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Many are fearful of investing, many already did it, others are on the fence as to whether it’s still worth it. Nicholas Gregory, founder and CEO of London-based cryptocurrency enabler CommerceBlock, here provides Finance Monthly with some insight as to whether you’ve missed the boat or not at this point.

The chatter surrounding Bitcoin investments has reached fever pitch in the new year, and the higher its value rises, the louder it gets.

But how do you time an investment in a market like this, and is it worth it?

A massive stumbling block for would-be investors is the fact that nobody inside the industry truly understands how valuable Bitcoin really is. Fair value is difficult to pinpoint, and the market has been gyrating wildly as record high after record high has bowed to the cryptocurrency’s seemingly unstoppable rise.

Meanwhile skeptics continue to question whether Bitcoin has any value at all.

Warren Buffett of Berkshire Hathaway famously called Bitcoin a “mirage” back in 2014, and his criticism still echoes today. This is largely because regulation in many jurisdictions is yet to catch up.

Putting the intrinsic value of Bitcoin aside for a moment, the appeal of cryptocurrency largely depends on whether or not the investor expects other people to want to take it off them at a later date.

If people think Bitcoin has value, then it does. This faith - that it is a store of value and means of exchange - is what has underpinned traditional Fiat currencies ever since stone money was created in Micronesia. Those ‘coins’, which could be so large they weren’t even moved, were also a store of value solely because a community of people agreed they should be.

This same dynamic can lead potential investors to grow nervous over the future value of Bitcoin but, as history shows, it’s nothing new.

I, and my colleagues at CommerceBlock, help companies do business in Bitcoin. So if it’s true that Bitcoin is worthless, then we are in serious trouble.

What makes me more certain than ever that we have a future, is the same excitement that is driving the headlines. Bitcoin promises to be a currency not anchored to the old guard, not beholden to bankers, lawyers, high fees and costly international settlements. It’s a no-brainer for businesses who can accept huge payments from the other side of the world in minutes.

So what impact does this have on the value of Bitcoin? Well, anyone who has observed the astronomical growth in its valuation over the course of 2017 will know that its price has been volatile, to say the least. At the start of the year it was at around $800, before more than doubling to $2,000 in May. Then, in August, it broke the $4,000 mark for the first time. As I write this, Bitcoin is worth over $16,600 just four months later.

However, it’s a leap of faith to chase a market that has risen so dramatically. At the same time, I am one of those who believe bitcoin will be worth $100,000 one day. It’s either that or it will be worth nothing at all.

This is only my opinion. But even if I’m right, I can’t tell you how long that will take or what bumps we will encounter along the way.

In investing, you can be right in the long run, but still lose money. It is best summed up by a retort to famed hedge fund manager Michael Burry, played by Christian Bale, in the film The Big Short, as he defends his decision to short the housing market.

Burry tells a disgruntled colleague: “I may have been early, but I'm not wrong.”

Then comes the reply: “It’s the same thing.”

Alarming new research from bed manufacturer Sealy UK, has revealed the nation’s bankers and finance professionals are turning up for work sleep deprived - impacting not only on their productivity and mood, but even their safety. It is now spearheading a major initiative, appealing to bosses to take this often-overlooked issue more seriously.

The awareness campaign is based on data from Sealy’s recent Worldwide Sleep Census, which questioned 5,000 people of a working age from across the UK, revealing a staggering 79% of bankers and finance professionals admitted they could function better at work if they slept better.

This places the sector as the second most sleep-deprived profession in the UK, coming below hospitality (86%), but above construction, retail and transport.

It appears this ongoing sleep deprivation is causing some serious issues in the working week; 65% of bankers regularly lose their temper or have been irritable to a colleague, 30% claim they suffer a lack of productivity, while 19% say they’re often late into work or have time off as a result.

A shocking 1-in-25 even admitted falling asleep whilst at work.

However, perhaps most worrying is the 11% of bankers who have had a recent accident at work – such as a trip or a slip, due to feeling tired.

A call for bosses to put sleep at the top of their agenda

Despite the popularity of ‘wellness’ perks at companies across the UK, from gym memberships to medical insurance and even free healthy snacks, sleep remains something that is often overlooked by employers, and not treated as an important issue. This happens despite the potentially serious impact of staff not achieving adequate rest, as demonstrated in the study.

Neil Robinson, an expert on sleep at Sealy, comments: "Lack of sleep – and the subsequent fallout the next day – can be caused by a wide range of legitimate medical conditions, from stress, to mental health problems or respiratory disease. Even at the less severe end of the spectrum, there’s usually an underlying health issue causing sleeplessness. However, it’s often treated as an incidental issue by bosses, with a ‘pull yourself together’ attitude. This is not helpful for employees, especially when there are some potentially severe consequences of turning up exhausted.

