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Tag: Financial Planning

  • Futures Rise on Nvidia Chip Plan, China GDP Beats: Markets Wrap

    Futures Rise on Nvidia Chip Plan, China GDP Beats: Markets Wrap

    It’s today, July 15, 2025. Stock futures, by the way, are up early in the morning on economic growth out of China, which is coming in better than expected, and renewed optimism about strategic manoeuvres for NVIDIA in China.

    Persisting concerns over the next round of US inflation figures and the ongoing, expanding repercussions of US tariff policies on global trade are taking the edge off the positive push.

    NVIDIA’s China Plan Offers a Glimmer in Technology’s Gathering Gloom

    Technology stocks, particularly in semiconductors, are being actively bid in pre-market as a major change to NVIDIA’s China plans is released. The AI chip giant said on Tuesday that it will resume sales to China after the US government committed to grant licences. In accordance with U.S. export law (ALUMINIUM RAM HERE WE COME), the H20 chip is a downgraded (crippled) edition specifically for the Chinese market.

    On top of that, NVIDIA announced a new RTX Pro GPU model optimised for AI use in logistics and smart factories and is optimised for Chinese regulatory requirements. As does Nvidia CEO Jensen Huang visiting with US and Chinese officials to promote AI cooperation, the ANT says. “This action will serve as crucial support in ensuring Nvidia’s leading position in the Chinese market,” the ANT says. The news also helps clear up some concern among investors over how export restrictions might affect NVIDIA’s earnings, with this development setting up a bright outlook not just for the company but for the broader tech industry.

    China’s Q2 GDP Beats Forecasts

    Bullish sentiment also was lifted by a stronger-than-expected report on China’s economy in the second quarter. Official figures for China showed the country’s gross domestic product was up 5.2 per cent from the 2024 period during the second quarter, April through June. While it surpassed analysts’ predictions of a 5.1 per cent increase, it suggested resilience despite lingering domestic challenges and international trade pressures.

    Robust exports were partly to blame for the better-than-forecast showing, with Chinese firms reputedly front-loading shipments to get ahead of looming US tariff cut-off dates. The Q2 data is a welcome pick-up in global risk sentiment, particularly in emerging markets which are vulnerable to the fortunes of the Chinese economy, although analysts warn the second half of the year could see a slowdown as domestic demand weakens and the real estate sector has problems.

    Shadows Linger: Tariff & US Inflation A lack thereof of Uncertainty

    “The global markets are still vacillating, waiting with bated breath for the release of the US CPI report for June 2025 tomorrow, bad news from China and the good from NVIDIA notwithstanding,” Wadhwa said. As inflation figures are likely to play a crucial role in future decision-making on interest rates at the Federal Reserve, that data is causing an outsized response from investors. The dollar, bonds and stocks could all become volatile if there is a large deviation from expectations.

    Adding to the uncertainty are U.S. policies of tariffs on the rise. President Donald Trump’s administration stepped up trade tensions by sending warning letters on the tariffs to more than 20 countries and free trade zones, including some of foes and closest allies.

    Saxony’s Economy Minister Martin Dulig warned of “serious negative effects for the auto industry” if bilateral trade pacts could not be reached by August 1, when 20%-50% tariffs would be introduced. Analysts forecast that this will hit the US economy with a “stagflationary shock”, pushing up inflation at home and triggering havoc across global supply chains. The future of global investment and trade is also complicated by the potential for retaliatory measures.

    Though tech optimism and China’s surprising economic resilience are providing some tailwinds to the trading day, investors are finding comfort from broader concerns about U.S. inflation and the fickle nature of global trade policy.

  • Underwriting: Definition and How the Various Types Work

    Underwriting: Definition and How the Various Types Work

    Have you ever wondered how a bank determines whether you qualify for a loan or how an insurance company decides what to charge you for coverage? You can thank something called underwriting.

    This critical measure essentially assesses the risk involved with a venture, a loan, an insurance policy, or an investment for a fee. In this report, we’ll explain the different types of underwriting, how they operate, and why they’re essential to banks and the stability of markets.

    What is Underwriting? The Foundation of Financial Decisions

    Underwriting is when an individual or institution takes on financial risk for a fee after working to evaluate the risk associated with a particular venture, loan, or investment.

    Role of an Underwriter

    This critical judgement call is made by underwriters, the experts who are doing the evaluating. Their core purpose includes:

    • Eligibility for loans, insurance and investments.
    • Risk quantification and pricing, including interest rates, premiums and prices of securities.
    • Protecting the underwriter or bank from potential losses.

    Historical Context

    Derivative Origin The term “underwriting” comes from a shipping insurance practice whereby two or more parties would sign under the risk, denoting that they had underwritten their names underneath the description of the risk, and were accepting it.

    A Glimpse into the General Underwriting Process: Step by Step

    Underwriting: Definition and How the Various Types Work

    1. Application/Submission

    The whole process of underwriting commences with the application for a loan, insurance, or other security.

    2. Information Gathering & Verification

    • Interest and Other Collection: That’s for those financial statements, credit bureau reports, medical data, property valuation and business plans.
    • Confirmation of Accuracy: Underwriters confirm the accuracy and completeness of the submitted data.

    3. Risk Analysis & Assessment

    • Analysis: Processing data using models, algorithms and human analysis.
    • Risk Identification: Assessing the probability and effects of risks.
    • Creditworthiness: Measuring a candidate’s creditworthiness/risk.

    4. Decision Making

    • Approved: With rates, terms, or premiums Other specific terms, rates or premiums.
    • Conditional Approval: Additional information or conditions requested; Not all criteria have been met.
    • Refusal: If the risk is considered to be too great.

