Women and the Green

By:


What do you ponder when you. think about golf? Most people picture a group of wealthy businessmen exchanging murmurs on the green and talking shop. 

When I play golf it’s a different scene. Four women, crushing drives, laughing, drinking seltzers, and listening to music. 

The golf stereotype is the epitome of the relentless drive towards a never-ending lack of gender equality in the world. Now many chose to sit and dwell in the sanctity of darkness within this topic, I chose to fight back at it. 

Drive further than the men, have more fun than the men, win more money than the men, then shake their hand at the end and have a beer with them. 

Why in the depths of societies’ failures do we need to accept depressing matters in a depressing manner? My glass has always been half full, which I am appreciative of, my outlook on the world is that of the hopeful spirit and less of the dweller. I am however acutely aware of the lack of inclusion for women in the vast if not the majority of arenas: sports, finance, business and so on. Every sport I have ever played in, the boys team was more important, but what mattered the most to me was the inclusion and accessibility of those that wanted to play the sport. If women include women why scowl at the dugout on the boys team, when we have our own glorious corner, with much cuter outfits and more angst than 100 teenage boys. 

The theme of adversity seemed to journey into adulthood when you realize not only are the sports not equal, but neither are the jobs, payroll, household roles, finances…the list is intimidating at least. In Mandela’s words, “Freedom cannot be achieved unless the women have been emancipated from all forms of oppression.” Yet, still in 2022 we are bounded by our creation. But this does not falter me, it made me fight harder, work harder, and become more confident. 

When I first learned to play golf, I felt strange doing so, it was one of the only sports I had left untouched due to the male domination, and quite frankly it looked kind of boring to me. Little did I know that the empowerment I found from swinging the club, and getting those amazing moments made everyone else on the course invisible. It was for me and my enjoyment. Now don’t get me wrong, there were moments in this learning process when the sheer pressure of having to drive off the first tee in front of men with single digit handicaps had me shaking in my golf skirt, but what is a challenge without fear, and what is overcoming fear without a true challenge? 

TeeMates became this character for me. An unachievable, male dominated industry, of Sports tech. Maybe that is why I was so determined to take a giant bite out of it. To pull myself up on the bar to where they could look straight at me, eye level, and to where I could climb onto their levels of minted green. Either way, I was getting it done. I was going to start creating a sports app empire and no one was stopping me. So, I dug and dug, head down until I got somewhere. This is when the challenge of the most slopped green hit me in the face. As my little golf tech baby grew, I needed money, money to keep it going, to grow it, to keep up with the small beast it was becoming. I pitched and pitched and pitched, knowing that my self-funding days were running low. Suddenly, the number 2 was thrown in my face (and not in the good Eagle way), but in the statistic way. Less than 2% of Venture funds went to female founded businesses (Hinchliffe, n.d.). I couldn’t believe the number and it made me want to start puffing on Daly’s smokes immediately. How could this be, I thought? 

I had always made my own way financially, yet now you’re telling me I’m a less than 2% statistic. Because I’m a smart, hustling entrepreneur? So again, as I thought back to my own favorite life lesson, I will not dwell in the lack of female green for the love of the greens, I will fight my way to that damn ace and make them throw that money at me. This is what I did. I started Girl’s golf events, I called everyone, posted everything, made it happen. Green was my favorite color, and I was not going to be lacking in it anywhere. 

Taking your finances and your financial future into your own hands means freedom, means fulfillment. The Financial Policy Council stands to protect this freedom, to fill your green with single putts. You are allowed to fight for your rights to not only be great at a sport but to be successful and financially independent. To all my strong and powerful ladies, Learn golf. It is not a man’s sport. Find ways to create multiple fairways of financial flow. 

Fill your head with freedom, it is your right, and do what Tiger did, don’t give a Fuck. If he doesn’t have to, why should we? 

Categories:
Tagged:

How to Form Good Money Habits in the New Normal

By:


There’s a lot about the pandemic period that you want to forget. For much of it, you’re either isolated, broke, or sick, which can be detrimental to your physical, mental, and financial health. As everyone is coming out and heading towards the new normal, good money habits are something everyone needs to keep. 

