Five Simple Steps Toward Financial Literacy

Financial Literacy Does Not Have To Be Difficult

First Published Date: November 15, 2012 ADawnJournal.com

November is Financial Literacy Month. This is a special post to participate in Blog for Financial Literacy campaign. 

Financial literacy does not mean you need to have an MBA, CFA, CGA, and so on or you spend hours endlessly deciphering the Wall Street Journal everyday. Financial literacy begins with taking some simple steps and today I will discuss such basic steps you can take right now to build a solid financial future.

Step One – Spend Less Than You Earn – This is the most basic, yet most difficult, step to take to become financially independent. If you can’t do it, any other financial plans will become meaningless.

Step Two – Pay Yourself First – If you have money in your hand, for sure you will spend it and it will be gone. Depending on your affordability, set aside 5 to 20 percent of your income every month and invest it in a low MER, income-generating and less volatile mutual fund or ETF. Do the whole Step 2 automatically so you don’t see this money and it gets deducted and invested automatically each month, year after year.

Step Three – Avoid Accumulation Debts – Avoid the accumulation of credit card or any debt. Use a credit card only when you can pay it off in full each month. Avoid buying a car or furniture on loan. However, good loans to build asset and generate income are okay, such as mortgage, investment loan, etc.

Step Four – Build An Emergency Fund – Have six months to one year living expenses set aside separately in a high interest paying savings account, mutual fund, or ETF.

Step Five – Set Goals and Review – Know what your goals are (such as buying a home, paying off a mortgage, retirement, etc.) and start saving realistically to pursue your goals. At least once a year review your progress and adjust your spending habits to reach your goals.

These five steps are not the end of financial literacy journey; they are only the beginning. Once you kick off your journey with these basic steps, start educating yourself more on financial literacy and flourish to become financially literate and independent.

India Feels Global Economic Crisis Heat

And There Is The Possibility of Credit Rating Downgrade

First Published Date: December 5, 2012 ADawnJournal.com

Although the Indian economy showed streaks of optimism in September after the government’s economic reforms program, it did not take long to become sluggish again. India’s stock index and as well as its currency has weakened since October. Finance minister P. Chidambaram was right to mention that India’s economy can not be insulated due to the economic crisis the world is going through.

In 2012, the Indian economy is expected to grow 5.5 to 6 percent. Growth is expected at 7 percent in 2013. Beyond 2013, growth should be back to 8 percent. However, the International Monetary Fund (IMF) slashed India’s growth forecast from 6.1 percent to 4.9 percent.

The industrial output showed slight signs of growth, but not enough to invigorate the economy. High inflation is also a concern – although it seems like inflation has eased slightly recently. The Reserve Bank of India (RBI) has kept interest rates unchanged in the last policy review. The expectations that RBI would lower interest rates did not happen. The RBI is to announce its next monetary policy on December 18.

Public sector enterprises have been blaming high borrowing costs for the sluggishness of Asia’s 3rd largest economy. Higher borrowing costs curb consumer spending and lower industrial output. The government has been blaming public sector enterprises for sitting on large amounts of cash without putting them on investments to help the economy grow. And then there is the recent fear that rating agency Standard & Poor’s might downgrade India’s credit rating. However, India’s government is in decline and a credit rating downgrade will not happen as India is taking all the necessary steps to ride through the economic crisis.

North Korea's Underground Illegal Economy

The Black Economy of North Korea

First Published Date: November 23, 2011 ADawnJournal.com

Like many other 3rd world countries, but on a larger scale, North Korean elites live a life of luxury accompanied by imported luxury goods such as luxury cars, yachts, the latest digital electronics, fine wines, expensive shoes, and so on. However, the country has difficulty feeding its general population. Its deteriorating rationing system can only feed about 4 million North Koreans. The other 20 million rely on the black market economy. Also, the government elites need the black market or illegal economic activities to generate foreign currency to support their lifestyle. It’s a situation where both groups benefit. For one group, it is essential to buy food in order to survive; for the other group, it is essential to buy their luxury goods.

According to an estimate, the North Korean regime has spent US$ 1.04 billion or possibly more since 2008 to import luxury goods from foreign countries. To buy these goods, North Korea needs foreign currency. However, its own currency can’t be converted to foreign currency, as North Korean currency is worthless outside North Korea. So, where does Kim Jong II get U.S. dollars to fund his regime?

The country does not have a manufacturing sector to manufacture anything that can be sold outside to get foreign currency. There are hundreds of abandoned manufacturing factories all over North Korea with broken glass or windows; they look like ghost factories. North Korea uses thousands of acres of land to grow opium and use these about-to-collapse factories to manufacture narcotics at night on state level. Then the North Korean government uses government-backed drug dealers to transport it to China. In North Korea, the government uses its law-enforcement agencies to crack down on small non-government drug dealers so government drug dealers can mind their business without any interruptions and provide dollars to the regime.

