This post was co-authored by Kim Garver, M.D., and Amy Young, Ph.D.

Burnout is rampant. What helps?

Lighter workloads, more efficient systems, and greater support for mental health are sorely needed. Given the financial and staffing challenges many organizations are currently facing, near-term progress in these areas is likely to be slow at best.

Recent research notes several “lifelines” individuals can leverage in the short term as long-term, system-level changes unfold in parallel. We describe three such strategies and the research that supports them.

One-on-One Coaching Helps

A proven strategy that aids burnout is 1:1 coaching. A 2019 randomized clinical trial published in JAMA Internal Medicine by Liselotte Drybe, M.D. and colleagues from the Mayo Clinic showed a statistically significant decrease in physician burnout with 1:1 coaching over a 5-month period. Absolute rates of high emotional exhaustion at 5 months decreased by about 20 percent in the intervention group and increased by about 10 percent in the control group.

While coaching carries some cost (around $1400/individual in this report), the price of burnout is much higher, running in the billions per year. The Cleveland Clinic estimates its coaching program has saved over 133 million in physician retention alone, while also improving wellness and leadership skills.

Mindfulness-Based Interventions Aid Burnout

As with coaching, latest research indicates mindfulness-based interventions (MBIs) aid burnout in the short term. A 2021 meta-analysis of 25 studies involving 925 physicians examined the impact of MBIs on burnout and stress and demonstrated they were associated with small-to-medium benefits that persisted on follow-up.

This study and others have noted MBIs are also associated with increased compassion and dedication to work, and an improved therapeutic alliance between providers and clients. MBIs include breath- and body-based practices. They offer flexibility in when and how they are used and are not tied to a specific place or time, like a gym, making them an attractive option for busy individuals.

When offering MBIs in our health system, one of us (DF) has noted that sessions on “mindfulness of feelings” and “self-compassion” are especially resonant for healthcare workers who continue to navigate the impact of COVID-19.

Burnout and the Benefits of Support Groups

A third short-term strategy that individuals can leverage is a peer support group. Such groups have proven helpful with a range of issues from burnout to leadership development.

One way support groups help is by normalizing the range of emotions individuals experience, from exhaustion to the stresses of navigating career and family life. Such support, coming directly from those with similar experiences, can be especially resonant.

In a 2021 randomized controlled trial by Colin West, M.D., and colleagues from the Mayo Clinic, support groups reduced the rate of overall burnout in the short term. In this study, groups of six to eight individuals met every two weeks over a six-month time period to share a meal and discuss relevant topics. Follow-up assessment six months after the program ended showed statistically meaningful changes in overall burnout and depressive symptoms in the intervention arm versus the control group.

Coaching, mindfulness interventions, and support groups can all be accessed online, supporting privacy and convenience. Importantly, these three strategies are not mutually exclusive. Two or more can be used in the same day or week to support growth, health, and wellness. Many other approaches, like CBT, may also be effective in aiding burnout at the individual level.

We have first-hand experience using and offering these three strategies. Clearly, they are not substitutes for organizational-level efforts to address the fundamental system-level drivers of burnout. For lasting change to occur, root causes must be addressed. Both short- and long-term strategies can aid these efforts.

Organizations must intensify efforts to decrease workload, create more efficient systems, and support mental health for long-term improvements in burnout. Meanwhile, if you are facing burnout, know that evidence-based help is available now.

• There are two types of millionaires: self-made millionaires and those born into wealth.
• More than two-thirds of individuals with a net worth of $30 million or more are considered “self-made.”
• No matter how millionaires get their money, they all share some core traits, including prioritizing savings and diversifying investments.
• This article is for those curious about how self-made millionaires got to where they are today and hoping to learn something from their success.

Most of today’s millionaires weren’t born into their wealth, research shows.

A 2019 study published by Wealth-X found that around 68% of those with a net worth of $30 million or more made it themselves.

Further, a second study by Fidelity Investments found that 88% of all millionaires are self-made, meaning they did not inherit their wealth.

The Fidelity study also revealed that self-made millionaires’ top sources of assets were investments/capital appreciation, compensation and employee stock options/profit sharing. This path is markedly different from those who inherited their wealth, who are more likely to cite entrepreneurship,  real estate investment appreciation and the inheritance itself as asset sources.

For self-made millionaires, though, coming into wealth isn’t always a simple process – many of them worked hard to achieve the financial success they did, and then had the smarts and savvy and put their new wealth in the right places. What do some of these self-made millionaires have in common, and what lessons can you learn for your own investment strategy?

What traits do millionaires have in common?

The Fidelity study results showed that even though millionaires have different ways of making money, they often share these traits:

• They set ambitious goals and act on them. Self-made millionaires put their ideas and dreams into action, whether that’s starting a business or achieving other professional or personal pursuits. This determination is a common driver among many who made their millions without an inheritance.
• They have mentors. Many self-made millionaires are quick to admit that they cannot possibly know how to do everything. They reach out to others who know the ins and outs of different types of saving and investing, tapping into the best minds on each subject for perspective and insight. That certainly pays off.
• They look for feedback. For a self-made millionaire, self-improvement never stops. Self-made millionaires look for critique and feedback in their ideas and business practices, ensuring that they can better identify blind spots and ensure that their ventures will succeed.
• They are not afraid of failure. Millionaires understand the benefits of learning lessons through failure. However, the risks they take are thoroughly calculated and each scenario played out. Once they commit to something, they give their all.
• They understand the value of time. Time is money, and millionaires know this all too They quickly learn how to manage their time, and they know that there is no reason to trade time for money.

Key takeaway: Surveys show that millionaires share many traits in common, including ambition, the value of time, not being afraid of failure, and knowing when to ask the experts for help.

What do millionaires do with their money?

When it comes to investment strategies, self-made millionaires were more likely to add equity investments, while those who were born wealthy typically had more real estate investments, according to the study. Diversifying those investments is key among many millionaires.

Millionaires put their money in a variety of places, including their primary residence, mutual funds, stocks and retirement accounts. Millionaires focus on putting their money where it is going to grow. They are careful not to invest large sums into items that will depreciate. A car for everyday driving, for example, will most likely lose value over time.

The key for most millionaires is to save money before spending it. No matter how much their annual salary may be, most millionaires put their money where it will grow, usually in stocks, bonds, and other types of stable investments. 

Key takeaway: Millionaires put their money into places where it will grow such as mutual funds, stocks and retirement accounts. 

Examples of self-made millionaires

According to the same Wealth-X study discussed earlier in this article, as of 2018, a little over 265,000 individuals are considered ultra-wealthy, meaning they have a net worth of $30 million or more. Moreover, more than two-thirds are self-made. Here are three famous examples:

• Barbara Corcoran: The real estate mogul turned Shark Tank investor started her eponymous brokerage business with a $1,000 loan. Under her supervision, shegrew the business into a multi-million-dollar empire that she sold for $66 million in 2001.
• Janice Bryant Howroyd. The founder and CEO of ActOne Group started her staffing agency with $1,500 ($900 of which she borrowed from her mother), a fax machine, and a phone. She is now one of the richest self-made Black women millionaires in the U.S., with an estimated net worth of $285 million.
• Warren Buffet. Perhaps one of the most famous and richest people in the world – and technically a billionaire and not a millionaire — Warren Buffett still merits a mention in this list because he is well known for being self-made. The Berkshire Hathaway chairman and CEO made his first millions by running a hedge fund and is known for his principled and sensible approach to investing.

