We’re excited to share that XTP trading is officially back online in the Tap app!
Following the successful integration of ProBit, a trusted exchange that continues to support XTP, users can now trade seamlessly within the app once again. This marks an important step in restoring access and strengthening the trading experience for our community
We know that waiting isn’t always easy, and we want to sincerely thank you for your patience and continued support throughout this transition. Your trust drives everything we do.
As always, we’re working behind the scenes to bring you more ways to access and use XTP, stay tuned for what’s next.
The Tap team.
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In the complex world of economics, recessions are a common concern, and knowing what they are matters. But what exactly is a recession, and why is it important to understand? A recession is a significant economic downturn that affects individuals, businesses, and entire nations. It's more than a financial term; it's a real-life event that can impact us all.
In a world where economic stability matters to us all, this knowledge is essential. In this article, we'll explain what a recession is and why it's important for everyone, whether you're an economist or just someone trying to navigate the modern world. Let's unpack what a recession is and explore why it matters.
The economic aspects of a recession
To grasp the significance of a recession, let's take a look at its economic aspects. We'll begin by looking at key economic indicators, like Gross Domestic Product (GDP).
GDP is like an economic health check. It measures the total value of goods and services produced in a country. When GDP shrinks, it's often a sign of a looming recession. By monitoring GDP, economists gain a better understanding of economic ups and downs.
Economic growth, measured by GDP, plays a vital role in preventing recessions. It creates jobs, helps businesses grow, and boosts consumer confidence. It goes without saying that a strong economy is better at handling tough times.
How recessions affect businesses and industries
When a recession hits, it affects businesses and industries in various ways:
Decreased consumer spending
In a recession, people usually cut back on non-essential spending. This hurts businesses that rely on such purchases.
Decline in production and sales
Less spending leads to less production and fewer sales. Businesses may end up with too much inventory and unused equipment.
Job losses and unemployment
Businesses struggling in a recession often have to lay off workers. This leads to more people without jobs, which is tough for families and communities.
Bankruptcies and closures
Some businesses can't survive a recession's pressures and go bankrupt or close. This can affect entire industries.
The COVID-19 pandemic showed how a global recession can be triggered. Lockdowns, travel restrictions, and supply chain problems disrupted businesses worldwide, requiring governments to step in and help.
Identifying the causes and indicators of a recession
By understanding these causes and economic indicators, people and policymakers can take timely action to prevent or deal with recessions and highlight the value of informed decision-making in our connected global economy.
Causes of a recession
Recessions are not random occurrences, they often stem from a combination of economic factors, financial market fluctuations, and global events. By understanding these causes, people are often better able to anticipate a looming recession and mitigate its effects.
First and foremost, recessions often have roots in economic imbalances, such as excessive debt, inflationary pressures, or overproduction. When these imbalances become unsustainable, they can trigger a recession.
On that note, the health of financial markets and the housing sector is closely tied to the overall economy. The bursting of housing bubbles and disruptions in financial markets, like banking crises, can set the stage for economic downturns.
And lastly, events like geopolitical conflicts, natural disasters, or global health crises, as witnessed during the COVID-19 pandemic, can have ripple effects that lead to recessions. After all, the global economy is interconnected.
Economic indicators that signal a recession
Economic indicators act as early warning signals, helping us identify the onset of a recession. These act as data points that provide insights into the state of an economy and serve as barometers for assessing economic health.
Below are several examples of key indicators:
Yield curve inversion
This occurs when short-term interest rates surpass long-term rates, often signalling an impending recession.
Unemployment rate
A rising unemployment rate can indicate economic distress as businesses cut jobs in response to slowing growth.
Consumer confidence index
A drop in consumer confidence can foreshadow reduced spending, which can lead to economic contraction.
Stock market performance
Plummeting stock market indices can signal investor pessimism about future economic prospects.
Recessions vs depressions
We’ve all heard of The Great Depression in the 1930s, but was this a recession or a depression?
A depression is a severe and long-lasting economic downturn. It's marked by extensive declines in various economic sectors, often lasting for years or even decades. Much like recessions, depressions bring widespread unemployment, significant drops in consumer spending and business investments, and a massive decrease in GDP.
However, they differ in a number of ways, namely the magnitude and duration, the impact it has on business, jobs, and the GDP, and, typically, how the government responds.
The key difference between a recession and a depression is how bad and how long they last. Recessions are shorter and less severe, typically lasting a few months to a couple of years. Depressions, on the other hand, are much more extreme and can drag on for years or even a decade or more.