Although there is nothing being manufactured in North Korea, the government is very good at manufacturing illegal weapons. The government uses its military and other departments to manufacture a wide array of weapons ranging from rifles to missiles, chemicals and nuclear warheads. These weapons are sold to other rogue regimes, drug dealers, and terrorists across the globe through the black market to earn foreign currency.

North Korea manufactures counterfeit U.S. dollars (supernotes) and sell them in the underground black market (mainly in China across its border) for a 40 to 50 percent discount to get real U.S. dollars. North Korea also manufactures gigantic monuments depicting 3rd world country “glorious” leaders. These monuments cost millions of dollars a piece.

The pain, agony, and suffering of the North Korean population is deplorable. However, its black market economy is booming, and so is the living standard and lifestyle of North Korean elites.

First Impressions of Cairo | Egypt Travel Blog: Day 0 (Part 2)

Airport to the Oasis Hotel, Alexandria Desert Road, Giza, Cairo, Egypt

Egypt Travel Blog: 10 DAYS Egypt Explorer - Felucca Cruise & Red Sea

My airport guide brought me to a car in the parking lot. There were no other passengers or guides. He said the driver would take me to my hotel, so we headed towards my hotel, which would be about an hour's drive.

After exiting the airport, the highway to Giza seemed to be on high land and it offered a very nice view of Cairo from afar.

My first impression of Cairo was on the drive from the airport to the hotel. The first thing on the street I noticed was that no one was following lanes and driving was chaotic. Some drivers were cursing at each other for trying to cut through or whimsical overtaking, although it seemed to be the norm. I instantly realized that I was no longer in Canada.

One strange thing that struck me right away is the intertwining of ancient and modern Egypt. Although it’s a modern city, Cairo still has that ancient feeling. It’s like Ancient Egypt lives within present Egypt’s modern structure and modern landscape. I have not had this kind feeling anywhere else - that I am in a very ancient city. The structures, air, noise, smell, landscapes, sights in the distance … everything reminded me that I am experiencing a living history 3000 years old. 

I noticed lots of frames of abandoned buildings that were never completed. I was not sure why so many abandoned buildings were left standing like shadows of ghosts.

I will write more about Cairo in future posts, but if you want me to summarize Cairo, I will tell you this: Cairo is crazy, intense, chaotic, confusion, mayhem, noisy, polluted, hot, unthinkable, uncontrolled, disorganized, and dirty.

But don’t get me wrong here. I didn’t say I disliked Cairo. What I mentioned above is what makes Cairo unique. Cairo is also colorful, vibrant, ancient, full of life, welcoming, safe, friendly, bubbly, warm, and accommodating.

There was something about the ancient sprawling mega metropolis that tugged at my heart and I put Cairo on my list of Forever in Love. I will not hesitate to visit Cairo many times in the future.

India’s Falling Rupee and Its Economic Future

India’’s All-Time Low Rupee Causes Downward Chain Reactions

Published Date: December 1, 2011 ADawnJournak.com

The Indian falling rupee has reached an all-time low when it reached 52 against the US dollar on November 21. The rupee has lost 16 percent of its value against the US dollar this year – making it the most depreciated currency in Asia and the 3rd most depreciated in the world.

The European debt crisis, slowing domestic economy, high interest rates, and fear that India will be hit by a shortage of US dollars are some of the factors that are putting pressure on Indian currency and causing the fall. According to data released by India’s Securities and Exchange board, foreign funds bought only $392 million of Indian stocks this year in comparison to $30 billion in 2010. Figures like this show that foreign investors are nervous about India’s weak economy and the sentiment will continue to deteriorate with the declining Indian rupee.

India’s targeted fiscal deficit is at 4.6 percent of its GDP. It is unlikely that this target will be achieved. It was initially thought that India would be unaffected by the Euro crisis and global economic slowdown. However, recent steady streams of financial news and data show that this is not the case. And the recent downward currency fall adds more worries to an economy that is already on a slippery slope.

22 percent of India’s GDP is made up of imports and India imports 21 percent of the world’s pulses to meet domestic demands. Also, India imports 70 percent of its gas and oil demands. A weaker rupee will make imports more expensive, and thus will increase inflation and raise the current account deficit.

High inflation and high interest rates cause corporate profits to decline and make foreign investors withdraw investments – adding more pressure on a currency that is already declining. To fight its account deficit, India needs direct foreign investments. With a declining currency, declining foreign investments, Euro debt crisis, global economic slowdown, and 320 billion foreign exchange reserves, India has a lot of work to do to in the coming months.