rate rises, the SVR immediately rises. This movement pushes up mortgage repayments.
    • Discounted rates: These are discounts off the SVR that lenders charge borrowers for a defined period. After the period ends, the mortgage goes back to the SVR. Borrowers must shop around not just for the top discounts but for the best rate overall to ensure they can afford their repayments after the discount window ends.
    • Tracker rates: Debt instruments with tracker rates move directly in step with the Bank of England’s base rate. If the base rate goes up by 0.25%, the tracker-mortgage rate will also go up by the same proportion.

    Quantify the Impact of a Rise in Interest Rates on Your Repayments

    Knowing what your mortgage contract is means you work out how different interest rate scenarios will affect your repayments. For instance if you have a 25-year mortgage whose principal and interest rate are £130,000 and 2.5%. Your monthly repayment will be £583. If rates rise by 0.5%, you may find yourself paying £616, which is £33 more.

    Determine Whether You Can Still Repay Your Mortgage

    With the different interest rise scenarios before you, do a self-assessment of whether or not you can afford the repayments. You may have to forecast your earnings and expenses, cut where you can and see if that makes sense. If not, you can seek the help of a financial adviser.

    Shop For the Best Deals

    A rise in interest rates will most certainly put to an end the extraordinary cheap mortgages that UK homeowners have been enjoying. If your current mortgage deal is coming to an end, you may take advantage and remortgage to a better deal. To get the best deal, you must work to improve your credit score. A better financial profile will give you bargaining power whether or not you are remortgaging.

    Take Advantage of Overpayments

    If your mortgage provider allows, you can make overpayments and save on interest payments down the road as rates rise. Check for limits to how much you can pay off early to avoid being penalised or charged.

    Impact Of Rising Interest Rates on other borrowers

    Other than homebuyers, credit card holders and people with unsecured or secured loans must also reassess their positions. For instance, existing small personal borrowers will typically not be affected by a rise in interest rates because their facilities are mainly on fixed interest rate contracts.

    On the other hand, credit card holders may see a less-than-proportional upward shift in their monthly repayments. However, the increase may not be immediate as the card companies must first communicate to their customers and set an effective date based on the terms of their contracts. Credit cardholders may also cancel their cards and repay the accrued balance within two months. The interest billed over this period will be at a lower rate.

    New personal loan borrowers and credit card applicants will have to contend with higher rates and monthly repayments. Again, comparing among different lenders will help in securing great deals.

    What About Savers?

    If you have a variable rate Cash Individual Savings Account (Cash ISA) you stand to benefit when interest rates go up. A Cash ISA has an added benefit to ordinary savings account in that account holders don’t pay tax on the interest earned. Currently, the annual limit (ISA allowance) is £20,000, thus giving you considerable room to save and earn tax-free.

    The competition for deposits may also see commercial banks and building societies raising their interest rates to attract more savers. Shop around for the best savings vehicles to cash in on the upward rates.

    If you want to buy an annuity for your retirement savings, the best time is when interest rates are rising. In the UK, an annuity can be linked to government bond yields (gilt yields) and guarantee you a constant stream of income post-retirement. The best annuities for pensioners are index-linked annuities. These annuities guarantee savers a minimum interest rate and a variable rate linked to the movement in an index, say the FTSE 100. In the event of rising inflation, whether permanent or transitory and global supply chain bottlenecks, indexed annuities will protect the purchasing power of your future inflows.

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    What are the implications of a cashless society?

    Clicking, swiping, and tapping, are the new ways of describing payments in the digital era. The use of cash as we know it is up against an accelerating onslaught from contactless and mobile payments especially among young people. In its The post What are the implications of a cashless society? appeared first on Solution...

    Clicking, swiping, and tapping, are the new ways of describing payments in the digital era. The use of cash as we know it is up against an accelerating onslaught from contactless and mobile payments especially among young people. In its 2021 Payment Markets Report, UK Finance revealed that more than a quarter of all 2020 UK payments were contactless. Additionally, research by YouGov on behalf of Link showed that over 54% of Brits are avoiding cash and instead opting for alternative payment methods.