Depressions also hit businesses, jobs, and GDP much harder than recessions. In a depression, businesses struggle to survive, unemployment soars and GDP takes a nosedive to historic lows. While recessions hurt, their effects are usually less severe.
Governments respond differently to recessions and depressions. Depressions often lead to major government intervention, including big stimulus packages, bank rescues, and public projects to kickstart the economy. Recessions may also prompt government action, but it's usually not as extensive or urgent.
How to prepare for a recession
Unfortunately, recessions form an integral part of economic cycles and are inevitable. Fortunately, there are some steps individuals can take to better buffer themselves against the harsh effects of an impending recession.
Here are two of the most important steps:
Build an emergency fund
Start by creating a sturdy emergency fund. This fund should cover at least three to six months' worth of living expenses and acts as a safety net in case of unexpected job loss or financial crises.
Minimize debt
Simplify your finances by reducing debt and cutting non-essential expenses. Clearing high-interest debts and trimming unnecessary spending can free up resources to tackle more essential needs.
Securing income and job stability becomes equally important as the economy faces uncertainty. Here are several strategies to ensure you maintain job security.
Upskilling
Invest in your skills and stay adaptable to changing job demands. Continuous learning and gaining skills in demand boost your employability and resilience in a shifting job market.
Networking
Cultivate a robust professional network. It can provide job leads, referrals, and opportunities when times are uncertain. Networking increases your chances of finding new employment or additional income sources.
Diversifying sources of income
Explore multiple income streams beyond your primary job. Consider part-time work, freelance opportunities, or passive income ventures. These can help soften the blow of a recession.
In an unpredictable economic world, these steps give individuals and households financial preparedness and adaptable income strategies and can provide a sense of security and resilience in tough economic times.
Closing thoughts
Understanding recessions, its indicators, and its real-world impact is essential. Key points include recognising economic aspects like GDP and understanding how recessions affect businesses.
Identifying causes and signals empowers proactive responses while distinguishing recessions from depressions clarifies their severity and the need for government intervention. Practical steps, like building emergency funds and upskilling, boost resilience. In an uncertain economic world, knowledge and preparedness are our reliable allies for navigating recessions successfully.
Did you know that there are 6 unique money personalities, with each one playing a heavy role in your ability to handle and manage money? In this article we’re taking a look at each one, helping you not only identify which category you fall into but also recognize where you can improve your money management practices.
What is a financial personality and how does it affect money management?
A financial personality looks at the big picture of how you handle your money. From how you think about money, the views that guide your actions, and the actions that stem from your beliefs. It's not just about how much money you have; it's also about how effectively you handle the money that comes into your life.
Money management is a learned skill so don't feel disheartened if this doesn't come naturally to you. Sure starting early influences financial habits, but that doesn't mean that these skills can't be learned over time.
These financial personalities are built around a set of traits and characteristics that shape a particular style of money management. They're designed to help us become more aware of our behavior, keep our personalities in check when red flags trigger a knee-jerk reaction and assist us in achieving a healthier financial future.
These personalities coincide with the five main personality traits that are often used when reviewing someone's financial status: conscientiousness, neuroticism, extraversion, agreeableness, and openness to experience. Used by researchers, these traits help to shape how one might handle money.
Each top 6 financial personality reflects traits of the following
The six types of financial personality are based on your personal financial habits and include The Saver, The Spender, The Investor, The Dreamer, The Optimist, and The Pessimist. Each financial personality speaks volumes about how one views and acts with money.
1. The Saver
If you're a saver, you've already established yourself as someone who is good at saving money. You have a natural ability to save money and concentrate on long-term objectives. You know exactly how much money you want to save each month, and you stick to your plan even when tempted away from it.
You are practical with your savings as a saver. One of the things you might have done is to make direct debits from your bank account to a savings account or wealth management solution.
2. The Spender
Spenders are impulsive and rash. They're not great at handling money, either. They don't save well, invest, or budget. They're more interested in ways to generate income versus growth. You're likely a spender if you struggle with these financial decisions.
Spenders are focused on short-term pleasures and luxury items. They find it difficult to save since they're so concentrated on pleasuring themselves right now.
3. The Investor
You can take advantage of investment opportunities as they arise, even if they appear risky or complex. You keep an eye on the market and stocks to make sure that any investments that aren't performing are removed from your portfolio. They're down for both aggressive or conservative investments.