What are the best ways to become a millionaire?

The Fidelity study showed that when considering their financial future, 30% of the millionaires surveyed said they were concerned with preserving their wealth, while 20% said they were focused on growing their fortune. This forms the basis of some basic strategies if you’re hoping to join the millionaire ranks.

“Today’s millionaires are multidimensional, and to really understand them, you need to look not only at their outlook but also at their path to wealth and their financial goals for the future,” said Sanjiv Mirchandani, president of National Financial, a Fidelity Investments company.

Millionaires suggest several paths to building your wealth. Here are a few that you can learn from yourself:

Invest in different places and avenues

Don’t put your eggs in one basket. Diversifying your investments helps manage risk by ensuring that all your money is not at risk if a particular investment goes south.

Have multiple streams of income

Many self-made millionaires have money coming in from several places, including their salaries, dividends from investments, income from rental properties, and investments they have made in other business enterprises, to name a few examples. If one income stream slows down, there’s another that can take its place. Much of this is called passive income, or money being earned without actively spending time and effort in the enterprise.

Save, save, save

One common theme you’ll hear from self-made millionaires is to hold on to your money. Put your money in investment accounts where it can sit and earn interest over time (even though interest rates are much lower than they used to be).   

© Provided by TheStreet

Harrington Group, a business software company, has published a survey with rankings of where it’s best to have a business.

If you’re thinking of starting a new business, you might be mulling where to locate it.

This could help. Harrington Group International, a business software company based in Orlando, Florida, has published a survey ranking states (and Washington, D.C.) according to where it’s best to operate a business.

Harrington used nine metrics that fell into three categories: workforce and consumer habits; business culture; and financial climate.

The metrics include:

· Workforce and consumer habits: job growth, educated worker mobility, and consumer spending.

· Business culture: business growth rate, start-up survival rate, and business self-assessment.

· Financial climate: state credit rating, income tax burden, state GDP growth.

1. Florida

2. Texas

3. Tennessee

4. South Dakota

5. Idaho

6. Montana

7. South Carolina

8. North Carolina

9. Nevada

10. Oregon.

Florida ranked No. 1 for workforce and consumer habits, No. 2 for financial climate, but only No. 28 for business culture. Texas ranked No. 1 for financial climate, No. 2 for workforce and consumer habits, but only No. 38 for business culture. It’s not clear what would be weak about the business culture in Florida and Texas.

In any case, in 2021, nearly 134,000 people with at least some college education moved to Florida, the report said. Consumer spending and job growth rates there have risen over the past year by 15.6% and 4.9%, respectively.

Also, Florida has a triple-A credit rating from S&P, and just 6.9% of state tax revenue came from corporate income taxes last year.

Looking at Texas, it has no personal or corporate income tax, the report noted. While U.S. GDP dipped 0.6% annualized in the second quarter, Texas GDP rose 1.8%, and its payrolls grew 5.7% during the year ended in August..

42. Louisiana

43. Missouri

44. California

45. New Hampshire

46. Hawaii

47. Washington, D.C.

48. Kansas

49. New York

50. Illinois

51. Connecticut.

Washington ranked No. 44 for business culture, No. 43 for workforce and consumer habits, and No. 29 for financial climate.

In Connecticut, annualized GDP fell by 4.7% in the second quarter, and 58.3% of state tax revenue comes from personal and corporate income, the report said.

When it comes to Illinois, S&P gave it a triple-B-plus credit rating, the worst score among states and close to the lowest investment-grade rating (triple-B-minus).

While New York has strong job growth of 4.7%, educated workers are fleeing the state. More than 162,000 left in 2021. And consumer spending growth was slower than the national average, the report said.

Kansas’ GDP fell this year, and fewer businesses are opening in Washington, D.C., while startups are unlikely to survive in either place.

Looking at the numbers overall, “most states have at least something to recommend them to business owners,” the report said.

“Twenty-eight states had more educated workers moving in than leaving, and 15 earned S&P’s triple-A credit rating, its highest designation.

Key findings

How to make managing your finances less stressful

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Creating and managing a successful monthly budget is all about knowing how much money you bring in and how you actually spend it. So the two key parts of any standard budget are your income and expenses.

Begin by calculating your total monthly income, including your salary, wages, tips, interest, child support, alimony and any passive income. Then list your essential monthly expenses. This could include costs like housing, insurance, utilities, bank fees and minimum credit card payments.

Next, list nonessential expenses, such as monthly subscriptions, streaming services, your average dining and entertainment costs and anything else you regularly spend money on but could live without. Look to past credit card and bank statements to ensure you’re not missing anything. Add your necessary expenses to your nonessential expenses to determine your total monthly expenses.

Is your income greater than your expenses? If so, that’s a great start. But if your balance isn’t where you want it to be, it’s time to create a budget. Understanding your goals will help you choose the best budgeting app for your needs.

Why Is Budgeting Important?

With more than half of Americans living paycheck to paycheck, according to multiple surveys, budgeting is critical to helping people break free from financial struggle and create financial stability. The U.S. has seen a rapid escalation in housing and health care costs over the last 30 years, leaving less money to put toward savings and retirement.

Having no financial plan or budget in place can cause stress and overwhelm you, leading to increased spending, living beyond one’s means and perpetuating destructive cycles. But having a solid budget in place as part of your overall money mindfulness can make a huge difference—not only by helping you achieve your financial goals but also by reducing stress and anxiety and improving your overall quality of life.

Related: Best Savings Accounts 2022

Stocks as a Path to Wealth

“The best way to measure your investing success is not by whether you’re beating the market. It’s by putting in place a financial plan and a behavioral discipline that is going to get you where you want to go”– Benjamin Graham

Stock market investing is one of the greatest wealth-creation vehicles in world history – if not the greatest.

And the data backs it up.

According to Standard & Poor’s comparison of stock, bond, and cash returns from 1926 to 2021, stocks easily produce the biggest gains for investors.

According to the study…

• $1 invested in stocks in 1926 grew to $10,000 by 2021.
• $1 invested in bonds in 1926 grew to $100 by 2021.
• $1 invested in cash reserves in 1926 grew to $12 by 2021.

While the rewards are abundant, becoming a successful – and profitable – investor isn’t easy. To make money investing in stocks you need good money management skills and asset allocation… you need to understand your personal risk/reward profile… and you should outline your personal investing goals ahead of time. Then, of course, you need to find the right stocks to invest in.

Educating yourself on stocks and the financial markets can mean the difference between big portfolio gains and frustrating portfolio losses.

In this free report from InvestorPlace, we’ll explain how stocks work, demystify the complicated nature of stock trading, and provide a bulletproof plan to maximize your stock market investment experience – for the short-term and the long-term.

What Are Stocks?

A stock represents a share of ownership of a publicly traded company.

