The Latest Market Commentary as on 11th May, 2011

I am pleased to provide the latest Pure FX market commentary. Detailing the main factors that have been affecting currency exchange rates recently.

Sterling overview

Sterling took a bit of a battering last month following a string of lopsided economic releases. Important sectors including Services and Manufacturing showed growth but both came in below market expectations – contributing to sterling’s fall against currencies including the euro.
In spite of this George Osborne had reason to breathe a huge sigh of relief. Britain returned to economic growth with GDP figures for the first quarter 2011 arriving at +0.5%. This indicates that Osborne’s budget cuts are working - stimulating growth while slashing Britain’s mammoth public deficit.

The Bank of England meanwhile decided to hold interest rates at 0.5%. This was forecast on the markets but has also contributed to sterling’s decline. Each month that the BoE holds interest rates is another month in which investors receive smaller returns – hence making the pound less attractive.

Sterling weakness is of course brilliant for people bringing funds back from the continent and elsewhere. As always for a more in-depth assessment of your particular currency feel free to speak to a currency dealer at Pure FX.

Euro

The euro remains the biggest climber in recent weeks in spite of a flood of negative headlines – gaining several percent against sterling. The single biggest reason for this climb has been the European Central Bank’s decision to raise interest rates to 1.25%. This prompted the markets to plough cash into the euro since higher interest rates mean better returns.

In fact this climb has only halted last week after the ECB’s decision to not increase rates, proving a great disappointment to investors that had factored in another rise.

In other EU news Portugal became the third euro member to seek a bailout – receiving €78bn from the ECB-IMF. This weekend meanwhile rumours have been rife that Greece could exit the euro. It hence seems the EU peripheral crisis could continue for months to come.

In GDP meanwhile the EMU expanded 2.0% in the first quarter 2011 – providing further fuel to the euro’s fire.

US dollar

In economic terms the US continued to resemble someone walking a tightrope in a strong breeze last month – just about keeping his balance.

The US expanded +0.45% in the first quarter 2011 according to recent data – positive but slow compared to 3.1% growth in Q4 2010. Important non-farm payroll figures meanwhile arrived strong – pointing to 244k new jobs last month – but at the same time unemployment rate increased +0.2% to 9.0%.

CA dollar

The election of a Conservative government in Canada last month should boost the loonie in coming months. New prime minister Stephen Harper is committed to cutting Canada’s national debt and safeguarding the nation’s credit rating – actions that should please the markets.

AU dollar

It’s been a strong month for the Australian dollar on several counts – and the forecast for coming months looks good too.

For one the Reserve Bank of Australia (RBA) raised its inflation forecast last month. This prompted investors to pick up Australian dollars in expectations of an interest rate rise. In addition RBA noted that strong demand from China and India for Australia’s natural resources is set to continue for years to come.

NZ dollar

The NZ dollar suffered last month on reports that migrant intake to New Zealand fell into negative figures for the first time in almost 3 years. This is owing to the earthquake that struck Christchurch two months ago – devastating the nation’s economic outlook and prompting potential migrants to look elsewhere.

Saving Money Comes To People As An Afterthought

So you enjoy a savings account. Oh, really? A lot of people have saving accounts but find it hard to deposit into it. This is a very common problem and you may be experiencing it. When your paycheck arrives, it is usually deposited automatically to your checking account to pay the never ending stream of bills and expenses.

But before you go rushing to your bank to close your savings account, consider first putting it to good use. Here’s how to save more money using your savings account. The scheme is you talk to your employer and ask if they can deposit a part of your paycheck to your savings account as well. And that’s it.

It doesn’t really matter how much is deposited, just keep this scheme going to ensure that your money is saved before it’s spent. It’s that simple but why is it very effective?

When you receive your income, you will most probably do some budgeting and allocate the money to bills, rent or mortgage, groceries and other necessities and expenses. Left over money, if there is, is what usually end up as savings.

The problem is, for most of the times, nothing is left to be added to your savings. There is almost never any money left. If there is, left over money still has to survive your temptations of spending them. If you have excess money and it’s easily accessible, your tendency is use it to buy the first beautiful dress you see, or the latest electronic upgrade for your computer and other fancy materials that may catch your attention.

Automatic and regular deposits of your income to your savings account mean you don’t have to think about it and you don’t have to rely on what’s left. The money is already saved before you have to think about expenses and before you can spend it on other things.

You don’t get to hold the money and be tempted to spend it for comfort goods. Automatic savings is very easy to do, thanks to modern day technology and automated systems. Although some employers don’t allow this splitting, most banks can make a direct link between your savings and checking accounts.