Investors are enticed by the potential return on investment; they desire high returns without too much risk—so, if they see two alternative investment options with equal potential gains but one with greater risk, they'll pick option B every time.
4. The Dreamer
Dreamers are usually content with what they have and understand how to manifest their desires. The difficult part is not allowing emotions to control spending or budgeting decisions. Instead, dreamers develop a plan and stick to it - no matter the temptation.
If you consider yourself a Dreamer, your financial habits are likely to be the ones that will make you financially successful. Dreamers are usually intuitive and have a clear idea of what will make them happy in relation to their finances. They come up with creative ways to put their plan into action.
5. The Optimist
Optimists are individuals who believe that good things will occur. They tend to have a happy disposition and see the silver lining in every situation. Optimists are more likely to be wealthy financially than other personality types since they save money and make investments, take calculated risks, and generally have a talent for making money.
Surprisingly, optimists tend to have not only better physical health and happiness but also greater financial success! It may sound too good to be true, but there is data to back this claim up. Studies show that optimism and wealth often go hand-in-hand. For example, one study found that people who are optimistic about the future make more money than those with a negative outlook.
6. The Pessimist
The last distinctive financial personality on the list is the pessimists. They are always looking for ways to save money, and they don't just stop at finding opportunities. Financial wellbeing is important and they always anticipate needing to save. If you're a pessimist, then you're probably thinking of ways to cut costs right now.
Although pessimists might come across as boring, they have great financial stability because they never spend money on unnecessary things and shy away from risks.
Pessimists always think ahead. The Boy Scouts of financial personalities, they're cautious and they plan for the worst-case scenario so that they'll be ready to handle it if it ever happens.
How these financial personalities can help with managing money
Understanding which category (or categories) you fit into will give you a greater understanding of how you might react in a situation demanding your attention.
With greater self-awareness comes a greater understanding of how one might make decisions pertaining to their finances. If you want to make more informed decisions about your finances, begin by taking the time to learn about your relationship with money.
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With inflation rates soaring across all corners of the globe, the rising cost of living is taking its toll on everyone involved. Before we dive into how you can stay afloat in these uncertain times, let's first cover the basics.
When inflation occurs, the prices of goods and services go up, which in turn decreases the buying power of consumers. This leads to a decline in economic growth as people now have less spending power and high costs to contend with.
Everything is more costly than it was a year ago—and even a few months ago. The cost of living has been going up dramatically, with costs for basic expenses like household goods and services on the rise. So, how can you stay ahead of the curve?
Below we cover three important steps to take in order to stay ahead of the rising cost of living. Protect your finances and protect your livelihood with these three top tips:
1. Safeguard your finances from inflation
While saving is vital to anyone's financial health, in periods of increasing inflation it's best to diversify and not keep all your savings in a fiat currency. This is due to fiat currencies depreciating in value during inflation, equating to a reduced amount of money in several weeks or months.
Instead, try to move some of your savings into vetted investments, this allows you to keep your funds safe and grow their value at the same time. This might also lead to capital appreciation and dividends, should you invest in dollar-based investments.
Explore alternative options that protect your funds from inflation but also allow them to grow.
2. Increase your income
For a while now, consumer prices have been increasing steadily. It's unfortunate but it doesn't look like things will be getting any cheaper in the near future. You can't keep waiting and hoping for a better situation - you need to take action.
The best way to do this is by focusing on ways to increase your income. Here are three options below, however, there are plenty more available online. Consider spending some time exploring this avenue.
Apply for a promotion
Ask for an increase/promotion: If you're currently earning a salary, it's probably time to talk to your employer about boosting your earnings. Make a thorough account of what you've achieved and why you deserve a raise—and present it to the correct person. Look for resources on how to ask for a raise if you don't feel confident to do so right now.
Learn a new skill
Add a new skill to your resume: With thousands of free tools online, look for a new skill that both interests you and leverages your current skillset. Learning a new skill is not only great for your mind but can also contribute to that promotion you are after or a high-paying job. Find an in-demand skill and get learning.
Monetize new skill
Turn your skill into an income: Whether it's your new skill or something you're naturally talented in, consider turning your skills into income-generating products. From creating online classes to consulting to publishing online books, turn your skill/s into money. Again, there are plenty of resources online that can assist you in this endeavor.
Focus on building wealth through avenues already accessible to you, from asking for a raise to creating an online course, these new avenues of income can help you stay afloat in periods of inflation.