With so much uncertainty coming into the future, a better focus on money matters can help shift you into better habits. There are so many financial improvements we can do in our lives now that we’re going back outside. Here’s how you can form good money habits in the new normal and be more ready for the future. 

Start Your Financial Planning 

One good money mindset to have in the new normal is to “step back, then step forward.” In simpler words, you need to plan first before moving forward with any big spending. If you intend on going for a vacation or buying something big in the coming months, it’s time to reevaluate your future plans. 

Think about the bigger picture when it comes to your financial health. Sure, you can start cutting down on your coffee and save pennies on the dollar. Instead, you can take a step back and give your life a good, long think. How do you visualize where you are in a few years? 

Ask yourself a few crucial questions: 

How much savings do you have?
How much should you save every month?
Do you want to work from home or from an office?
What kind of investments are you comfortable having?
What kind of insurance do you have? 

Change your answers to these questions according to your long-term needs. Planning is an ever-changing exercise that needs consistent attention. You need to make sure that your plans are not “dreams.” You want them to be actionable, with a specific timeline to help you achieve them. 

Enjoy, But Don’t Go Crazy With Your Money 

Post-pandemic, people have pent-up energies. Everyone wants to go places, enjoy a vacation, and go out to town. There’s a big desire to go out into the world, do the things they’ve always done, and go wild if they can. It’s not bad to enjoy your hard-earned money but remember to go back slowly. 

Don’t go crazy with your money. Make sure that you have enough money to live through the month. Have a plan in place to pay for entertainment expenses so you can play around guilt-free. Even then, don’t go into debt just because you want to feel alive. 

Look for deals available out there, especially now that businesses are looking to get people walking through their establishments. Living your life means living beyond the moment. Saving some money now takes a good amount of discipline to do. 

Stick To A Budget 

One of the financial areas that everyone had to learn over the pandemic was budgeting. Sticking to a budget was a must because having cash on hand can be useful when emergencies happen. Being prudent with your disposable cash means you can take stock of your needs and potential expenses. 

Once we move on to a life post-pandemic, budgeting needs to stay. Not only will it help you prevent overspending, it will also give you a sense of control with your life. As everything gets better, you can generate long-term savings and help you get out of debt or, at least, avoid getting more. 

Practice frugal, rather than discretionary, spending. Once you’re in a pickle, it’s crucial to know which parts of your lifestyle to cut off. Less spending on travel, eating out, and going to concerts means more savings for you. Reevaluate your cash flow and stick to a set budget for every expense you have. 

Live Within Your Means 

The idea of “living within your means” can be a problematic aphorism but the truth is that you need to stay within how much you can pay for a certain period without going into debt. Many who lost their jobs suddenly had to cut back on credit card spending and learned that they were going beyond their means, which is never good news. 

Living within your means is not restricting yourself from your own money. Rather, you need to understand that spending for something out of budget means you need to pull it off somewhere. Even if you take out the credit card to pay for it, the payments that go towards your card should increase. 

There are many ways to monitor your spending and do your best to live within your means. It’s one thing to create a budget and it’s another to live within your budget. If you want to maximize some areas of your budget, you need to cut in some areas that are far less important for you. 

Build A Six-Month Emergency Fund 

The six-month emergency fund feels like a big number to strive for but you will thank yourself for getting it once you need it. The rule of thumb is to have six months’ worth of your monthly expenses prepared as your emergency fund. This money should also be easily accessible and not in any type of investment where you can’t easily pull it out. 

Six months’ worth of expenses can be the absolute bare minimum time you would need to find a new job. It can be your period of recovery from an accident or illness. If you can afford to, it’s best to create emergency funds for up to a year. It can be challenging to meet this astronomical number, especially for cash-strapped individuals, but it should be worth it. 

Start with a small amount. As you’re still healthy, build towards the number by chipping away at it. If any financial issue comes up, this should be money that you can fall back on. A 6-month fund should give you ample financial security to find your way back, while a 12-month emergency fund can give you better freedom of choice. 

