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An Intro to High-Risk Investments

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High-risk investments are investments in which there is a possibility that the investor can lose a substantial amount of or the entire investment. 

In simple terms, high-risk investments are investments in which you can lose a large amount of your money or possibly all your money. These kinds of investments sound dangerous, but they are very popular because of the large profits they can promise to investors. It’s a multidimensional path: you could get a large percentage of profit, make just enough profit, or lose some money.

Examples of Popular High-Risk Investments

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1.Crypto Assets 

Crypto assets are assets that are based on cryptography, peer-to-peer trading, a decentralized network, and the blockchain network. Crypto assets are grouped into four categories: cryptocurrencies, utility tokens, security tokens, and stablecoins (such as Tether). Of all the crypto assets, cryptocurrencies are the most popular. 

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Cryptocurrencies such as Bitcoin, Ethereum, LiteCoin, Bitcoin Cash, and Tether are popular as coins for trading and investment.

On the 17th of June, 2021 a BBC article was released on its website detailing the dangers investors could face from investing in crypto assets. People are going as far as borrowing money to purchase cryptocurrency coins in the hope that they will rise shortly. 

However, the volatility of the cryptocurrency market does not guarantee that a coin will rise: dips happen and a 1000 dollar investment could become $500 or less in days. In some cases, the investment could yield amazing profits. 

2. Foreign Exchange Market (FOREX) 

The FOREX trading market is not for the faint-hearted and that is for a good reason. The 24-hour market that runs on all days of the week except weekends requires vigilance and careful trading to make a good profit. 

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Forex trading involves exchanging different currencies at different prices in a decentralized market. The foreign exchange market is one of the largest markets in the world and minor changes in the prices of currencies could translate to major losses. Investors buy currencies that are likely to rise, with the hope of selling such currencies in the future.

For example, if I have American dollars I can buy British pounds with the hope that the British pound will rise against the American dollar, and I will make my profit. However, this is not always the case. Speculations about the profitability of a currency may turn out to be false and the investors may lose their money. In other scenarios, the market may be favorable and the investors will then take home a lot of profit.

3. Options

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Options are contracts that you acquire to buy or sell a company’s stock at a particular price within a period. You have the option of letting the contract expire by not buying or selling the stock on the date of sale, but you lose a fixed amount that you pay when you bought the option. This fixed amount is called a premium and it is your loss for letting the option expire. People invest in options because the investment offers more control than stocks. There are two types of options: calls and puts. 

A call gives you the right to buy an organization’s stock at a particular price within a fixed time. The call option allows the buyer to buy the stock at a fixed price known as strike price while paying full premium. If the price of the stock increases before the option expires, you can sell at the expiration date and recover your money. If the price of the stock does not increase, you are likely to lose your premium and some of your money.

A put option gives you the right to sell an organization’s stock at a particular price within a particular period. Your potential loss is dependent on the cost of the put contract. As long as the price of the stock does not go below the price that you can sell the stock for, your investment is safe. On the other hand, if your selling price which is fixed is higher than the price the stock goes for at the expiration date you could incur a huge financial loss.

High-Risk Investments: What You Should Remember

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High-risk investments can come with large profits and equally large losses. 

These investments are capable of turning you into a millionaire or sending you out into the streets if you aren’t careful with your money. In my opinion, when you want to invest, gauge your risk appetite. Some people would prefer an investment that brings in small profit and guarantees the safety of their investment. 

Others prefer medium-risk investments, and then there are the brave investors: losing money may not be so traumatic for them. In investing, any investment that promises a large percentage profit comes with a high risk. High-risk investments should be done with vigilance and with spare money: do not borrow money to invest in any high-risk investment. This is because if you lose the money you could be in a lot of debt. Invest wisely and carefully: avoid reckless investments for the hope of a large profit.

Disclaimer: This article is for informational purposes only and in no way constitutes investment advice. Please be sure to do your own thorough research before making investments of any kind.

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Forex

Cromwell FX Market View Dollar drifted as Fed taper all but confirmed

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The US dollar drifted lower throughout the week continuing its negative correlation with risk assets. Optimism in risk assets meant the USD lost ground against commodity pairs such as NZD and AUD. Fed Chairman Powell spoke and he confirmed that the taper is coming with a base case start of November. We still see a firmer dollar market in place despite these headwinds given the anticipated growth and yield advantages.

Despite a general risk on move and oil prices continuing to climb, CAD lost ground during the week suggesting a degree of caution and some mild profit-taking setting in on the CAD ahead of next weeks BoC policy decision.

The week ahead sees top tier economic event risk from ECB, BoC and BoJ rate decisions. Markets will be watching  how the central banks are viewing current inflationary trends. Friday sees Core PCE data from the US which is the Feds choice gauge of inflation.

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Source: https://www.blockleaders.io/cromwell-fx-market-view-dollar-drifted-as-fed-taper-all-but-confirmed/

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Forex

Another banking giant joining the digital banking space

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Following the revolutionary updates in banking systems worldwide, UK has witnessed its first entire digital bank in 2015 when Revolut bank was introduced, offering a full range of services conducted wholly by digital means, no physical location and no employees, a pure virtual means of communication offering full banking services to its customer.

Digital banks started to emerge over the last few years to accommodate the recent technological advancement, and to mark the global movement towards everything going digital. Given the unprecedented events that we witnessed the last couple of years, most of the services were performed online, giving the path for more demands for innovative digital service, and giving the digital banks more reasons to exist

Despite the speculations around digital banks, there have been quite successful attempts in India, and in some Eastern European countries, where customers were able to receive banking service virtually, especially in the times of the pandemic, when people were locked in their houses, and everyone tried to social distance themselves from contact, digital banks become the main player in the services industry.