    Pricing/Terms Setting

    Setting interest rates, premiums, or prices of securities according to perceived risk.

    Type 1: Origins, Loan Underwriting – Definition of Creditworthiness.

    Definition

    Loan underwriting is the procedure for determining the borrower’s ability to pay and their creditworthiness.

    Key Factors Assessed (The “5 Cs” of Credit)

    • Character: Reputation, how you have paid other people in the past.
    • Capacity: Debt-to-income ratio, steady income and ability to repay.
    • Capital: Money or savings, assets, down payment.
    • Collateral: The value of assets offered for security (secured loans such as mortgages).

    Common Sub-Types

    • Mortgage Underwriting: Focus on the borrower’s financials and property appraisal.
    • Personal Loan Underwriting: Emphasis on credit history and debt-to-income.
    • Auto Loan Underwriting: Looks at borrower credit and value of car.
    • Business Loan Underwriting: Requires a deep dive into business financials, industry and management.

    Automated vs. Manual Underwriting

    Technology is a factor in loan underwriting, but human underwriters remain essential for complex cases.

    Type 2: Insurance Underwriting – Assessing Insurability and Risk

    Definition

    Insurance underwriting is the process of evaluating the risk of insuring a particular person or asset in a particular portfolio and then determining the terms of insurance (called pricing/products).

    Goal

    The main objective is to position the company to pay for claims with a profit while providing coverage on a fair basis.

    Key Factors Assessed

    • Life Insurance: Age, health (medical background, lifestyle patterns), where you work and your family medical history.
    • Medical cover: the medical history, pre-existing conditions, the age, and the lifestyle.
    • Property & Casualty Insurance: Driving record, claims experience, location of the property, type of property, condition of the property, safety features.
    • Business Insurance: Your industry, claims history and safety measures.

    Outcomes

    • Approval (standard premium)
    • Approval (loaded premium/special conditions)
    • Denial

    Type 3: Underwriting Securities (Bringing Assets to Market)

    Definition

    The issuance and sale of new securities–stocks or bonds–is often called underwriting because the process is usually led by investment banks. The underwriter takes on the risk of not being able to sell the securities.

    Primary Market Role

    This process is especially important for IPOs and follow-on offerings.

    Types of Securities Underwriting Agreements

    • Firm Commitment: The underwriter purchases the entire issue from the issuer and then resells it to investors, taking on full risk.
    • Best Efforts: The underwriter stands as agent for the issuer, committing itself only to use ‘best efforts’ to sell the issue and does not guarantee the sale of all of the securities. Risk of Unsold Shares The issuer takes on the risk of any unsold shares.
    • All-or-None: A type of “best efforts” offering in which the entire issue is cancelled if the underwriter is unable to sell all of the securities.
    • Syndicate: A syndicate is frequently organised, consisting of several investment banks in order to share the risk of large issues.

    Process

    This involves monitoring issuers, valuing and pricing securities, and marketing and distributing securities issues.

    The Significance and Development of Underwriting

    1. Risk Management

    Underwriting stops banks from taking too much risk, and maintains stability in the market.

    2. Market Stability

    (b)/(c) It promotes the proper flow of capital and aids investors, by establishing rates and premiums commensurate with the risk of other investors.

    3. Technological Advancements

    • Automated Underwriting Systems (AUS): Improves the ease of preparation of routine cases.
    • Big Data and AI: Towards better risk predictions and personalized interventions.
    • Alternative Data: Using sources of non-traditional data to judge creditworthiness (e.g., utility payments, rental history).

    Human Element

    As much as technology helps us, complex cases do need seasoned human underwriters to take an informed call.

    Conclusion

    To sum it up, underwriting is pervasive in finance and forms the basis of educated finance decisions. It promotes market trust and stability, allowing institutions and individuals to fight financial risk management well.

    Call to Action

    Continue researching how to manage your risk and meet with a financial advisor to understand your underwriting criteria, and learn more about a career in underwriting.

    Frequently Asked Questions

    1. Who is an underwriter?

    An underwriter is a professional who determines the risks of loans, insurance or investments.

    2. What is the purpose of underwriting?

    The purpose of underwriting is simply to mitigate the risk of a financial decision and to guarantee that the institution is able to cover potential losses.

    3. Can I appeal the underwriting decision?

    In some cases, underwriting decisions can be appealed – particularly if new information is provided that could impact your ranking on risk.

  • Cybersecurity Threats Evolve, E-Waste Accumulates, and Forest Protection Gains Traction

    Cybersecurity Threats Evolve, E-Waste Accumulates, and Forest Protection Gains Traction

    In mid-2025, the world is characterised by a fluid mix of pressing challenges and promising advances on the most critical environmental and digital fronts. Cybersecurity menaces are becoming more and more advanced, supported by artificial intelligence, and the international e-waste is still a huge environmental and health burden.

    Yet, in the face of these threats, there has been a resurgence around the world of movements to protect and restore forests through creative means.

    Cybersecurity Threats: AI’s changing landscape of dual use

    Description: The cyberspace for 2025 is characterised by more sophisticated and varied threats. Ransomware attacks continue to be both a common and catastrophic scourge, with miscreants going so far as “double extortion” in many cases, in which data is not just encrypted but also threatened with exposure.

    There is a significant increase in the cyber warfare and espionage efforts of nation-state actors, aimed at critical infrastructure and sensitive data with increasing accuracy.

    One concern is the double edge of AI. AI is being used by defenders to automate threat detection and analyse large data sets, trying to improve user identification through behavioural biometrics, but also being weaponised by attackers.