“There are of course occasions when staff are tired as a result of staying up too late or burning the candle at both ends. However, this campaign is about helping bosses make that distinction, as well as encouraging a common-sense approach to effectively managing sleep in the workplace”.

To address this important issue, Sealy is working with a leading HR expert, Kate Russell, of Russell HR Consulting – a firm advising companies of all sizes across the UK when it comes to best-practice HR policy – to produce a ‘common sense’ guide for bosses to better manage sleep deprivation of staff.

(Source: Sealy)

Last week, the FTSE 100 saw a late upward rush as it closed at a new record high of 7,724.22 points. This was after a fresh record high at the end of the year, spurred by a rally in mining stocks and a healthcare burst. But how will FTSE kick off the year and will it sustain its consistency in record highs throughout 2018?

According to some sources, the success of FTSE in 2018 will largely depend on the outcome of Brexit negotiations, although a rise in the pound may make it a mixed blessing. Below Finance Monthly has heard Your Thoughts, and listed several comments from top industry experts on this matter.

Jordan Hiscott, Chief Trader, ayondo markets:

I believe the FTSE 100 will go above 8,000 in 2018. In part, this is due to the current political turmoil we are experiencing, with the incumbent UK government looking increasingly unstable as each week passes, an economy that seems to be lagging behind Europe on a relative basis, and the ongoing turbulence from Brexit.

However, all these factors are already known to investors and traders and so far, the FTSE has performed well despite these fears. For 2018, I believe the Brexit turmoil will increase dramatically as negotiations with Europe continue down an incredibly fractious route.

Craig Erlam, Senior Market Analyst, OANDA:

Two key factors contributing to the performance of the FTSE this year will be the global economy and movements in the pound. The improving global economic environment was an important driver of equity market performance in 2017 and many expect that to continue in 2018, with some potential headwinds having subsided over the last year. The FTSE 100 contains a large number of stocks that are global facing, rather than domestically reliant, and so the global economy is an important factor in its performance. Stronger economic performance is also typically associated with stronger commodity prices and with the FTSE having large exposure to these stocks, I would expect this to benefit the index.

The global exposure of the index also makes the FTSE sensitive to movements in the pound. After the Brexit vote, the FTSE continued to perform well as a weaker pound was favourable for earnings generated in other currencies. The pound has since gradually recovered in line with positive progress in Brexit negotiations and a more resilient UK economy. Should negotiations continue to make positive progress this may create a headwind for the index and offset some of the gains mentioned above. A negative turn for the negotiations though would likely weaken sterling and provide an additional positive for the index.

While many people are confident about the economy, Brexit negotiations are more uncertain and will have a significant impact on the index’s performance, as we have seen over the last 18 months.

Sophie Kennedy, Head of Research, EQ Investors:

We believe that the synchronised global growth and continued easy monetary policy should support global risk assets going forward. As such, equities should deliver a reasonable return over the next year, which will be the starting point for FTSE performance.

The deviation of FTSE performance around global equity performance will likely be a function of a few factors:

  1. The level of sterling is extremely important. Many FTSE companies have very global revenue streams. As such, when sterling falls, foreign earnings are inflated. The level of sterling over the next year is likely to be a function of Brexit-negotiations, the result of which we are not attempting to forecast.
  2. There are a number of large commodity producers in the FTSE. Their profits and share prices tend to rise and fall with the price of commodities. The oil market looks more balanced than it has previously and strong global growth should boost global commodity demand. However, we have already had a large rally since the middle of 2017, so upside is likely to be more muted.
  3. The trajectory of the UK economy is also relevant, particularly for the smaller capitalisation parts of the market and sectors including housebuilders and utilities. We are not hugely positive on this point, on account of the real income squeeze and continued weak investment environment.

We feel that points 1 and 2 are neutral but point 3 is negative. As such, we expect the FTSE to deliver positive returns but likely underperform the MSCI World.

Tim Sambrook, Professor of Finance, Audencia Business School:

2017 ended the year strongly and is now around all-time highs. The 7% return and 4% dividend gain was better than most had hoped. But will this positive trend continue or will investors worry about the price?

The FTSE has performed strongly, because the global economy has done well. The FTSE is largely a collection of international conglomerates who happen to be based in the UK. The political mess has had little effect on the economic environment (fortunately!).

Strangely, a poor negotiation on Brexit will have a positive effect on the FTSE (if not the UK economy) as a large part of the earnings of the larger companies are overseas. Hence a fall in sterling will lead to a boost in earnings and hence push up the price of the FTSE.

Currently there is little reason to believe that the global economy, and hence corporate earnings, will not continue to do well in 2018. The current PE of the FTSE is not cheap at around the 18-20, and is without doubt above the long-term average of around 15-16. However, this is not excessive and could even support some negative surprises this year.

