ReportWire

Tag: gr0

  • Entrepreneur | What Is a Brokerage Account? Do You Need One?

    Entrepreneur | What Is a Brokerage Account? Do You Need One?

    [ad_1]

    If you’ve been conducting research on investment options or retirement planning, then you may have come across brokerage accounts. It can be challenging to sort through all the information, but it is crucial to do so to make the best financial decision for yourself.

    If you’re interested in learning more about brokerage accounts, eep reading for everything you need to know, including the pros and cons, how to open one and whether or not you need one.

    What is a brokerage account?

    A brokerage account is a type of investment account through which you can buy, sell and trade many different types of investments. With a brokerage account, you can allocate money for retirement, college tuition, down payments and other significant life investments.

    While many investment or retirement accounts do not allow you ready access to the invested assets, brokerage accounts will enable you to transfer money in and out freely, like a standard bank account.

    Common types of assets in a brokerage account include:

    • Stocks.
    • Bonds.
    • Mutual funds.
    • Exchange-traded funds (ETFs).
    • Other securities.

    Brokerage accounts are also known as “taxable accounts” because any income gained from this investment is subject to capital gains tax, which could be 0%, 15% or 20%, depending on your filing status. Because of this, brokerage accounts are best for long-term investments rather than a fast way to play the stock market.

    How do brokerage accounts work?

    Generally, you do not need a large sum of money to open a brokerage account. For some, you might not even need an up-front deposit.

    You will, however, need to fund the account before buying investments. Because brokerage accounts are easily accessible, you can move money into the account from your checking account, savings account or another brokerage account.

    Related: 3 Best Business Checking Accounts of 2023

    With a brokerage account, the broker holds your account, but you own the money and the investments. The broker is simply the middleman that asks as the messenger between you and the assets you’re interested in purchasing.

    Related: 6 Best Online Brokers Of 2023

    How does a brokerage account compare to other accounts?

    Other common types of accounts include retirement accounts and checking accounts. To see how a brokerage account compares to these, look below.

    Brokerage account

    • Purpose: Investing.
    • Fees: Possible maintenance fees depending on the institution.
    • Taxes: Offers flexibility based on what you sell and typically must claim any capital gains as taxable income.
    • Contribution limits: None.
    • Withdrawal rules: No restrictions or fees.

    Retirement account

    • Purpose: Long-term growth and retirement savings.
    • Fees: Possible maintenance fees depending on the institution.
    • Taxes: Possible tax benefits depending on your chosen IRA.
    • Contribution limits: Contribution limits and eligibility requirements.
    • Withdrawal rules: Possible penalties for withdrawing money before retirement.

    Checking account

    • Purpose: Everyday spending.
    • Fees: Possible maintenance fees depending on the institution.
    • Taxes: Possible taxes on earned interest income based on checking account type.
    • Contribution limits: None.
    • Withdrawal rules: No restrictions or fees.

    Individual retirement account (IRA)

    • Purpose: Long-term growth and retirement savings.
    • Fees: Possible maintenance fees depending on the institution.
    • Taxes: Possible taxes depending on several factors, including withdrawals.
    • Contribution limits: Yes, depending on year and age.
    • Withdrawal rules: Yes, depending on contribution and age.

    Related: What Is a Roth IRA? How It Works and How to Get One Started

    What types of brokerage accounts exist?

    There are two different types of brokerage accounts that you can open. The structure you choose will depend on how you plan to handle your securities.

    Cash account

    With a cash account, an investor is required to pay the entire amount for purchased securities. A cash account structure does not allow you to borrow broker funds to pay for account transactions.

    Margin account

    Opposite to a cash account, a margin account structure allows the investor to borrow money from the broker-dealer to purchase securities. To do this, you must have securities in your account that will serve as collateral for the loan. Remember that margin accounts, like any other loan, will require you to pay interest.

    The margin account structure is riskier than a cash account because of the uncertainty of borrowing.

    For example, if you purchase a security on borrowed money and your security value declines, your broker can require you to deposit cash or equivalent securities into your account to cover the loss. Your broker also has the power to sell your securities without advance notice to cover the loss.

    Related: How Many Credit Cards Should I Have?

    What are the different brokerage account ownership types?