Competing at home

Revolut bank has been home alone so far, enjoying being the sole provider for such service in the U.K. which is about to be disrupted by JP Morgan Chase, the bank giant has decided to launch its neobank named “Chase”. which is set to initiate a direct competition between these two digital banks, yielding high-end services and quality at the user’s disposal.

This new digital bank is intending to introduce a comprehensive set of digital services based on simplicity and swiftness, where customers can open new accounts, change features for current accounts, handle investing and debt accounts, and order new debit or credit cards, all in an online application and without any human contact.

Customer concerns

While some customers might be suspicious about dealing with non-physical banks, it can be associated with the background of that very financial institute, it is challenging to gain customers’ trust when a wholly new name is emerging in the market. However, Chase seems to be relying on its name a classic bank, to gain a sense of trustworthiness among its future customers and is confident to gain customers’ satisfaction by providing a new system of rewards and cashback for account holders.

Another concern about being totally digital is the exposure to hacking attacks, which classic banks are facing every now and then, which can cause major damage considering that all the database and service options are virtually provided and handled. However, having a full range of services provided online, means that highly skilled cyber security developers are hired, and the database is in safe hands.

The future for physical banking

It is expected to shift entirely to a digital banking system within 10 years or so, which can be even sooner given that the whole world has changed in a course of 2 years, and if there will be a winner in this revolutionary change, it shall be the consumer who will enjoy the fruits of quality produces and serves as a result of a fierce competition

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Source: https://www.forexnewsnow.com/top-stories/another-banking-giant-joining-the-digital-banking-space/

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Forex

FX Market View #24

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A slew of central bank meetings in the week ahead will keep the markets engaged in monitoring the currency majors. Specific attention on Dollar strengthening as the market looks for potential trending patterns to emerge. All in all, there will be a release of policy data from 13 different central banks, divided across six major and seven emerging markets. The most significant data release to the global economies will be from the FOMC, however Norway’s central bank can steal some of the limelight. Since the pandemic struck over two years ago, Norges Bank would be the first high-income nation to raise interest rates. It will not surprise that the UK may follow suit behind Norway, however other G10 nations including; Sweden, Switzerland, Japan and the US are lagging behind.
 
The impact on the currency markets has been a pattern of strengthening from the Dollar. Coupled with a speculation of a hawkish tone from the Fed and surprisingly upbeat retail sales data, the Dollar continued its trend from the end of last week. Despite lower jobs growth in August and inflation remaining stubbornly elevated, the Fed rhetoric towards a path of tapering by the end of the year remains intact. However, making a connection from tapering to even a modest rate hike is still one step too far. The Dollar is still the major gainer for the week, advancing more significantly against the emerging currencies. Against the other majors, the currencies from nations which are lagging the rate hike recovery such as; Switzerland, Sweden and Japan are on the slide.
 
Another factor contributing towards a stronger Dollar is the fact that market risk is slowly waning. The lower levels of risk appetite throughout the financial markets since the end of last week, has adversely impacted the broader markets. Equity markets are on the decline, as well as global interest rate yields. Only the Yen and Swiss Franc are remaining firm, however this is mostly due to their status as a funding currency. Other G10 currencies are sliding under these market conditions, most notably the Aussie Dollar and Scandies. Unexpectedly, precious metals are not picking up the slack as investors seek alternative assets during periods of softer equity and yield markets. Other commodities such as oil and gas have pared recent gains.

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Source: https://www.blockleaders.io/fx-market-view-24/

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Forex

Tax reforms are coming for the United States

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The unprecedented events the world has witnessed over the last couple of years has done nothing but increasing the gap between the rich and the poor, while low-income families struggled to make living during the pandemic lockdown and unemployment, billionaires saw an increase in their wealth by $3.9 trillion between March and December of 2020, which is exactly what the IMF has warned about.

Biden has introduced in his last press conferences a new program to increase tax rates for the richest communities in the United States, as he stated “the rich got richer, and corporations have lost the accountability over their employees” the proposed tax raise is intended to finance the government aid programs, such as The American Families program which aims to increase the spending on healthcare, education, paid leave, and other areas that were hugely damaged by the unpleasant event the world has experienced over the last two years.

The newly proposed tax increase would tax the top individuals with 39.6% income tax, a 2.6% increase from the current 37%. While the top corporations will see a 5.5% increase to their tax rate to become 26.5% rather than the current 21%.

Facing opposition

While investors seem unbothered by this news, this tax hike is faced with big opposition by the U.S. Chamber of Commerce as well as other American business groups that will be highly affected by this proposed tax rise. Investors see this step as inevitable in the light of what global economies have experienced as a result of national lockdowns and increased unemployment rates around the world. Moreover, this step would help redistribute wealth among communities and improve the social benefit programs received by low-income families, and will eventually increase their spending which is better for the markets in the long run.

Democrats are looking for the vote of every Democratic senator over this bill, while this represents a real challenge because of the recent signs of cracks between the democrats in a previous vote to discuss the negotiation power over prescription drugs, President Biden is relying on the support of the American families who have always called for a similar program, and who will highly benefit from such move

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Source: https://www.forexnewsnow.com/top-stories/tax-reforms-are-coming-for-the-united-states/

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