3. Be wise with your money
This goes without saying, but no matter how much money you make, you want to stick to your budget and follow your financial plan. Now isn't the time to be spending lavishly. Also ensure that you have the resources in place to fall back on should you experience any unexpected hard times, like losing a job or emergency. healthcare costs
A great 3-step plan for preparing for, and then overcoming, inflation is to:
- Create a budget to cover basic expenses and lifestyle expenses, and stick to it.
- Pay off debt. Interest rates are going to increase meaning that you will be paying more for your current loan.
- Keep building your emergency fund. This is the first port of call when starting to save. Aim to have six months of living expenses saved up in an accessible account.
What is the cost of living index?
A cost-of-living index is a price index that measures the relative cost of living over time or in different regions. The index takes into account changes in prices for goods and services, as well as substitution with other items when prices vary.
As an example from the U.S. according to the Consumer Price Index (CPI), between March 2021 and March 2022, the cost of living index rose by 8.5% (before seasonal adjustment). This is the highest 12-month increase that has been reported since December 1981.
The bottom line on the cost of living
While inflation doesn't need to cause mass hysteria, it is a time to be more consistent and cautious with your money. Be mindful of what you're spending your money on, be aware that loan repayments will increase, and be prepared for increases in everyday goods and services. By following these three steps above (safeguard, increase, and be wise with your money), you should be able to stay ahead of the curve.
While everyone's wants and needs might be different, there is always a clear line in the sand between the two. When getting to grips with one's personal finance, distinguishing the key differences between the two becomes important.
Needs encompass basic needs like food while wants lean more toward things one desires, like luxury goods. Being able to distinguish between the two, and acting on this, is imperative to one's healthy financial standing.
In this article, we take a look at these two categories and assist you in differentiating between the two.
What falls under NEEDS?
The need category looks at living expenses that one needs to stay healthy in their day-to-day living. These include everything from rent to the utility bill, medication and healthcare needs as well as food, commuting, and any work-related expenses.
These are the basics required by one in order to function, and these should make up the bulk of your expenses. These expenses are also used to determine the amount you'll need when establishing your emergency fund. It is generally accepted that emergency funds should cover six months living expenses.
What falls under WANTS?
The wants category is likened to goods we could live without but choose to buy. These are not required for day-to-day living, however, when funds allow they can provide a more enjoyable quality of life. These include vacations, buying a house or car, entertainment, memberships, streaming accounts, etc.
How to determine needs from wants
While some needs will be glaringly obvious, it's often the case that some wants sneak into the needs category. Here are three simple tools to help you distinguish between the two.
Form vs function
If in doubt, consider how a product or service will be used. Clothing for instance: if the clothing will be worn to work it falls into the need category, however, if it's a clothing item centered around going out or recreation use, this will fall into the want category.
Embrace brand variety
Needs and wants will differ from person to person, so it's best to have a solid grounding on what falls into needs and wants specifically for you. For instance, if you were looking to upgrade your smartphone, someone working in the tech or digital marketing space might be required to have a certain product, while in other cases getting the latest and greatest will fall into the want category. In this case, it might be best to explore other devices that have a lower total value.
Should you split expenses?
Grocery shops will more often than not fall into the need category, as feeding yourself is essential to survival. However, if the grocery shop consists of wine, chocolate, and other treats, this will fall into the wants category.
While we don't expect you to scour through each grocery bill, be mindful of what you're spending your money on and try to balance shops between the two. For instance, if you splurge on a grocery shop one week with wants but register it in the needs category, consider adding the next week's grocery bill to the wants category.
Is saving a want or a need?
Saving for long-term financial objectives like settling debt, retirement plans, and emergency situations might be tough for someone who makes less money. Because these costs are not immediate, they are not always recognized as a necessity.
However, settling debt can be a necessity to ease the financial strain. Furthermore, an emergency may strike at any moment, and during that time, an emergency fund will save one from falling into further (if not crippling) debt. As a result, it's vital to understand that even if your earnings are low, saving is beneficial in the long run, therefore, savings fall into the need category.
How to navigate spending between wants and needs
Here are two easy steps to help you navigate your spending habits:
Create a budget
Establish a realistic budget and decipher how much you can spend on wants, needs, and savings. By creating a framework you can stick to, you can easily avoid any financial problems and still enjoy a good quality of life.
A common ratio used in the budgeting world is the 50:30:20 method. Use 50% of your income on needs (rent, food, bills), 30% on wants, and put the remaining 20% straight into your savings.
