Stash Your Cash – A Safe Haven for Your Savings

In the times we’re living in today many people are looking for alternative ways of saving their money. As inflation and debt levels continue to soar while wages remain stagnant, it’s becoming increasingly difficult for people to grow a nest egg.

In the book, “The Richest Man in Babylon”, Arkad was widely known for his great wealth. The story suggests he had a working theory of, “A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn… pay yourself first.”

Unfortunately, most of society has strayed away from this thinking.

The fact is Canadians aren’t saving as they once did and collectively are holding record high levels of debt. The average household savings rate in Canada has dropped from about 20 percent in the 1980’s, to 5.8 percent in the fourth quarter of 2016.[i] Many people believe they cannot save because after paying “all their bills” there’s nothing much left. However, understand that in most cases if you’re attempting to save after paying all your bills you may find this strategy to be futile. Instead, get in the habit of saving first or, consider it paying yourself first. Once you’ve developed this habit then you can look into what vehicle you want to save your cash in.

Generally speaking, when people DO consider saving often times the traditional approach is taken; open a bank savings account and dump as much cash in it as possible. Sit on it like a goose sits on her eggs and wait for your savings to hatch. The sad reality for most however, is making a future cash withdrawal only to be afforded the ability to buy less with their savings because inflation has eaten away at it. And you’ll always be on the losing side of a bank savings account because interest rates are not higher than inflation.

Another option many consider is putting money into the stock market however, one should not consider the stock market as a savings vehicle because the stock market has had a history of crashing dating back to beyond 1929.[ii]

Search the definition of saving in Webster’s dictionary and see “preservation from danger or destruction” while the definition of investing reads, “to commit (money) in order to earn a financial return.” Neither method is good or bad but you must understand which it is that you’re trying to do.

Finally, during my research I have found throughout history when people lose faith in their national currency, the banking system that controls it and their governments, many rush back to gold. Gold is the oldest form of money and has proved to be a safe haven for centuries. Gold cannot be printed, debased, or inflated. Simply put, gold is financial insurance.

To understand this concept more, it’s important to start investing in your own education. Financial literacy should be taught in our school system however, sadly it is not. If you are concerned about where to stash your cash so that you can protect your money from danger and destruction, you will have to take those matters into your own hands. And for good reason too, your savings should be in your hands because your economy should be the most important economy to you!

What Are Merchant Banks?

Merchant banks are the financial institutions that offer financial services, solutions, & consultation to organisations. According to a notification of the Ministry of Finance in India, a Merchant Banker in India is defined as ‘any person engaged in the business of issue management either by making arrangements regarding selling, buying, or subscribing to the securities as manager, consultant, an adviser in relation to such an issue management’. Thus, a merchant banker provides its client’s consultancy for financial, marketing, managerial and legal matters.

What is Merchant Banking?

Unlike commercial banks who caters to the needs of the common man whereas merchant banks cater to the needs of corporate firms.

Merchant Banking is typically the provision of guidance and service to corporate for a fee, which can help an entrepreneur start a new venture, raise capital, expand and modernize the existing business, restructuring a business or help companies register, buy and sell assets (shares) at a stock exchange.

What are Merchant Banking Services?

Project Management: Merchant bankers prepare project reports to analyse the financing patterns to evaluate the cost of a project and appraising the same with financial institutions.

Management of Debt and Equity offers: One of the major functions of a merchant banker in India is assisting companies in raising funds from the investors. The main services offered are,

• Product designing
• Pricing
• Registration of documents
• Guaranteeing support
• Allocation and refund
• Manage Stock exchange listing

Management of Issues: These bankers play an important role in the management of issue that involves the marketing of corporate securities like equity shares, preference shares and bonds offerings to the public.

Merchant banks act as a middle man in aiding transfer of capital from investors to their client. Per the SEBI guidelines in India, a merchant banker in India, organizes meetings between the company representatives and agents to settle arrangements related registration of prospectus, launching advertising campaign and fix board meetings to pass necessary resolutions. These bankers also consult companies in the Pricing of issues. The merchant bankers also provide Underwriting of Public Issue (not exceeding 15%).

Client Portfolio Management: Managing a diverse array of securities such as shares, bonds issued by different companies to ensure maximum return with minimum risk.

Placement and distribution: These bankers assist in the allocation and distribution of securities through the merchant banks institutional and retail network.

Corporate Restructuring: These bankers act as the middle agents in negotiations between the two companies and assisting the management of its client for various to restructure activities such as mergers and acquisitions, divestitures, management buyouts, joint venture and more.

Off Shore Funding: The merchant bankers help their clients manage joint ventures, foreign currency investment and foreign collaboration arrangements.

Loan Syndication: Merchant bankers assist clients in getting term loans for projects, obtainable from a single development finance institution, a syndicate or a consortium.

Corporate Counselling and Advisory Services: Corporate counselling is a comprehensive package of all merchant banking services, such as project counselling, restructuring, issue management, loan syndication, etc. Merchant bankers also offer their corporate customer’s customized solutions to financial difficulties along with attempts to refinancing alternatives, evaluating cheaper sources of funds.

How ERP Brings Increased Productivity for the Financial Sector

The finance industry deals with stocks, equity, funds and hefty amount of investments. The aim of a financial service provider is to boost the profit figures of clients and build a mutually valuable relationship. However, increasing revenue for them not only limits to increasing customer acquisition and sales. It also signifies the fact that having a flawless process workflow also helps in downsizing costs and minimising the turnaround time.

In a financial sector, especially in stocks, transactions happen in a single blink of an eye. Needless to say that these companies need to meticulously manage all the transactions and customer data. Thus, for streamlining these complex operations and increasing the level of efficiency, it is important to integrate an ERP software solution, which will deliver full data integration, ensure greater accuracy and accessibility of reports at real-time basis.

For a more detailed overview, here are some of the major advantageous aspects of using integrated ERP systems for the Financial sector.

Enhanced Productivity
One of the thriving benefits of ERP Integration is it allows a steady and quick boost to the business productivity of financial service companies. It manages and integrates all relevant business data for simplifying the operations and increasing productivity thereby, resulting in improved customers, boosting profit margins and maintaining partner relations better.

By deploying its extensive functionality, banks and other financial institutions can make their operations well-streamlined starting from the customer counter to strategy making level. This, in turn, will deliver consistent performance and unmatched operational efficiency.

Analysis and Integration
ERP for the financial service companies boosts the level of integration across varied organisational roles and operations. It helps the company to develop a single port of communication for employees, customers, managers and partners. Furthermore, it makes easier to have easy access to significant business data by using the finance module of ERP. This module consists of a range of specialised features including accounts receivable, accounts payable, general ledger, reconciliation, billing and payroll. All these features collectively help in performing various complex accounting tasks including collecting financial data, preparing financial reports, trailing balance data, quarterly and annual financial statements and balance sheets.

Reporting and Tracking
An advanced ERP solution hosts an array of features for the financial service companies, which help them to gather, analyse and comprehend data easily and prepare accurate reports as well. Thus, the users can easily explore and access data on real-time basis. Using this integrated solution will help banks and other financial institutions to track data, products, investments and offer clients with complete information to make well-informed investment decisions.

With ERP, businesses can explore a host of advantages including increased productivity, faster internal accounting, reduction of errors and task automation. Thus, seeking expert advice of a skilled OpenERP consultant will certainly improve profitability of financial service companies and enjoy sustainable level of growth.