    Theoretically, AI malware will be able to better adjust to its environment, avoid old forms of defence against old techniques, and attack systems in more precise ways.

    Generative AI is allowing more realistic phishing campaigns and social engineering tactics which make it more difficult for individuals to tell if content is malicious. “While these findings are startling, to say the least, they bring to light the reality that AI and ML are poised for opening up new frontiers in both security protection tools and in threats to these tools,” said Dr. Srinivas Mukkamala, co-founder and CEO at RiskSense.

    “The issue for organisations is to be agile in continually adjusting their defences to keep up with these rapidly evolving attacks, with a better focus on proactive measures, multi-factor authentication, security awareness training, and other battles that can’t be fought with AI.”

    Storage, it is also a small and efficient use of space!

    The world is facing an ever-increasing e-waste crisis. E-waste around the world In 2025, the amount of global e-waste will surpass 62 million tonnes per year, revealing a need for more economic tools to stimulate the market investment strategies for new devices and lower the cost.

    Despite increasing awareness, just around 22-25% of this e-waste is cleared through the proper recyclers. The vast majority is frequently disposed of in uncontrolled dumps or with informal waste-pickers, and the hazardous substances it contains – such as lead, mercury and cadmium – can cause serious health and environmental problems.

    The rise of wearable AI devices, 5G device connectivity, and IoT technology advancements continue in course to spur e-waste expansion. The brunt of the problem falls on developing countries that may be importing relatively high volumes of second-hand electronics but that don’t have the infrastructure, regulation and resources in place to handle it and recycle it safely.

    Artisanal dismantling and recycling in these areas, effectively employing open burning and acid leaching, emit hazardous pollutants into the air, soil and water, posing direct threats to human health and local ecosystems. Reversing this trend calls for greater international cooperation, enhanced formal recycling capacity and the roll-out of extended producer responsibility (EPR) programmes on a global scale.

    Forest Guarding: Some Successful New Initiatives

    Into this mix, there’s an increasing global commitment to protect and conserve forests. REAFFORESTATION, REFORESTRY AND CONSERVATION Efforts to reforest and conserve are increasingly taking hold around the world owing to increased awareness of the importance of forests to climate, biodiversity and the livelihoods of millions of people.

    The focus is on an increase in forest and tree cover and improved quality of degraded forests and important ecosystem services such as carbon sequestration and conservation of water. A lot of programmes have a strong focus on local engagement in forest protection, as part of the idea that local involvement is important for lasting results. Modern technology such as remote sensing, GPS and GIS is increasingly being used to observe and monitor forest fires in real-time and is enabling faster and more effective responses.

    In addition, there is added emphasis on agroforestry, which encourages farmers to plant trees as part of their farming systems for their ability to withstand the climate, provide income and improve soil health. Efforts are also underway to enhance local livelihoods through sustainable forest-based enterprises. As climate change challenges continue to mount, this rising global collaboration around this precious natural resource is a promising development in a world large in scope but small in scale.

  • US House to Vote on Major Crypto Bills, Mortgage Rates Remain High

    US House to Vote on Major Crypto Bills, Mortgage Rates Remain High

    The US House is headed for key “Crypto Week” from today, July 14, 2025, with historic votes planned on a number of bills for digital asset legislation. This regulatory push is the result of attempts to implement clearer regulations for the developing crypto industry.

    At the same time, U.S. home buyers continue to see stubbornly high mortgage rates that are making homes less affordable and discouraging the home buying process.

    House’s ‘Crypto Week’ Begins

    After years in which the crypto industry has called for clarity from regulators, the House is now preparing to take major steps. Members of Congress are set to vote on three pieces of legislation:

    • Digital Asset Market Clarity Act (CLARITY Act): This legislation would create a path for digital assets to be offered and sold as securities and identify how these assets are treated under securities law and is also meant to resolve conflicts between the SEC and the CFTC. This bill has been reported by both the House Financial Services Committee and the House Agriculture Committee with overwhelming bipartisan support.
    • Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act): The GENIUS Act would establish the first federal statutory framework for payment stablecoins and would require payment stablecoins to be one-to-one backed by cash. This bill has already been approved overwhelmingly by the Senate, and House passage would send it directly to the desk of President Donald Trump, who might sign the first large crypto law into effect.
    • The Anti-CBDC Surveillance State Act: This bill would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC), amid worries from certain lawmakers about privacy and potential government abuse.

    The “Crypto Week” schedule reflects a desire among many in Washington D.C. to move forward with digital assets and establish the U.S. as a global leader in financial technology, an effort that President Trump is personally directing. Market participants are watching these votes closely for a more favourable and predictable environment to conduct a crypto business or invest in one.

    Hotel Loans: Soness At Hotel Maturities Return – Mortgage Rates Still Near Highs

    Meantime, the U.S. housing market faces high borrowing costs. Average rates for a 30-year fixed-rate mortgage increased slightly this week to 6.72 per cent, according to Freddie Mac data released on July 10, 2025, in what had been a five-week string of loosening. The average on the 15-year fixed-rate mortgage increased to 5.86%.

    These stubbornly high levels — they’ve largely been between 6.5% and 7% for much of 2025 — are more a function of external economic conditions, such as the Federal Reserve’s monetary-policy setting and the movement of the 10-year Treasury yield. Yet despite some hopes for interest rate cutbacks later in the year, most economists say mortgage rates are likely to stay in the 6% to 7% range in the coming months unless there’s a dramatic change in inflation or economic reports.

