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Understanding the Process of Evaluating Your Statement of Account.

Statement of Account - Title Image

Introduction 

Have you ever received a paycheck or a sum of money from work, only to feel a few days or weeks later that you can’t account for your spending? You might think your bank deducted cash and be unable to reconcile your expenses with your income. After reviewing your transaction history or statement, you realise you were responsible for all the unaccounted spending.

Your statement of account or a bank statement offers the perfect financial diagnostics. It’s like having a health report for your account, empowering you to take control of your financial health. 

The statement above is not an overemphasis at all; in fact, this is how successful companies and organisations have stayed afloat. They have been able to do so by constantly monitoring their account statements to ensure that they are always in profit

What is a bank statement of account? 

A bank statement of account, often referred to as a bank statement, is a monthly financial document prepared by your bank that shows the financial activity of a bank account holder for that period. Even though most banks prepare their statement at the end of the month, customers can request their statement of account through online banking or go to the bank to obtain a printed copy if they need it at any point in time. 

Statement of Account - Review

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In summary, your account statement is healthy or tends towards healthy if, after evaluating your opening balance, deposit and withdrawal, you are not in zero. 

The analogy above does not perfectly describe your financial health, but it shows you that at the end of the month, you probably could not account for any left which could be put into savings or investments. 

Cash Inflow and Outflow

Who stockbrokers are and how they operate

Who is a Stockbrokers

A stockbroker is a financial expert or institution that transacts stocks and other financial instruments through a stock exchange or over the counter for someone willing to pay a fee or a commission in return. Usually, stockbrokers help people make financial decisions and handle their investments. In this instance, They may have legal backing to practice financial activities.

who are stockbrokers

Who is a Discount broker 

A discount broker is a professional who offers brokerage services that buy and sell stocks and other financial assets with very little commission required. A discount broker offers only trading services and does not provide investment advice or mentorship. In the past, getting a broker to work with you used to be a feat for the very wealthy. However, with the advent of numerous online discount brokers, anyone within any class of income can have access to a broker or brokerage firm from the comfort of their home. 

Who is  a Full-Service broker 

A full-service broker is a stockbroker who provides a client with a complete package of brokerage services, which includes trading, advisory and research. The most popular opinion about full-service brokers is that the cost of maintaining the assistance of one is a lot, and this is mainly because they provide both trading services and can feed you up on the happenings in the market so that you can have an idea of the behaviour of the stock market and the future of your investments. They can also offer extra services like tax advice, IPO shares, and details about the international market

Must Check before you trust a Stockbroker!

Formal Qualifications of a Stockbroker

Stockbrokers are generally expected to have a bachelor’s degree in business administration, finance or any other relevant course in finance. Stockbrokers should also have intricate knowledge of the regulatory laws of finance and accounting techniques. A holistic understanding of economics and expert financial predictions based on the behaviour of the market is also an essential requirement for any stockbroker. 

A stockbroker with a global certification will also prove trustworthy. Certifications like Chartered financial analyst (CFA) and Certified financial planner (CPF) are international certifications that can solidify your faith in a stockbroker you want to work with. 

Related Post: The Ultimate Financial Literacy Guide: Six Places to Acquire Knowledge.

Must have skills as a stockbroker

It takes a unique set of abilities and personality traits to make a stockbroker. A stockbroker must be flexible, have excellent verbal and interpersonal skills, and be eager to seize new opportunities. Stockbrokers to be able to take criticism properly and keep their cool under intense time constraints. 

They should also be able to convince customers and offer stellar service. They need to handle working with numbers, think critically, and have a solid grasp of economics and accounting. Stockbrokers also need to be confident in taking risks, skilled negotiators, and quick to act when necessary. Stockbrokers combine the skills of financial analysts, sales assistants, and executives.

FINRA’s role in stock trading

Why trade financial assets worth millions of dollars if you cannot do business in an ecosystem that guarantees security and equity? 

The safest way to do that is to trade under a regulated condition. In the United States of America, The Financial Industry Regulatory Authority (FINRA) is a not-for-profit organisation backed by Congress and saddled with the responsibility of fostering unified confidence in the hearts of investors.

FINRA implements several safeguards to protect investors in the stock market. These include protecting fundamental rights and interests, ensuring securities sellers undergo rigorous testing, qualifying, and licensing procedures, preventing false or misleading information in marketing, offering securities that meet regulatory standards, and providing ample information about the investment product before purchasing. These guidelines form a strong foundation for protecting stock market investors, ensuring they have the necessary information to make informed decisions.