As an investor the value of your ownership rises and falls with the company’s assets and earnings. When sales and earnings are growing, stock prices increase. When a stock’s price rises, investors make money on the shares they own. (Of course, stock prices can rise because of positive news, executive changes, or other things as well.)

Investors can also benefit from company dividends. Dividends, often paid quarterly in the form of cash or stock, are paid out from a company to its shareholders.

As a shareholder you can attend company shareholder meetings and occasionally vote on broad issues like confirming a board of directors, issuing new securities, and new company mergers and acquisitions, but your impact on company operations is limited.

Most stockholders are okay with that – the reason they invest in a company isn’t to run the business, it’s to benefit from superior financial performance that translates into higher stock prices.

On the downside, there’s no ensure a company’s stock will rise in value. Stock prices can and do decline.

That’s why robust research and working with a trusted financial adviser can be a big help when investing in stocks.

Different Types of Stocks

Just like your favorite ice cream shop has myriad flavors of ice cream, stocks come in myriad categories, too.

These stock investment categories are among the most widely used. Nearly all investment/brokerage firms offer these categories of stocks.

Growth stocks. If you’re looking for an investment that offers the potential for accelerated market gains, growth stocks could be for you. Amazon, Google and Apple are all examples of growth companies that made it big, stock market-wise.

Growth stocks often come from fast-moving industries, like technology, fintech and biosciences. Company executives tend to take revenues and plow them back into the business, to encourage further operational and financial growth. (That’s why growth companies don’t pay dividends – they want profits put back to work inside the company.)

Be forewarned, though. Companies who operate in the fast lane tend to take risks that more conservative companies don’t. That could lead to falling revenues and sliding stock prices when business is off, or in downbeat economies.

Value stocks. If you’re looking to take your risk/reward exposure down a notch and want to buy stocks at discounted prices, value stocks could be in play.

Value stocks are more defensive-oriented securities that perform well in tumbling economies, as interest rates rise and money is tight. That’s primarily so as value stocks are usually a better deal than growth stocks when measured by key metrics like a company’s price/earnings ratio, i.e., what a stock buyer pays for each dollar of a company’s earnings.

Value stocks can offer solid returns, but historically at a slower pace than growth stocks. Bank stocks, like Bank of America, and consumer good stocks, like Proctor & Gamble, are good examples of value stocks.

Dividend stocks. Investors who prefer companies that return cash directly to shareholders often turn to dividend stocks.

Dividend stocks usually come from older, more established companies that have a reliable record of earnings and may not require as much cash as a growth or value company. Typically, dividend-paying companies distribute profits to shareholders on a quarterly basis and also commit to doing so on a regular basis going forward.

Big Fortune 500 consumer and industrial brands like Coca-Cola, Dow, Walmart, and 3M tend to offer cash dividends, with dividend yields as high as 3%, 4% or even 5%. Such companies are called “dividend aristocrats”, as they’ve boosted dividend dividends per share for a minimum of 25 consecutive years.

Large-cap, mid-cap and small-cap stocks. Stocks can also be categorized by the size of a publicly-traded company’s market capitalization, i.e., the total financial value of their shares of stock. To properly calculate a company’s “market cap”, simply multiply the total number of a company’s tradeable shares by the company’s current stock price.

Typically, that size is broken down into three categories: large-cap, mid-cap, and small-cap stocks.

Large-cap stocks. These stocks come with market capitalizations of $10 billion or higher. They’re stocks that are deemed by traders to be more conservative and consistent, and are widely traded on major market exchanges like the New York Stock Exchange.

Mid-cap stocks. Publicly-traded companies with a market capitalization of between $2 billion and $10 billion are known as mid-cap stocks.

These stocks may offer different trajectories for investors, either as last-year’s large-cap stock or next year’s small-cap stock.

Consequently, if you’re looking for a stock with a balanced blend of growth and value, mid-cap stocks can make sense for stock market investors.

Small-cap stocks. Small-cap stocks come with market caps of between $300 million to $2 billion (another higher-risk stock category – micro-caps – have market caps of up to $300 million.)

Since there are so many small-cap stocks, given the vast number of companies with market cap ranges that low, small-caps are both widely and actively traded, thus bringing more market volatility into the mix compared to large-cap and mid-cap stocks.

With more risk on the table, investors should be thorough in vetting small-cap stocks, which may offer more opportunity for gains, but also more potential for significant losses.

ESG stocks. So-called environmental, social and governance (ESG) stocks are geared toward the ethically-minded investor.

With ESG stocks, the focus isn’t primarily on profits, although that’s an important component. Equally important are the values and ethics on key factors like impact on the environment, demonstrated, shareholder rights, health impact (i.e., no tobacco, alcohol or firearms, for example), and company-related charitable and community impact.

Studies do show that not only are ESG stocks popular with the investing public, their return on investment is highly competitive, too.

International stocks. For investors who don’t mind some wanderlust, international stocks can be a solid performance and diversification addition to any investment portfolio.

These stocks, which are traded outside the U.S., offer the prospect of good returns with portfolio geographical diversity. After all, the U.S. isn’t the only country with a robust economy.

Foreign bourses like Japan, Australia, Brazil, Belgium and South Africa, among many other countries, can also produce fast-growing economies with risk and return tendencies that are different from the U.S., and that can balance out any stock portfolio that’s loaded up with U.S. stocks.

Additionally, international stocks can negate or minimize the impact of a declining U.S. dollar, which can be offset by investments in foreign companies in countries where currencies are robust.

That said, there is a decent element of risk associated with investing stocks from far off lands.

International stocks require serious due diligence before investing in them. Global investors can benefit from investing in foreign stocks funds and by working closely with a professional money manager with solid international stock trading experience.

Initial public offering (IPO) stocks. Publicly-traded stocks have to start somewhere, and that comes in the context of newly-minted IPO stocks.

These stocks allow private companies to start trading publicly via an initial public offering on stock exchanges like the New York Stock Exchange or Nasdaq. It’s not always easy to get in on the ground floor of a publicly-traded company but that’s exactly what IPO stocks offer.

Even so, steering cash into a new, possibly unproven IPO can be risky. Thus, limiting exposure to IPO stocks may be an idea worth considering.

Stock funds. If betting on the fortunes of individual stocks is too daunting or too complex, why not invest in mutual funds or index funds that provides broad diversity to stock-minded investors?

It’s fairly easy to get the best of both worlds with stock funds – access to all kinds of stock indexes and categories along with a diversified stock portfolio that owns potentially owns hundreds of stocks.

Stock funds make good sense for investors who don’t want to take on the research and management that comes with comes with stock trading on a full-time basis. Instead of buying a single small-cap or value stock, you can buy into major index-weighted funds, like an S&P 500 or Nasdaq 100 index funds.

Fees are increasingly investor friendly – at about 1% or lower for a good exchange-traded fund – and there’s no need to do the legwork, as the fund’s professional money manager takes care of that task for you.

Like stocks, stock funds come with a fair share of investment risk, as some funds can move 30% in either direction of the course of a year. In general, however, you get more safety and diversification element with stock funds than you do with individual stocks.

Robo-advisor. The digital age has had a significant impact on stock market investing.