    The higher borrowing costs remain a major headwind for potential buyers, in particular for first-time buyers, and have led to a sales downturn in the housing market that commenced in 2022. There is plenty of demand for housing, but plenty of obstacles, too, both in the form of high interest rates and high home prices, which are keeping many on the sidelines. Refinance activity also has been tepid, with rates not low enough compared with the existing level of rates that many homeowners have.

  • Global Markets Brace for US Inflation Data and Tariff Impacts on July 14, 2025; India’s Financial Savings Decline

    Global Markets Brace for US Inflation Data and Tariff Impacts on July 14, 2025; India’s Financial Savings Decline

    Global financial markets wade into today, July 14, 2025, nervously awaiting a report on key US inflation data and struggling to understand the expanding ramifications of intensifying US tariff actions.

    Putting this building macroeconomic backdrop on a cautious stance broadly, across equities, bonds and currencies, the same is a concerning trend of falling household financial savings in India, as revealed by another report alongside.

    U.S. Inflation Data in Focus and Market Response

    US CPI for the month of June 2025 is reportedly out July 15. The official CPI report is due out for June 2025 tomorrow, but early signs and positioning are making news today. The May 2025 CPI press release – released on June 11 – indicated headline inflation of 2.4% year over year and core CPI — excluding food and energy — of 2.8%.

    On the horse-race front, analysts are eagerly awaiting the June numbers, which some predictions suggest may nudge up a bit. Traders are more attuned than usual to surprises in inflation readings because it will shape the outlook for the Federal Reserve’s monetary policy.

    Inflation ticking higher than expected would compound worries about a Fed that will prioritise keeping rates higher for longer, keeping a lid on equities and boosting the dollar. On the flipside, a softer inflation print would give some respite and hopes of an earlier interest rate cut towards the later part of the year.

    The popping of the precious metals with gold prices oscillating is a paying reflection of the volatility that already exists.

    The collateral damage of U.S. tariffs

    Adding to the inflation picture is the Trump administration’s increasingly protectionist US tariff policy. Added to that, the past few days have brought a level of trade antagonism not seen in some time: new tariff warning letters dispatched to more than 20 countries, including major economic partners such as Japan, South Korea, Mexico and the European Union.

    Tariffs between 20% and 50% are scheduled to be imposed on August 1, 2025, if certain bilateral trade agreements are not in place. Most analysts also agree that the tariffs will instead be a “stagflationary shock” to the US economy, which means that the US consumer will get hit most as they pay more for imported goods.

    In its July 9, 2025 report, the Swiss Re Institute predicted that US tariffs would suppress global GDP growth to 2.3 per cent in 2025 from 2.8 per cent in 2024. Policy uncertainty alone in Europe is likely to keep economic activity sluggish.

    The tariffs also threaten to dislocate global supply chains, increase long-term inflation and undermine confidence in the US as a “safe haven” for global capital. The prospects of counter-tariffs by affected countries further compound the instability, making matters more difficult for global trade and investment Strategies.

    India’s Declining Financial Savings

    India’s own domestic economic battle is playing out against this complicated global backdrop. India’s household financial savings dropped for the third consecutive year to 18.1 per cent of GDP in FY24, CareEdge Ratings said in a report released on June 15, 2025.

    This is down from 32.2% during FY15 and is in part the result of an increase in household financial liabilities that have almost doubled during the past 10 years, reaching 6.2% of GDP as households continue to use credit to meet their consumption needs.”

    Though the Reserve Bank of India maintains a high interest rate (8.05% for July–December 2025) on Floating Rate Savings Bonds and the Employees’ Provident Fund Organisation (EPFO) has already credited an 8.25% interest for FY25, the overall investment trend in household savings is a worry. Such a decrease in remittances could affect the availability of internal capital for investment and even the long-term stability of the economy.

    The immediate consequences of US economic policies and the continued threat posed by inflation, trade protectionism and other global challenges, as they play out in international markets, are being felt at home in economies like India, and absorption of these changes is becoming increasingly complex.

  • Crypto Market Surges on July 14, 2025: Bitcoin Breaks $121K, Metaplanet and Whales Make Major Acquisitions

    Crypto Market Surges on July 14, 2025: Bitcoin Breaks $121K, Metaplanet and Whales Make Major Acquisitions

    Today, July 14, 2025, the cryptocurrency market is seeing some massive upward action, as Bitcoin (BTC) has blown past an all-time high into what appears to be entirely new territory, setting foot beyond the $120,000 threshold and significantly overshooting the $121,000 mark.

    This rally is driven by an intoxicating combination of institutions buying, speculation on U.S. regulatory progress, and high-profile corporate and whale buys.

    Bitcoin’s Historic Ascent

    Bitcoin’s price jumped as high as $122,600 during Asian trading hours on Tuesday and reached a historic high for the world’s largest cryptocurrency. This extraordinary rally is a follow-up to an intense bullish trend that has seen BTC’s market cap at around $2.38 trillion.

    The price is not the only thing that analysts are watching as a critical support; now that $120,000 has had significant price action maintaining above the level, the door to $135-140k is looking plausible in the months ahead.

    The reason behind the push seems to be the extreme demand for Bitcoin ETFs. Just last week, Bitcoin ETFs had their biggest-ever single-day inflow of 2025, with a massive influx of $1.18 billion in new investments.

    The arrival of institutional capital is evidence of increasing global acceptance and trust in Bitcoin as a long-term Investment Strategies . “trenders “We believe that bitcoin’s ascent is attributed to longer-term institutional holders driving it, and it’s going to $125,000 over the next month or two,” BTSE Chief Operating Officer Jeff Mei said.