    Brokerage accounts are flexible in more than one way, as they also offer options for who will own the account.

    Individual brokerage account ownership

    If you choose this type, you will be the sole owner of the brokerage account, meaning it will be in your name and your name only.

    Joint brokerage account ownership

    If you choose this type, you can own a brokerage account with other people. Generally, those other people include spouses, children, parents or other family members.

    However, joint ownership does not have to be between blood relatives; it can also simply be between people with mutual financial goals.

    The three types of joint brokerage accounts include:

    • Joint tenants with survivorship rights: The individuals share equal ownership rights; if one dies, the other will receive the remaining share.
    • Tenants in common: If one owner dies, there is no right of survivorship and the deceased’s share will be allocated to their estate.
    • Community property: This ownership is reserved for married couples, and the assets are split equally. If one owner dies, the deceased’s share will be allocated to their estate. This type of ownership is not available in all states.

    Related: What are Your Investment Goals? Let’s Explore

    What are the pros and cons of a brokerage account?

    When making investment decisions, it is essential to weigh the benefits and drawbacks to determine the best possible outcome. To help see both sides, look at the pros and cons below.

    Pros of a brokerage account

    1. Diversification: Whether you’re a seasoned investor or a beginner, you can diversify your portfolio and gain experience with new ventures. In addition, because of the different areas of investments, gains in one area may offset losses in others.
    2. Convenience: Online brokerage accounts make all operations easy and accessible, as they can be completed from home. However, if you prefer to deal with your broker in person, investing with a brokerage firm you can physically visit is also an option.
    3. Growth potential: Brokerage accounts are a long-term investment, but they can help grow wealth over time. Stocks are generally the asset that will garner the most significant return; however, having multiple assets like you can with a brokerage account is a considerable advantage.
    4. Liquidity: There are few restrictions on handling your brokerage account investments, meaning you can access, buy and sell assets quickly and easily.
    5. Managed by professionals: With an online brokerage account, you may have access to a robo-dealer that will provide investment suggestions based on data. With a broker, you will have a human account advisor to advise your portfolio based on data and their expertise.

    Related: 6 Best Robo-Advisors Right Now: Top Picks for 2023 | Entrepreneur Guide

    Cons of a brokerage account

    1. Market risk: When you invest in stocks, there is always a risk because it is subject to market fluctuation.
    2. Fees: You will generally encounter fees with brokerage firms as part of the payment for their service. These fees may include maintenance fees, annual fees and trade execution fees.
    3. Regulatory risk: Government agencies like the Securities and Exchange Commission (SEC) regulate brokerage firms, meaning those regulations and enforcements may impact the firm, its stability and, therefore, your investments.
    4. Limited guarantee: Generally, brokerage firms are Securities Investor Protection Corporation (SIPC) members. This is not the same as being a member-FDIC entity, meaning FDIC insured. The SIPC does provide guaranteed asset protection but only up to a certain amount, and it does not protect against market losses.

    How can you open a brokerage account?

    If you’re ready to take your research to the next level, dive into this step-by-step process of opening a brokerage account.

    1. Choose the brokerage account type

    Remember, there are two account types: cash accounts and margin accounts. The cash account means everything you invest and trade is directly from your funds.

    The margin account allows you to borrow money from the financial institution but comes with a loan’s risks.

    2. Compare costs and incentives

    Many brokers offer commission-free trading and incentives for choosing their firm. Make sure to compare firms you are interested in to see which one will work best for you.

    In addition to the incentives, examine the broker’s full pricing schedule for all assets, as many firms charge for trades that do not involve stocks.

    3. Consider services and conveniences

    Finding the correct prices and incentives is a large part of the research; however, there are other considerations to make.

    When choosing a full-service firm, you should be considering:

    • Access to research: Many brokerage firms use their own stock ratings in addition to the S&P 500 and Dow Jones indices. Make sure their access matches what you are looking for.
    • Foreign trading: If you are interested in diversifying your portfolio with foreign trading, you must make sure you partner with a firm that offers the option to convert your account money into foreign currencies you can trade on international stock exchanges.
    • Fractional shares: If you are looking for affordable options to start investing, you will need to make sure the brokerage firm offers fractional shares, which allow you to purchase a fraction of a stock share rather than the entire share.
    • Trading platforms: The platform you trade is a personal preference, but you should ensure that the firm you choose operates on a platform that you deem user-friendly. With so many options, from trading software to mobile apps, it’s all about what is most accessible to you.
    • Convenience: How can the brokerage firm make your experience more convenient? Consider factors like locations, online options, robo-advisors, human investment advisors, account connecting from checking to brokerage and money transfers.