However, the underpinning of the current bull market has been dividend yields. The FTSE is currently offering 4% and is likely to increase over the coming year, with many of the large caps having excess liquidity. This is very attractive compared to other assets, particular as we shall be expecting higher rates in the future. The large number of income seekers are likely to increase the positions in the FTSE this year rather than reduce them.

Ron William, Senior Lecturer, London Academy of Trading:

The UK’s FTSE100 was reaching all-time record highs into the New Year, fuelled by a global wave of investor euphoria. 2018 was the best start to a year for S&P500 since 1999, marked by the Dow’s historic break above the psychological 25K handle.

All these technical new high breakouts are being supported by the highest level of upward earnings revisions since 2011, coupled with extreme levels of market optimism last seen at the peak of Black Monday 1987.

From a behavioural standpoint, it seems that analysts and investors are silencing tail-risk concerns in a precarious trade-off for fear of missing out on the party.

The “January Effect” is part of a tried and tested maxim that states “as the first week in January goes, so does the month”; and even more importantly, “as January goes, so does the year”. So our recommendation would be to see how January plays out as a potential barometer for the next 12 months.

However, keep in mind that we still live in known unknown times; some major markets have not even had a 5% setback in 16 months and the VIX index is at new record lows.

Back to the FTSE100, all eyes remain on the next glass ceiling: 8000. While there is an increasing probability that the market will achieve this historic price target, we must also apply prudent risk management as the asymmetric risk of a violent correction remains.

The long-term 200-day average, currently at 7422, is key. Only a sustained confirmation back under here would signal a major cliff-drop ahead from very high altitudes. Brexit tail risk will more than likely continue to weigh heavily on it.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Digital banking is growing in popularity with 53% of consumers using or willing to move to an online or mobile only bank — 27% have moved already, while 26% are considering the switch. This is according to research commissioned by Relay42.

The reasons for this shift included receiving a better online experience and functionality (58%), more attractive finance rates or fees (29%) and better quality of service (28%). In addition, just 13% of respondents said they weren’t interested in exploring new technologies to help them manage their money.

“The banking sector is undergoing significant change, in terms of shifting customer demands and expectations, as well as factors such as legislation and regulation. Customers are on the precipice of embracing future technology and new products, which means their existing banks need to keep pace with demands and innovation to ensure customer loyalty and competitiveness . Very often, the solution lies in orchestrating technology to create a relevant online experience and deliver personalised offers and service quality” says Julius Abensur, industry head: finance, Relay42.

More than half (56%) of respondents said they would actually remain loyal to their banks if they were sent customised offers based on their personal interests and behaviours. While this approach is reliant on data, this presents another operational and regulatory challenge as 41% stated they didn’t know how their data was being used by banks, while 29% expressed concerns regarding how it was being used.

“The appetite that consumers are showing for online or mobile only banking further demonstrates that convenience is shaping customer experience, which actually strengthens the relationship banks have with their customers.”

However, the research showed that 69% of respondents would change banks given the right motivation. Considering that 26% would change to digital-only banking, there is a definite desire for more convenience from customers.

“This openness for new services and offerings suggests they won’t remain loyal to one bank for very long,” says Abensur. “As a result, banks can’t afford to be complacent and must engage with their existing customers, streamline their journey and ensure complete relevance and personalisation on every touch point along the way.  Financial institutions need to focus on the customer experience and build that loyalty in order to ensure their future success.”

The research, conducted by Censuswide, independent survey consultants, was aimed at understanding consumer attitudes towards traditional banking, the role of technology in its future, and the idea of customer loyalty. 2,019 people across the UK participated in online interviews in September and October 2017.

For the full findings of the research, download the report here.

(Source: Relay42)

Investors now have little alternative but to support risk assets if they want to beat inflation, affirms one of the world’s largest independent financial advisory organisations.

The assertion from Tom Elliott, International Investment Strategist at deVere Group, comes as global stock markets enter 2018 with positive momentum, including the Dow Jones which has surpassed 25,000 for the first time in history.

Mr Elliott explains: “Market confidence is supported by a reasonably strong cyclical upswing in world GDP growth. This is being translated into corporate earnings growth, by a belief that central banks will not significantly tighten monetary policy unless justified by growth and inflation data, and by the U.S. corporate tax cuts announced in December which will boost Wall Street corporate earnings.

“In the face of continuing low interest rates and bond yields, investors now have little alternative but to support risk assets such as equities and non-core government bonds, if they want a yield that will beat inflation.”

An acronym is currently being popularised that describes how many investors see markets unfolding in 2018: MOTS, standing for ‘more of the same’. That is to say, solid returns for stock markets with continuing low volatility, and positive returns from investment grade corporate bonds.