Average income of stockbrokers

Basics of Taxation, Income tax and working principles.

Header Image: Income Tax Fundamentals

Brief history of Taxing

Unlike what we know today, the US used to be income-tax-free. This was mainly because of the absence of the federal government in its infancy years. The US was under a British colony, so it imposed a few taxes on its citizens. Some of these taxes were the head tax, a tax imposed on each adult male, the realty tax, a tax on land and buildings, and the legendary tea tax that ignited the historic Boston Tea Party.

The American Revolutionary War, a significant event in the history of the United States, began in 1775 and lasted till 1783. This war, a military contention between George Washington-led American patriots and the British colony, marked a turning point in the nation’s history. The independence of the American people, achieved through this war, led to the imposition of income tax on the American people, a significant step in the nation’s financial system. 

The United States follows the trend of other developed nations by having high-earning citizens pay a more significant percentage of their income in taxes to the government. In a progressive tax system, higher rates are levied on those who can afford it. Income taxes at the federal level are between 10% and 37%  as of 2023.

What is a tax on income?

Income tax is a tax that governments levy on the income earned by firms and people within their sphere of influence. This tax is used to cater to public services, fund government responsibilities, and provide basic amenities for its citizens. It is a crucial source of revenue for the government, which is then used to fund various public services, such as healthcare, education, and infrastructure development. Individuals’ wages, salaries, and other income are subject to a Personal Income Tax. In contrast, gains earned by small firms, self-employed, companies and partnerships are subject to a Business Income Tax.

THE ROLE OF BUDGETING IN FINANCES

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Introduction 

Being a graduate of a prestigious university and making a considerable income does not guarantee your financial safety. According to Parkinson’s law of spending, which states that expenses rise to meet income, people’s expenses will always increase proportionally to their income. This law validates the idea that people do not end up poor only because of the absence of money but also because of a lack of financial literacy. 

Financial literacy is the effective knowledge and understanding of using financial products, such as savings accounts, investments, and insurance, and skills, such as budgeting and debt management, to manage money and save individuals from financial unaccountability, fraud, and scams. 

To be financially literate is to have an intricate understanding of how money behaves; by doing so, you have established a life-long profitable relationship with money. Most people don’t get financially trained in college, but thanks to “Effective Business Idea,” you are about to gain the power to control your finances with a free financial education. 

The most fundamental knowledge you must acquire when working towards financial independence is the skill of budgeting. Budgeting plays a vital role in ensuring adequate money inflow and outflow, helping to increase accountability and prudence.  

What is a budget?

A budget is a planned estimate of anticipated income and expenditures for a certain period in the future, and it is created and reevaluated regularly. Everyone, from individuals to families of varying means, as well as governments and corporations, may benefit from developing and sticking to a budget.

Budgeting helps you control your monthly spending, prepare for the unexpected(rainy days), and buy luxury goods and properties without debt. Keeping a budget can be a smooth process; it doesn’t restrict you from buying what you want, but rather, it gives you the freedom to maintain a grip on your finances and a clearer picture of where your money is going.

Introduction to Budgeting

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What is insurance? Types of insurance, and why do you need one?

What is insurance? Types of insurance, and why do you need one?

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With a good Insurance policy, the insurance company promises to pay for certain losses, damages, sickness, or deaths in exchange. Insurance is a contract, usually shown by a policy, in which the user agrees to pay a certain fee to an insurance company or the state. It’s a way to protect your finances and handle risks. It protects you from unpredictable losses, damages, or injuries, empowering you to manage risks and control your financial future.

The company responsible for providing insurance is known as an insurance company or, for short, an Insurer. The one seeking to be insured is called a policyholder, which is the person who buys the insurance policy. The policy covers the organisation, person, or product, referred to as the Insured, the entity protected by the insurance policy.

In exchange for this payment, the insurer promises to pay the insured if a loss covered by the policy happens. Even though this loss is not only a financial one, it must be measurable in money. Also, the insurance deal usually involves something in which the covered has an insurable stake, shown by ownership, possession, or a relationship already in place. 

This differentiates insurance from gambling; whatever is being insured must have a direct link with the policyholder. For example, you cannot insure your neighbour’s house or cars because, in the case of damage, you do not have anything to lose in that accident. This financial security is a crucial benefit of insurance, providing reassurance about your financial stability.

Are Online Banks Trustworthy?

Are Online Banks Trust worthy

Online banks are financial firms that provide banking services mainly or totally through the Internet. Their services range from account opening to bill payments and CD investments. 

Online banks operate 24/7 and offer lower fees, fewer time limits, higher savings and CD rates, and cashback rewards.