    Related: 4 Best Money and Investment Management Apps

    4. Choose the right firm for you

    After you’ve done your research and considered all the options and factors, it’s time to decide based on what is the right fit for you.

    5. Complete the account application

    Once you’ve determined the right fit, you’ll need to complete an account application.

    The application will require you to provide information like:

    • Social Security number.
    • Driver’s license.
    • Net worth.
    • Employment status.
    • Investable assets.
    • Investment objectives and goals.

    Related: Short-Term, Mid-Term and Long-Term Personal Finance Goals: How to Iron Yours Out

    6. Fund your account

    You will need to add money to your account to begin investing.

    Depending on the rules of the brokerage firm, you will be able to transfer money via the following:

    • ETF.
    • Wire transfer.
    • Checks.
    • Asset transfer.
    • Stock certificates.

    7. Research and select investments

    Now that you’ve got everything settled, it’s time to start researching the investments you’d like to make. Learn the basics, build responsibly and start building your portfolio.

    Do you need a brokerage account?

    Whether or not you need a brokerage account is ultimately up to you. They are an excellent option for long-term investment strategies that will grow over time.

    Like most investments, certain risks come with brokerage accounts, but as long as you invest responsibly, they can be a great asset.

    Weigh the pros and cons, consider your financial goals and determine if a brokerage account is a right move for you.

    For more information on investment advice, retirement planning, financial advisors and more, visit Entrepreneur.com for the need-to-know information.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | What Are Index Funds and How Do They Work?

    Entrepreneur | What Are Index Funds and How Do They Work?

    [ad_1]

    If you’re looking to expand your investment portfolio, several investment products exist. In your research, you may have come across index funds. If you’re looking for more information, keep reading for everything you need to know.

    What are index funds?

    In 1976, Jack Bogle, the founder of Vanguard, created the first index fund to provide a low-cost investing method that valued the investor’s interest over the company’s.

    Index funds track the aggregate trends of a total market index, like the S&P 500, Dow Jones Industrial Average or Nasdaq. It is a type of mutual fund or exchange-traded fund (ETF).

    A mutual fund is an investment made by multiple people who purchase stocks, bonds and other securities. The mutual fund manager handles the day-to-day management to ensure the portfolio stays on track with the end-of-day purchase and sales. An ETF is a share or group of shares traded based on the stock exchange, with prices varying throughout the day.

    Unlike other investment funds, an index mutual fund is meant to work as a passive investment option rather than one that needs to be monitored against the market at all times. Index funds also tend to be lower maintenance because they offer a low-cost option with fewer management expenses.

    Related: The Difference Between Direct Indexing and ETFs

    How does an index fund work?

    An index fund’s performance is meant to mirror the index it tracks. For example, when the index fund manager purchases a stock or bond, they do so in the same proportion as is represented on the financial market index. For the most part, the fund monitors itself and will occasionally be rebalanced to continue mirroring any changes to the index.

    When someone decides to invest in an index fund, the shares they buy are essentially a small portion of the stock or bond they purchase, as represented in the index.

    An index fund holder’s financial returns are determined by that stock’s or bond’s performance, usually factoring in metrics like the fund companies’ market capitalizations.

    Again, index funds are built to be a low-risk, low-maintenance investment because they do not require the day-to-day management of other funds.

    Related: Index Fund Inflows & Outflows Show Which Asset Classes Are In Favor

    How does an index fund compare to mutual funds and ETFs?

    While mutual funds exist in the same realm as mutual funds and ETFs, they have some differences.

    Management style

    Index funds are meant to facilitate a passive management style, meaning they match the market index’s performance without the hassle of trying to outperform the market.

    Mutual funds and ETFs are a bit more flexible, as they can be managed actively or passively, depending on the fund manager and investors’ investment strategy.