Exhibit “A” is the robo-advisor approach, which allows investors to log onto an online investment site, fill out their investment goals, needs and timelines, and deposit some cash into the account.

The robo-investment advisor takes over from there, investing your money on your behalf, using your risk tolerance, time horizon, and short- and long-term investment goals.

Typically, the robo-advisor will place portfolio funds in low-cost mainstream index funds, thereby constructing a stock portfolio that’s unique to your needs for a low management cost (as low as 0.25% of your total assets on an annual basis.

Trading Places: A Short History of Stocks

Stocks – and the stock markets where securities are traded – date back to the 11th century. Then, French “brokers” handled trades between banks and farmers, based on the debts owed by agricultural landholders and the value of the commodities they produced (which rose and fell in value on a regular basis).

Two centuries later, a Belgian financier named Van de Burse began hosting merchants to trade commodities at his house in an early version of the stock market. Today we still use the word “bourse” to describe financial exchanges.

The first official stock exchange also originated in Europe. Merchants in Amsterdam gathered to swap shares of the Dutch East India Trading Co., the first publicly traded company that changed hands on a stock exchange.

America got into the action in the 1700s, when New York business owners gathered in lower Manhattan in what is now Wall Street to trade securities under a buttonwood tree. The experience went so well that the merchants created and signed the “Buttonwood Tree Agreement,” which historians credit with launching the New York Stock Exchange. The NYSE continues to be the largest stock exchange in the world today.

Stock exchanges proliferated during the late 1890s and early 1900s, a period which saw the Dow Jones Industrial Average and the Standard & Poor’s 500 index (both still key benchmarks for stock trading) play a major role in the trading and valuation of stocks on behalf of buyers and sellers.

Fast forward to the 21st centuries… and stocks are regularly traded digitally on major stock exchanges – the average daily trading volumes stood at 14.7 billion in 2021.

While the NYSE remains the largest stock exchange in the world, the all-electronic Nasdaq and major international exchanges like the ones in London and Tokyo have helped fuel an explosion in global stock trading.

Why Invest in Stocks? Pros and Cons

Given their track record as a reliable long-term investment option, there are decidedly more “pros” than “cons” when it comes to investing in stocks.

But investing in stocks is not without risk. When deciding to invest your hard-earned money in the markets, it important to understand the pros and cons…

The Pros

• Robust historical performance. According to industry statistics, the S&P 500 Index has averaged 10% annual returns over the last 100 years. That far outpaces other investment vehicles like bonds, certificates of deposit (CDs), bank savings accounts, and commodities like gold and silver.
• Stocks beat inflation, too – by a lot. At 10% average annual investment returns, stocks tend to stay well ahead of inflation, which usually clocks in at 2% or 3% annually.
• Stocks are easy to buy. With a vast array of brokerage services and online trading sites, stocks have never been easier to purchase. Many brokerages have removed historical barriers to buying stocks, like account minimums, high fees, and paid stock research programs.
• Multiple ways to make stocks pay off. Stock market investors can choose from multiple investment return models. For instance, they can buy shares of individual stocks, buy fractional shares of individual stocks, and buy “bundled” stocks in the form of exchange-traded funds (ETFs) or index funds. Stock market investors can go for short-term gains or invest for the long term to save money for retirement. Investors can even be paid for owning stocks through dividends.
• Stocks are highly liquid. Most stocks are readily bought and sold, giving investors a level of comfort that they can turn their stock shares into cash quickly, if needed.

The Cons

• No ensure of positive returns. Stocks aren’t bulletproof. Investors can and do lose money on stocks that don’t perform well. Stock market investors need to know going into it that they can lose money with stocks and adjust their expectations – and their investment strategies – accordingly.
• Investors face multiple risk issues. Whether it’s the risk of losing some or all of your money, the risk that your investments may not be liquid enough to sell quickly, or the risk that your stock portfolio isn’t sufficiently diversified, investors have to account for myriad outcomes – bad and good – when investing in stocks.
• You need to do your homework. While wealthier investors frequently lean on professional stockbrokers to build their portfolios, Main Street investors often research stocks and markets on their own. That takes time, discipline, and patience. After all, you likely wouldn’t buy a car without kicking a few tires. The same goes for stock research, which can involve studying complex financial documents, tracking the news regularly, using highly sophisticated trading tools and charts, and budgeting the appropriate amount of money needed to meet your unique portfolio investment needs.
• Tax issues. While stock market investors can benefit from certain tax breaks if you sell a stock for a loss, selling for a gain results in a capital gains tax. Capitol gains taxes vary in percentage depending on how long you’ve held the stock. Taxes tend to be higher on short-term holdings – usually under a year. In other words, day and swing traders pay a lot more in taxes than long-term investors.
• Potentially high stress. Stocks can take an emotional toll on investors, particularly those who take higher risks. That can lead to unfortunate scenarios like selling out of fear or trying to “time the market” by removing money from stock portfolio accounts when stocks decline – and then missing out when the market rebounds.

At a Glance: Build a studying list before you invest. Becoming a good stock investor means becoming a good reader.

That means regular reviewing key investment documents like annual company reports, Standard & Poor’s stock reports company 10K and 10Q reports filed with the U.S. Securities and Exchange Commission (SEC), and media like InvestorPlace, The Wall Street Journal, and other informative investment content.

On Wall Street, a little knowledge goes a long way, so get in the habit of studying the stock market data and news that makes you a smarter investor.

How Stock Market Trading Works

Before starting to invest, job one is to understand why companies issue stock and what that process means to you as an investor.

Basically, companies issue stock shares to raise money to run their operations. Using stock share income enables companies to hire employees, conduct research, build plants and offices, and acquire other companies – just for starters.

A company’s first step in issuing stock shares is to go through an initial public offering. An IPO means a company is issuing stock shares publicly for the first time. Once the IPO is complete, the shares are traded publicly on a stock exchange – like the NYSE or Nasdaq – for anyone to buy or sell.

When you buy a company’s stock, you’re not buying it from the company itself; you’re actually buying it from other investors who own shares in that company. Correspondingly, if you sell shares in a company’s stock, you won’t be selling the stock back to the company. Instead, you’ll be selling the stock to another investor.

Stock trades are executed by a broker or trader, via a stock exchange, such as the NYSE or Nasdaq. Today, it’s common for investors to purchase stocks online through a broker’s digital trading platform, which connects the investor to the appropriate stock exchange where the specific stock trades.

Once you understand how and where stocks are traded, your next step is to open a stock brokerage account. Here’s a step-by-step process to get the job done right.

The right kind of stock brokerage account depends on your unique investment needs. Usually, that scenario leads to one of several stock trading accounts.

