There are so many dynamic changes in the World of Finance from craze over Mutual Fund Investments to the Robot (AI) takeover. But how does one keep up with these trends and why?
The greatest misconception about financing is- that it is reserved only for businessmen, your friends in commerce field or the elite and that you need a lot of money to start partaking in this topic. This could have been true 10 years ago and not in 2023. All the barriers to entry have been taken down by technology and development in the financial sector.
With all these advancements there is no excuse for beginners and non-commerce folks to not attain knowledge about finance for personal – monetary and status growth in today’s economic world.
“Dealing with these trends will help to focus strategic planning efforts for 2023 and beyond and help us personally to develop the skills, capabilities and characteristics required for finance of the future,” advises Craig Wilton, CFO – Global Research Firm.
So take a look at these top trends in Futuristic Finance and get into the dynamics of growing and managing your personal wealth and savings.
There is no rank order for these trends, but each of them have a profound effect on individual configuration, interest, attainment, tools (both technological and manual) and implementation.
Neo Banks: 24×7 Mobile and Internet Banking Services
To make banking simple, convenient and meaningful, some modern-day start-ups are launching Neo-banks for retail customers in India. These businesses are partnering with traditional banks and offering better solutions by using technology like AI (AI) and machine learning (ML). Initially, the neo-banks that were launched in India targeted only business customer however soon they’re expanding their plethora to people of all incomes.
But digitalization of payments is already offered by apps like Google Pay, Paytm, PhonePe and now even the new soon- to-be launched WhatsApp pay. So what sets these neo banks apart?
Some solutions that neo-banks address might be almost like the present offerings of other fintechs. But they’re also addressing problems in banking that others don’t. With better insights on the funds of customer, they’re during a position of offer better solutions.
For example, if the customer has ₹10,000 lying within the account for a few weeks, the AI can suggest that the cash be kept during a liquid fund or a sweep-in fixed deposit which will earn better returns. this will be wiped out a couple of clicks. within the case of other apps offering solutions, the customer must be proactive to try to this.
Many of those platforms are targeting college students to become their first bank. they’re also watching millennials 
to supply lifestyle solutions. If there’s a budget-conscious consumer, he can choose one that has budgeting and savings tools built into accounts. If there are flat mates that share expenses, they will have an account with a neo-bank to trace and share the expenses. Individual business owners can choose neo-banks to reconcile their payments with their accounting software
To differentiate their offering, each neo-bank provides an answer that regular banks don’t. Before you decide for one, assess whether the answer it’s offering—be it expense management, investments or remittances—will be useful for you or not.
‘Faceless’ Tax Assessments – Transparent Taxation for Honoring the Honest.
A new taxation system has been launched in India to honour and encourage honest taxpayers under the leadership of Prime Minister Narendra Modi.
He said that this new scheme offers big reforms like faceless assessment, faceless appeal, and taxpayers charter. it’s surely estimated to vary the way we pay tax in India.
Under the system, appeals are going to be randomly allotted to any officer within the country. The taxpayer won’t be required to go to the tax office or the officer and therefore the case decisions are going to be team-based and reviewed.
The scheme aims to eliminate the interface between the taxpayer and therefore the tax department. The system abolishes territorial jurisdiction. Any person from any part of the country can be allotted an officer from an entirely different place
Faceless assessments are an honest idea since, the less the interaction of tax officials and taxpayers and their CAs, the less the prospect of corruption. It also reduces the burden on the tax employees who need to slog all day behind the assesses as they never disclose full information with the fear of being taxed.
The Standard and Poor Funds Investment (S&P 500 Index) – Mutual funds to ETFs.
Growth oriented assets have the power to boost your net worth credibly fast especially when you are young. These funds take the advantage and power of compound interest and will grow your money faster than any other investment. These funds have given investors an average return of 10% from 1926. It is one of the safest and most rewarding investment.
For example– If you invest $10000 in certificates of deposits with an annual return of 2% from the age of 25 with a plan of retiring at 65, you would have 22 thousand dollars at retirement. But by investing the same amount in S and P 500 Index fund with an average annual rate of 10 & you would have 100 thousand dollars at retirement which is more than 20 times as much you would receive in CDs option.
However, please note that the 10% return rate on S&P 500 funds is the average acquired from the last ten years. You may lose 20 % in one year and gain 40% in the next as the rates can fluctuate drastically. But when you are young this is the risk you can afford to take.
REITs (Real Estate Investment Trusts)
REITs is another growth type investment you can’t ignore in 2023. If you can’t afford to invest in real estate or afford to buy property, this is a great channel for you.
By investing in REITs you are taking the opportunity to hold portfolio of commercial real estate. Experts believe this is the better option than owning a single real estate unit because your investment portfolio will be diversified and invested in multiple properties within different regions giving you better security on your investment. Its best to be safe with your hard earned money.
The other advantage is that you don’t need to invest as much as you would with a single property. All you need is a couple 1000 bucks which in comparison to a single unit that acquires not only a large amount of capital plus rent and maintenance charges. Also you don’t have to actively manage the investment. Another benefit is this investment type will give you the advantage of investing in commercial property which often does better than residential property.
If you are still not sure about investment in Real estate, then note that it has been one of the best performing investment in last 5 decades. Secondly real estate is independent of stock market so it is possible for REIT to give you positive returns even when stock market is not doing so great. You can gather more knowledge on this investment from our exclusive article on REITs at The Indian Wire.
ROBO advisors- The Artificial Intelligence Takeover.
If you are not comfortable with dishing your money in real estates and stock funds (REITs and S&P funds) on your own, then you could use a Robot Advisor.
