Special Contributor

This post comes from a Personal Profitability partner.

Forex trading, also known as foreign currency trading, can be a lucrative hobby for those interested in putting in the time and effort. 

Today, you do not need deep pockets to get started. There are online forex brokers and platforms that cater to small-scale traders, and you can open a real-money trading account with them even if your bankroll is small. You have quite a lot of brokers to choose from if you can make a $200 first deposit, and some brokers accept even less than this – such as $100 or even a mere $10. 

Doing it small-scale to begin with and gradually building up a bankroll makes it easy to follow the #1 rule: do not risk money you can not afford to lose. Putting money on the line through forex trading always entails risk, and there are no “safe bets”. 

Therefore, proper risk management is essential for long-term profitability. If you have a small bankroll, choose a forex broker that permits small trades. For example, if you only have $100 in your account, you should go with a broker that allows you to make tiny trades – otherwise, you have to risk far too much of your total capital on each trade, which makes proper risk management impossible. 

What is forex trading?

Forex trading is the same as foreign currency trading. The global forex market is huge and decentralized, and the bulk of the trading is carried out by enormous entities such as central banks, investment banks, and hedge funds. All in all, currency worth around 6.6 trillion USD will be traded on the global forex market during an average trading day.

Currency pairs

The trading on the forex market is based on currency pairs. The most traded currency pair is  EUR/USD, which accounts for roughly one-quarter of the total trading. This currency pair is traded so heavily because it represents two of the world's largest economies: the European single market and the United States of America. These two currencies are also widely used outside Europe and the United States.  

Examples of other well-known and heavily traded currency pairs include:

• The United States dollar and the Japanese yen: USD/JPY.
• The British pound sterling and the United States dollar: GBP/USD.
• The United States dollar and the Swiss franc: USD/CHF.
• The Australian dollar and the United States dollar: AUD/USD. 
• The United States dollar and the Canadian dollar: USD/CAD. 
• The New Zealand dollar and the United States dollar: NZD/USD.

Base currency and quote currency

In a currency pair, the first currency is the base currency, and the second is the quote currency. 

Example: In the currency pair EUR/USD, Euro is the base currency, and the US dollar is the quote currency. In the currency pair USD/JPY, the US dollar is the base currency, with the Japanese yen as the quote currency. 

0.9844 USD/EUR means that you have to pay 0.9844 Euro to get 1 USD. 

Forex derivatives

A wide range of financial instruments are based on forex. Here are a few examples:

• Basis swap
• Currency future
• Currency swap
• Foreign exchange binary option
• Foreign exchange forward
• Foreign exchange option
• Foreign exchange swap
• Forward exchange rate
• Non-deliverable forward
• Power reverse dual-currency note (PRDC)

Comparing forex brokers

Below, we will look at a few points that are good to keep in mind when comparing forex brokers. It is good to keep in mind that you do not need to find a broker that fits all your needs. If you employ two different trading strategies or trade with two other currency pairs, do not hesitate to sign up with two different forex brokers instead of compromising. The forex broker that is ideal for your first strategy might be unsuitable for your other strategy, and so on.

Asset, strategy, and associated trading costs

• Does this broker offer the currency pair I want to focus on? 
• Does this broker offer the type of instrument I wish to use for my forex trading (e.g. Contracts for Difference)?
• Is this broker suitable for my strategy (e.g. scalping)?
• What would it cost to employ my trading strategy with this broker for this currency pair?

It is important to look at all the costs. For example, a broker luring you in with promises of zero spreads might charge a higher-than-average commission and vice versa. Also, be vigilant about small fees that may add up in the long run, such as deposit and withdrawal fees, platform fees, etcetera. 

The trading platform

Use a free demo account with play-money to test out the trading platform risk-free. It is important that you like the platform and that it is easy to use.