• A traditional brokerage account: A traditional stock brokerage account, formally known as a taxable brokerage account or a standard brokerage account, is a popular choice for investors who don’t have complicated investment portfolios. If you simply want to trade stocks from time to time or trade stocks to meet short-term personal financial goals, a traditional brokerage account is a solid option.
• A margin account: If you have a little more risk appetite, you can open a traditional broker account with a margin account add-on. Margin accounts enable you to borrow money from the brokerage firm to trade more stocks, using your stock portfolio as collateral. Expect to pay interest on any funds borrowed via a margin account, and note that margin accounts come with abundant risk.If, for instance, the market drops significantly, the brokerage firm can demand payment on your margin loans immediately. If you can’t make the payments, the brokerage can legally seize your portfolio assets to cover the costs of the margin loan.
• An IRA account: New stock market investors with a long-term horizon may opt for an individual retirement account (IRA) geared to stashing money away for retirement.The upside to IRA accounts are the tax deductions that come part and parcel with such accounts. One downside is that you can’t access your account funds until age 59-and-a-half. If you raid your IRA prior to that time, you face hefty fines and penalties imposed by Uncle Sam.Roth IRA accounts enable you to access your account funds more easily. Just note that account withdrawals are limited to direct contributions – investment profits cannot be taken out of the account.

Brokerage charges and fees have significantly declined over the past decade, as online trading platforms have driven market prices down.

While that’s good news for new stock traders, it’s still a good idea to price shop before putting any money down is a stock brokerage account.

Launch that process with a full review of any broker’s pricing schedules. Increasingly, basic “buy” and “sell” executions come with either no or low service fees. If, however, you want to trade other assets, like bonds, commodities, equity options, cryptocurrencies, or ETFs, you’ll likely pay a higher fee to do so.

For firms that charge fees, the average stands at about $3 to $7 per trade. Thanks in part to Robinhood’s free trading platform gaining in popularity the last few years, many online brokerage firms have lowered their fees to $0 for unassisted stock trades.

You can also anticipate additional charges, such as annual account fees (about $50 to $75 per year); research fees (from $1 to $30 per month); and paper statement fees (about $2 per month), in addition to other fees related to more complex trading strategies. Brokerage firms outline their fee structure on their websites, so be sure to check them out so you are not surprised later.

In addition to looking at stock trading costs, new investors should thoroughly review the features and amenities offered by brokerage/trading firms.

Here’s a short list of items that should be offered by a brokerage firm:

• Good research. Smart stock trading doesn’t usually happen without access to quality research. When choosing a trading firm, make sure it offers a robust stock rating feature along with clean access to quality stock research firms like Morningstar or Standard & Poor’s.
• A solid trading platform. Efficient, easy-to-use trading software is a “must have” for any stock investor – especially a new one. Ask your broker about its trading software features (for example,, does it allow for trading foreign stocks or cryptocurrencies; does it allow trading of fractional shares; what’s the mobile app trading experience like; and can you actively test the trading software before paying for the service?). Ask around and see what trading platform your friends, families, and other experienced traders recommend. Online reviews are easy to find and can help you evaluate a brokerage’s stock trade services.
• Help desk and customer service. A stock trading platform is only as good as its customer service – and so you should vet a brokerage’s customer experience. Check to see if the trading firm has the customer service options you need, such as face-to-face branch office availability, 24/7 customer services by phone, an easy-to-use and reliable mobile app, account features like easy money transfers, and online/mobile full trading services.

Again, ask around and leverage web reviews to see if a potential brokerage trading partner meets your specific needs.

Okay, you’ve done your research and vetted potential brokerage partners – now it’s time to make a decision and start trading stocks.

You want to choose a brokerage firm that offers the best trading tools at an affordable price. You’ll want a trading partner that offers superior customer service and caters to stock-trading beginners.

Don’t make this process too complicated.

Start a “pros” and “cons” list for each of the brokerage firms under consideration. Whichever one has the best ratio of “pros” to “cons” should be your winner. If you’re still in doubt, share your list with trusted friends and family and any regular stock traders you know. They can help pick the stock trading platform that best meets your best unique needs.

Once you’ve chosen a firm, it’s time to complete your new brokerage account information.

Most trading firms offer online account registration, which can make for a quick and easy process.

When you open up the sign-in document, expect to include the following information in your account registration process:

• Name
• Phone number
• Address
• Social Security number
• Driver’s license information
• Employment status
• Investable assets
• Investment goals
• Your net worth (possibly)

You’ll also need to include your banking information, especially your preferred way of funding your account and taking withdrawals.

These options include:

• E-funds transfer. This mechanism enables you to send and receive money by linking your checking account to the bank’s electronic payment system. Expect payments to hit your account the next business day.
• Wire transfer. This mode of bank payment allows you to see payments completed within a few minutes, as a bank-to-bank payment transfer is a quick and seamless process.
• Paper checks. Brokerage firms still accept traditional paper checks, but the process may take several days to complete.
• Rolled-over assets. Sometimes, new investors need to transmit funds directly from their 401(k) or IRA accounts. That’s perfectly acceptable – just ask your broker the best way to set payments up using rollover accounts.

One note on funding your trading firm account. No matter what banking mechanism you use to fund and receive payments with your brokerage firm, you may have to meet minimum funding and operating levels (usually between $100 and $500 for traditional accounts, or a $1,000-and-up minimum account level for more sophisticated accounts).

That’s it – now you’re ready to buy and sell stocks.

It’s a good idea to talk to a trusted financial professional about your investment goals and stock trading preferences. A good, local financial planner should do the trick.

The National Association of Personal Financial Advisors (NAPFA) offers a good database of certified U.S.-based financial planners to choose from – just plug in your ZIP code and start searching right away here.

Stock Market Research and Trading Strategies: “Best Bets” to Build Your Portfolio

There’s no shortage of ways to structure a stock trading strategy, but some trading models have stood the test of time better than others – especially for traders just starting out.

Let’s look at the most common and effective stock trading strategies, and see how they might fit into your long-term portfolio management experience.

Before you begin, make sure to review your investment goals, current household budget, current household cash flow, and investment risk tolerance.

It’s highly advisable to keep your stock purchase activity well inside the constraints of your household finances – for the short and long term. Remember: You can lose money trading stocks, and you shouldn’t go into debt by overbuying stocks, especially when you’re just getting the lay of the market land.

Value Investing

One of the best, and safer, stock market investment strategies can be found in value investing.

Value investing is the bargain shopping corner of the stock investment landscape. Value investors like Berkshire Hathaway founder Warren Buffet and former Fidelity Investments star manager Peter Lynch believed that certain stocks are undervalued, and that there are characteristics and clues available to help investors single out value stocks.

The great value investors also believe there are certain irregularities in the stock market that trigger discounted prices in select stocks.

Those traders didn’t need to comb through volumes of complex financial data to pick good value stocks. Instead, they leaned on bedrock corporate finance principles like company cash flow, price-versus-earnings, market share, annual revenue minus debt, and the ability and length of term of company decision makers.

The great value investors don’t place a high priority on sophisticated trading charts and market algorithms. Instead, they place it on a simple concept – is the underlying company a good, well-run business that can thrive over the long haul? (Remember, as a market investor, you’re not really buying stocks – you’re buying companies.)

Time matters, too. So-called “buy and hold” investors like Buffet view value stocks as long-term propositions. As long as performance remains stable and strong, there’s no reason to sell a value stock early – not when value investors make stock investment selections based on years (even decades) of company performance, and with future decades of share growth in mind.

One of the best and simplest formulas for uncovering hidden stock market gems that produce gains over the long term is a company’s price-to-earnings ratio.