The main drawback of Online banks is their exclusive virtual operation: Customers will be unable to deposit or withdraw cash due to this. Some online banks offer ATM services, like Capital One 360, blending physical and virtual operations, widely recognised as online. However, these developments still do not entirely remove the doubt many still have about online banks. 

In this blog post, you will get a very definite understanding of how online banks handle security and if you can trust an online bank to keep your earnings.

FDIC’s role in bank security

In 1933, Congress inaugurated the Federal Deposit Insurance Corporation (FDIC) to keep the country’s banking system stable and the public’s trust in it. This was an urgent and highly needed move because, in the 1920s, spanning into the early 30s, a national bank failure resulted in a severe loss of many American savings. 

The FDIC has been saddled with the responsibility of Insuring financial institutions, bringing accountability, and increasing customer protection. Part of the duties is to make significant economic issues easily resolvable. Since its inception, the FDIC has proven its capacity over the years by changing the US banking security trajectory. 

Aside from federal government funding, the FDIC collects premiums from its members to cover expenses and compensate depositors at failing banks. The bank deposits the money into a Deposit Insurance Fund (DIF), with banks paying based on insured deposit balances and risk levels.

Related blog post: What are online banks? Features, Drawbacks & Reputable Banks.

What are online banks? Features, Drawbacks & Reputable Banks.

What are online banks

What are online banks?

Online banks are also known as e-banks, web banks, electronic banks, or, in the US, direct banks. These institutions primarily or solely operate online, utilizing websites, mobile apps, and digital channels instead of physical branches.

Financial institutions provide digital experiences via mobile apps for seamless online account access and transaction execution. Online banks differ from these in that they do not have physical branches. 

Capital One 360 runs a hybrid structure with a handful of physical offices and an imposing digital structure. It is, in a real sense, regarded as an online bank. This hybrid structure gives a great impression to those who want the low transaction rates that come with online banking and the confident assurance that comes with traditional brick-and-mortar banks

A brief history of online banks

On October 1, 1989, First Direct began offering 24-hour telephone banking in the United Kingdom. That decision paved the way for the introduction of online banking, which started in the early 1990s with the commercialisation of the Internet when computers became more prominent.

The first online (direct) Bank in the US was Security First Network Bank (SFNB), established in 1995 and pioneered the insurance of direct banks by the Federal Deposit Insurance Corporation (FDIC). This Bank proved that online banking was a move in the right direction despite its inability to close its initial year in profit.   

As internet banking grew, so did the willingness of customers to use the Internet for banking. The FDIC’s banking report shows that at least 60% of bank users do at least one or more forms of banking activity online. This statistic is also responsible for the fast-rising growth of exclusive online banks.  

Notable features of Online banks

Like traditional banks, online banks cater to all the services most bank users need. These include account opening, savings, fund transfers, and bill payments. Some online banks can offer savings even in the absence of physical offices because of ATM networks where customers can deposit and withdraw money with no or very minimal charges. 

The complete digital structure adopted by most online banks is responsible for lower operational costs because they do not have to pay rent, buy many buildings, or worry about high maintenance costs. 

Below are a few notable features of online banks:

  • 24/7 Access

Traditional banks have designated working hours before and after which they do not attend to more customers. The case is different with online banks, which offer a 24-hour service accessible anywhere as long as access to a broadband network exists.

  • Attractive Interest Rates

Are you looking for the best CD rates? Then, an online bank is one of your best options. Online banks are likelier to give the highest annual percentage yield (APY).

A certificate of deposit (CD) allows customers to save for a set amount of time and earn interest. CDs differ from savings accounts because you can only touch the money at the end of the term, or you’ll have to pay fees or lose interest.

  • A small deposit is required to open an account

Most internet banks don’t make you keep a minimum balance like most traditional banks do. You usually only need a small amount of money to open an account with them, or nothing at all. 

  • Competitive incentives

Traditional banks entice customers with attractive interest rates and incentives like referral bonuses and cashback rewards on transactions.

  • Zero charges on ATM withdrawals

Online banks tend to operate fee-free ATM transactions, and even when they do not, they tend to offer a certain number of free transactions during the day. 

  • Better Online Experiences

Because online banks operate exclusively or primarily online, they are prone to investing mainly in this specialisation. A 2018 Bain and Company survey reveals traditional banks’ lag in crucial customer-centric areas compared to online banks.

The Ultimate Financial Literacy Guide: Six Places to Acquire Knowledge.