    Do we want a completely cashless society?

    Considering these and a lot more developments in cashless usage, would it be accurate to say that cash has lost its shine? Are we sleepwalking into a cashless society without guardrails or is our conscience clear that this is what we exactly want? Whether we are staring right into the eye of a cash apocalypse or wading through a cashless illusion, we must have a sober discussion on what this is all about.

    Are We Bidding Cash Farewell?

    Cash has been around us for centuries, transcending generations and dynasties. However, the developing armageddon that we are currently witnessing between cash and cashless payment options may as well be the death blow to cash as king.

    Even before the covid-19 pandemic, people had already started falling out of favour with the transactional use of cash. Covid only accelerated the trend with 35% less of Britons paying via cash in 2020 compared to 2019. In the face of covid, many people have been avoiding cash for hygiene reasons and the risk it poses to the spread of the virus. Having said that, the WHO and the Bank of England are on record stressing that the risk of transmission through cash handling is low.

    Despite there being no definite timeline, an extrapolation of the cashless trend in the UK may see the country become a cashless society going by 2026. Online banking and contactless payments have been billed as being convenient, safer, traceable, and quicker than cash. However, embedded in these benefits are also the downsides of cashless transactions.

    Is Everyone Onboard the Cashless Train?

    By all means no. According to UK Finance, 2.2 million Britons still use cash to defray their expenses. Out of this group, 1.3 million have no access to bank accounts. This means that they are at risk of being locked out of the cashless infrastructure.

    Aside from that, pensioners use cash essentially to pay for their utilities.  For this reason, Age UK is pushing for the legal right to access cash for all age groups to avoid certain sections of society from being locked out of cash and banking services.

    Another group at risk of being financially excluded are people living in rural areas. In addition to them not having the luxury of cash machines within walking distances, many of them have no access to reliable internet connectivity to pivot to digital payments.

    The homeless and low-income households are also likely to be disproportionately affected by a shift to a cashless society. This is because of their exclusive reliance on cash to pay for their expenditures.

    To these and many other people, the thought of developments such as the Lloyds Banking Group closing 44 branches presumably for lack of customers is a move that is most certainly not welcome. From January 2015 to date, over 4,000 bank branches have shut down, putting entire communities at risk of running out of cash.

    Free-to-use cash machines have also been disappearing at an alarming rate. Data from an Access to Cash study released in March 2019 shows that without banknotes and coins, over 8 million people will be struggling to cope. According to another study by A2Z, we still have 20.5 million people across the UK who are heavily reliant on cash, and they consider it a necessity.

    Therefore, looking at the breakneck speed at which digital finance is advancing, there is a much greater risk of leaving a section of the society behind.

    Why Is a Cashless Society So Alluring?

    Well, private players and governments the world over, have been toying with the idea of moving consumers to digital-first payment systems. Among the reasons this push is gaining momentum by the day, include.

    Cost-Effectiveness of Cashless systems

    According to the Access to Cash report the UK cash infrastructure is becoming unstainable, costing approximately £5 billion annually to run. The weight of this cost is ultimately passed down to consumers in the form of increased bank charges and withdrawal of services such as bank branch closures. On the contrary, a cashless infrastructure isn’t as expensive to run with many of the fixed costs knocked down or simply inexistent.

    Enhances Tax Compliance and Safety

    Digital payments including mobile, online, and contactless transactions are traceable. This makes it easier to track incomes without the hurdles often experienced in cash-in-hand transactions. Also, the risk of robberies and over the counter crimes is drastically reduced.

    Climate-friendly

    The manufacture and distribution processes of money contribute to climate change in more ways than one. Think of the machines cranking and the materials used to produce notes and coins. Thereafter, the distribution vans and other logistics involved in the transfer of hard cash from point A to B. All this can be avoided with cashless platforms.