A company’s price/earnings ratio, also known as the P/E ratio, is represented by a business’s stock share price and its earnings per share. Value investors use the P/E ratio to essentially peg the real value of the company (hence the term “value investing”).

The goal for any value stock investor is to leverage a company’s P/E ratio to evaluate current and future expectations for a stock, based on the price per unit that investor will be willing to pay for a specific value stock.

While a firm’s P/E ratio is certainly an important factor in valuing a stock, it’s not the only one. You should include good research on a company’s history, its executive team, and its ability to build robust market share – and on potential stock dividend payouts – in any value stock investment strategy.

What to look for in a value stock:

• A robust earnings per share.
• A company with a good rating from Standard & Poor’s (B or better).
• A company with low debt. (Check its ratio of assets to liabilities.)
• Positive earnings growth over time.
• A company that gives back dividends.

At a Glance: Value Stocks Can Be a Reliable Investment. Vanguard Investments expects value stocks to outperform growth stocks by 5% to 7% over the next decade, and “perhaps by even a wider margin over the next five years.”

A good way to track value stocks is through the Russell 1000 Index, which is a value-weighted index composed of 1,000 of the largest U.S. companies, by market capitalization.

Growth Stocks

Unlike, value investing, which is focused on the current earnings and overall financial health of a company, growth investors place a higher priority on the future growth of select companies.

No doubt, early investors were handsomely rewarded with early purchases of stocks in companies like Apple, Amazon and Google. Yet for every Apple, there are hundreds of thousands of small company stocks that don’t grow, and thus disappoint investors.

That’s the trick with growth stocks – figuring out which ones offer robust upside growth based on future earnings.

If you hit the mark with a growth stock, the return can be substantial. Over the past 10 years, growth stocks have outperformed value stocks by an average of 7.8%, although value stocks tend to outperform growth on a 10-year time line basis dating back to the 1930s, according to Vanguard Investments.

Structurally, growth investors seek companies with evidence of strong future earnings.

Growth investors may use a variety of analytical tools to properly evaluate a growing company, including the industry it resides in and the prospects of future earnings growth inside that industry.

For example, if a growth investor is probing an electric car manufacturer like Tesla, that investor may spend as much time studying the electric vehicle market as they will be researching Tesla.

By taking an industry-intensive approach to stock picking, a growth investor hopefully can uncover the potential for a company’s growth potential in that industry for decades to come. That said, a growth approach also considers a company’s current earnings picture, along with a potential trend of robust earnings and sales that provide evidence of long-term growth.

Growth stocks also can be cyclical in nature. Market data show that growth stocks tend to do well in periods of economic growth when interest rates are low. In periods of economic decline, when rates tend to trend higher, growth stocks underperform against other asset investment models.

What to look for in a growth stock:

• A company with good, experienced leadership.
• A company that’s in an industry with strong growth potential.
• A company with robust sales.
• A company with a big target market.
• A company with profit margins that increase over time.

At a Glance: No Dividends With Growth Stocks. One feature that most growth stocks won’t provide is dividend payments.

When companies are growing at a speedy pace, company decision makers prefer to pour stock market proceeds back into the company in order to accelerate even faster growth rates. In that scenario, dividend payments are deemed a luxury that competitive growth companies can’t afford.

To best track growth stocks, the Dow Jones U.S. Small-Cap Growth Total Stock Market Index is a good index to follow on a regular basis.

Momentum Investing

Another, lesser-known stock market investment strategy – at least compared to growth and value investing – is momentum investing.

Momentum investing is the risk takers’ table in the stock market dining room. Investors who adhere to momentum investing (also known as “ride the wave” investing) rely on technical analysis and crunching data to find stocks that offer the potential to rise dramatically in short periods of time.

They study tiny share-price patterns that point to small slivers of opportunity of market growth – opportunities that may only offer a short trading window just minutes long.

Momentum investing is especially popular with so-called day traders. These are aggressive traders who spend their days looking to exploit inefficiencies in the market, snapping up shares of stock that have – if the data is right – short bursts of upward stock movement.

When the data show the stock is no longer in ascendency, momentum traders sell out of the position as quickly as possible, and then move on to the next “technical” stock opportunity.

While there’s a case to be made that day trading can produce good returns for traders with deep experience moving in and out of positions quickly, momentum trading is not a smart option for new investors.

Aside from a knowledge deficiency, new investors who embrace momentum-based day trading face significantly higher trading risks, potentially sky-high trading costs, and long days on the computer studying data algorithms and weighing trade opportunity after trade opportunity.

For now, at least until you get up to speed on the markets and share-price movements, it’s best to forego the machine-gun style of stock market trading and focus instead on studying growth and value stocks with an eye for the long haul.

Always Be a Regular Investor

No matter what stock strategy you use, having a set schedule to invest and aiming to invest regularly can make a big difference over time.

Here’s why.

Imagine that Investor A and Investor B both have opened a stock brokerage account with a $5,000 initial deposit. The market is largely robust over a decade, and average annual returns amount to 12% each year, leaving approximately $15,500 in one investor’s account, but not the other’s.

That’s because Investor A did something Investor B did not – adding an extra $50 to her brokerage account to buy more stocks. She did so for the same 10-year period. Instead of having $15,500 in her investment account after the 10-year period, Investor A had $27,300 in her account.

If either investor had added $100 to the trading account each month, the returns would have been even higher, given the same time period and the same 12% average annual returns. In that scenario, the original $5,000 investment would have grown to a whopping $39,000.

The moral of the story?

Regular contributions to your stock trading account can substantially help grow your assets under management. That’s a habit every stock investor should be pursuing.

The Takeaway on Stock Market Trading Strategies

No matter which stock market trading strategy you choose, don’t sell the process short.

It’s a process that takes time, discipline, and diligence – and that makes the process of selecting stocks as equally important as the outcomes the strategy produces.

By immersing key factors like risk tolerance, time constraints, and a personal budget into the mix, fledgling investors can maximize their stock trading strategy experience – and to a long and potentially prosperous run as a stock market investor.

At a Glance: Common Stock Orders Defined.

When you start buying stocks, it’s easy to be overwhelmed by the jargon. Don’t let that get to you – keep the process simple with these common stock execution definitions.

Ask. This tells buyers what price sellers are willing to accept for a stock.

Bid. This describes the price that buyers are willing to pay when buying a stock.

Spread. This is difference between the highest bid price and the lowest ask price for a stock.

Market order. This describes an investor’s call to buy or sell a stock as soon as possible as the best available price.

Limit order. This terms to a call from an investor to buy or sell a stock at a specific price or better.

Stop-loss order. When a stock hits a certain price, a “stop” or “stop-loss” order triggers an automatic market trade execution where the buyer’s stock position is partially or fully sold.

10 Golden Rules for Stronger Stock Market Trading

With our foundational pieces in place, let’s add to the “starting out” experience with several time-tested tips to better market trading results. Each should fit nicely into a new stock trader’s tool kit.

Former heavyweight boxing champion Mike Tyson once said that “Everybody has a plan until they get punched in the mouth.”

Wise words, indeed. That’s exactly why your portfolio investment plan has to be bulletproof, and why the planning process should start with a thorough and honest self-audit.