The Bottom Line 

Forming good money habits in the new normal can be one of the biggest financial challenges you face. Apart from having to prepare for the worse, it’s a lot of the boring stuff that most people overlook like budgeting and staying within your means. Then again, these will benefit you and your loved ones over time. 

Follow the money tips above and see why you need to reevaluate your spending habits. As you make personal and financial adjustments, you will slowly achieve the life you want. 

Tagged:

Credit Reporting Reform: Individual Consumers Must Take Responsibility of Their Own Data

By:


In September 2017, Equifax announced that the information of 143 million of Americans had been hacked. This was just one of the latest companies to be compromised, joining Yahoo’s 1 billion accounts, JPMorgan’s 83 million accounts, and Target’s 40 million accounts hacked, among others.

What made this hack very concerning was the fact that Equifax is one of the largest consumer reporting agencies that collects our very personal and actionable information, including our names, birthdates, social security numbers, addresses, personal finances, credit card numbers, student loans, insurance of choice, rent payments, and others, without us knowing or giving consent, into a centralized database. 143 million accounts (60% of all adults in US) have been compromised. Our data, which we never offered or given permission to be collected and used, has been made available to malicious strangers. This is a very important topic.

The Fair Credit Reporting Act (FCRA), a law that was last updated in 1970 currently governs Equifax and the other credit reporting agencies. Since then, there hasn’t been any changes or updates, except in 2010, when Congress created the Consumer Financial Protection Bureau (CFPB) as the first federal agency with authority to examine and regulate consumer reporting agencies. While this was a much-needed addition, it does not provide the necessary requirements to keep our data safe.

Credit bureaus are treated much more loosely than banks, as they do not have the same regulatory oversight and do not have regular security audits. In the event of data breaches, such as Equifax’s, there is no specific federal entity designated to investigate the breach.

In response this tragedy, Rep. Maxine Waters has introduced the Comprehensive Consumer Credit Reporting Reform Act of 2017, which intends to be a complete overhaul the country’s credit reporting system. Among others, it plans to change the dispute process, switching the responsibility of proving accuracy of information from consumers to credit bureaus, restore the affected credit of victims of predatory activities and unfair practices, restrict the use of credit information for employment, rehabilitate the credit standing of struggling private education loan borrowers and limit the amount of time negative information can stay on a credit report.

The proposed changes of this act could positively impact consumers, but they do not specifically address the cybersecurity problem. This act does not provide a specific solution to preventing data breaches and protecting consumers’ information from hackers.

This is a new world defined by ubiquitous, overpowering cyberattacks that render all current cybersecurity systems inadequate and lacking. For the time being, unfortunately, it seems that there isn’t a hack proof solution of storing our data. So, if we cannot control who sees our data, we must at least be able to control, and limit the use of our data.

The best bet is to provide each individual person with their own ability to monitor and control access to their credit information. Regulators must require credit reporting agencies to provide free credit freezes to all people.

A credit freeze is a process that allows you to automatically block anyone from checking your credit, making it impossible for impersonators to open any line of credit under your name. If your credit has a freeze on it, you’ll be notified if someone even attempts to open a line of credit using your information. In the same way you have a 2-factor verification system for your email or cryptocurrency accounts, credit freezes can provide added security layers that consumers can monitor and control individually.

This way, you can keep your credit info in “dark mode”, and only open access to your credit in the exact instant you are applying for a loan, or do any other activity requiring access to your credit score. As soon as you were approved/denied, you can freeze your credit again.

Currently, credit freezes cost $20 each time you initiate it. And because you most likely must initiate a credit freeze for each of the big three credit reporting agencies (Equifax, Experian, and TransUnion), this cost adds up to $60 per credit freeze. Even more, there are hundreds other smaller credit reporting agencies, so this process can get rather complicated and tedious. New legislation needs to require this credit freeze process to be available, and preferably free (or much lower cost) for the consumer across all agencies.