Be realistic about your wants
If you're looking to save more money or are working on building your emergency fund, consider adjusting your spending on wants. Being more strict with what you can and cannot buy or lowering your standards somewhat can assist you in saving money and rather allocating the funds to a retirement fund for example. Other ways to reduce spending habits are to get a roommate or use public transport.
In conclusion
Spending intelligently is without a doubt one of the most important ways to make your money go further. The principles, on the other hand, are focused on saving more, spending moderately on necessities, and sparingly on wants. Paying more attention to desires might lead to issues and limit financial development.
Consider carefully what your needs and wants are and then gradually attempt to lower your standard of living. By focusing on your essential needs without disregarding the importance of saving, you'll be on the fast track to financial ease in no time.
While Bitcoin remains ahead of the pack by a mile, that doesn't mean that it's the only cryptocurrency worth investing in. With thousands of coins on the market, there is plenty of innovative solutions and impressive technology to go around. In this article, we're outlining the 7 crypto coins you should know about, providing a range of Bitcoin alternatives that hold statistical significance.
Money in the bank is nice, but will it grow to the heights that we've witnessed in the digital currency markets? The answer is probably not. With the right portfolio, an adequate amount of research and solid trading strategies, you could be seeing impressive returns when compared to other assets in the financial sector. Consider the information below to be a strong starting point, and take it from there.
Ethereum (ETH)
Ethereum has the biggest market capitalization in the crypto industry after Bitcoin and has held this position for quite some time. The decentralised platform has made headlines in recent months as it shifts from a Proof of Work to a Proof of Stake network, requiring less energy to operate and a new means of rewarding the users for verifying transactions.
Ethereum is highly regarded in the industry for providing the first platform on which developers can create decentralized applications (dapps) and smart contracts. This allowed anyone the chance to build any app across any industry while harnessing blockchain technology. Providing a giant leap forward for blockchain development, Ethereum remains on the cutting edge of innovation.
Cardano (ADA)
Cardano was created by one of the Ethereum founders and is celebrated for being academically driven. While the project launched without a whitepaper (an unusual beginning for any cryptocurrency), at the time of launching there were over 90 academic papers written by a team of mathematicians, cryptography experts and engineers supporting the project. To this day all upgrades are rigorously tested through peer reviews before being implemented onto the blockchain.
Cardano offers developers a platform on which to build dapps and smart contracts using a proof of stake consensus. With lower fees and faster transactions, this eco-friendlier platform has been well received in the blockchain development community.
Polkadot (DOT)
Polkadot is a blockchain platform working toward blockchain operability, meaning that it allows various blockchains and oracles to exchange data and value in a secure manner. Through an intricate blockchain structure involving a relay chain and numerous parachains, the proof of stake network provides an innovative solution to connectivity and interoperability in the industry.
Polkadot was created by one of the Ethereum founders, Gavin Wood, and launched in 2020, quickly making its way to the top of the biggest cryptocurrencies on the market.
Litecoin (LTC)
One of the original hard forks off of the Bitcoin network, Litecoin is a long-standing payment focused cryptocurrency. Created by a former Google engineer in 2011, Litecoin went on to become an excellent Bitcoin alternative.
Through several changes to its predecessor's blockchain, the platform offers faster and more cost-effective value transactions over the internet.
Dogecoin (DOGE)
You will struggle to read cryptocurrency headlines without at least a few mentions of Dogecoin. Dogecoin is the original meme token and has been around since 2013. Designed to poke fun at the seriousness of the crypto industry, Dogecoin went on to become a massive cult favourite and accumulate some big fans along the way.
The blockchain is a hard fork off of the Litecoin network and provides fast, easy and cheap transactions. Typically sued for micropayments, such as tipping content creators on social media platforms, Dogecoin has seen massive success due to the tweets of Elon Musk and his favourable attitude toward the cryptocurrency.
Tether (USDT)
Tether is the first stablecoin to enter the market and one of the most successful. Currently ranking as the third biggest cryptocurrency by market cap, Tether sits behind Bitcoin and Ethereum. Designed to combat market volatility, Tether's value is pegged to the US dollar and is always valued at $1.
Tether was created in 2014 and is managed by a Hong Kong-based company of the same name. The blockchain platform provides not only an effective means of entering the crypto market but a payment solution for companies and individuals looking to conduct fast international payments without the risk of volatility.
Bitcoin Cash (BCH)
Another fork off of the Bitcoin network, Bitcoin Cash was created in 2017 as a result of a disagreement within the Bitcoin community. With several members torn over the direction of the Bitcoin network, several members chose to create a new blockchain and implement the changes they saw best for the network.