“The risks to the MOTS scenario include central bank policy error, Trump turning America away from its traditional support for free trade, a credit crunch in the Chinese financial system and from geopolitics such as North Korea and the Middle East. However, as supporters of MOTS would argue, none of these risks are particularly new and they failed to de-rail markets in 2017,” confirms the strategist.

He continues: “We favour a long-term multi-asset approach to investing, whereby investors choose a suitable combination of global equities and bonds - depending on their risk profile and investment horizon - and leave the portfolio unchanged. Regular re-balancing ensures winners are sold and losers are bought – which financial history, and common sense, supports but which is so hard for us to do in practice.”

Mr Elliott goes on to say: “Looking forward to 2018, Japanese and emerging market stock markets appear to some commentators to offer most value, the U.S. less so. The Japanese economy, which grew at an annualised rate of 1.4% in the third quarter 2017 (despite a shrinking population), continues to benefit from a weak yen and the upturn in global demand for its exports. Fiscal reform, in particular lower corporate tax rates for companies that increase wages by 3% or more, comes into effect in April. It is hoped that this will lead to improvements in household demand growth, which has been weak in recent years. Emerging market equities continue to look undervalued relative to their developed market peers on most valuation measures, despite their outperformance in 2017.

“Wall Street is the most overvalued of the major stock markets, with the attractiveness of equities against bonds diminishing as Treasury yields creep up. However, the increase in yields is likely to be modest and U.S. corporate earnings growth will remain strong, limiting any pull-back in share prices. The weak dollar boosts export earnings, while strong consumer confidence supports domestic-focused sectors. Tax cuts will be a net benefit to U.S. corporate earnings, but the impact of changes to the tax code on individual sectors is as yet unpredictable. Fourth quarter earnings statements and outlook comments, from mid-January, will hopefully offer clues.”

Mr Elliott is not so confident about fixed income. He concludes: “Once again we begin the year with commentators generally nervous of bonds, fearing that an inflation problem is around the corner. Some fear that central banks will tighten monetary policy faster than is priced into the market in an accelerated effort to ‘normalise’ policy.

“It seems prudent to heed such warnings, even while acknowledging that the fear of imminent inflation has been voiced by monetarist hawks – and proved wrong- ever since central bank’s policies of quantitative easing and ultra-low interest rates began nearly 10 years ago. This suggests favouring short duration core government bonds, since the cash can be re-invested in a few years in higher bond yields.”

(Source: deVere Group)

If you’re feeling the pinch after an expensive festive season, now is the perfect time to start revising your current finances and begin to make plans for the new year. Managing your finances more effectively is easier than you think, with just a few small changes, you can put yourself in a much stronger financial position to face the year ahead.

1. Organise your Current Finances

The best way to start your new plan is to organise and understand your current finances. It’s a good idea to set out clearly what you earn, what you owe, what you save, and what you spend. This way, you will be able to work out exactly what you spend and what you have spare each month.

You can do this easily by printing out your last few months’ bank statements as they will show all of your income and expenditure. Then, it is a good idea to highlight all of the expenses you can’t save on, like rent/mortgage payments and bills, so you can see clearly what your total ‘certain’ costs are.

Then, do the same with all of your other expenses; living costs, financial products (insurances), travel and leisure, so you can give yourself a full understanding on where your money goes each month. Once you know this, you will be able to start sorting out areas where you can save money.

2. Cancel Unused Subscriptions/Memberships

It’s not unusual to have a few expenses that manage to keep going unnoticed each month, especially when they automatically leave your account in a direct debit. I am guilty myself of having a 6 month gym contract that was never used!

If you’ve noticed that you have a few expenses, other examples could be magazine subscriptions that you no longer read or monthly subscription boxes, you will be surprised at how much they can add up to over a few months. Being realistic and strict with yourself and only paying for the things you actually use and enjoy will cut down a lot of money wastage.

3. Change Vehicle Insurance Providers

Most of us own a vehicle of some kind which needs insurance paid for on a monthly basis (if you choose to pay it monthly, rather than annually). A lot of people stick with the same insurance provider year after year, simply because it’s the easiest option. What a lot of people don’t know is that you can often get a cheaper premium if you switch to a different provider, especially if your financial circumstances have changed.

Some providers will offer attractive deals to new customers, or, they may just simply be cheaper because they look at things differently – and you may have never heard of them! Using comparison sites such as Gocomapre.com is often the best way to find the cheapest deals.

You can switch to a new provider at any time, you don’t have to wait for your current policy to expire.

I would recommend checking for better deals on a yearly basis, especially if you haven’t made any claims on your insurance throughout the year. But you should also check when you have a change in personal or financial circumstances, such as:

I can’t guarantee that any of these will make massive changes to your rates, but it’s definitely worth a look.