Instruct your bank to establish an automated transfer between the two accounts on a regular basis. Say your paycheck arrives every Monday, you can set an automatic transfer for a fixed amount of money to coincide with this day. How much you save matters only if you are planning on a goal.

But if you are saving just for keeps, even $20 every payday is so much better than nothing. However, it is highly suggested that you allot at least 5% of your total income to go to your savings. What matters, as has been repeated, is that you keep this going for as long you can, for as long as possible.

Couple your savings with the bank’s interest rate and you are definitely going to have a wealthy sum you can use for the future or whenever needed.

You can use all these strategies to save money, reduce debt and improve your life but it means nothing unless you have a foolproof method automatically set up to do it for you. Get my FREE money saving secrets set on auto pilot at: www.the-richest-man-in-babylon.com

Money is something for which you trade your life energy

Have you ever wondered when are you going to die? Sounds strange, Isn't it? Today I visited one of the site which actually predicted my year, month and day of death. Though I never believe in these things still just for fun I wanted to see how many more days I am alive. How can a website estimate how much life you have left. That is not at all possible.

But the question is what this have to do with personal finance? It is actually very much related because that can help us in revealing what we think of our money?

What is Money according to u? As per me it is :

A medium or an exchange involved for the payments of your debts. Money is power, it is a source of luxurious living, a source of comfort and security. The best definition that I have come a crossed about money is : "Money is Something for which you trade your life energy"

Give a deep thought on this. Majority of people in this world get money by giving up some part of our lives. Just imagine you go for work, work hard, earn some money and by this time your death clock is ticking down. No doubt when you are young, you are more energetic and can convert some of this excess into money. But the saddest part is that it only a conversion not a storehouse.

Our life is traded for money and once it is done, it cannot be changed back to original. The only goal that would left with us would be of striking a balance to convert the sufficient life energy into the money that you will need for enjoying rest of your life.

Cost Counting

To apply this principle you need to find out your hourly wage. This will help you in providing the information on how much your life energy is actually worth of. This is how you will be able to measure the cost of money spent equivalent of value of life energy lost. Why not you try some eye opening conversions i.e. take general examples from your daily life. Like:

Calculate how much energy do you spend at your work? Check if you spend less energy and still you can be happy or not? how much energy you are using to buy any new things for your family and many more such examples.

I am not saying that you should never spend money, but you should find a point where you are spending more and still being happy and joyful. You have to learn to say " I have enough and I dont need more... ".

So always remember that when ever next time you spend enough money do nos forget to ask yourself how many hours all these purchases costing you, not only this, is it really worth or not? Do come back and share your views with us.

Why I Failed in making Investments?

On one of my Friend's recommended me to invest in my long term assets. So I decided to give it a try. But I guess I was not at all successful in making good investments. There were many factors that let to my failure. Let me discuss them one by one so that you don't fall in to the same trap.

Lack of Domain Knowledge

With utter excitement I went and just made the investment in my long term assets without even understanding the current market structures and prices. I never considered important to take advices from the professionals and took made all bad decisions which lead to my failure.

No goal in mind

My dad always says that there should always be a proper goal before taking any decision especially in the terms of relationships and finances. I never made any investment goal which lead me to the failure during the last moment. There should always be proper planning in whatever we do. Absence of the same caused me huge money loss.

No Risk Knowledge

My friend only told me about the profits that I would gain from investment, but he forgot to tell me about the risks and knowledge. Whenever you are investing in short term or long term assets make sure your risk taking capacity is high.

Lack of patience

Patience is one of the most required quality any investor should possess. Lack of the same will always lead to investment failure. Risk is directly associated with patience.

No Investment Identifications

I never identified which investment is best suitable for me. Long term or short term. I straight away went and invested in the long term investments. Factors like risk, patience, goals should be kept in mind before deciding the type of investments to be made.

No Right Adviser with me

My friend is very new in this profession. He joined this business 6 months back and as a result of this I never got proper and good guidance from anyone. If I had good adviser maybe I wouldn't have committed stupid mistakes.

I was Over Confident

My dad always used to tell me, "Confidence is good, Over confidence is worst". I din respected his words and as a result of this I lost huge amount of money. I was over confident of my success in investments.



I always had a Bad Luck

A good investor is one whose luck always favor him. And my bad luck just goes hand in hand with me. I invested huge sum of money in playing in casinos and lost all of them.

Aggressive Attitude

Since very beginning of my life I have been very aggressive in whatever I do. As a result of my this attitude I never thought about the losses and always concentrated on making only profits.

I know I have built my own graves, but life gives us a learning lesson. I have promised to myself that I will never make any investments until and unless I am confident about the domain.