    Speed, Convenience, and Minimal Contact

    Cashless means lesser queues and minimal person-to-person contact especially during these extraordinary times. At the touch of a button, accounts get credited and debited, thereby making commerce efficient.

    Ease of Tracking and Management

    Cashless payments are captured on statements, and you can easily track and trace in real-time in case of suspected losses. However, for solid cash, once it is gone, the chances of getting it back are minimal.  You can also block lost cards or fraudulent transactions with ease.

    Is There Any Justification for Us to Hold onto Cash?

    Looking at the advantages of a cashless society, you may think that holding and transacting in cash is a bad old habit. But wait a minute, there are strong reasons as well why cash still rules the streets.

    Good Spend Management Practices

    Notes and coins make people more aware and sensitive about their inflows and outflows. This is in sharp contrast to swiping and tapping which can easily make expenditures go unnoticed thanks to automation and compulsive tendencies.

    Personal Touch

    Cash has a way of bringing people together whether it is with cashiers during shopping, or when paying your gardener or window cleaner, or when giving cash as a gift to your loved ones on their special days. Here is the deal with cash, the mere thought of handing over your hard-earned cash to someone else, is enough to create a feeling of emotional and social connection that is absent in digital finance.

    Not Susceptible to Cyber Attacks

    Despite its tap and go conveniences, digital payments are vulnerable to cyber risks and IT system failures. With cash, you don’t have to worry about phishing, malware attacks and identity theft. You may look old school with notes and coins, but you are safe.

    What Is the Best Way Forward? Remain with Cash or Go Cashless?

    This is one of those questions with “it depends on” kind of answers.  If you are a baby boomer, cash-based business, or living in far-flung areas with limited broadband access, having cash is always preferable. However, if you belong to Generation Z or Alpha living in urban areas, chances are digital cash works for you.

    Irrespective of the angle from which you look at the cash and cashless trends in the UK, the bottom line is that society is hurtling towards digital finance. As with any socio-economic transformation, there are bound to be implications both desirable and not so desirable. Our duty and that of the government is to safeguard access to cash for those who need it while keeping the momentum on for those shifting to digital payments.

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    How to Invest in Cryptocurrencies, But How Safe Are They?

    On April 14, 2021, Bitcoin made headlines for being the first and only cryptocurrency to hit $65,000 per unit. Viewing this crypto rally through the 2010 lens, when the first crypto investor decided to sell their Bitcoin holdings, swapping 10,000 The post How to Invest in Cryptocurrencies, But How Safe Are They? appeared first on Solution...

    On April 14, 2021, Bitcoin made headlines for being the first and only cryptocurrency to hit $65,000 per unit. Viewing this crypto rally through the 2010 lens, when the first crypto investor decided to sell their Bitcoin holdings, swapping 10,000 units for just two pizzas, you may think what a missed opportunity! Well, the same could be said of those who are selling their Bitcoin now, because projections from industry experts have it that bitcoin could hit $397,000 by 2030.

    That having been said, there are many stories and perceptions out there when it comes to cryptocurrencies. Some view them as nothing but currencies, others as something to bet on, and finally there are those who believe they are solid investment opportunities. In this article, we shall cover these alternatives and in the case of investments, how you should approach crypto investing against a backdrop of volatility and regulatory crackdowns.
    Investing in cryptocurrency

    The Crypto Universe

    As of October 2021, there were more than 6,700 cryptocurrencies actively trading with a total market capitalization of slightly over $2.3T. The top five cryptocurrencies according to data from crypto exchanges are Bitcoin (BTC), Ether (ETH), Cardano (ADA), Tether (USDT) and Binance Coin (BNB). Others worth keeping a tab on are XRP, Solana, USD coin, Polkadot, and Dogecoin.

    It is also worth mentioning that crypto transactions (buying, selling, storage, and transfers), are done on specific networks also known as distributed ledgers. For instance, Bitcoin transactions are executed on the blockchain network while Ether transactions are done on the Ethereum network. Apart from hosting cryptocurrencies, decentralized ledgers have other applications such as decentralised finance (DEFi), gaming, and governance.