These advisors are automated investment platforms which will make all the investment decisions on your behalf. This includes a portfolio for you and managing it accordingly in the future. Sounds too good to be true right? But let’s face it, we might not have all the updated knowledge to make right investment choices. This is where the Robo-advisor come in to save the day.
These auto-mated platforms will reinvest your dividends and rebalance your portfolio and will offer you expert tax strategies to minimize your taxable investment revenue to at most minimum all you need to do us fund your account and let the robots work its hands-off investing at its best. These automated platforms will typically invest in a mix of bonds and stocks by creating an optimum portfolio.
Retirement Plan in your 20’s
Yes, you read that right! The average retirement age is in your 50s and 60s but the financial planning has gained importance at the early ages especially for millennials. You have to get a retirement plan, if you start early you will get an early jump on retirement savings and harness the power of compounding interest in your favor.
A year’s difference in retirement savings could amount to 1000s of dollars. If you start contributing 500$ a month to retirement plans with a return of 7% at the age of 25, you will have 2 million dollars at retirement. Let’s say you procrastinated this for 10 more years, now you are 35 yrs. old saving 1000 $ a month into retirement plan with a return of 7% you will have about $ 16,00,000 at retirement which is 20% less even though the annual contribution is 50% higher.
This example says that the earlier you start the more finances you have. When it comes to compound interest and its effect on your money – Time is your greatest advantage. If you want more money in your retirement, start early. It’s not how much you put in but for how long you. You can start with small amounts like 70-100$ and increase it over time. But if you could start with a lot more go for it without thinking otherwise.
The earlier you sow the more bountiful you reap.
The other reason why retirement plan is trending and so awesome is because it gets you tax deferral benefits [tax deferred pension plans include- 401(k)s, 403(b)s, 457 (b)s, Roth IRA etc.] Who wouldn’t want to pay less tax?
Invest in Your Personal Self- Health and Skills.
I know you probably didn’t think this wouldn’t be here but the 2023 Pandemic has made us realize the importance of one’s personal health care and growth in terms of skills and knowledge. By investing in yourself we mean taking care of all factors that affect you, this includes your body, mind, career, education, relationships and daily routine.
Invest in proper health care insurance and adopt a healthy lifestyle also continuously take courses to increase in your knowledge and be up-to-date. You don’t want to be 50 and struggling to be studying because a younger employee has come with fresh skillsets and knowledge. Take advantage of the fact that you are young and at home with available resources like the internet which is the plethora of information.
Take as many professional courses within your career path. Not only will this boost your knowledge but also open more opportunities for better paying job or help you manage your business better if you are an aspiring entrepreneur.
Networking is the New Norm
With increasing demand for job at the corporates, the competition to fill a single seat has gone up. Especially in the current scenario, career experts and skill trainers stress on the building of networking skills for a better financially secured job.
It’s not always about money. In your 20’s you should focus on building a strong network of people who can push you to the next level. Attend meaningful evens, join useful clubs, socialize with people and build your online presence.
Most people don’t think creating links is important but what they don’t see is that your network is your net worth.
You can easily get a better paying job, change career, identify opportunities or even get contacts for your business through your network. As you build one ensure you have a mentor to guide you through. In your 20’s you may not be able to immediately jump to the top position but with gradual building of professional friend’s network will guide you to your desirable position when the time is right. Make sure to update your LinkedIn and learn how to take full advantage of that network building application.
Investment in Financial Knowledge.
Recent studies have shown that people are throwing their money in attending courses and classes regarding financial intelligence. Many webinars are being conducted by the professionals who are eligible to create financial awareness among common people with very little to no financial or commerce knowledge.
They say you can never know too much. This applies to every aspect of your life including your finances. Taking up online courses on personal financial managements and read financial logs online, browse through wealth management magazines and attend events and conferences that will expand your knowledge on this topic.
The more you know the more you will be in a better position to make informed decisions concerning your money. Also, being always on the lookout will help you identify deals, promotions which could save you lot of money. This can also be approached in another way; you can improve skills based on your career path. It is no secret that companies retrench their employees during financially hard times like these.
If you are well qualified changes you will keep your job and if you get retrenched your additional skills will give you upper hand in getting a job. If you are aspiring entrepreneur continuously studying new trends and apply them to your business to increase your competitive advantage. This could increase your sales giving you a better pay-check at the end of month which in turn grows your wealth. Taking that time to study or learn something new can really pay of big time.
Decentralization of Wealth Allocation.
2023 is surely one of the craziest year especially for stock investments and markets. The prices of goal, silver and other resources like coal surged high thanks to uncertainty and fear of recession among the investors like you and I. The most important trend of this year in finance world was the disinvestment from currency and money to investment in safety wealth like Gold.
Experts believe that an investor’s portfolio may not look well-balanced if it doesn’t consist of gold.
Presently the upward pattern in gold costs makes the yellow metal a suitable speculation road with different venture alternatives accessible in the market. Presently, many lean toward putting resources into physical gold like gold adornments, gold bars, and coins, however those may be a somewhat unsafe recommendation in this season of the pandemic. Hence enters the hottest financial investment of 2023- Gold ETFs and bonds. You can learn about it in detail here.
While we are on the finance trends the Cryptocurrency gets a special mention as it is the most popular debatable yet in demand investment. The pi digital currency has become popular in Indian friend’s circle and they also now have a verified twitter account which brought in more investments. Bitcoins and other cryptocurrencies are gaining interest of millennials; you can gather knowledge about it on the exclusive article made by the Indian Wire on Bitcoins.
Although the list has covered 10 modern trending hot topics in finance as of now, layering all the financial trends will require months because of the ever changing dynamics of the national and global financial and economic fashions.