This is a tremendous opportunity for the private sector to provide a much-needed solution: create a platform or application which connects with all credit agencies and offers consumers instant and painless options to take control over their data. Instead of logging on to multiple credit agencies websites each time they wish to freeze/unfreeze their credit profile, there should be a simple application that communicates with all credit agencies (or separate ones – depending on the consumers’ preference) and is able to freeze/unfreeze credit profiles with the simple push of a button.

This collaboration between the government and private sector must have the chief purpose of allowing individual consumers to control their own use of their credit profile, in the hopes of enhancing security. By definition, it is much more complicated, discouraging and fruitless for hackers to try to break into 143 million individual accounts, than it is breaking into one database holding 143 million accounts. As our banking and financial system is changing to provide consumers with more freedom over their money, perhaps it is time for the credit reporting agencies to do so as well.

Since the credit bureaus and regulatory organizations cannot protect our credit data, it is time to let the private market and individual consumers provide a smarter solution.

Sources:

Categories:
Tagged:

Nonbank Lenders: The New Risk in the U.S. Mortgage Industry

By:


The US housing market in the past 10 years has been characterized by unusually long-lasting low interest rates and robust government-backed mortgage programs. These market conditions have allowed nonbank lenders to boom in the last decade. In 2018 there are several proposals brought forth by regulators looking to agree on a final housing finance reform solution – the single largest piece of unfinished business 10 years after the housing crisis. The problem with these proposals is that they put too much emphasis on traditional lenders such as banks and depository institutions, and not enough on the new risk-takers of the U.S. economy: non-bank lenders.

In the aftermath of the 2008 crisis, regulators and lawmakers implemented a myriad of regulations on banks’ lending practices, in an effort to prevent toxic mortgages. As a result, over the past decade most banks decided to either completely exit the mortgage lending business, or severely limit their mortgage lending to only the worthiest borrowers with stellar credit. This created a very large gap in the lending market. Enter the nonbank lenders.

These nonbanks are usually private institutions that offer limited transparency into their lending activities, and don’t fall under the same regulations as banks. Nonbanks are regulated by state financials regulators such as the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators. However, these organizations have not yet established uniform data and reporting standards – it is very much a work in progress. Thus, for the time being, nonbanks have the liberty to provide mortgages to less financially-qualified borrowers without much oversight.

As a result, in 2016, these nonbank lenders originated over half (53%) of all mortgages in the US. However, that 53% is mostly made-up of mortgage borrowers with lower credit scores. Most non-bank borrowers have less income/wealth, are less likely to have college degrees and are more likely to be minorities. They include 85% of all FHA borrowers, 64% of all black and Hispanic borrowers, and 58% of all low-to-moderate income borrowers. These groups tend to require loans with smaller down payments and have less inherited wealth to depend on in case of an economic downturn. The risk of defaulting on their payments is considerably higher.

While these nonbank lenders are filling in the funding gap and provide financing to a very large demographic that is not being serviced by the traditional lenders, they are exposing themselves and the lending industry to huge risks.

Unlike traditional banks, which handled all three main mortgage functions (origination, servicing and funding), nonbanks only handle the origination and servicing part, while using borrowed funds from banks. Nonbank mortgage lenders depend on credit to finance their origination costs and costs of mortgages in default. Most nonbanks are required to continue making payments to investors, insurers and tax authorities even when their borrowers skip or default on their payments. Also, nonbanks’ creditors – the warehouse lenders – can decide to pull or renegotiate their lines of credit, leaving nonbanks illiquid. Declines in house prices, a rise in mortgage defaults, or sustained rises in long-term interest rates, could each prove fatal to the nonbank lending companies. These multiple points of failure make it a very risky business.

While taking most of the risk, unlike banks, non-bank lenders have extremely limited resources available to survive an economic downturn. Only six percent of their assets are cash, while seventy percent of the nonbanks’ assets are mortgages held for sale. This means that they are used as collateral for their lines of credit and cannot be used by the company to cover any losses. To make matters worse, as of end of 2017, eighty-three percent of nonbanks’ debt was in lines of credit with maturities of less than a year. When that year is over, there is a high risk the interest rates will increase. Without the resources available to banks, such as the Federal Reserve and the Federal Home Loan Banks, nonbanks have no liquidity backstop – absolutely no safety net – in the event of an economic downturn. This could prove catastrophic to the U.S. economy.