    With this background in mind, let us now look at crypto and whether they are currencies or investments or both.

    Are Cryptos Assets or Simply Digital Currencies?

    Well, this is the big debate and how you interact with crypto will depending on the side of the argument you align with. Thanks to big names such as Tesla and Ark Invest putting their cash into crypto investments, the growing belief is that crypto is an asset class just like any other where investors can buy low and sell high.

    Those against crypto as an asset are clear in their argument that, unlike traditional assets, cryptos do not generate cash flows. An asset is a resource with an economic value where those controlling it (organisations, individuals, and governments) expect a future benefit.

    On the other side of the divide, the general lack of exchange of crypto limits its use as a currency. Even though institutional players such PayPal, MasterCard and Square have integrated the use of crypto as a currency, there is still doubt as not everybody agrees on the transactional value of digital currencies.

    For instance, the volatility of cryptocurrencies has made it hard to predictably hold their value. In the same vein, cryptos are based on decentralised networks with no central government backing their issuance and acceptability. This is in sharp contrast to traditional currencies such as the dollar, sterling, euro, and many other major currencies.

    What If Crypto Is an investment?

    Thanks to the crypto rally and the fact that you can buy low and sell high, investing in this asset class can be attractive. However, if you are to do it, you must do it right. Before we come to the step-by-step guide on how to invest in crypto, here are a couple of quick things you must know about this form of investment.

    Asset Value

    Cryptocurrencies are subject to the forces of supply and demand much like commodities. As people anticipate the rise in the global adoption of crypto for eCommerce and as hedging instruments, their values will continue appreciating. However, unlike gold, cryptos have no intrinsic value. You hold them for what they can be exchanged for. This view was reiterated by Andrew Bailey of the Bank of England in May 2021.

    Volatility

    Cryptocurrencies are highly volatile with swings of up to 10%, albeit some more than others. For instance, Bitcoin started 2021 with a solid stance hitting a maximum high of $65,000 only for it to close the first half 47% down. This is one area you’ll have to keep tabs on as you put in your hard-earned money.

    Regulatory Risk

    Central regulatory authorities around the world are becoming increasingly interested in cryptos, but it is how they view them that is a little concerning. For example, the Financial Conduct Authority (FCA) in the UK issued a statement back in January 2021, stating that cryptos are neither commodities nor currencies for regulatory purposes. In October 2020, the FCA banned certain cryptocurrency investment products including the sale of exchange-traded notes and derivatives to retail investors.

    That notwithstanding, you can still invest in crypto in the UK and make money out of it. However, the question is, how do you invest in cryptocurrencies without exposing yourself to all these risks? In the section that follows we shall get straight into that.

    The ABC of Investing in Cryptocurrencies

    If you need a quick summary of how to get into crypto investments; making a purchase and getting on with your day, here it is.

    Step1: Open an account

    As an investor, you need to open an account with a crypto brokerage or exchange. Through the account, you can purchase cryptocurrencies of your choice, store them, and transfer them as desired. Look for an exchange that gives you the simplest time to sign up, has low fees, is secure, and supports lots of cryptocurrencies.

    Step 2: Provide and verify your ID

    As part of the know your customer (KYC) process, many exchanges require that you provide proof of ID which could be a passport, national ID or driver’s license.

    Step 3: Fund your account

    For you to start trading, you must make a deposit to your account. There are many ways you can fund your account the most common of which are wire transfer, debit, and credit card payments. Some exchanges may also have a minimum deposit requirement and preferred currencies.

    Step 4: Make your purchase

    Once you’ve funded your account, you can now proceed to make your crypto asset purchases. You can choose the number of units of cryptocurrency you want to buy or put in the amount you want to spend and the exchange system will tell you how many units you can purchase.

    Which Cryptocurrency Should You Buy?