    Related: Best Passive Income Investments: 8 Methods

    Investment objective

    An index fund gets its name because it is designed to track the performance of a market index. Mutual and ETFs do not necessarily follow that same objective. Mutual funds and ETFs might be an investment to generate income or appreciate capital.

    Trading and pricing

    ETFs are stock exchange trades, which means they are bought and sold throughout the ebbs and flows of the daily stock market hours. Mutual funds are priced per day, meaning they are the price of the fund’s net asset value for that day. Index funds typically work the same way.

    Related: Become a Better Investor in the Stock Market with This Training

    What are the pros of index funds?

    Diversification

    Because of the nature of index funds, they provide the investor with a diversification of their portfolio.

    When an investor chooses an index fund, they buy a piece of each stock or bond on that index, meaning their risk is spread over a larger number of holdings, reducing the risk of individual securities.

    Low fees and costs

    Because index funds are meant to be passive investments, they typically have lower management fees than those requiring constant attention. Over time, lower fees can equate to larger returns. Costs you can expect with index funds include:

    • Investment minimum.
    • Account minimum.
    • Expense ratio.
    • Tax-cost ratio.

    Performance

    Index funds are a long-term investment rather than a “get rich quick” short-term decision. They are generally reliable and consistent investments that do not involve the volatility of other assets.

    Index funds can work for someone searching for a lower-risk, lower-cost option that will perform well in the long run.

    Related: This Small-Cap Healthcare Name Is Outperforming Its Index

    Ease of investment

    Index funds are easily accessible and involve a straightforward process. You can purchase them through a brokerage account or a company that handles mutual funds. Because of the low cost, they are available to a wider range of investors than other funds.

    Liquidity

    High liquidity helps provide ease of buying and selling shares. Investors who want easy and quick access to their funds should consider index funds as an option.

    Tax efficiency

    Because index funds are straightforward, they usually generate a lower portfolio turnover than other funds. Lower turnover means lower capital gains taxes.

    Market exposure

    Again, index funds are low-cost and low-risk, which can be a great starting point for investors looking to get their footing in a particular market.

    Index funds allow investors to gain familiarity with market areas without selecting individual stocks. Once they’ve studied the market enough, investors can move on to higher-cost, higher-risk investments.

    What are the cons of index funds?

    Limited upside potential

    Unfortunately, there is rarely such a thing as low risk, low reward. Index funds are meant to replicate the index’s performance, meaning they will likely not outperform the stock market. Investors looking for high returns should look to another type of investment.

    No control over portfolio composition

    Because an index fund means the investor does not have complete control over the actual portfolio composition, investors might not be happy with the industries or companies involved.

    Also, indexes change which can result in removed securities, meaning the fund has to sell that security. This might lead to the investor owing capital gains taxes.

    Market risk

    While index funds are low-risk investments, that does not mean they are risk-free. The fund’s holding value will fluctuate, which means that the investor is at risk of losing money if the market takes a dip.

    Tracking errors

    Index funds are designed to replicate the underlying index’s performance. However, there is a slight chance that performance differences occur due to tax treatments and the timing of sales and purchases. The performance difference is called a “tracking error,” which can negatively affect the index fund.

    Lack of customization

    The broad market exposure that comes with index funds means that investors with a specific interest or streamlined goals are better off with a different type of investment. Actively managed funds are the types that will better suit investors who want to be able to customize their portfolios.

    What are the best index funds of 2023?

    If you’re ready to take the plunge or want some direction, look at the most popular index funds for S&P 500 and Nasdaq.

    S&P 500

    1. Vanguard 500 Index Fund – Admiral shares (VFIAX)
    • Minimum investment: $3,000.
    • Expense ratio: 0.04%.
    1. Schwab S&P 500 Index Fund (SWPPX)
    • Minimum investment: no minimum.
    • Expense ratio: 0.02%.
    1. Fidelity 500 Index Fund (FXAIX)
    • Minimum investment: no minimum.
    • Expense ratio: 0.015%.
    1. Fidelity Zero Large Cap Index (FNILX)
    • Minimum investment: no minimum.
    • Expense ratio: 0.0%.
    1. T. Rowe Price Equity Index 500 Fund (PREIX)
    • Minimum investment: $2,500.
    • Expense ratio: 0.15%.