    Corporate Aggregation: The Pole is taken by Metaplanet

    Adding to the institutional appetite, the Japanese hotel operator and investment firm Metaplanet disclosed a major new purchase of Bitcoin today. It bought the extra 797 BTC for $93.6 million at an average price of about $117,451 per Bitcoin.

    The latest move takes Metaplanet’s total stash of bitcoins to 16,352 coins and solidifies its position as the fifth-largest public company holder of the cryptocurrency, behind heavyweights such as MicroStrategy. Metaplanet’s aggressive acquisition strategy saw the company’s bitcoin holdings rise from less than 4,000 BTC in March to over 15,500 BTC in July, which reflects a growing trend of corporations integrating bitcoin into their treasury policies.

    This is not just confidence in the value of Bitcoin long-term but also what helps fuel the perception of scarcity as more coins are removed from the open market.

    “Whale” Activity and Regulatory Optimism

    Aside from corporate purchases, on-chain data shows large individual holders, or “whales”, have been accumulating. These large buy-ins continue to encourage bullishness and conviction by whales about the direction of Bitcoin’s price action in the future.

    Contributing to the favourable market sentiment is the build-up to the forthcoming “Crypto Week” taking place in Washington D.C., where the U.S. House of Representatives plans to discuss a string of crypto-related bills.

    The legislative efforts to provide legal clarity for digital asset companies and to provide a regulatory regime for stablecoins are broadly viewed as the first steps in the direction of increased clarity and acceptance for the crypto industry. What’s more, U.S. President Donald Trump’s pro-crypto attitude has added to the positive sentiment.

    This isn’t all about Bitcoin, though. Other large cryptocurrencies, such as Ether (Ethereum), have also experienced huge price jumps, and Ether reached a five-month high of $3,048.23, helping to propel a broader surge in digital asset prices.

    With the cryptosphere still moving north, investors and market observers are also watching the horizon for more institutional cues and regulatory action that could have a say in the markets’ trajectory for the rest of 2025.

  • How to Find Your Return on Investment (ROI) in Real Estate

    How to Find Your Return on Investment (ROI) in Real Estate

    Real estate investing is one of the most common ways to accumulate wealth the world over. You watch property values increase, but how can you be sure if your investment is really profitable?

    This post will break down how to calculate your Return on Investment (ROI) in real estate. You will understand all of the primary real estate ROI formulas, which costs and gains are important and how to calculate the profit of your property, regardless of where you are investing.

    1. Understanding Real Estate ROI: The Basics

    • Definition: ROI (Return on Investment) is a percentage that indicates the amount of profit you have made on an investment compared to the purchase price. It’s your ultimate “profit score”.
    • Easy to Understand: In it, you invest money and try to get back more money. ROI measures how efficient that return was.

    Why It Matters: ROI is important when it comes to assessing past investments, comparing opportunities, and making new ones in the future.

    2. How to Calculate Your Real Estate ROI Step by Step

    There are Different Things to Count as “Cost” and “Return”: Key Components

    1. Total Investment (All money in the deal):

    • Purchase price of the property.
    • Closing Costs: Legal fees, transfer taxes, title insurance premium, appraisals, home inspection fees, loan origination fees (if any), and broker’s commissions (if you are paying them).
    • The remaining balance of any substantial repairs or rehab that need to be performed to get the property to functional or marketable condition.

    2. Total gain (sum of all money received or gained):

    • Selling Price: The price at which you sell the property.
    • Rental Income: Everything you’ve ever collected from tenants while you’ve been an owner.

    3. Rental & Sale Costs (Money you paid while in, or upon selling):

    • Property Taxes.
    • Homeowner’s Insurance.
    • Regular Maintenance & Repairs.
    • Loan Interest Payments (if financed).
    • Utility costs (if landlord pays).
    • Property Management Fees (if applicable).
    • Sale costs: sales commissions, legal fees, transfer taxes at the time of sale, possible capital gains taxes.

    How to Calculate Return on Investment (ROI): Examples for Common Scenarios

    Example 1: No Rental but a Resale Property from the Developer (Simplest Case)

    You purchased a property for $200,000 (including all of your initial closing costs). You sold it 3 years later for $300,000. The total selling expenses (commissions and taxes on sale) were $15,000.

    Solution: Net Gain = Selling Price – Total Initial Investment Cost – Total Selling Costs Net Gain = 300,000 – 200,000 – 15,000 = 85,000 [] ROI = \left( \frac{85,000}{200,000} \right) \times 100% = 42.5%

    Translation: For each dollar invested, there was a profit of $0.425.

    3. More Than Simple ROI: Advanced Metrics for Savvy Investors

    Advanced Tools for a Clearer Financial Picture

    1. Cash-on-Cash Return:

    • What it means: Your annual cash profit versus the actual cash you have put into the home (for example, the down payment and closing costs), not counting borrowed funds.
    • Why it’s helpful: Excellent for comparing a property purchased with a loan, and it displays gross cash flow.

    2. Capitalisation Rate (Cap Rate):

    • What it means: The annualized rate of return on an income-generating property, based on the property’s purchase price and no financing (though financing may be used in the actual purchase).
    • Why it’s helpful: Can assist in quickly comparing the profitability of various income properties.

    3. Annualised Return – The Compound Annual Growth Rate – CAGR:

    • What it tells you: How much in interest the bank has paid you for your investment in one year’s time.
    • Why it’s useful: Allows for a more apples-to-apples comparison of investments held for different time periods that factors in the time value of money.