4. Balance Transfer your Credit Card

If you have some debt build up on your credit cards which you’re paying a lot of interest on, then it might be worth transferring some, or all, of the balance onto a different credit card which has cheaper rates. You can find cards that are specifically designed for this purpose called a balance transfer card.

A lot of balance transfer cards offer 0% interest for an introductory period (sometimes up to 6 or 9 months) which will benefit you as you will be able to start paying off the actual credit card balance, not just the interest.

After the 0% introductory period, the rates will increase to the standard rate, so make sure you know what this will be, and that it is cheaper than your current card.

Top Tips:

5. Change your Bank Account

Some banks charge a monthly fee for some types of bank accounts, If this is something you are paying, it will be beneficial to have a look around to see what other banks are offering. You may find a bank offering cheaper fees, or none at all, depending on what type of account you want to open.

Some banks will offer new customers attractive interest rates, as well as some even offering you a bonus upfront for simply opening an account with them.

This may not make you any huge savings upfront, but would be beneficial to you in the long-run if you are able to gain better interest and cheaper fees.

6. Switch Home Phone and Broadband Suppliers

You may find that if you stick with your current home phone and broadband provider, your bills could increase if you just let your contract roll over. However, switching providers is likely to give you much cheaper rates, saving you money all year on household bills. Using comparison sites will show you which providers will be able to offer you the cheapest price for your usage - make sure you only accept a deal which covers what you need so don’t end up over paying! Your current provider will be able to tell you this information.

The length of time it will take to switch will depend on what providers you are switching from and to – but you shouldn’t be without connection for long, if at all, so the small inconvenience will be worth the saving.

If you are still unsure about switching, try phoning your current provider instead. If you’re lucky, you should be able to haggle with them to bring down your price a bit – especially if you are overpaying for your usage anyway.

7. Pay Yourself First

I think a really good method of saving money is to set up a direct debit from your current account into a savings account for the same day as when you get paid each month. You should set it to an amount that you know you can afford so you will be less likely to notice that the money has gone. By doing this, you will be saving money without even having to think about it.

This can be an emergency fund for unexpected expenses, for example car or home repairs, which could end up putting you in debt if you don’t have the money readily available and need to take out a loan to cover the cost.

8. Check your Mobile Phone Contract

Mobile phone contracts can be very expensive, especially if you have a brand new model of phone. However, a lot of us end up paying for more than we actually use. There’s no point taking out a contract with an ‘unlimited data’ deal and paying more for something if you’re not going to use it. If you contact your provider, they will be able to tell you exactly what your mobile phone usage is; including minutes, texts and data. Then you will be able to choose a contract that’s tailored to you.

Also, if you are someone who uses your mobile phone more rarely, it might be worth thinking about a pay-as-you-go deal instead of a monthly contract. This way, you will only be paying for exactly what you use each month which should make it much cheaper for you. It will also mean you are not tied into a contract so you can change your phone and switch to a contract, if you think that would be better for you, whenever you want.

9. Text Alerts from your Bank

A good way to keep track of your spending is to set up text alerts with your bank. By doing this you will get notified when you either; get close to your limit (when your balance falls below £50), you have started using your overdraft and you are being charged, if you don’t have enough money in your account to pay a standing order or direct debit (they will give you time to transfer money into your account, if you can), and when your balance has gone down to £0. Doing this will enable you to effortlessly keep an eye on your accounts and keep track of your spending. It will also prevent you from going into your overdraft without realising, saving you from facing charges.

Most major banks offer these services and you can set it up through your online banking account, in branch, or over the phone.

(This information was taken from Lloyds bank, alternative banks may differ).

Bigger Steps…

If you're looking into making some even bigger changes to your finances, there are a couple of steps you can take:

1. Re-mortgaging

Re-mortgaging your home could seem like a huge step to take, but, it could potentially make you huge savings if you find the right deal.

If you have been on the same variable rate mortgage for a long period of time, you may not be paying the best interest rates available to you. By re-mortgaging with a different lender, you will be likely to benefit from cheaper interest rates and various introductory deals. Most lenders offer deals for the first 2-5 years of the loan term, whether that’s a fixed, capped, or discounted rate. Once this period has ended, the interest rates will go back to the lender’s standard variable rate, so, of course you want to make sure you choose a lender that has a cheaper rate than your current one.

There a few upfront costs involved with re-mortgaging your home, such as exit and administration fees, but if you compare the costs with the money you will be saving on interest, it should prove cheaper in the long-run.

Or, if you don’t want to go through the process of re-mortgaging, it will be worth contacting your current lender and asking them to lower their rates for you, especially if you have already found cheaper rates elsewhere. Not all lenders will do this for you, but most will want to keep you as a customer so will probably try to help.

It will be worth getting independent financial advice if this is something you are looking to do. This will make sure you are doing the right thing and that you are getting the best deal.