Financial Literacy: Key  Image

Do you want to acquire an intricate knowledge of finances and get ahead financially? There is always an opportunity to improve financially, ranging from free courses to programs costing thousands of dollars. 

Financial literacy is essential for managing money well, making wise choices, and becoming financially stable in the long run. Proper financial knowledge has a good impact on individual and corporate saving habits. The Financial Industry Regulatory Authority (FINRA) did a study that showed people who know more about money are more likely to save for emergencies and handle their day-to-day finances better.

In this blog post, we will consider six channels through which anyone can acquire financial knowledge.

1. University degree (Finance-related courses) 

Are you looking to get financial education inside the walls of a school (either in person or online)? So, the word “finance” could be used for any course that teaches how to spend and handle money.

If you get a degree in Finance, you will know a lot about corporate Finance, which is business finance. Accounting, Valuation, Risk Management, International Finance, and Economics are all courses connected to Finance and will help you learn a lot about them.

A bachelor’s programme typically lasts three to four years, with some four-year programmes requiring students to intern at local businesses as a condition of graduation. Finance is often taught as part of a Bachelor of Business Administration or Bachelor of Economics. 

Here are a few prominent institutions that offer finance-related courses: 

Another academic option to consider if you want to spend less is going for a short-term financial course. 

2. Short-term Finance courses

A short-term finance course is ideal for those seeking affordable education without the commitment of a multi-year college degree. It’s also great for workers who want to move up in their jobs by getting a certificate in finance from a well-known school.

The great thing about a short-term course is that any novice or professional can enrol and improve their personal or organisational financial life. While some short-term finance courses require experience, many are open to people without a background in finance.

A short-term finance certificate programme teaches you how to make the most of your chances in the financial markets and make smart choices about money and investments. 

Five (5)  Crucial Mistakes to Avoid as Your Business Grows in 2024

Medium shot of a business owner trying to grow his business 

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Entrepreneurs face challenges and opportunities every year, and it’s always good to be ready with the right strategies. This blog post discusses five (5) business growth mistakes business owners should try to avoid in 2024, drawing on the experiences of successful entrepreneurs and current trends. By following these strategies, you as a business owner are ready to experience business progress.

Read more: Five (5)  Crucial Mistakes to Avoid as Your Business Grows in 2024

Record Label offer? Know this before signing a deal!

What is A Record Label

Are you interested in using your love for good music to make a fortune while working with a record label? This is the right blog post you need to help you take your vision to the next level without getting into any problems with your record label. 

Who is a recording artist and performer?

Recording artists are professional musicians who make a living by recording music, most of which is that of others but can also be their own, selling it, and performing at live events. This can be an individual, a band or group of friends, or a large orchestra.

In the past, it was pretty difficult to venture into the business of song recording because of the limitations of technology. New technology like multitrack recordings and stereophonic recordings makes it easier for record labels to sign more deals with people to produce their recordings. With the very vast softwares available for recording, even a teenager can start a career in music and begin to rake in several thousand dollars after a while. 

Recording Artist in a Record Label

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There are two ways to take your song recording and performance to a professional level: either sign with a record label or work as an independent artist. Each has its own pros and cons. 

What is a Record Label

A record label is a company that manages brands and trademarks and coordinates the production, distribution, marketing, promotion, and intellectual property rights compliance for musical recordings and music videos. Record labels also recruit and grow new musicians and maintain agreements with recording artists and respective managers.

Signing with a record label can be a huge step forward for any recording artist or anyone looking to make a career out of music. In fact, artists flaunt their record deals and celebrate when they get a deal with a record label. 

While some artists will never get a record deal with a record label and hit it big, Getting a deal with a record label can make a difference in an artist’s music career. In most cases, artists think that landing a record deal is the key to success, and while it can be a major part of one, it is not the only step to a successful career, and the journey could get demanding after some time. 

There are two major types of record labels:

  • Major labels: The music business is dominated by three well-known record labels known as ‘The Big 3’: Sony, Universal, and Warner. These labels are usually associated with well-known musicians. 

Major labels are well-funded and have a wide range of divisions that cover every aspect of music production. Furthermore, they manage a number of smaller independent labels that specialise in specific genres and specialisations.

  • Independent labels (indie labels): Independent (indie) record labels and music publishers are those that are not under the ownership or control of the big three. The term “indie label” may refer to those who fit specified criteria for organisation and scale, or it may refer to any non-mainstream music releaser, regardless of structure.

Indie labels are frequently more artist-friendly. Despite lower sales, they frequently give higher artist royalties, which is usual in 50/50 arrangements. These labels are usually artist-owned, with the goal of controlling output quality. 