A platform that is difficult to navigate or where it is easy to accidentally put in the wrong order will be especially detrimental for fast-paced day traders who employ a trading strategy where every second counts. Fortunately, many brokers will allow you to open a free demo account. It will be filled with play money so that you can make play-money trades on the platform. It is a great way to learn and experiment without risking any real money.

Mobile trading

If your plan is to do most of your trading on your phone or tablet, make sure you test-run the trading platform on that device. Some trading platforms have a nice interface for desktop traders but sub-par trading apps for mobile devices.

Technical analysis

Do you carry out technical analysis? Is it important that the platform provides historical trading data and a lot of tools for technical analysis?

Minimum deposit

If you do not wish to make a big first deposit, make sure you select a forex broker who does not require this. Some forex brokers cater to micro-traders and accept very small first deposits, e.g. $10.

Transaction methods

Does this broker accept a method for deposits and withdrawals that you are comfortable with? Are there any deposit and/or withdrawal fees for this method? 

Do you get to make at least one withdrawal per month without paying the fee? What are the minimums for deposits and withdrawals?

Minimum trades

Most hobby traders are on a small budget when they start out, and it is important that you select a  broker that will allow you to make trades small enough for proper risk management. Even if you have $1,000 in your account, it is not wise to stay with a broker where each trade must be $1,000 or nearly that. Do not put all your eggs in one basket. Select a broker where you can properly manage risk and only put a fraction of your total bankroll into each trade. 

Customer support

• Not all brokers offer phone support nowadays, so if this is important to you, make sure you select a broker who does. Also, check if you will be required to make a potentially expensive phone call to another country to reach the support by phone. 
• If you want to be able to get help in real-time, make sure the broker offers phone support or live chat – not just email support.
• Check if support is available in a language you are okay with using.
• Check if the support is staffed when you are most likely to trade. It is nice to be able to sort out issues directly, even if they occur outside normal office hours.

Regulation

• Is the broker licensed by a reputable license authority? Examples of license authorities that have a good reputation among the traders are CySec, BaFin, UK FCA, FINMA, and ASIC. 
• Is the broker licensed by a licensing authority in your part of the world? If you live in Country  A and pick a broker company that is based in Country B and licensed from Country C, you are putting yourself in a complex legal situation. 

Please note: Many large broker corporations have set up subsidiaries within the European Union and are licensed from one or more member countries. The subsidiary must adhere to the EU regulation, including MiFID II, so the legal framework is pretty straightforward even when a subsidiary does not have a license from the member country you live in.

Reputation

Does this broker have a good reputation among the traders online? 

All restaurants – even the truly great ones – have at least a few angry customers posting scathing reviews online, and the same is true for forex brokers. You would be hard-pressed to find a broker with 100% happy clients giving nothing but 5-star reviews. (That might actually be a bit of a red flag in itself.) With that said, try to get a feel for the general reputation of a broker. Does this broker seem to, in general, have a good reputation? When clients complain, what are they complaining about, and do the complaints seem to be well-founded? Are the same issues popping up over and over again?

This post comes from a Personal Profitability partner.

Do you often find yourself wondering where your money went? Has it been proving to be such a struggle for you to truly save up and improve your financial situation? Have you been racking your brain trying to determine where the leak in your finances is and how to plug it? 

Budgeting finances can understandably be complex, but it doesn’t have to be. There are many different techniques and apps you can use to help improve your financial management know-how and skills. 

Here are a few simple tips that can get you one step closer to financial maturity. 

Make a Financial Audit

Before you jump into a brand new game plan, you should first try to have a clear understanding of your financial situation. What expenses do you have exactly, and are they recurring? It would help to make a list of all your expected bills and dues on a monthly basis, so you can have a base standard of how much you should have in your account at any given time. 

For credit or loans, make sure to account for the interest rate, and especially the due date. Missing payment deadlines do impact the amount due, so you should do your best not to miss out on any of them. If the option is available, it’s always better to enroll in autopay, which means money will automatically be debit from your linked account to pay your credit or loan through their preferred platform. 