2. Get a Lodger

This may not always be a popular option with a lot of people, but if you have a spare room, it may be worth thinking about getting in a lodger who will pay you monthly rent. You could have a friend who’s looking for a place to stay, or you can publicly advertise the room – it depends what you’re comfortable with.

If you do this, the rent would be an extra source of income for you, which should help to cover the cost of bills and food.

(Source: KIS Bridging Loans)

The Dow just soared through yet another milestone, crossing 25,000 for the first time. CNN's Christine Romans explains what's driving gains.

More than nine in ten finance and accounting professionals (92%) are optimistic about increased automation in the profession, according to new research from Renaix.

The study, which questioned over 200 finance and accounting professionals, reveals that 81% are seeing their role impacted by emerging technologies, such as advanced data analytics (63%), cloud computing (42%), robotics (17%) and artificial intelligence (15%). This increases to more than nine in ten (94%) who believe these technologies will impact their role in the next five years.

Yet, despite the increasing role of technology, only 12% of those questioned believe their job will be completely automated within the next five years, with most seeing new tools as an opportunity rather than threat. Two thirds (69%) say automation will enable them to be more efficient, over half (59%) say it will allow them to add greater value to clients and 40% say it will reduce the amount of transactional work they’re involved in.

But that doesn’t mean there aren’t challenges, with more than half (59%) of respondents having to learn new skills to keep up with technological developments, with data analytics (54%), soft skills (54%) and working with new technologies (51%) coming top of the list.

Many are also worried about skills shortages over the coming years, particularly in data analytics (52%), STEM (science, technology, engineering and maths – 42%), and soft skills (31%). Furthermore, a quarter (25%) of those questioned say their employer still isn’t investing in upskilling the finance function to work with new technologies.

Paul Jarrett, Managing Director at Renaix, comments: “Emerging technologies are set to transform the finance and accounting sectors, with many professionals already feeling the impact on their day-to-day responsibilities. And it’s encouraging to see that, far from being intimidated or threatened by these new ways of working, the majority of professionals are excited and optimistic, believing automation will improve and expand their role in the coming years.

“Finance and accounting organisations have a fantastic opportunity to drive forward digital transformation, empowering all employees to play their part in developing and implementing new ways of working. However, to do so effectively, employers need to ensure they are equipping the workforce with the right skills, as well as investing in bringing in the right talent. While there will always be a need for traditional finance and accounting skills, we’re seeing a significant rise in demand for a broader range of backgrounds, particularly those with STEM qualifications. Businesses therefore need to plan their talent needs effectively, to ensure they stay ahead of the game.”

(Source: Renaix)

Many dedicated cryptocurrency and blockchain companies will be ‘R&D by default’, says specialist tax relief firm, Catax. They could therefore be eligible for much more relief than a standard business, meaning US and UK firms could be in line for hundreds of millions in tax relief. Traditional firms investigating blockchain technology and the commercial potential of cryptocurrencies will also be eligible for R&D tax relief.

Catax estimates that as much as 82% of the work carried out by dedicated crypto firms will be eligible for R&D tax relief given its ‘ingrained innovation’. This compares to roughly 35% with a traditional company performing R&D.

In many cases, the enhanced R&D eligibility is because the majority of the workforce will be focused on developing this technology and adapting it to a specific sector or use case.

Rather than channel-specific, the R&D being performed at these companies is company-wide.

But traditional firms investigating the use of these new technologies for their specific sectors will also be eligible.

Firms in countless sectors are currently weighing up the benefits of trading in cryptocurrency amid the recent $12,000 valuation of Bitcoin, and the acknowledged efficiencies of the blockchain. This amounts to time and money ‘developing a new product or business process’ — the basic requirement for an R&D tax claim.

UK firms have already raised a total of £52.8m ($71m)1 in ICOs, while the total raised in the US has reached more than $1.1bn (£820m). In the United States, firms are allowed to claim relief under the R&S Tax Credit system.

TokenData has revealed 90% of funds raised through ICOs has occurred in 2017, which means R&D tax relief for UK firms will fall well within the two year deadline for claiming.

Mark Tighe, CEO, Catax, commented: “Each day we’re seeing more and more dedicated blockchain and crypto companies emerge, while a growing number of traditional firms are also allocating significant resource into how they could integrate this technology into their own operations and sector.

“Within the crypto field, innovation is often company-wide rather than channel-specific and so the eligible expenditure is considerably higher than with traditional firms carrying out Research and Development.

“While you can’t claim R&D on Bitcoin and the blockchain itself, the potential for relief comes when companies evolve them or create new versions altogether. An example might be creating bespoke ‘sidechains’ for your sector that run alongside the blockchain, or a new digital currency altogether.”