    Well, there are lots of cryptocurrencies you can buy but not every one of them is for you. For the best results, you must have a strategy. For instance, you can look at the crypto’s user community, its price performance, the buzz around it and the team behind it. You can start with the most common ones like Bitcoin and then spread gradually to alternative coins.

    Can You Invest in Crypto Without Buying Crypto?

    Yes, you can invest in cryptocurrencies without actually buying them. For instance, you can buy shares in a company that has exposure to crypto in its portfolio. Alternatively, you can invest in ETFs or Index funds such as Bitcoin ETFs. Most of these ETFs have stakes in companies involved in cryptocurrency mining, blockchain technology development, or directly hold crypto assets in their balance sheets.

    Are Crypto Gains Taxed

    The HRMC considers cryptocurrencies to be either utility tokens, exchange tokens, stablecoins or security tokens. If you are a resident in the UK for tax purposes, any gains you make on crypto trading are taxed in the same way as bonds and shares. The most interesting bit is that even if you use your crypto holdings to buy another item say a car or phone, that is considered a disposal transaction and hence the proceeds must be assessed for capital gains tax.

    For instance, if you buy a Tesla for £50k using bitcoin that you acquired for £40k, the £10k is considered as a gain under capital gains tax rules.

    Conclusion

    Crypto exchanges never sleep, and you can invest 24/7 from any part of the world as long as the exchange allows it. Whether you look at crypto as an asset or simply a digital currency, the reality is that you can invest and speculatively make money from price movements. However, before you invest, you must take note of factors such as price volatility, regulatory risk, and expert projections on the cryptocurrency movements. Choose the best exchange, open an account, verify your identity and begin trading!

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    What To Do About Soaring Energy Bills

    None of us would say that energy is cheap today. Whether it’s fuel for our cars or gas and electricity for our homes we’ve been faced with ever-rising prices. For the poorest 10% of UK households, the cost of energy The post What To Do About Soaring Energy Bills appeared first on Solution...

    None of us would say that energy is cheap today. Whether it’s fuel for our cars or gas and electricity for our homes we’ve been faced with ever-rising prices. For the poorest 10% of UK households, the cost of energy has doubled its share of income since 2004 (when it was 5.5%). This means that “fuel poverty” has rapidly increased too (defined as being when more than 10% of a household’s income is spent on energy). But the bad news is that with global gas prices soaring things are only going to get worse as we head into 2022. This is a global issue and not unique to the UK.

    As I write this The Guardian is reporting that energy bills could rise by 30% in 2022 driven by the global rise in wholesale (i.e. market) prices combined with the collapse of more UK energy companies. This would equate to an additional £400 on bills based on the volume of energy consumed. What these higher prices will do is make the return on energy efficiency improvement projects much more worthwhile. It may also make us shop around for better deals. It astounds me that 43% of Britons don’t shop around for better energy deals especially when it is so, so simple to do!

    Over the year’s we’ve written numerous articles about managing domestic fuel bills. Now it seems the chickens have come home to roost and we all need to take this much, much more seriously. Below we’ve organised our articles into a number of themes.

    Energy Consumption

    Energy Prices

    Other Energy Issues

     

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    How matched betting works and why it could be a good side hustle

    Everybody knows that betting involves a certain degree of risk whether you bet on sport, reality TV shows, or even the Oscars. The outcome may either be in your favour where you win or against your prediction and you lose. The post How matched betting works and why it could be a good side hustle appeared first on Solution...

    Everybody knows that betting involves a certain degree of risk whether you bet on sport, reality TV shows, or even the Oscars. The outcome may either be in your favour where you win or against your prediction and you lose. However, did you know that there is another form of betting where you can profit with almost zero risk? Well, it sounds unbelievable but matched betting gives you exactly that.
    Matched Betting

    What Is Matched Betting?