The Housing Reform Act is currently underway but most of the rules and regulations proposed are focused on the traditional bank lenders and GSEs, while all but ignoring the rapid rise of nonbank lending and the risks that come with it. If nonbanks were to fail, the U.S. government (taxpayers) would still have to financially cover the losses through FHA, VA, GSEs or Ginnie Mae. From our perspective as taxpayers, it would be a similar situation as the 2008 crisis, but instead of bailing out banks, we would have to bail out nonbanks. We cannot let this happen.

The regulators must take a more active role to address the regulations of the nonbank lending sector, similar to the traditional banking regulatory framework. Regulators must find a way to either limit the nonbank’s sector exposure to risk, or ensure nonbanks secure the resources necessary to sustain themselves in an economic downturn, or a combination of both. Regulators must finalize the state prudential minimums for nonbanks. In addition to net worth, capital and liquidity requirements, this new regulation must consider all factors that determine the nonbanks’ risk, such as maturity and capacity of their debt facilities, business model, and their hedging strategies. To do so, regulators must immediately address and correct the lack of access to data (nonbanks are mostly private) and the lack of staff and resources dedicated to the regulation of nonbanks. They pose an enormous risk on the U.S. economy – comparable to that of the 2008 mortgage crisis – and thus, must be treated accordingly.

Sources:

Forbes: Banks Are Not Lending Like They Should

Federal Reserve: The Decline in Lending to Lower Income Borrowers by the Biggest Banks

Brookings Institute: Mapping the Boom in the Nonbank Mortgage Lending

Tagged:

Emerging Markets Infrastructure Project Investment: Issues and Opportunities

By:


Global investment in real estate and infrastructure projects are on the rise. Preqin’s 2018 Infrastructure Fund Manager Outlook notes that institutional investors have heavily invested in the infrastructure asset class for solid diversification and stable returns. Indeed, the report ascertains aggregate asset under management (AUM) quadrupled from US$99bn to US$418bn over the past decade. The industry is expected to increase exponentially over the next decade. Globally, North America and Europe present the most viable of real estate and infrastructure opportunities. However, a bundle of emerging markets economies follow a close third. Global emerging markets infrastructure investments are currently fueled by Asia Pacific’s growth as opposed to other developing regions. Total deal value for the Asia Pacific amounted to roughly US$50bn over the past five years, with more dry powder allocated to projects within Asia.

Feasible emerging market infrastructure projects usually have a Public Private Partnership (PPP) structure, especially for risk mitigation. As we had examined in US Infrastructure: A Case for Public Private Partnerships, PPPs are beneficial as the private entity internalizes life-cycle costs during the majority building phase of new projects, while the project is listed as public investments on the government balance sheet. Purely public sector projects tend to be inefficient, and have full political risk, while purely private projects may have higher returns, but would not have the accountability of check and balance which sovereign involvement brings. Even so, there are many challenges which investors, financiers, and infrastructure fund managers must take into consideration primarily for emerging markets.

Challenges Faced:

The Macquarie Group is one of the global leaders in asset management with US$356bn AUM, and is considered to be the top global infrastructure finance advisor as at 2017. The Group has dispensed significant pain points and mitigating factors with regards to project investment in emerging markets. Most issues stem from long standing bureaucracy, lack of transparency, corruption, geopolitical and cross border risks. Highlights are follows:

Bid and Post-Bid Processes:

In short, red tape from every conceivable side of the project is challenging at best. Emerging markets tend to have delays in bid preparation, unclear bid guidelines, erratic time to submit request for proposals, and restrictive bid processes which place heavy tariffs on the build-operators of the project. In addition, project ‘hand-holding’ requires higher cost of bid bonds and of additional advisors, planners, quantity surveyors and numerous government officers. In addition, deciding on the best commercial funding structure for the PPP would most likely not be as clear or timely as with developed country projects. For instance, financing default from the private side of the PPP may lead to immediate freezing of project assets, as opposed to debt coverage negotiation.