This resulted in a new payment focused blockchain platform offering a faster and cheaper means of the transaction value. Bitcoin Cash remains a strong Bitcoin alternative, with high daily trading volumes.
Create a well-rounded crypto portfolio
By considering these 7 alternative cryptocurrencies listed above, you have the opportunity to create a well-rounded crypto portfolio conveniently from your own home. All of these coins can be accessed through the Tap mobile application. You can easily view their market prices and engage in buying and selling digital currencies directly from your mobile device.
As we delve deeper into understanding the global financial market and the investment opportunities within it, here we break down the difference between the capital market and the money market. Together, these two markets make up a large portion of what is effectively known as the financial market.
Capital market vs money market
As we break down the money market vs capital market debate, let's first cover the basics of what each entails.
The capital market is where stocks and bonds are traded between financial institutions, professional brokers, and individual investors with a focus on long-term price appreciation.
The money market centers around the exchange of short-term debt between governments, commercial banks, corporations, and other financial institutions. It entails borrowing and lending for a limited amount of time - anything from an overnight transaction to up to a year at maximum.
What is the money market, exactly?
The money market refers to the market where short-term debt securities are traded among financial institutions, commercial banks and corporations. These securities typically have maturities of one year or less and are considered to be very low-risk investments.
Money market securities include instruments such as Treasury bills, commercial paper, certificates of deposit (CDs), and repurchase agreements (repos). These securities are issued by governments, corporations, and financial institutions as a way to raise capital quickly and at a relatively low cost.
How to participate in the market
Investors can participate in the money market by purchasing these financial assets directly or through a money market mutual fund. Money market funds invest in a variety of short-term debt instruments and are designed to provide a safe and liquid investment option for individuals and institutions looking to park their cash reserves or earn a modest return while maintaining a high level of liquidity.
What is the capital market, exactly?
The capital market refers to the market where long-term securities, such as stocks, bonds, and other financial instruments, are bought and sold among investors and institutions. Unlike the money market, which deals with short-term debt securities, the capital market deals with longer-term investments that typically have maturities of more than one year.
The primary market and secondary market are two different stages of the capital market where securities are bought and sold.
Stages: primary market and secondary market
The primary market is where securities, such as stocks, bonds, and other financial instruments, are first issued by companies or governments to raise capital. This is often referred to as an initial public offering (IPO) or a new issue. In the primary market, the securities are sold directly to investors through underwriters or investment banks.
The secondary market, on the other hand, is where previously issued securities are bought and sold among investors. This market allows investors to buy and sell securities with other retail investors, rather than directly with the issuing company. Stock exchanges such as the New York Stock Exchange is an example of a secondary market where investors can trade stocks that are listed on the exchange.
Equity market
The capital market can be divided into two main segments: the equity market and the debt market. The equity market, also known as the stock market, is where shares of publicly traded companies are bought and sold.
Investors can purchase shares of stocks, which represent ownership in a company and entitle the shareholder to a portion of the company's profits, known as dividends. Investors can also profit from capital appreciation, which is the increase in the value of the stock over time.
Debt market
The debt market, on the other hand, is where companies and governments issue bonds to raise capital. Bonds are essentially loans made by investors to the issuer, which promises to pay back the principal amount with interest over a specified period. Bonds are generally considered to be less risky than stocks, but they also offer lower returns.
How to participate in the market
Investors can participate in the capital market through various means, such as buying capital market instruments like stocks or bonds directly, investing in mutual funds or exchange-traded funds (ETFs), or through alternative investment vehicles such as private equity or hedge funds.
The key differences between the capital market and money markets
The capital market can be more volatile than the money market due to the longer-term nature of investments, but it can also offer the potential for higher returns over time. It is an important component of the global financial system and can play a significant role in economic growth and development.
On the other hand, the money market can be an attractive option for investors who prioritize safety and liquidity over high returns. Because money market securities are short-term and typically low-risk, they offer a lower yield than other investments, such as stocks or corporate bonds.
However, money market instruments can be an important component of a diversified investment portfolio, particularly for those who are looking to minimize risk and maintain a stable source of income in the financial market.
Which is best for you?
Determining which market to engage in will depend on each person’s financial goals, risk management levels, and interest in the markets. Speak to your financial advisor or conduct the research on your own to establish which investment options best align with your needs and goals. Both options present strong pros and cons, the ultimate decision will come down to your unique preferences.