Separate Your Savings

Anything that you will need to pay your monthly dues should be on its own account, and separate from your savings. You can either make the monthly deposit manually or enroll it as an auto-debit with your bank as well. 

The trick is to remove a set amount from your expenses account and your mind. Don’t even think that you have that money to spend–you don’t because it should be sitting nicely in your savings account instead. 

You may start small, but over time, you’d be surprised at how much your savings have already grown, for as long as you don’t keep dipping your hands into it. With an active, growing savings account, you can then look forward to the next step to financial freedom, which is investing. After all, you should only invest money that you can afford to lose. 

Identify Miscellaneous Expenses

It’s easy to overlook miscellaneous expenses as the leak because they don’t seem that much, to begin with. However, it turns out that these “small” expenses do eventually add up. Dining out, for example, can instantly bump up your expenses without you noticing it. The same goes for deliveries and online shopping.

Transportation through cabs and ride-sharing apps also do end up being very expensive, especially since the charges can fluctuate depending on a variety of factors, such as distance and traffic. 

Make a detailed note of all these types of expenses that you usually have. It should be easy to trace back based on your credit card transactions, anyway. Ultimately, the point is for you to see how much these add up to, and how much they actually impact your finances.

Use Technology

At this point, there’s no reason for you not to get the help you need from technology. Once you’re done doing your audit, and since you already have an idea where the financial leak is coming from, it’s time to rectify the situation by staying on top of things. Using budget management apps like Simplifi by Quicken can help you avoid overspending by keeping track of your finances in real-time. 

Budgeting apps only take a simple installation on your phone, so you can check the status of your finances wherever you are. You can even get budget management tips and ideas to further improve your financial literacy. Hopefully, you can finally achieve your savings goals.

This post comes from a Personal Profitability partner.

Many people have heard of the term “PPP loan” before, but they aren't entirely sure what it actually is or who can apply for one. Fortunately, some banks and financial institutions can help you determine whether you qualify and assist you will filing out your PPP loan application when the time comes. Before you begin, however, it's helpful to have more background knowledge on what PPP loans are, who they can help, and when you can apply for PPP loan forgiveness. 

Note: This post comes to you in conjunction with a Personal Profitability partner.

What is a PPP Loan? 

PPP loans, or Paycheck Protection Program loans, are money provided by the government to encourage to keep their employees on the payroll. Nobody wants to lay off employees or cut their pay, but when times are tough, many small businesses have to do just that. With a PPP loan, however, you are given funds to continue paying your employees, including their benefits, and they can also be used to help with rent, utilities, and property damage or theft. 

Is There Interest on PPP Loans?

Yes, there is a small 1% interest rate on PPP loans. Fortunately, if you follow strict criteria, you can get your loan payments forgiven, though this is never guaranteed. Either way, the small 1% interest rate helps prevent small businesses from getting in too deep, as interest accumulates much slower than it would from a private lender that may charge several times more interest. 

Who Qualifies for a PPP Loan?

It can be a bit tricky to determine who actually may qualify for a PPP loan but enlisting the help of a trusted banker or financial consultant can help you understand if it's an option for you. Generally, people who apply for PPP loans are those who own small businesses that adhere to the Small Business Association's size standards, sole proprietors, independent contractors, and those who are self-employed. 

Non-profit organizations may also be eligible for a PPP loan, depending upon their size and specific codes. 

Can I Apply More Than Once?

Yes, some small businesses may qualify for more than one PPP loan, depending upon their own unique set of circumstances, or they may qualify for an increase in the loan they originally received. Receiving another PPP loan is called a Second Draw PPP loan, though the terms are substantially more strict than First Draw PPP loans. 

When Can I Apply for Forgiveness?

Businesses or individuals can apply for loan forgiveness after they have used all of the money, and before the maturity date of the loan passes. In many cases, the loan maturity date is about 10 months after the last date of the covered period, so it's in your best interest to apply for forgiveness as soon as possible if you qualify. 