Terms of Concession Agreements:

Land Acquisition is one of the most troublesome components of the project process in emerging markets. The land surveying, land release, ground approvals and resource rights processes, especially in real estate type transactions, take an inordinate amount of time. The best PPP investment projects that may circumvent this onerous component would be public works and transport type projects, where the government already has clear ownership of the sites in question, with full government use of site resources. Also, there is a huge communication gap in terms of the types of environmental and regulatory requirements needed for all emerging markets projects. As the Macquarie Group states, most delays in their infrastructure portfolio stems from having to backtrack and fulfill regulations that were not mentioned from pre-bid inception onwards.

FOREX Challenges:

Forex issues come in second only to land acquisition challenges in emerging market PPP project fulfillment. This is by no means theoretical as I am currently battling this challenge. In many parts of LATAM & the Caribbean multi-million infrastructure developments are offered a mere US$200.00 a day by Central Banks due to paucity in supply and treasury mismanagement. From an investment perspective, Forex volatility for projects denominated in local currencies may create lower yields due to cross border risks, and hedging for many emerging markets currencies is not available.

Macroeconomic Inefficiencies:

In addition to the Macquarie Group’s points supported above, project developers and financiers know that labor supply, labor quality, labor laws, as well as tariffs on materials, material supplies and weather factors are extremely dictating of successful project fulfillment. Most emerging markets may seem to have a dearth of labor supply. However, educated construction labor may be hard to find, and to keep. Many viable emerging market infrastructure projects that have been fully funded have stalled indefinitely due to a lack of both construction and management labor. Unfortunately with PPPs government policy would require local labor to be sourced, creating a chicken and egg situation.

Solutions Presented:

Emerging market project development, financing and investment fit in with high risk, high reward appetite. Yet as we mentioned before prudent infrastructure investments give solid returns and add practical diversification to portfolios. Therefore emerging markets project financing and investments are not to be avoided, but to be mitigated. Successful project investment takes a great deal of sovereign and macroeconomic research, whether per project or via an infrastructure fund. The Macquarie Group pinpoints several requirements needed for investor comfort when it comes to infrastructure investing, and especially for emerging market conditions.

  1. Stable Political Environment:

    Note that a stable political environment will not mitigate red tape. However, mitigated political risk allows PPP projects to be safeguarded against event risks such as coups, and freezing of foreign investments.

  2. Stable Economy with Growth Potential:

    Overall a stable economy with high credit rating gives comfort of low default risk. However, it is necessary to delve further into macroeconomic variables such as labor and capital intensive predilections. Does the country have stringent union interests? Does the country’s labor have the educative capacity to cost effectively get PPP projects done? Are there punitive tariffs on capital intensive projects? It is necessary to ensure the emerging market country accounted for PPP infrastructure projects in its annual budget, broken down by sectors such as transport, seaports, utilities etc.

  3. Open and Transparent and PPP Bid Process:

    Is the country’s public procurement and bid processes in line with international standards and policy frameworks? What is the track record of successful PPP projects in terms of pre-bid to completion timeline? It is necessary to be in close contact with the country’s department of public works, transport and infrastructure to get a detailed log of such a track record before investing in any project, or in any fund.

  4. Stable Financial Market:

    This one is tricky for actual returns, especially as most emerging market projects are structured in local currencies. If investing in an infrastructure fund, the risk is mitigated. If there is direct investment in the PPP project, the risk is heightened, no matter how stable the financial market is. And don’t be fooled by oil-based emerging market countries. One would believe that such countries would have strong cross border Forex capabilities. However, if the projects are non-energy infrastructure, FX paucity and volatility can still be an issue. It’s necessary to examine the country’s central bank and its monetary policy beforehand.

Sources:

Tagged:
Page 1 of 6
1 2 3 6