    Related: 3 Inflation-Proof ETFs to Put into Your Portfolio

    Nasdaq

    1. Invesco NASDAQ 100 ETF (QQQM)
    • Minimum investment: no minimum.
    • Expense ratio: 0.15%.
    1. Invesco QQQ (QQQ)
    • Minimum investment: no minimum.
    • Expense ratio: 0.20%.
    1. Fidelity NASDAQ Composite Index Fund (FNCMX)
    • Minimum investment: no minimum.
    • Expense ratio: 0.37%.

    Related: Should You Bet Against The Nasdaq 100 With This Inverse ETF?

    How do you invest in index funds?

    Ready to invest in your very own index fund? Take a look below at the step-by-step process for how to get started.

    1. Create a goal for your index fund.
    2. Complete thorough research.
    3. Choose the index fund.
    4. Decide where to purchase the index fund.
    5. Purchase index fund.

    What can index funds do for you?

    Index funds are passively managed investments that can be an excellent option for investors looking for a low-cost, low-risk investment that will work towards a diversified portfolio.

    A few drawbacks come with index funds, like a lack of customization and limited upside potential.

    However, seasoned and novice investors should always complete thorough research, consult with a financial advisor and make the financial decisions that are right for them.

    Are you looking for more information about funds, finances or investment strategy? Check out Entrepreneur.com for all the latest need-to-know.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | What Is a Chatbot? Here’s Everything To Know

    Entrepreneur | What Is a Chatbot? Here’s Everything To Know

    [ad_1]

    Many websites have a small box or popup in the corner with a button encouraging you to chat with them or reach out for help. If you’ve seen that messaging prompt or even used one, you’ve interacted with a chatbot.

    It’s becoming increasingly common for companies to incorporate chatbots into their customer experience strategy. But what are chatbots? How do they work, and what are they for? Read on for all the answers.

    What is a chatbot?

    A chatbot is a language-processing computer program that simulates written or spoken human conversation. Artificial intelligence (AI) technology is interactive, as the chatbot is meant to replace a human assistant for specific customer interactions through its natural language understanding.

    A chatbot operates from an extensive knowledge base that allows the AI program to be integrated into multiple industries. The complexities and abilities of chatbots span a wide range, as some are built to answer simple questions and others are sophisticated enough to work as virtual assistants that personalize information for human users.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    What types of chatbots exist?

    Different types of chatbot technology are used for similar needs but function differently and have other capabilities. The two main chatbots that customers will interact with are below.

    Rule-based chatbots

    These chatbots might also be called task-oriented or declarative chatbots, and they are used to respond to specific keywords that use a set of rules. Rule-based chatbots are built to handle specific and straightforward situations, limiting their capabilities.

    They do not have predictive or dynamic abilities, so they are generally used for situations that involve FAQs, providing pre-set information or directing users to existing resources.

    You can use rule-based chatbots for:

    • A bank’s customer service line that’s built to answer basic account-related questions like balance updates and deposit information.
    • A restaurant’s website that provides menu information and allows customers to schedule, change and cancel reservations.
    • An amusement park’s website that provides information about events, operating hours and tickets.

    Self-learning chatbots

    Also known as data-driven, predictive or conversational chatbots, this type of AI is the most advanced chatbot. Machine learning algorithms are programmed into the AI to help prove their responses as they go, based on user interaction.

    Chatbots can do this because they have been trained with an extensive data set to produce their responses through recognized patterns. Because of this training, they can handle more complex types of customer queries.

    You can use self-learning chatbots for:

    • A retail company’s customer service phone line or chat feature that learns from past interactions and provides updated, personalized support and recommendations.
    • A human resources department that onboards new employees and improves its responses over time based on interactions.
    • A travel website that helps customers find, book and manage travel arrangements by using machine learning algorithms to improve its recommendations over time.

    Related: AI: How the Rise Of Chatbot Is Powering a Futuristic Present?

    Why were chatbots created?

    Society has become increasingly reliant on technology, and many customers expect it to be a part of any self-service, shopping, onboarding or customer service experience.

    Chatbots were created as part of the automation revolution, as companies learned they could streamline work systems by using chatbots for more straightforward issues to provide more time for employees to handle human-necessary tasks.