(Source: Catax)

One of the biggest trade crazes of 2017, Bitcoin and cryptoculture is a young profit-making hobby turned job for many. Now recognized as a serious business through the regulatory backing of governments and large corporations, it’s future is almost certainly one of continued proliferation, but what does its history look like? Below, Finance Monthly hears from trusted cryptocurrency expert, Fiona Cincotta, Senior Market Analyst at City Index, on the past 10 years of Bitcoin.

So far Bitcoin has only had a short life. However, the few years that it has been in existence have seen the currency go from almost unknown, to hitting the headlines on a daily basis.

Let’s take a look at a brief history of Bitcoin.

2008 – The Legend of Satoshi Nakamoto

Satoshi Nakamoto, or someone working under that alias, allegedly started the bitcoin concept, or so the legend goes. In 2008, Satoshi Nakamoto published a paper, which outlines the concept of the bitcoin. Most notably this paper addresses the problem of double spending, so as to avoid the currency being copied and spent twice. This was an essential foundation brick, that allowed Bitcoin to expand where other attempts at cryptocurrencies had failed.

This same year Bitcoin.org was born. The domain was registered through a site which permits its users to buy and register domain names anonymously.

If we think back to August 2008, it was just weeks before the collapse of Lehman Brothers and at a time when banks were notorious for behaving as they pleased. Bitcoin was intended as a decentralised alternative, controlled and monitored by market forces rather than banks and governments

2009 – Bitcoin becomes public

Bitcoin software is made available to the public for the first time. The first ever block is mined – it was called Genesis. Mining is the process by which new bitcoins can be created. The transactions are recorded and verified on the blockchain. The first ever Bitcoin transaction occurred between Satoshi and Hal Finney, a developer and cryptographic supporter.

By the end of 2009, the first bitcoin exchange rate is established and published. Bitcoin receives a value like a traditional currency. At this point $1 = 1309 Bitcoin

2010 – Bitcoin’s first real world transaction

As global economies continued to recover from the financial crash, the first real world Bitcoin transaction occurred, when a Florida programmer paid 10,000 bitcoins for 2 pizzas worth around $25. Later that year bitcoin was hacked, drawing attention to its principal weaknesses; security. Bitcoin had been trading at around $1, prior to the hack, which then sent the value through the floor. Further bad press this same year, which suggested it could be used to fund terrorist groups did little to increase its popularity.

2011 – Parity with the dollar

Bitcoin reaches parity with the dollar for the first time. By June of the same year each bitcoin was worth $31 each, which meant the total market cap reached $206 million. 25% of the projected total of 21 million bitcoins have now been mined. Encrypted currencies in general were starting to catch on around now and alternatives were appearing, such as Litecoin. Each virtual currency tries to improve on the original Bitcoin. Today there are around 1000 cryptocurrencies in circulation.

2013 – Security Issues; Price Crashes

June of this year saw a major theft of bitcoin take place, from a digital wallet - once again highlighting some of the cryptocurrency’s weaknesses. In the same year, another major security breech saw the value of bitcoin tumble from $17.50 to just $0.01. 2013 also saw the US Financial Crimes Enforcement Network issue the first bitcoin regulation. This would be the start of an ongoing debate as to how best regulate the virtual currency. Bitcoin’s market capitalisation had reached $1 billion.

2014 – Mt.Gox disappears along with 850,000 bitcoins

This year was characterised by growing understanding and desire to regulate bitcoin. Not surprising after the world’s largest bitcoin exchange Mt.Gox suddenly went offline and 850,000 bitcoins were never seen again. Whilst there is still no answer to what happened to those Bitcoins, valued at the time at $450 million, at today’s value those coins would be worth $4.4 billion. The same year US released the Bit License – proposed rules and guidelines for regulating virtual currencies. Microsoft begun accepting payment in Bitcoins.

2016 – Bitcoin boomed

Bitcoin saw an annual gain of 54%, outperforming all fiat currencies. This was the year that the bitcoin really started to establish itself and provided holders of the currency various ways to generate a return or indeed use the currency. It was seen as a safe haven from traditional assets in a year of Brexit, Trump winning Presidency, the continued rise of ISIS and the refugee crisis in Europe.

2017 – Legitimacy and $20,000

The value of bitcoin jumped from $997 to over $19,661 and its popularity has soared exponentially. The currency went mainstream as it became listed on two futures exchanges CBOE and CME. The listing of Bitcoin Future contracts on these exchanges has boosted the legitimacy of bitcoin and made it more widely available. Despite the futures contracts providing ability to short bitcoin, the value of the cryptocurrency hits an all time high.

Finance Monthly also recently heard from Fiona Cincotta, Senior Market Analyst at City Index, on the spread of cryptoculture and the passion for conversion among entrepreneurs globally.