    Matched betting is a technique where you stand to earn a guaranteed profit by taking advantage of free bets offered by bookmakers. It is a legit and legal way of making some extra cash – a potential side hustle. To understand how matched betting works and how to earn sustainable profits from it, there are a couple of terms that you need to understand:

    A Back bet: This is where you bet on a particular outcome happening. For instance, if you are betting in an English premier league match between Arsenal and Tottenham Hotspurs and you place your bet on Arsenal to win then that’s a back bet. If Arsenal goes ahead and wins, you profit from your bet. However, if it loses or draws, then you lose too.

    Lay bet: This is the opposite of a back bet. You place your bet against a certain outcome. In the example above, if you bet that Arsenal is not going to win, that is a lay bet. If Arsenal doesn’t win the game then you profit from your bet.

    Having understood what back bets and lay bets are, profiting from matched betting becomes much clearer and easier. Here is how profit is generated in matched betting.

    How The Income Is Generated in Matched Betting

    To make money in matched betting, you need to:

    1. put in your money, and then
    2. take advantage of free bets offered by bookmakers.

    You’ve probably seen bookmakers offering promotions such as Bet £25, Get £25! In this case, when you bet your £25, you qualify for a free bet worth £25.

    The Qualifying Bet

    The goal of the first bet is to enable you to qualify for the free bet without suffering loss. You can achieve this by placing a back bet at the bookies and placing a lay bet at a betting exchange such as Betfair for the same event at the same or slightly differing odds to counter your back bet. The reason you cannot lose is that every outcome is covered by your bets.

    The only loss you may suffer at this point is what is called a qualifying loss. This is a loss you suffer to unlock your free bet. It mainly comes from the commission charged by the betting exchange you use.

    Free Bet

    Once you’ve completed the qualifying bet, the bookmaker will credit the free bet into your account so that you can use it in your next bet. When betting check under the bet type header for Free Bet (SNR) meaning Free Bet stake not returned.

    Example of How To Make Money from Matched Betting

    STEP 1: The Qualifying Bet

    Assume Bookmaker A has a Bet £25, Get £25! offer. Open an account with them and deposit £25 and place a bet. Using an oddsmatcher tool, you find a match to bet on, say Manchester United vs Aston Villa. The back odds of Manchester United on Bookmaker A could be 2.0. You place your back bet of £25.

    The next task is to find a lay bet on a betting exchange with odds as close as possible to the back bet for the same match. Assume you get a lay bet on Betfair at odds of 2.02

    If you input the back bet, lay bet, odds, and the commission on a lay betting calculator, you will get your lay stake, lay liability and overall profit. In our case, the information is as follows:

    • Back stake -£25
    • Back odds -2.0
    • Lay odds -2.02
    • Exchange commission 5%

    Lay stake

    The lay stake is calculated as follows: lay stake = back odds / (lay odds – exchange commission) * back stake. In our example the value would be £25.38 [{2.0 / (2.02-0.05)} * £25]. This means that you should place a £25.38 lay bet on Manchester United not winning.

    Lay bet liability

    The second parameter is the lay bet liability. Although the calculator will give you this figure without breaking a sweat, here is how it is calculated.

    Liability = lay stake * (Lay odds – 1)

    In our case: Liability = £25.38 * (2.02 – 1) giving us £25.89.

    This means you are risking £25.89 by placing your lay bet. In case you lose, this is the amount that will be deducted from your account balance. Therefore, you must have £25.89 in your exchange account.

    Here are the possible outcomes from your qualifying bet:

    • If Manchester United wins against Aston Villa you win £25 on Bookmaker A and lose £25.89 on Betfair. Your qualifying loss is therefore £0.89; the difference between the two figures.
    • If Manchester United doesn’t win, you lose £25 on Bookmaker A and win £24.11 on Betfair. The figure of £24.11 is arrived at by subtracting the commission (5%) from the lay stake (£25.38- £1.27). Your qualifying loss is £25-£24.11 giving you £0.89.

    Therefore, whatever the outcome, your qualifying loss will be the same £0.89. However, there is a difference, you now have a £25 free bet!