    4. Main Factors of Your Real Estate ROI

    What (or Who) Determines Property Profitability

    • Location: Value and rent demand of a property is largely a function of how close it is to amenities, infrastructure, jobs and good local economies.”
    • Market conditions: supply and demand, economic growth, interest rates and inflation.
    • Type Of Property: Home, business, industrial, land… each with its own risk/return profile.
    • Property Conditions & Maintenance: Well-kept-up properties bring in superior tenants and buyers. High costs of repair can cut into the returns.
    • Financing Expenses: Mortgage interest rates play a direct role in your available cash and overall returns.
    • Taxes & Fees: property taxes, transfer taxes, income taxes on rental profit, and capital gains taxes all cut into your net returns.
    • Vacancy Rates: Empty units bite into the bottom line for rental properties.

    Section 5: Limitations of ROI

    How to Find Your Return on Investment (ROI) in Real Estate

    Behind the Number: What ROI Does Not Always Reveal

    • Time Value of Money (for the simple ROI): A simple ROI alone doesn’t tell us how long it took to get that back. Use CAGR for this.
    • Risk: A high return on investment can also mean high risk. It does not measure its own risk level.
    • Liquidity: Real estate is illiquid, and turning it into cash can be a big hassle.
    • Effort: It does not take into consideration how much time and effort it takes to manage the property.
    • Surprise Costs: Things like big-time repairs or legal problems can throw actual ROI for a major loop.
    • Inflation: Be sure to figure your real return after inflation eats away at purchasing power.

    Conclusion

    Learning how to calculate your Return on Investment (ROI) in real estate is more than just serving and crunching numbers – it’s (arguably) the most important part of a real estate investment.

    When you are computing your ROI correctly with all the costs and benefits and using the appropriate metrics for your particular situation, it provides you with a lot of great information as to how your property is really doing. It gives you that knowledge so you can make better, more lucrative investment decisions!

    Call to Action

    Begin to apply those formulas to your existing properties or future investments. The more you know, the more money you make.

    Frequently Asked Questions

    1. What is a “good” ROI in real estate worldwide?

    There’s no such thing as a “good” ROI, and it’s conditional on location, type of property, specific market conditions and how much risk you and your client will take on. Most investors are looking for returns that far outstrip inflation and non-stock investments.

    For rental income (cap rate or rental yield), perhaps a solid range for many stable markets is 4-8%, while overall ROI, including appreciation, might want to average 8-15% or more on an annual basis depending on the type of investment and specific market.

    2. How is ROI affected if we are taking a mortgage (loan)?

    The answer is :yes! Using other people’s money (aka leverage) can have a dramatic effect on your ROI. Though a simple ROI won’t include specifics about the loan, high interest payments lower your net profit.

    Metrics such as Cash-on-Cash Return are engineered to show your profit measured against how much cash you put in the investment, which is specifically useful for mortgaged properties.

    3. Do I have to add in the capital gain taxes that I have to pay when calculating the 9% return needed?

    Absolutely. You also need to subtract all tax consequences of the investment, including capital gains taxes on sales, for an accurate estimate of your net profit. These are flat-out costs that syphon away the money you get to keep.

    4. Can we always say that the higher the ROI, the better?

    Not necessarily. A very high ROI might mean that there’s a greater associated risk. Return potential must be balanced against risks, liquidity and work involved in the investment. Always consider the risk-adjusted return.

  • New SEC regulations require stricter ESG disclosures, impacting fund classifications

    New SEC regulations require stricter ESG disclosures, impacting fund classifications

    ESG Investing Is Changing for Programmes Aimed at changing American businesses and business practices Nowhere is that change more apparent than in the world of ESG (Environmental, Social and Governance) investing in the United States.

    Adopted on July 10, 2025, these regulations are designed to provide transparency and to give investors more consistent and emphasized information on how ESG-focused funds are classified and marketed.

    The Push for Greater Transparency

    For years, the rapid rise of ESG investing has been dogged by worries of “greenwashing” – where funds are marketed as environmentally or socially responsible while not actually incorporating ESG factors into their investment strategies.

    The SEC’s new rules respond to these developments and aim to codify and enhance the disclosures of investment funds that allege to take ESG considerations into account.

    At the heart of the new rules is a requirement for enhanced and standardized disclosure on the integration of ESG factors into a fund’s investment process, including the approach to the fund’s investment objectives, strategies and principal risks.

    Funds will now have to explain how they define and measure ESG factors, which data sources they use and how they apply this understanding in investment decisions. The aim of such a measure is to enable investors to make better-informed decisions so that their investments truly reflect their sustainability preferences.

    Redefining ESG Fund Classifications

    One of the most important parts of the new SEC rules is the way it could change how ESG funds are categorised and viewed. The rules put in place more clearly delineatethe various types of ESG funds:

    “Integration Funds” are new challenges about how they consider ESG factors vis-à-vis all other material factors in their investment process.

    While “ESG-Focused Funds” (those that view ESG as a primary investment strategy) will be subject to more prescriptive guidance, including, where possible, measurable indicators about how such funds are incorporating ESG as part of investment processes. These might be specific environmental metrics (like carbon footprint), social metrics (like diversity statistics), or governance metrics (like board independence).

    Impact Funds (i.e., funds that seek to achieve specific, measurable ESG outcomes alongside returns) – whose disclosure obligations should be much stronger (i.e., providing full disclosure of their impact objectives, the methods by which their impacts are measured and periodic updates on actual impact).

    Analysts expect this tiered approach to prompt a rethink from many fund managers about their existing ESG claims and perhaps result in some existing funds being reclassified to fit under the stricter definitions. Funds unable to comply with the additional disclosure required for greater ESG categories could avoid making higher ESG claims or work towards deeper ESG integration.

