Monday, 7 May 2012

How to Stay Motivated at Work

Consider this situation: Your organization has just laid off 20% of its workforce, and you and your team have to pick up the extra work. To make matters worse, the organization has been losing money throughout the economic downturn, and the leadership team expects increased productivity rates from the staff. To top it off, a pay freeze has been put in place for the next 18 months. 
For many workers, this workplace situation is a reality. Increased workloads, high-stress working environments, and stagnant wages are creating a perfect storm for low morale and motivation in the office. This combination creates a vicious cycle: As motivation and morale fall, so does your ability to produce quality work and stay productive, which can make you more vulnerable to a layoff. 

Finding Deeper Meaning in Your Work

No matter what you do, your job exists for a reason, and experts says finding the human element in what you do is key to staying motivated when raises are nonexistent.
"When cash is short, people need to focus on the meaning of their roles," says James Manktelow, productivity expert and CEO of leadership coaching site "If they can see how their work helps others, they can set stimulating, challenging, useful goals for themselves, and they can take real satisfaction when they achieve these goals." 


When organizations go through a round of layoffs to trim expenses, the remaining employees are often left with an increased workload without additional compensation. This can make anyone feel stretched to the breaking point. Knowing how to prioritize your work is essential for focusing on important, and not just urgent, work.
"Professionals need to focus on high value, high importance tasks," states Manktelow. "They need to delegate, renegotiate, delay, or eliminate low value activities. By prioritizing intelligently, people can actually increase the importance, quality, and value of their work, at the same time that they bring their workload back under control." 

Take Time for Yourself

With the threat of layoffs looming and a to-do list spanning several pages, it's tempting to come in early, skip lunch, and stay late in order to show your worth and get everything accomplished. But spending this much time working without a break can quickly lead to exhaustion and career burnout. 
Experts say it is essential you take time for yourself during the day to give your mind a break and recharge. No one can focus effectively for eight hours straight. Every hour, take five minutes away from your desk. Go for a short walk, drink water, and stretch. Even a little amount of exercise will get your blood flowing, help relieve stress, and help you focus better. And make sure you take the time for a healthy brown bag lunch.

Use Your Skills

Everyone has natural talents and it's important to recognize how to use them to your advantage. "Take a moment to write down the three things you are naturally good at," says Julie Lynch, principal at Uncommon Consulting and an expert in motivation and productivity.
Her advice is to do whatever you can to use your strengths on a regular basis. "These are things that colleagues, friends, and family seek you out for when they need help. These are some of your inherent talents. Now consider how you feel when you're engaged in doing those things. It feels good right? Brain research shows that when you use your natural talents, you get a neuropsychological boost. Actively applying these personal strengths to your work is like having your own personal motivation engine