The latest car registration data brings worrying confirmation that the long run of a retail driven economy may be starting to falter. With the performance of the automotive sector so intrinsically dependent upon the nation’s levels of disposable income and access to credit, the recent performance of the sector in the 10 months to October 2017 indicates that car dealerships across the country may face an extremely challenging end to 2017 and start of 2018, according to Duff & Phelps.

“The recent public statements of the larger motor dealers are of profit warnings and of a softening of used car values. Further, the interest rate rise of 0.25% - the first rise since 2007 - will impact on a number of consumer reliant sectors, no more so than an industry fuelled on the availability of credit. Consumers have also had additional spending power as a result of PPI redress, but this will soon be coming to an end. The question therefore is how well prepared are manufacturers and their dealership networks to manage through what appears to be, the start of a potentially significant downturn?” states Michael Bills, Managing Director, Restructuring Advisory, Duff & Phelps.

“Overall, in the 10 months to October 2017, the market is 4.6% down compared with 2016 and 12.2% down on October alone. However, it is somewhat polarised between those manufacturers and dealers enjoying a modest increase in sales this year and those for whom the opposite is true. Certain marques are seeing reductions in sales demand of around 20% year-on-year. And there will be regional differences too that need to be considered,” added Robert Tallentire, Duff & Phelps.

What is certain is that for many in the industry this will be new territory, a new set of trading parameters that they have not experienced for quite some time. With some 169,000 people employed directly in manufacturing and in excess of 814,000 across the wider automotive industry, it accounts for 12.0% of total UK export of goods and invests £4 billion each year in automotive R&D.

More than 30 manufacturers build in excess of 70 models of vehicle in the UK supported by 2,500 component providers and some of the world’s most skilled engineers.

“The question is what resources and abilities can the average independent dealer draw on to confront the challenge. Manufacturer franchising agreements are not that flexible for the independent dealer with the infrastructure and staffing of the business dictated by franchise agreements. Will these rules be relaxed to maintain dealer networks as the UK goes through the seemingly unending and unsettling Brexit process?” continued Robert.

Dealerships are faced with a business structure predicated on a predominance of fixed costs with labour as the main variable. For many the volume driven bonuses from Q3 that they use to provide a cash buffer for the slower winter months ahead were not earned and consequently were not paid at the end of October. Where dealers have traded outside usual parameters in order to reach bonus volumes, they are potentially now sat on what look like over-priced used vehicles stock, that will be challenging to liquidate and turn into cash. Either way, it feels like there could be a prolonged period of working capital challenges before dealers have the opportunity of a good bonus month again.

For lenders to the sector, the change in fortunes in new car sales and the softening of used car values may have crept up unnoticed. Those that extended seasonal facilities in August and September in the anticipation of a strong end to Q3 and subsequent cash receipts may be wondering quite where they go from here especially after the announcement of the October car sales made by the Society of Motor Manufacturers & Traders (SMMT).

Michael concluded: “Manufacturers will not want to see long standing dealerships suffering and possibly even disappearing as a result of an economic slowdown. Accurate forecasting, planning ahead and embracing of the rescue principles which Duff & Phelps promotes will be necessary to manage a tricky economic period. Our UK advisory team is uniquely positioned to advise dealerships and their stakeholders in a variety of distressed and special situations. Our team has sector experts, recruited from the industry and with real ‘workshop floor’ dealership experience and we understand the challenges being faced, so we would urge those dealerships facing tougher trading conditions to contact us to steer a route through the winter months.

(Source: Duff & Phelps)

Online research from Equifax reveals that 43% of British adults don’t have any personal savings set aside for unexpected financial events such as unemployment, illness or urgent repairs to their home.

The survey, conducted by YouGov ahead of the recent Bank of England rate rise, found that nearly one third (29%) of people, are concerned about their ability to meet all their financial commitments, for example rent, utility bills or mortgage payments, over the next six months. People are even more worried about their longer term financial commitments, with 37% concerned about meeting their obligations over the next two years. This figure rises to 48% for 35-44 year olds.

Half as many renters (33%) have savings set aside to fall back on compared to homeowners (67%), despite 43% of people who rent expecting their rent payments to increase to some extent in the next year, and of these people, 42% say they’re unable to afford any increase.

Jake Ranson, Banking and Financial Institution expert at Equifax Ltd, said: “The extent to which people live pay cheque to pay cheque with no financial cushion is a particular concern in the current uncertain economic environment. Debt levels are on the rise and wherever possible consumers should budget for unexpected expenses. The recent interest rate hike highlights the importance of setting aside some cash to counter any financial shocks.

“To help consumers better manage their finances, companies must ensure they offer products that match an individual’s financial capacity in the long term, taking into account economic jolts that could impact their ability to meet repayments.”

(Source: Equifax)

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