Despite the fact that independent labels lack the “big three” resources and market shares, indie artists might earn more because of cheaper production costs. Smaller revenues might sometimes help them repay their original investments.

What is a Recording Contracts 

A recording contract is a legally binding agreement that dictates the terms of the professional engagement between a recording artist and a record label. Usually, the label has a contractual responsibility to support and collaborate with the artist, and the artist accepts the label’s offer to record music.

The specifics and commitments in a recording contract are not really standardised. To interpret the contract, the artist must be prepared to speak with a legal expert who is very familiar with music and copyright laws

The artist will agree to produce songs for the record label for the number of years stated in the contract. This contract can be extended based on mutual agreement between the artist and the label. However, the label is most likely to terminate the contract if the artist is not profitable for the label. 

Signing a Record Label Deal

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According to the IFPI standard, the typical investment a major record label makes in new artists is between $500,000 and $2,000,000. This money covers many things, most of which is spent on advance, production (sound and video), promotion, and tours. This investment is usually pivotal to the huge success of many artists signed by major labels, as it provides sufficient budget to take an artist from obscurity to fame. 

In a case where the recording artist has a track record of success as an independent artist, the artist will have more bargaining rights than an artist with no track record. In fact, during negotiation, you must present your best foot before the record label and prove that you have what it takes to be a successful artist. 

Termination of contract

Typically, contracts include provisions for cancellation, with artists agreeing to pay back any advances in order to exit the contract. The label maintains ownership of the music recordings and could also force the artist to give over every track they produce until the advance fund is repaid.

Related Blogpost: 5 Reasons to Start Your Career as an Independent Artist

Pros and Cons of signing a record deal

Pros.

  • Exposure: Signing with a major label makes it simple to get more exposure because they have a good reputation, a bigger budget, and a global presence. 
  • Paid for and prepaid: After signing with a record label, an artist has access to financial support for studio time, production, marketing, promotion, tours, and other expenses, making it easier for them to complete the process without worrying about money.

Cons. 

  • Reduced creative freedom: Most record labels are all about the business, which results in a situation where the creativity of the artist is highly prioritised. Record firms, especially large labels, focus on nurturing musicians into “sellable” products. Artists interested in financial gain may find this deal beneficial.
  • Profit is distributed on a percentage basis: labels typically give artists 20% of their earnings from large record deals, with the remaining 80% going to the label. However, these arrangements frequently include the previously stated advance payments as well as a lot of exposure, so it’s not all terrible and may change with a subsequent review of the contract. 

Earning money as a signed recording artist

If an artist lands a record deal, he or she must be intimately acquainted with a few things. This is because a record deal might not be the end of an artist’s personal financial problems; it can even be the reason why the artist goes broke later in life. Just like in any other field, a sound knowledge of how the business of that realm works will be the difference between a successful and unsuccessful artist.

How royalties work for record labels 

In general, the earnings of a recording artist under a record label come from the label. The record label releases the track or album through distributors. The earnings from the product are paid to the distributor, which then pays the label. The label pays the artist in the form of royalties. 

An artist also gets a performance royalty every time his or her recording is played on the radio or performed by others at a live event, even if it’s the artist’s own event, as long as the set list is submitted to the performing rights organisation.  

However, this is dependent on the kind of contract the artist has with the record label. This type of contract will determine whether a portion of the performance royalty will go to the record label or not. 

Record Label Advances 

On signing a record deal, a record label usually pays the artist a sum of money to help the artist-run their day-to-day activities during the whole production process, just before the royalties begin to flow in. This is called an advance. This is to help the artist focus on creating the best that they can because they have undisturbed time to explore their creativity. An advance is not usually considered a loan; however, this money is usually recouped immediately when the record label begins to make money from the releases. In the case where the record deal yields no profit, the record label is not obligated to demand any repayment from the artist. A typical advance amount will usually range from anything between $50,000 and $350,000, depending on the size of the record label and the track record of the artist. 

How much, on average, can a record label artist make?

Royalties from music streams can be so small for every individual stream that you almost think no artist can make a fortune from royalties. However, when you consider that over one million times in a year someone streams a song released in the United States, you will realise that streaming royalties can amount to a fortune for the several parties involved in the whole production of the sound and video. Billboard estimates that in the year 2021, Dua Lipa raked in a whopping sum of over four million dollars on a single track, which happened to be the most streamed song in 2021. Being a record label signee has many advantages. The most important thing, however, is to make sure that you read the contract’s terms and that you consult with a professional in the area of legal issues to help you fully investigate all of the terms of the contract before signing any agreement. 

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