Nobody likes filling out paperwork, and accepting help from an institution can be hard for many business owners and independent contractors. At the same time, you don't have to face this alone, and getting help in these matters from an expert can make the whole process much easier. 

This post comes to you in conjunction with a Personal Profitability partner.

This post was originally published on June 15, 2021, and updated on February 17, 2022.

Driving can cost a lot of money. Between car payments, maintenance, fuel costs, and insurance, driving expenses add up quickly. It pays to look for ways to save on your transportation costs however you can, especially if you happen to drive a lot — because even your insurance rates can see an impact if you happen to qualify as a high-mileage driver.

What Qualifies as High Mileage Driving?

First, let's take a quick look at why high-mileage driving could result in higher insurance rates.

Simply put, mileage influences car insurance premiums because more time spent on the road means a higher risk of accident or damage. After all, if your car spends most of the time in the garage, it's not very likely to be the source of an insurance claim. If you're making a long commute every day, your accident risks are objectively higher — thus the higher premiums.

So are you a high-mileage driver? According to statistics, the average American motorist drives around 13,000 miles per year. If you fall in the range of 10,000 to 15,000 miles yearly, your premiums are unlikely to see a hike. If you drive over 15,000 miles in a year, you may qualify as a high-mileage driver. Similarly, if you drive somewhere between 5,000 and 8,000 miles a year, you may qualify for a discount as a low-mileage driver.

How Much More Do High-mileage Drivers Pay?

How much more will you pay if it turns out you are a high-mileage driver? Let's look at some average statistics from The Zebra:

Average six-month premium, by mileage:
10,000 – 15,000 miles: $965
15,000 – 20,000 miles: $972
20,000 – 25,000 miles: $974
25,000 – 30,000 miles: $976

While this is a fairly marginal change in premiums, you should also be aware that premiums can vary by state. For example, in California, rate hikes for high-mileage drivers could go up to 30% (as compared to 1-3% for high-mileage drivers in other states).

How Can High-mileage Drivers Lower Their Insurance Car Rate?

• Find a cheaper insurer. It always pays to shop around for a better deal, regardless of how many miles you drive in a year. Online tools have made it easier than ever to compare insurance rates between companies and hopefully find a better rate than you have now.
• Maintain a clean driving record. A driving record free of accidents and traffic violations is one of the most dependable ways to keep your rates low (or at least them from getting any higher). Do your best to stay out of trouble when it comes to your driving.
• Take advantage of discounts. There are almost always more discounts available to drivers than they might guess at first glance. Insurers commonly offer discounts and other perks for a variety of criteria: student discounts, good driver discounts, discounts for bundling your insurance policies or paying ahead. Get in touch with your insurance company and find out what's available to you.
• Change your coverage. If your car is fully paid off and worth less than $4,000, consider dumping your collision and comprehensive coverage. Your liability insurance should be sufficient for your needs — the rest is unlikely to do you any good until you get a newer vehicle.
• By a cheaper used vehicle. Older cars tend to attract lower rates as their value depreciates. Now might be a good time to trade down!
• Take a defensive driving course. Some insurance companies will lower your insurance if you can prove you completed a defensive driving course, which will reduce your risk of accident on the road regardless of how much you drive. Contact your insurer and see if this is a program they offer (or shop around for an insurance provider who does).
• Try to drive less and lower your mileage. While this one might seem like a no-brainer, it might be worth looking into how you could drive less often. If public transportation or biking is an option, consider giving that a try — or see about working from home more often.

Should I Install a Telematics System?

One of the major ways car insurance companies are now offering their customers lower rates: telematics. A driving tracker installed in your car will collect usage data telling the insurer how much you drive, what time of days you drive most, and what your driving behavior is like (such as force of braking, speeding, etc.)

If the data collected shows you drive safely, you can use that data to negotiate a lower rate — and many insurers will give you a discount simply for letting them collect that data in the first place. For some, this might be a privacy concern — but if you are looking for another way to save money, this might be just the thing.