    As FAQ and troubleshooting pages became more and more common for companies and brands to have on their website, chatbots were able to take that user experience one step further by making it personalized.

    Chatbots can save time and money for companies and promote customer satisfaction. Essentially, they were made as a modern convenience.

    What industries can utilize chatbots?

    One of the best things about chatbots is that they are pretty versatile and can be helpful in multiple industries.

    As more and more companies discover the technology and realize the benefits of chatbots, more and more have begun integrations for their communication services. Check out some examples below.

    1. Customer service

    No matter the industry, chatbots can provide around-the-clock service for customers and work the odd hours that humans might not be available to work.

    For frequently asked questions, customer requests or complaints and resource direction, chatbots and their natural language processing (NLP) are outstanding when it comes to taking the pressure off customer service agents.

    Related: 6 WhatsApp Features That Are Perfect for Small Business Owners

    2. Ecommerce

    Ecommerce is now a trillion-dollar industry; with that boom, it can be challenging for companies to scale fast enough to keep up with demand.

    By integrating chatbots into ecommerce sites and messaging apps, companies can reach a broader range of customers for product recommendations, orders, returns and real-time assistance.

    Chatbots integrated into websites have all of that site’s data stored in its neural network and, therefore, can access it within seconds. This means that a chatbot programmed for an ecommerce retail store can help customers locate products, sizes and colors and provide more information at the customer’s request.

    The chatbot can also consider that customer’s browsing and purchase history and make recommendations based on that data.

    Conversational AI can also:

    • Capture and qualify faster lead generation.
    • Create shorter sales cycles.
    • Provide cross-platform support.
    • Save time.
    • Make more money.

    Related: 5 Ways to Make Money Through a Mobile App for Your Business

    3. Healthcare

    Healthcare can be a pain point for customers. If you’ve ever sat in a waiting line for thirty minutes with shrill orchestra music playing over the other end, then you understand.

    Chatbots are an excellent solution for this problem because they can assist with scheduling appointments and administrative tasks and providing information. This can take pressure off of healthcare providers, front desk and customer service and provide a better experience for customers with simple tasks.

    Chatbots in the healthcare industry can help customers:

    • Finding the nearest emergency room.
    • Find information about wait times.
    • Schedule appointments with a doctor.
    • Update medical records.
    • Answer questions about insurance coverage.

    4. Banking and finance

    Customers put a lot of thought into who they choose to bank with. They want privacy, security and top-notch customer service. The banking industry has incorporated digital assistants into its practices to provide its patrons with the best possible experience.

    Chatbot uses in the banking industry include:

    • Automating routine customer service tasks like balance inquiries, payments and transfers.
    • Product information and recommendations like credit cards and loans.

    5. Telecommunications

    One of the chatbots’ best uses is troubleshooting, which, unfortunately, can be a big part of the telecommunication industry. Chatbots can communicate with customers to provide real-time support for issues including internet, cable and phone lines.

    More specifically, chatbots can assist with the following:

    • Helping customers resolve network outages.
    • Upgrading a customer’s service.
    • Answering billing questions.

    Related: This Bot Will Argue With Your Internet Provider For You and Get You a Cheaper Bill

    6. Education

    There are many different uses for chatbots in education.

    On the administrative side, chatbots can help with handling inquiries about:

    • Enrollment.
    • Resources.
    • Course information.
    • Financial aid.
    • Campus events.
    • Student housing.

    On the classroom side, there are chatbots that teachers and students can use for educational purposes. Chatbots can supplement lessons, provide language and grammar help for students and become an alternate resource to Google.

    7. Travel and hospitality

    After the lockdowns of the pandemic, travel and hospitality are booming. Chatbots can be an excellent resource for companies to keep up with demand. From airlines to travel agencies, chatbots can cut down on volume by answering more straightforward questions and providing service information.

    Chatbots in the travel and hospitality industry can also:

    • Assist guests with booking rooms.
    • Order room service.
    • Arrange transportation.
    • Provide information about local attractions.
    • Answer questions about hotel amenities.

    8. Marketing and advertising

    A big part of marketing is getting the products in front of the consumer. Because chatbots can boost customer engagement through personalized recommendations based on stored data, they can be a great marketing tool.