Assessing factors like your investment goals and your cash-flow situation before buying stocks are all components of a financial self-audit.

Don’t flinch with your pre-stock trading self-assessment. The more you know about your household financial situation, the better financial steward you’ll be when the markets get chaotic and the fists start flying – with your money on the line.

In stock investing, stability counts for a whole lot. Good financial planning before you start buying stocks can build the foundation needed to grow your portfolio assets over time, within the confines of a good household budget and a solid long-term investment strategy.

New stock market investors can take some financial risk out of the equation by opening an IRA account with their stock brokerage firm.

Most online brokerage firms accept IRA accounts for stock trading and make them easy to open and to start trading.

The big advantage is that you can steer up to $6,000 annually into your IRA account ($7,000 for Americans over the age of 50) in a tax-advantaged basis, which can add account funds to your stock trading experience.

One note of caution: IRA withdrawals before the age of 59-and-a-half can trigger IRS fees and penalties. When you use IRA funds to trade, think long term – a good idea for most stock investors.

Chances are that you won’t want an investment portfolio that’s top-heavy with stocks. It can be risky to do so, especially for new investors with little experience managing an investment portfolio.

That’s where index funds can help. Instead of laying all out your cash on a few stocks, parcel some cash out for index funds or ETFs that pool dozens or even hundreds of stocks into one fund.

Having a stake in 10 funds instead of 100 individual stocks reduces overall investment risk, but still allows investors to take advantage of effective investment vehicles like value stocks, growth stocks, international stocks, and sector-specific stocks like technology, healthcare, or banking and finance.

Additionally, index funds and ETFs come with low fees – sometimes as low as 0.100% to 0.25% of all assets under management.

When you’re starting out as a stock investor, it’s a good idea to limit your stock investments until you’ve gained more experience as a market trader. There’s no standard rule of thumb, but many financial planners advise limiting the individual stock portion of your investment portfolio to 10% or 15%.

Working regularly with a financial planner, you can adjust the stock portion of your overall portfolio over time, as you become more familiar with securities trading.

So-called penny stocks are just what you may think – the bargain bin for securities traders.

As a new stock market investor, give penny stocks a wide birth. They not only come with high risk, but they can be difficult to trade (not many buyers want them) and can easily be delisted by major stock exchanges – usually for significant price declines or malfeasance by the company.

While it’s understandingly tempting to buy and sell stock shares based on what you see on CNBC, what you read in The Wall Street Journal, or what you see on Twitter, resist the urge. Short-term swings based on company or industry news are likely temporary and go against your long-term “buy and hold” strategy.

As long as you’re stocking your portfolio with solid companies that perform over time, ignore the news and stick to your investment plan. After all, news comes and goes, but a good investment strategy stays for the long haul.

Stock trading success largely depends on buying low and selling high, but that’s not possible when investing in chaotic markets with millions of trades executed every day.

One way to benefit more regularly from market fluctuations when buying stocks is through dollar-cost averaging (DCA). This investment strategy curbs the impact of high market volatility when buying stocks. With DCA, instead of making a single lump-sum stock purchase, you buy smaller amounts of stocks on a predetermined periodic timetable (monthly or quarterly, for example), until you own the number of shares needed, based on your investment strategy.

This “slow and steady” stock-buying strategy can take an abundant amount of pricing risk out of the equation, while keeping your stock market investment goals in good standing.

Most reputable stock brokerage firms will offer you the opportunity to practice trading via “test” market trading software. With demo trading, you can dip into the trading waters and gain valuable knowledge on how stocks work and how they’re traded on various exchanges.

Better yet, you won’t absorb any financial losses when you make trading mistakes. The genuine accounting won’t take place until you begin trading for real – which you’ll be bettered prepared for after a few weeks of demo-stock trading.

Even the best stock pickers make mistakes, and you will, too. The worst mistakes, however, are when you make market moves out of fear or emotion, and not logic and reasoning.

Warren Buffett once advised Main Street investors to “control your urges” when trading, and that’s good advice. Let your head, and not your heart (or, worse, your stomach), make the final call on tough trades. As the old adage goes, when you can keep your head on when others are losing theirs, you’re way ahead of the game – and usually the market, too.

Buffett also once famously said that it’s “far better to buy a good company at a fair price than it is to buy a fair company at a good price.”

Those should be words to live by for new stock investors. Take risk out of the equation with good research and a disciplined trading mindset that aims for singles and doubles and not great slams. When you swing for the fences on Wall Street, you wind up striking out a lot.

Stock Market Investing: Your Financial Future Is Now

When it comes to learning how to invest and building the habits of a savvy stock trader, the future really is now.

By embracing the tenets listed above and taking the time needed to educate yourself on the stock market, you’re taking the first action steps in becoming the trader you need to be to really build wealth over the long haul.

Even better, watching your investment portfolio grow over time is one of the substantial joys of stock market investing.

After all, growth means expanding, and that’s the goal of any stock market investor.

So get going today. Take the proven path to financial security with a time-tested means of helping you reach your lifetime financial goals – one share of stock at a time

The post How to Invest in Stocks: A Survival Guide appeared first on InvestorPlace.

What is a UTR number?

A UTR number is your 'unique taxpayer reference' number. HMRC assigns each self-assessment taxpayer a different number in order to track their tax records.

All UTR numbers have 10 digits, and sometimes there's a letter 'K' at the end.

Once you get your UTR number it stays with you all your life - just like your National Insurance number.

• Submit your 2021-22 tax return with the Which? tax calculator direct to HMRC

Who needs a UTR number from HMRC?

You only need a UTR number if you submit a self-assessment tax return.

This could be the case if you're self-employed or have set up a limited company, if you owe tax on savings interest, dividends or capital gains, or if you earn more than £100,000.

There are a range of other circumstances where you'll be required to submit a tax return. We explain the full criteria in our guide to self-assessment tax returns.

How to get a UTR number

You won't automatically be given a UTR number. You need to register for self-assessment to be issued with one. Here's how to do it:

• Register for self-assessment online: Before you submit a tax return for the first time - say, after you've started a new business - you need to register for self-assessment, which you can do on the HMRC website. When you do this, you will automatically be assigned a UTR number, which will be sent in a letter through the post.
• Apply over the phone: you can call HMRC on 0300 200 3310 to ask about your UTR number. You may have to provide some details, and they may still direct you to apply online.
• Apply by post: you can write to HMRC to request a UTR number. Be aware that it's likely to take a long time as several letters are likely to go back and forth asking you to provide information.

How long does it take to get a UTR number?

After registering for self-assessment you should receive your UTR number in 10 working days or 21 working days if you're abroad.

Information you'll need to get your UTR number

To register for self-assessment, you'll need the following information:

• Full name
• Current address
• National Insurance number
• Date of birth
• Phone number
• Email address

If you run your own business, you may also need:

• The date you started being self-employed
• Type of business
• Business address
• Business phone number

I've lost my UTR number: what should I do?

If you have already been issued a UTR number but can't find it, you can find it by logging into your personal tax account, or try the HMRC app. 

HMRC has made this YouTube video to show you how to find your UTR number on the app. 

