Low-Risk Investments that Yield Worthy Returns

While most investors will stay away from day trading or trying to find a short-term investment that booms in a very short time, many still want a good yield on a safe investment. Usually, you’ll hear that risk is proportional to reward in that the more risk you take, the more reward you get. Now the important thing to keep in mind is that there is no such thing as a risk-free investment because whether you’re talking about market changes, inflationary risks, or even political-related risks, any one of those things could affect an investment. But there are a few investments that will usually bring in pretty good returns while not putting your portfolio in jeopardy.

Preferred Stock Investments

Not all stocks are the same, and generally, they’re classified as either preferred or common stocks, though there are even more categories within these. The advantage of owning preferred stock is that you can own a piece of a company if you want to do so without being heavily involved in it. You also have priority for dividend payments if the company is doing well and makes them, and you also could still recover your principal investment if the company has to liquidate its assets, although bondholders still have the top priority in this. The disadvantage is that preferred stocks can be more influenced by the Fed’s interest rate movement, but they still tend to have higher returns than most bonds.

Established Bond Fund Investments

The bond market can be a little trickier than the stock market, and one of the risks that come with it is liquidity, or being able to sell bonds when you need to. With bond funds, which are mutual funds that have a variety of bonds in their portfolio from corporate bonds to municipal bonds, there’s a chance you may have higher yields than most “safe” bonds while still having about the same level of risk. This is because some of these mutual funds in the bond market are made up of high-yield below investment grade bonds, but they’re also balanced out by investment-grade corporate bonds or low-risk government bonds. The bottom line is you don’t have to relegate your investments to US Treasury bonds to have low risk in the bond market.

REIT Investments Or ETFs Based In REITs

A real estate investment trust (REIT) can be a good asset to add to your portfolio that doesn’t require as much hands-on work with real estate. If buying individual REIT shares is too much for you, you can invest in them through an exchange-traded fund (ETF). Now compared to the stock and bond market, there can be a little more risk to REITs, and events like what happened in 2008 are reasons you shouldn’t put too many eggs in this basket. But they can have huge rewards such as being required by law to pay out 90℅ of their income in dividends. Also, they can be a hedge at times against inflation, and they can perform well when the Fed’s interest rates are low without the volatility of stocks. If stocks, bonds, mutual funds or other ETFs aren’t looking too attractive at the moment for you, a REIT may provide a great alternative.

This article was originally published on YoussefKabbaj.com

Embracing AI’s Impact on the Financial Industry

As Artificial Intelligence (AI) empowers any industry that can be touched by computers, the financial sector needs to both embrace and protect itself from tech advances.

There’s a massive opportunity for wealth when it comes to streamlining financial data, but there are opportunities to manipulate the rules–or even create bad exceptions to the rule. Manipulation can happen in high-tech ways that tech novices aren’t likely to question because they don’t know what they’re reading.

AI-Powered Credit Decisions

Credit decisions need to lack human bias. Whether they’re conscious of their bias or not, people may make decisions based on a name, someone’s appearance, or details about someone’s life that triggers the decision-makers’ stigma. It’s not about being hostile on purpose; unconscious bias can create negative, but unnoticed decisions that trickle down into incorrect decisions.

AI is a driving force in removing as many points of unconscious bias as possible. Lenders can instead generate raw data about details that matter to financial decisions, such as credit history, income, the intended purchase, market pressures, and other details. That said, what if some bias points are right? This is hardly a justification for some of the worst examples of bias that step into unjustified bigotry, but what if a team wants to analyze related data that seems unrelated.

Until proven, that data shouldn’t be factored into an automated decision. However, a separate set of analyses that consider the removed factors alone, the financial sector-approved factors alone, and then those factors together for experimental decisions can be done. This grinds out many instances of unconscious bias, delivers information for the curious, and makes it harder for intentional discrimination by putting a brighter spotlight on fewer individuals who make the final call–all while making that final call easier to make.

Fraud Prevention in the Automated Age

Detecting fraud is about more than catching obvious thieves. Crime and justice are constantly evolving after each other, with innovative methods of stealing coming from innovative ways of catching a crime. AI is at the frontier for everything, crime and justice included.

For fraud prevention, the financial sector has common theft to handle in bulk and innovations in fraud. For standard instances of fraud that are simply written off as losses, fraud prevention simply needs to detect known patterns and flag them for review. That kind of flagging automation is where automation and AI thrive, and represent the proven, standard use for AI in the business world. You know what the problem is and you know how to find it, so you build or buy AI that can detect it.

Concerned about catching the wrong people? You don’t need to program AI to flag and penalize people. AI can simply become the system that helps your fraud specialists find the most suspicious accounts for immediate review. At the frontier of fraud prevention, discovering new, erratic patterns can help you find the newest criminals. Any sophisticated criminal will make their activities look as legitimate as possible, and the current method of finding sophisticated thieves is via random checks.

Those random checks can be automated along with manual, human-managed checks. The AI can learn alongside the human worker, and they can verify each other’s work for both speed and getting a second set of eyes–real and artificial. A flagged, but legitimate, random check is no different than a human’s random check, so the worst-performing AI will at least help workers pick random accounts. Better systems will find eccentricities and possibly stumble upon previously unseen fraud patterns that will help humans detect fraud.

Its automating coincidence and luck in some ways. Humans will still have an instinct or simple luck, but augmenting those opportunities with AI is still helpful.

This article was originally published on YoussefKabbaj.com

6 Tips For Improving Your Credit Score

Improving your credit score goes beyond quick-fix tips and tricks. The best place to start is by paying bills on time and being aware of your credit utilization. Using more than 30% of your available credit limit starts to lower credit scores. Failing to pay bills on time stays on a credit report for the duration of the account.

Changing credit usage and paying bills on time is the best starting point for turning things around. Here are a few tips to improve your credit score further.

Payment Reminders

Start by writing down all payment deadlines for the month on a calendar. Use a smartphone app to set up reminders that give plenty of notice before bills are due. Frequently referencing this document and changing it as your debt obligations evolve can help keep finances on track. Consistently paying bills on time is the best way to improve your credit score.

Pay Twice A Month

Budgeting in an additional payment per month can help pay down debt faster. Paying down debt is another great way to improve your credit score by lowering credit utilization.

Contact Creditors

For people who are struggling to make ends meet, discussing the situation with creditors can help. Creditors can lower interest rates, set up monthly payment plans, and may give you some leeway on one missed payment. Communicating with creditors about debt shows a willingness to acknowledge a bad situation, and most creditors appreciate that.

Be Careful With Old Debt

Missing payments on old credit cards may significantly lower a credit score. It may be tempting to make payments on old debt that is marked charged off, but that might be a bad idea. Charged off accounts mean the creditor expects no more payments to be made. Any payment made on the account may reactivate the debt, and that could lower your credit score.

0% Transfer Offers

For people who are serious about paying down their debt in favorable conditions, a balance transfer offer may help. Many credit card companies offer a 0% interest on transferred balances for an introductory period. Paying off the transferred debt within that period gives you 12-18 months of interest-free payments.

Debt Consolidation

Debt consolidation plans can help get debt under control, but they also temporarily impact credit scores. Making payments to the plan on time means a definite improvement to credit scores.

This article was originally published on YoussefKabbaj.com