    Because of their ability, chatbots can also:

    • Update customer profiles.
    • Tracking shipments.
    • Process returns.

    Related: The Proactive Solution to Data Protection That Every Modern Business Should Be Using

    9. Human resources

    Long-term success often starts with HR, as it is the backbone of every company. During the recruiting process, HR employees are responsible for many different tasks. HR is constantly busy, from finding suitable candidates to ensuring those new hires are properly onboarded.

    Chatbots can optimize these processes by assisting with the following:

    • Onboarding, including paperwork and company policies.
    • Employee benefits.
    • Employment information.
    • Questions and queries.
    • Attract relevant prospective candidates.
    • Qualify candidates based on automated background checks.

    10. Real estate

    The real estate industry relies on customers and relationships. From social media to ecommerce sites, real estate agents must always appear available. That is where chatbots come in.

    For quick and relevant answers, real estate companies are turning to chatbots to help with instant conversations to gather information, point prospective clients in the right direction and match them with the appropriate live agent.

    Chatbots can help real estate customers with information like:

    • Locations.
    • Prices.
    • Property measurements.
    • Neighborhood data.
    • Open house information.

    5 examples of companies using chatbots

    Thousands of companies in multiple industries are integrating chatbots into their systems and sites. Take a look at five companies making the most of artificial intelligence.

    1. Babylon Healthcare chatbot

    Babylon Health’s platform uses its chatbots to diagnose based on user responses. This is one of the newest forms of telehealth that allows users to get answers without having to travel to urgent care or wait for a video chat with a doctor.

    It provides 24/7 access to care and pairs patients with healthcare professionals if they prefer to speak with a human agent.

    2. Kasisto’s KAI financial chatbot

    Kasisto’s financial chatbot can handle financial tasks, retail transactions and corporate bank demands. The chatbot is built with an API-centric design combined with conversational NLP.

    3. Marriott International’s hotel chatbot

    Marriott International’s chatbot is called ChatBotlr. It is accessible to customers through Facebook Messenger and Slack and is built to help members research hotel travel and book trips and their thousands of hotel locations.

    4. Apartment Ocean real estate chatbot

    This real estate chatbot is meant to provide customers with a personal experience by using personalized greetings, helping users through leads and providing customer support with FAQs. Apartment Ocean is integrated into over 1,000 real estate companies to increase customer acquisition and satisfaction.

    5. Feebi restaurant chatbot

    Feebie, the restaurant chatbot, can be integrated into a restaurant’s booking system to help with reservations, menu requests, operating hours and other common questions. According to its data, Feebi can take care of 90% of standard restaurant customer services.

    Related: Will a Chatbot Really Save Your Company Money?

    What chatbots can do for you

    Chatbots have come a long way. They are more common than you might think, as many ecommerce sites have pop-ups and prompts that encourage customers to engage with their chatbot. AI chatbots are more than just Amazon’s Alexa or Apple’s Siri — they are visual and auditory processors that can be integrated into any company’s site or service.

    Chatbots are a form of automation that can genuinely transform how customer service works and how much time can be given back to human employees for an optimized workflow.

    Want to find out more about chatbots, automation or artificial intelligence? Visit Entrepreneur.com for additional information.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | What Does ChatGPT Mean for the Future of Business?

    Entrepreneur | What Does ChatGPT Mean for the Future of Business?

    [ad_1]

    ChatGPT has been a hot topic in the news recently, with a flurry of AI enthusiasts praising the new technology and some who are a bit more technology resistant worrying about what ChatGPT could mean for the future.

    In 2022, OpenAI, an artificial intelligence research and development company, introduced ChatGPT to the public. ChatGPT is a free artificial intelligence technology that anyone with a device and internet can use.

    Its accessibility was a huge part of the rapid popularity, as it now has a predicted 100 million active monthly users, with that number continuing to grow. To put that into perspective, it took TikTok nine months and Instagram two and a half years to achieve that kind of recognition.

    With so many enthusiasms and apprehensions swirling around the program, you may have several questions about the technology and its potential effect on the future of business. Keep reading for the full rundown on ChatGPT and how it will impact the business world.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    What is ChatGPT?