Friday, 4 May 2012

The Challenge of Islamic Finance

The Challenge of Islamic Finance

HONG KONG – With Britain now in talks to sell part of the government’s 82% stake in the Royal Bank of Scotland to Abu Dhabi sovereign-wealth funds, the Islamic world’s growing financial clout is once again on display. That clout also poses a systemic challenge to the dominant way that finance is now practiced around the world.
From humble beginnings in the 1990’s, Islamic finance has become a trillion-dollar industry. The market consensus is that Islamic finance has a bright future, owing to favorable demographics and rising incomes in Muslim communities.
CommentsDespite skepticism regarding accommodation between Islamic and global finance, leading banks are buying Islamic bonds and forming subsidiaries specifically to conduct Islamic finance. Special laws have been enacted in non-Muslim financial centers – London, Singapore, and Hong Kong – to facilitate the operation of Islamic banks and associated financial institutions.
CommentsHow should these developments be viewed from the perspective of Western finance and mainstream economic analysis? Does Islamic finance really constitute a viable alternative financial system?
CommentsThe very fact that such a question is asked nowadays is significant. Not so long ago, Islamic finance was superficially dubbed a zero-interest-rate system that would lead to inadequate and inefficient resource mobilization and utilization. Ironically, mainstream central bankers today routinely use precisely such policies when pursuing massive “quantitative easing.”
CommentsThere are two central precepts of Islamic finance: absolute prohibition on charging interest on financial transactions, and high moral standards on the part of lenders and borrowers. Interestingly, the best economic rationale for a zero-interest-rate system is provided in John Maynard Keynes’s The General Theory:
CommentsProvisions against usury are amongst the most ancient economic practices of which we have record….In a world, therefore, which no one reckoned to be safe, it was almost inevitable that the rate of interest, unless it was curbed by every instrument at the disposal of society, would rise too high to permit of an adequate inducement to invest.”
CommentsKeynes suggested that only a very low or zero interest rate could ensure continuous full employment and distributional equity. Keynes’s endorsement of such a policy does not necessarily make it right, but his analysis does suggest that it should be regarded as a serious proposition.
CommentsImportantly, although interest is prohibited under Islamic finance, profit is not; the latter is derived from various arrangements that combine finance and enterprise. In essence, this is a profit-sharing and risk-sharing system that is based entirely on equity finance.
CommentsIslamic finance thus contrasts with the current dominant system based on interest-bearing debt, in which risks are theoretically transferred to debt holders, but in practice are socialized during crises. Other things being equal, most economists will agree that debt finance leads to greater instability than equity finance.
CommentsIt follows from the second major tenet of Islamic finance that if people adhered strictly to its ethical requirements, there would be fewer moral-hazard problems in Islamic banking. Moral hazard exists in all systems in which the state ultimately absorbs the risks of private citizens.
CommentsBut, whether any particular system is efficient in avoiding moral hazard is a matter of practice, rather than of theory. Many would agree that, historically, Christian morality played an important role in the rise of Western capitalism. Secular capitalism, however, has experienced an erosion of values, whereby the financial sector has put its own interests above those of the rest of society.& If the ethical values in Islamic finance – grounded in sharia religious law – can further deter moral hazard and the abuse of fiduciary duties by financial institutions, Islamic finance could prove to be a serious alternative to current models of derivative finance.
CommentsMoreover, the basic tenets of Islamic finance force us to re-think the ethical basis of modern monetary arrangements, which have evolved into a global reserve-currency system founded on fiat money. In the past, gold had been the anchor of monetary stability and financial discipline, even if it was deflationary.
CommentsThe test of any alternative financial system depends ultimately on whether it is – or can be – more efficient, ethical, stable, and adaptable than the prevailing system. For now, there is no Islamic global reserve currency and no lender of last resort. But the Islamic world is the custodian of huge natural resources that back its trading and financial activities.
As the Islamic world grows in stature and influence, Islamic finance will become a formidable competitor to the current financial system. The world would have much to gain if the two systems were to compete fairly and constructively to meet people’s needs for different types of finance.

The 10 Principles of Investing Safely

The 10 Principles of Investing Safely

The following list outlines the principles of investing safely. Each point combines elements of strategy (decision-making), finance (investing), and operations (process) management; and all the site's pages are related to these guidelines.

  1. YOU must be responsible for your financial future.

  2. Always protect against losses.

  3. The only "good" investments are the ones that make you money.

  4. Always use a process to make investing decisions.

  5. Always trade using a structured set of rules.

  6. Continually measure the performance of your plan or system; there is always something that can be improved.

  7. Constantly pursue ways to reduce costs.

  8. Mastering your current situation requires you're educated in personal finance, market factors, and personal money management techniques.

  9. Improving your results requires improving your system; tools alone will not improve your profits.

  10. Learn from your mistakes (i.e. losses); you've already paid for them.

1st Principle of Investing Safely

You must be responsible for your financial future
You must control your money; No one else is, nor can they be, responsible for your financial future.
It is easy to find excuses when you give up control of your finances. And having someone or something to blame may feel good for a while.
It's the my broker's/spouse's/boss's/CEO's/Adviser's/Neighbor's fault. Or Wall Street's/Europe's/China's/Big Bank's/Corporate America's/President's/Republican's/Democrat's/Tea Party's fault.
But tomorrow, you will still have payments, debts, and expenses. In other words, blame does not pay the bills.