Alternatively, you can call HMRC's self-assessment helpline (0300 200 3310). To help them find your UTR number, you should have your National Insurance number to hand.

Note that HMRC cannot give your UTR number over the phone, and will have to post it to you - which could take 10-15 days.

Submitting a tax return without your UTR number could result in a fine, as HMRC may not be able to match your return to their records before the submission deadline.

Your UTR questions answered

Below, we tackle commonly-asked questions about UTR numbers.

Tackling climate change is critical to ensuring a healthy planet as it also makes good economic sense, writes Eniola Adetola

Climate change has become the greatest priority and it poses significant risks to global financial systems and those that rely on them. Reducing uncertainty about the pace of climate change and policy, as well as improving entities’ ability to accurately assess risk, will be imperative to mitigating climate financial risks now and in the future.

Tackling climate change is critical to ensuring a healthy planet, but it also makes good economic sense. Studies have shown that the social gains far outweigh the costs of climate financing. There is now a sizeable and growing body of literature providing quantitative estimates on the “social cost of carbon.” This measures the incremental harm from climate change caused by additional carbon emissions. And evidence now shows that avoiding emissions and moving to renewables would result in significant social benefits and an overall net gain for society.

Potential risks to energy transition could amplify risks to the financial system.  The energy-related repercussions from the war in Ukraine, is an opportunity to look towards phasing out fossil fuel subsidies in emerging markets and developing economies and also begin to embrace or invest in clean and renewable energy. A delayed or disorderly climate transition could magnify the risks to the financial system. 

There are eight financial market tools that support sound assessment and mitigation of climate-related financial risks by different entities. Such as the central bank and financial regulators.

One, the pressing needforstructural reforms to minimize the impact of climate change on the financial system and proper implementation ofclimate-related financial policies by policymakers: There is a direct positive relationship between climate protection and economic performance and financial stability. Therefore, there is a need to properly implement sound financial policies and carry out structural reforms to minimize the impact of climate change on the financial system. One of the reasons this has been stalled in the developing markets, is the lack of proper financing to affect structural changes.

Two, the Central bank and financial regulators must systematically integrate climate risk assessments into their financial stability frameworks: When climate risks are deemed material and systemic importance exists, special attention will be needed to ensure the evaluation of how climate risks amplify and transmit risks to the financial sector. They should therefore ensure that climate-related risks are adequately captured in their processes. Where these risks are assessed as being material and likely to threaten financial stability, they should intervene early.

Three, building capacity in the area of climate-related financial risks. Preserving financial stability is the core mandate of financial authorities, in other to ensure that climate-related risks are adequately captured in their supervisory/regulatory processes, capacity building in the area of climate-related financial risks should be prioritized.

Four, central bank’s mandates and balance sheets: There is a need for an analytical assessment of the impact of climate change on central bank operations, governance framework, policy-setting framework, and financial stability. It should be incorporated within the mandate of the central bank, how environmental sustainability objectives should influence central bank operations and the use of monetary policy tools, and integrate sustainability considerations into the central bank’s balance sheets.

Five, disclosure is the process by which an entity reports its assets, liabilities, and risks. Financial regulators across the world generally require disclosures of key financial information from public and private companies to help investors make informed decisions. In a climate context, this could include greenhouse gas emissions (both direct and in its supply chain), exposure to climate impacts such as flooding and wildfires, and management practices to address physical and transition risks. As the climate changes, these metrics are becoming increasingly relevant for investment decisions; for example, an investor in a State with stringent climate policies should be less inclined to invest in a business with relatively high carbon emissions.

Six, establishment of climate information gathering structure. Identifying and assessing climate risks, and enabling informed investment decisions require a robust information structure around climate risks. The information structure should consist of reliable and high-quality data, a harmonized and consistent set of climate disclosure standards; and principles to align investments to sustainability goals. Implementing a climate information gathering structure may serve as the foundation to develop sustainable finance markets in emerging and developing economies. In this regard, current standard-setting work should fully take into consideration, the difficulties in data collection in emerging markets, while ensuring that company-level disclosures are mainstreamed across these economies.

Seven, climate Stress testing is a standard tool used by financial institutions and regulators to assess financial resilience in adverse scenarios such as a recession. This approach is recognized as an essential tool to analyze exposure to climate-related financial risks. Most proposed and ongoing climate stress tests take the form of a scenario analysis, which applies a set of forward-looking scenarios that capture plausible future states of climate change and climate policies and evaluate a financial entity’s performance in them. The Network for Greening the Financial System (NGFS), a network of several dozen central banks and financial supervisors, has issued official guidance on climate scenario analysis for financial regulators. As of spring 2022, adopters of climate stress testing include the Netherlands, France, the European Central Bank, Canada, Australia, and the United Kingdom. US financial regulators, such as the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, are also developing principles and infrastructure for climate stress testing.

Eight, mobilization of both public and private funds towards climate financing: Local, national, or transnational financing drawn from public, private and alternative sources of financing that seek to support mitigation and adaptation actions that will address climate change are needed because large-scale investments require funds to significantly reduce emissions. We need to understand the potential avenues to scale up private financing to mitigate climate risks, which is required to develop sustainable finance markets. Access to finance continues to be a barrier in many economies. In some economies, climate finance flows need to increase by four to eight times until 2030, according to the latest estimates from the Intergovernmental Panel on Climate Change.

Momentum is continuing to build on climate financing and other initiatives, but we need to act now to ensure the necessary frameworks are in place in the years ahead. Everyone must play a role in scaling up work and effort on climate-related financial risks and climate finance.

 Adetola is a

Senior ESG consultant,

IPMC Ltd

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U of A students who plan to use scholarships or financial aid to pay for spring self-paced online courses that begin Jan. 17 may submit enrollment requests now through Dec. 18.

Learn how to request enrollment and explore financial aid and scholarship guidelines on our website or call 479-575-3647.

Colleges and schools at the university offer college credit through these self-paced online courses. These courses are offered through the U of A Global Campus.

Students must be enrolled in at least three university credit hours that are not self-paced online courses before they can enroll in up to three credit hours of self-paced online coursework using scholarship funds and financial aid. Students enrolled in six credit hours that are not self-paced online courses may take up to six hours of self-paced online coursework using scholarships and financial aid. Submitting a request for enrollment in a self-paced course does not ensure successful enrollment in the requested course.

Self-paced courses offer the most flexibility of any university credit course while meeting the same academic standards as face-to-face or traditional online courses. Self-paced courses allow students to set their own learning tempos, rather than following structured learning environments led by faculty or instructors. Students should consult with an academic adviser regarding course selection to ensure courses will count toward their degree requirements.

This may be the last chance for students to enroll in a self-paced course that fits their needs. The U of A is phasing out self-paced online courses by reducing the number of classes being offered each semester. Academic advisers and students should note this plan when developing course schedules. The last day a person can request enrollment in a self-paced course will be June 18, 2023. For more information about the phase-out, see the related article in News or visit the self-paced courses website.

The Global Campus also supports colleges and schools in the development and delivery of distance education offerings, including degree programs that are completely or primarily online. The Global Campus provides instructional design services, technology services, access to national distance education organizations and assistance with marketing and strategic academic development.