    For Investors and Fund Managers

    The new rules offer a quantum leap in the clarity and comparability of ESG products, to the benefit of investors. They will be in a stronger position to tell the truly ESG-oriented funds from those that pay mere lip service to ESG. This greater visibility should help increase confidence in the market for ESG investment.

    For fund managers, the new standards require a full review of your current ESG policies and procedures, marketing materials and how data is captured internally. Compliance will necessitate significant investment in resources for data management, reporting, and knowledge in ESG analysis.

    Though difficult in the short run, it is in the long term likely to lead to truer and stronger ESG integration across the industry, which should help to buttress the credibility and long-term health of ESG investing. The S.E.C.’s action represents a sign of maturity for the E.S.G. market, which has been moving beyond broad claims to deliver impacts that can be measured and held to account.

  • New EU laws mandate companies to report climate vulnerability by 2026

    New EU laws mandate companies to report climate vulnerability by 2026

    The time has come for new EU laws mandate companies to not only make a business case for sustainability but also to focus on a new campaign for (climate) transparency.

    While investors already appreciate the strong correlation between good sustainability performance and good financial planning, the European Union is driving home this point by introducing forceful legislation that compels a more complete and open assessment of companies’ climate exposure.

    Starting in 2026, more types of businesses will be mandated to disclose how climate change affects their businesses and the extent to which their operations contribute to climate risks, a huge step forward for corporate climate accountability.

    The CSRD is in the Spotlight

    This is accounted for by the Corporate Sustainability Reporting Directive (CSRD), which has been effective from January 2024. While the first reports for some large firms date back to financial year 2024 (reports published in 2025), the number grows significantly in number in 2026 (for FY 25) and will include a much larger sample of firms.

    That means all big firms (of a certain level of employees, balance sheet, or revenue) operating in the EU. Queensland Listed Small and Medium-sized Enterprises (SMEs) will also report from the 2027 calendar year with a 2-year deferral power.

    The ultimate objective of the CSRD is to bring sustainability reporting on par with financial reporting. It requires wide-reaching reporting on environmental, social and governance information (ESG), beyond that which was previously covered by the Non-Financial Reporting Directive (NFRD).

    “Double Materiality” and Climate Risks

    Central to the CSRD and particularly pertinent in the climate vulnerability context is the notion of “double materiality”. This forces companies to report in two places:

    • Impact Materiality: The influence of the company’s books and records on the environment/people (e.g., its carbon emissions, pollination).
    • Materiality for Financial Considerations: The company’s exposure to material financial risks and opportunities for how sustainability issues, such as climate change.

    Under this structure, companies are to identify and assess their exposure to different climate risks, namely:

    • Physical risks: These are the direct effects of climate change, including acute catastrophes like floods, wildfires and extreme heat, as well as more chronic changes like sea-level rise and altered precipitation patterns. Businesses will also have to consider how those could impact their assets, operations and supply chains.
    • Transition risks: These are related to the move toward a low-carbon economy, including policy changes (e.g., carbon pricing, tighter emissions regulations), technology developments (e.g., outdated high-carbon assets), market forces (e.g., consumer preferences favouring sustainable products) and reputational considerations.
    • Streamlining Disclosures: European Sustainability Reporting Standards (ESRS) With a proposal to establish an EU non-financial reporting directive written in the sand, a new system is in the makings for mandatory European climate, environmental and social disclosures (ESG, sustainability report). Copyright 2021 Eagle Alpha This report was produced by Eagle Alpha, a data and analytics firm that provides investors early access to market-moving insights.

    In order to have a level playing field and a fair comparison, companies under the CSRD should report in accordance with European Sustainability Reporting Standards (ESRS).

    Developed by the European Financial Reporting Advisory Group (EFRAG), these’ve detailed standards which provide a comprehensive guidance for reporting on a broad set of ESG topics, with specific requirements for climate-related disclosures (ESRS E1 – Climate Change).

    Companies will have to decide their climate transition plans, targets for reducing emissions (including “Scope 3” emissions emanating from their entire value chain) and strategies for building resilience to the physical effects of climate change.

    And that will take proactive data collection and scenario analysis, with transparent disclosure of climate-related governance, strategy, risk management and performance metrics.

    Driving Transparency and Resilience

    The EU New Mandate aims to offer market participants, including investors, consumers, companies, and policymakers, transparent, comparable, and robust indicators to measure companies’ sustainability performance and their resilience to climate risks.

    It aims to avoid “greenwashing” and direct investment into genuinely sustainable economic activities while drawing in line with the wider objectives of the European Green Deal and the EU Taxonomy for sustainable finance.

    While implementation will require substantial effort and investment from the business community, it should encourage greater responsibility and innovation to adapt to and mitigate the impacts of climate change and help support the construction of a more resilient and sustainable European economy.

  • 8 Steps to Building an Emergency Fund

    8 Steps to Building an Emergency Fund

    Life is unpredictable. From unanticipated medical issues to surprise job loss or an emergency home repair, financial emergencies have a way of shattering even the best of plans. That is when an “emergency fund” becomes your most important financial asset.

    This article provides “8 Steps to Building an Emergency Fund” to serve as your personal financial safety net. Discover “how to save money in an emergency fund” the right way, and it gives you peace of mind yet keeps your long-term financial goals safe from unexpected emergencies.

    1. Why You Need an Emergency Fund FIRST off: Does it actually make sense?

    The Main Reason: Protecting Your Financial Future

    What it is: A set-aside pile of instantly accessible cash (and only cash) for unexpected but necessary expenses.