2nd Principle of Investing Safely

Always protect against losses
Always, always, always, cut your losses. And this rule doesn't just apply to investments.
Do not keep balances on high interest rate credit cards...this is a monthly loss. Do not pay monthly maintenance fees on checking accounts...this is also a monthly loss. Do not pay ATM fees...this is a per use loss. Do not hold on to losing positions, waiting for the market to turn around.
In all of the above, you'll end up spending a lot of time and effort just to break-even!
Compound Interest Example - Yearly Compounding Needed to Break Even
Time Required to "Catch-Up" after a One Year Loss of 7%
(Click the image for a deeper explanation of compound interest)
When it comes to investments, individual investors are at a disadvantage from the start.
Many financial experts refer to investing as a zero-sum game. In order for you to buy, some else has to sell. In order for you to make money, someone else has to lose money. This statement is only a half-truth!
Investing is a NEGATIVE-sum game. When you buy a stock, someone else does have to sell it to you. But neither of you play the game for free! The buyer and seller have a broker, and that broker charges BOTH sides commissions and fees.
If investing were zero sum, everything you gained or lost would go to the other person. Instead, you lose part of your gain to the broker, and the other person adds to his loss! Principle #2 is the reason the Principle #7 is so important!

3rd Principle of Investing Safely

The only "good" investments are the ones that make you money
All investments are bad until you sell them for a profit. Why? Because any time you have money in the market, you can lose that money.
Only after you sell can you can figure out whether you made a good investment. This is the reason that selling is also called "locking in your gains".
Learn how to buy AND how to sell!

4th Principle of Investing Safely

Always use a process to make investing decisions.
Do you know why NASCAR, MotoGP, and other motorsports garages have bright, white floors? Because with a white floor, it is very easy to see something that is out of place. Nuts, bolts, hoses, fluids, and anything else that should be ON the car or bike shows up immediately.
Your investing process can do the same thing for your money. At the start, your personal financial statements will show you where you're leaking money.
As you build experience, your track record will show you whether your investing and trading in the right places.

5th Principle of Investing Safely

Always trade using a structured set of rules.
Following rules is a key to repeatable investing success. When you invest the same way, over and over again, you'll quickly notice when things aren't going according to plan.
If you don't follow a structured set of rules, there is no way to know whether your system works or if you're just lucky.

6th Principle of Investing Safely

Continually measure the performance of your plan or system; there is always something that can be improved.
Peter Drucker, the father of management science, once said "what gets measured gets managed".
The same goes for investing. Look at your investing process and see what can be improved. Keep in mind that improving a system isn't always about profit and loss.
How much time do you spend on personal finances, investing, or trading? If you're spending every waking moment working on your investments, odds are there is room for improvement!

7th Principle of Investing Safely

Constantly pursue ways to reduce costs.
If you have a $50,000 retirement portfolio, and own 1 mutual fund that increases in price 4% a year. Let's say that mutual fund charges you a 1% "fee" (which is low). You'll never see the fee straightaway...instead, the mutual fund will just return 3%. 1% of your $2,000 profit (4% of 50,000) is $20 that you won't get.
But that is only for 1 fund, 1 year, and a lump sum of $50,000. What happens as your account grows to $500,000 or even $1,000,000 over a 20-30 year time frame? This is why it is so important to reduce costs.

8th Principle of Investing Safely

Mastering your current situation requires you're educated in personal finance, market factors, and personal money management techniques.
There are two situations everyone thinks about; where you are and where you want to be.
You need to have your starting point, or baseline, well defined if you plan to achieve your goals.
It is not enough to navel gaze about how you "wish" things were, or how you "think" things are...You need to know how things really are. Only then can you begin to change them.
Some say that a goal without a plan is just a dream. I say switch it up: Your financial dream is only a plan away.

9th Principle of Investing Safely

Improving your results requires improving your system; tools alone will not improve your profits.
Tools such as discount brokers, ETF's, hedge funds, trading platforms, etc. can all be very helpful to investing. However, a majority are set-up to keep you busy, rather than to make you money. If tools were guaranteed to make money, they'd say so.
That is why it is so important to improve your system. 20 years ago, people made money in the stock market without all the technology we have today.
How did they do it? They created a system for making decisions and then used the tools that were available.
Today's technology gives us more data, more often, more quickly. But all successful investors use a decision-making process to cut through noise and leverage all those tools into a money making opportunities.

10th Principle of Investing Safely

Learn from your mistakes (i.e. losses); you've already paid for them.
Admitting mistakes is hard. Admitting mistakes that involve money is almost impossible. Why? Because no one likes making mistakes in the first place. Throw some money in the mix, and you've created one of the most emotionally charged issues that exists.
If you have a long term view of investing, you know that the journey is going to be filled with some peaks and some valleys.