    STEP 2: The Free Bet

    Using the same process as before, you look for an event with slightly higher odds. For instance, you could choose Manchester City versus Chelsea. Assume the odds for Manchester City winning are 5.0 on Bookmaker B and lay odds of 5.2 on Betfair. Remember higher odds means you need more money in your exchange balance, but also you stand to reap a larger profit.

    Using your matched betting calculator, you feed in the following information:

    • Back stake -£25
    • Back odds -5.0
    • Lay odds -5.2
    • Exchange lay commission- 5%

    Follow the formula: Lay stake = (back odds – 1) / (lay odds – commission) * free bet size. In our case, the lay stake = {(5.0-1)/ (5.2-0.05)} *£25 giving you £19.42

    You can calculate your lay bet liability using the same formula: Liability = lay stake * (Lay odds – 1). In our case, liability = £19.42* (5.2 – 1) giving you £81.56

    Here are the possible outcomes from the free bet:

    • If Manchester City wins, you win £100 on Bookmaker B because of the 5.0 back odds. However, at Betfair, you will have lost £81.56. Your profit will therefore be £18.44 computed as £100 -£81.56.
    • If Manchester City doesn’t win, you don’t lose on Bookmaker B because you are on a free bet. However, you’ll win £18.44 on the Betfair exchange, computed as £19.42 less 5% commission.

    Irrespective of the results of the matches, you win either way. While £18.44 may not seem to be much, if you play matched betting multiple times, it can quickly build up to a substantial amount.

    How Much Can You Earn Doing Matched Betting?

    You can see how much you can make per bet so the overall amount you can earn from matched betting depends on the time and effort you are able to spend on the task. On average, you could make around £200 a month, but some people earn up to £800 or even more.

    Having said that, the biggest challenge with matched betting is that you may lose some accounts with time and fail to get as many free bets and promotions as you did at the beginning.

    Frequently Asked Questions About Matched Betting

    Here are some of the most common questions people have when considering starting to do matched betting.

    Is Matched Betting Legit?

    Matched betting is 100% legit. The process is clear, the math adds up, and opportunities for free bets from licensed bookmakers are all over the internet. The practical example above shows you that there is no catch. Since you are covering all the outcomes, there are zero chances of loss except for the negligible qualifying loss.

    Is Matched Betting Legal?

    Matched betting is legal. There is no law barring the use of free bets and it is from the free bets loophole that you make money in matched betting.

    How Do I Start?

    Starting is simple. Sign up for an account with a betting exchange such as Betfair to enable you to place lay bets and shop around for bookmakers with competitive promotions and free bets.

    How Much Should I Put in At the Beginning?

    There is no upper limit on how much you can put in matched betting, but you can start with a small budget of anywhere between £100-£200.

    How Much Time Should I Commit Per Day?

    Time is money and the more hours you put in the higher your earnings. However, on average, expect to spend between 15-60 minutes per day. One bet can take about 15 minutes to complete.

    Why Do Bookmakers Allow Matched Betting?

    Well, asked in another way, the question would be why bookmakers give free bets? Betting is a highly competitive market and so bookmakers use free bets to encourage people to sign-up for their services and not another’s.

    How Fast Can I Learn Matched Betting?

    This is largely a question of personal capabilities and interest. However, within a day or two, you should have fully understood it.

    Are The Profits Taxable?

    No. In the UK, proceeds from gambling including matched betting are tax-free.

    What Are the Risks to Look Out For?

    Beginners normally make small errors such as entering stakes that are different from what the calculator suggests. Even though the errors are not too costly, always follow the instructions given for a smooth ride.

    Probably the biggest risk is that of being disqualified from accessing promotions and free bets. This happens when the bookmakers suspect abuse of their bonuses and promotions. To prevent this from happening, try to make some regular bets in between your matched bets.

    Does Matched Betting Impact My Credit Score?

    No, it doesn’t. However, since you will be transacting through your bank account, lenders may be a little concerned seeing large amounts debited and credit to your account from bookies and betting exchanges.

     

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    The post How matched betting works and why it could be a good side hustle appeared first on Solution Loans.


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