    Why It’s Crucial:

    • No Debt: Stops you from using expensive credit cards or personal loans when you need them the most.
    • Safeguards Investments: Prevents you from surrendering long-term investments (such as SIPs, FDs or shares) at a loss.
    • Helps Ease Stress: It can soothe the minds of those who find themselves easily worried over not knowing what the future holds.
    • Economic Recovery: Makes it so you can rebound from challenges more quickly.
    • Analogy: It’s the equivalent of the spare tire for your financial journey — you hope you never need it, but when you do, you’re profoundly glad to have it.

    2. Here are the 8 Steps to Building an Emergency Fund

    8 Steps to Building an Emergency Fund

    Step 1: Determine the Goal (How Much Do You Need?)

    • Practical Tip: Total up 3-6 months of nitty-gritty living expenses (fixed expenses like rent or EMI, utilities, groceries, commuting costs, and insurance premiums). Don’t include discretionary spending.
    • Considerations: Your job security, number of dependants and health conditions will probably affect whether you are aiming for 3, 6 or even 12 months.
    • Example (Indian Context): If your monthly essential expenses are ₹30,000, then your target could be ₹90,000 (3 months) to ₹180,000 (6 months).

    Step 2: Open an Account for Your Emergency Fund

    • Practical Tip: Get a new term deposit or PPF account or open another bank savings account (Keep the account at a different bank than your regular account). Keep your emergency fund in a separate savings account or liquid mutual fund.
    • Why: Separates money from daily spending to prevent the accidental spending of cash. Ensures liquidity.
    • Considerations: Choose safety over high returns Accessing your money is easier than ever.

    Step 3: Set Up Automatic Contributions (“Pay Yourself First”)

    • Practical Tip: Schedule an automatic transfer from your main bank account to your emergency fund account every time you get paid.
    • Why: It takes willpower out of the equation. Ensures consistency. These little, regular amounts do add up.
    • Example: Automate ₹2,000 or ₹5,000 per month.

    Step 4: Cut Other Things Away (Find ‘Found Money’)

    • Practical Tip: Keep an eye out for “money leaks” such as unused subscriptions, daily impulse purchases, and purchases made on impulse.
    • Why: You can put every penny you save on unnecessary expenses directly into your emergency fund, which will ultimately increase the amount.

    Step 5: Increase Your Income (Boost Your Fund)

    • Practical Tip: You might explore temporary side hustles, freelancing, selling unused stuff or working more hours.
    • Why: Supplementary earnings can be applied 100% toward beefing up your emergency fund sooner without affecting your normal budget.

    Step 6: Put a Hold on Other Investing (if needed)

    • Practical Tip: At the cost of a few per cent for a short period of time, temporarily park all non-retirement investments (general SIPs, etc.) in the emergency fund account till it is fully funded.
    • Why: Your emergency fund is your financial planning; it takes precedence over aggressive investment growth in the early going.

    Caveat: Don’t stop your retirement savings if you can possibly avoid it, especially if you receive an employer match.

    Step 7: Handle Windfalls Wisely

    • Practical Tip: Funnel all surprise money (a tax refund, bonus, gift, or inheritance) into your emergency savings.
    • Why: Windfalls bring shortcuts to your goal.

    Step 8: Don’t Spend It (Except for Emergencies!)

    Practical Tips: Be explicit on what is an emergency. It’s for job loss, a medical crisis, to fix the car or home, not that bleeping new gadget or that night on the beach.

    Why: You’re defeating the purpose of the emergency fund, and you’re potentially leaving yourself exposed.

    3. Staying on your emergency fund

    Keep It Full and Handy

    • Replenish: If you need to shed some money, then let building it back up be the first thing you do with your money.
    • Review: Every year, review your list of critical costs, and adjust your fund target as your life situation or cost of living changes.
    • Place: It should be in a safe and liquid place, such as another savings account or a fixed deposit (FD) which has an auto-renewal and partial withdrawal facility. Avoid illiquid investments.

    Conclusion

    To sum up, steps to building an emergency fund include setting a target, establishing a separate account, setting up regular contributions, slashing expenses, increasing earnings, and addressing windfalls strategically.

    But building an “emergency fund” isn’t just about money; it’s about constructing resilience and peace of mind and giving yourself the flexibility to work toward your financial goals without being derailed by an unwelcome surprise. It’s the silent protector of your future.

    Call to Action

    Today, even if it requires baby steps, begin the process of building this fundamental security blanket.

    Frequently Asked Questions

    1. How large should an emergency fund be?

    The most widely used rule of thumb is 3 to 6 months of essential living expenses. But if you have a less stable income, dependents or certain health issues, 9-12 months might make more sense.

    2. Can I invest my emergency fund, or does it need to be in a savings account?

    It needs to mostly be in a very liquid and safe account, e.g., a high-yield savings account or a short-term FD with easy withdrawal. Stay away from risky investments like stocks.

    As you may need the money at a time when the markets are in a funk. Some others invest in ultra-safe liquid mutual funds, but make sure you get to know about their instant redemption facility.

    3. If it’s my money, can I do whatever I want with my emergency fund?

    It’s your money, but an emergency fund serves a very defined purpose: unexpected, unavoidable financial emergencies.

    Its very application for non-emergency situations (like a holiday, a new toy, or impulse shopping) debases it and leaves you unprotected when an actual tragedy strikes.

    4. What details differentiate an emergency fund from general savings?

    General savings could be for certain goals, like a down payment on a house, a car or a trip. An emergency is not “wanting to have more money to meet your monthly obligations if you have an emergency”.

    An emergency fund is for UNFORESEEN emergencies only, such as job loss, medical emergencies or a major home repair. It is a financial airbag, not a goal-orientated savings account.