    The co-founders of OpenAI, including Elon Musk, Sam Altman, Greg Brockman, Ilya Sutskever and Wojciech Zaremba, introduced ChatGPT in 2018.

    The artificial intelligence is based on the third natural language processing project model, GPT-3. ChatGPT is a large-scale, pre-trained language model that uses the GPT-3 architecture to search information stored in a massive pool of internet sources and data to produce that information for its users.

    The feature that has made ChatGPT such a hot topic is its ability to communicate in a human-like way. The program has been fine-tuned for extensive language generation tasks that include language translation, question-answering and short and long-form writing, all designed to sound like a human.

    ChatGPT can do this because of its transformer-based neural networks that are pre-trained with endless amounts of text data that help the AI understand context, reference millions of examples and adapt its knowledge to mimic human diction.

    How can businesses use ChatGPT?

    While chatbots certainly exist, ChatGPT is one of the first to produce such in-depth answers as clearly and human-like as it does. This opens up a whole new opportunity for the business world.

    From automation to communication to research, businesses that are open to a new way of streamlining can utilize ChatGPT to tackle various pain points for internal use and to create a better customer experience. Keep reading for three concrete examples of how businesses can use ChatGPT.

    1. Streamlining operations

    Living in the digital age means that more and more businesses are turning towards technology to help streamline their processes and operations. Automation is a great option to help simplify tedious tasks, optimize workflow and give businesses back their time.

    Automation is any process that relies on artificial intelligence rather than a human, like online banking and chatbots for online shopping. Businesses can automate departments like accounting, social media, learning management and human resources.

    When businesses use ChatGPT to reduce manual labor, all of that time is given back to employees to dedicate to creativity and tasks humans can only perform.

    When it comes to streamlining operations, ChatGPT can help businesses with the following:

    • Data entry.
    • Appointment scheduling.
    • Reduce the risk of errors.
    • Improve the accuracy of data.
    • Ensuring businesses’ efficiency and effectiveness.
    • Saving costs.
    • Improving productivity.
    • Strengthening the bottom line.

    Related: Professionals In This Industry Already Can’t Imagine Life Without ChatGPT: ‘I Can’t Remember the Last Time Something Has Wowed Me This Much.’

    2. Customer experience

    Customers love to feel like they are unique and receive individualized attention. And with ChatGPT, they can. No matter the business, chatbots can provide around-the-clock service for customers, as they can work more hours than humans.

    ChatGPT can understand customer queries and respond in real time, just as humans would. The program is pre-trained to create personalized suggestions based on the customer’s history.

    While improving the consumer experience, ChatGPT will also be collecting customer data that can be used to guide future segmentation, ad targeting, marketing campaigns and business decisions.

    Related: Conversational AI Is a Revolution That’s Just Getting Started. Here’s How It Can Boost Your Business.

    3. Cutting-edge innovation

    Because ChatGPT is programmed to analyze immense amounts of data from its neural network and generate insights and suggestions based on that data, businesses can make informed, cutting-edge, data-driven decisions.

    More information on consumers can also spark creativity in business professionals, allowing them to stay ahead of the curve with new ideas that their customers will love.

    In addition to new ideas, ChatGPT’s analytical capabilities allow it to perform complex processes, including supply chain management and financial planning or suggestions to increase efficiency and save costs.

    Related: Top Four Data Analytics And AI Trends That Will Drive Businesses In 2023

    What types of businesses can utilize ChatGPT?

    ChatGPT can genuinely be utilized in any business. Take a look at 11 industries that could benefit from ChatGPT:

    1. Ecommerce and retail.
    2. Healthcare.
    3. Banking and finance.
    4. Telecommunications.
    5. Transport and logistics.
    6. Manufacturing.
    7. Education.
    8. Tourism and hospitality.
    9. Real estate.
    10. Entertainment.
    11. Marketing and advertising.

    Related: The Complete Guide to Effectively Using AI Writing Tools in Content Marketing

    What are some pros and cons of ChatGPT in business?

    Like anything else, ChatGPT does come with advantages and disadvantages. Before you integrate AI into your business, make sure you examine both sides of the coin.

    Pros of ChatGPT in business

    Because of its automotive and language capabilities, there are several advantages to incorporating ChatGPT into a business environment.

    • Cost-effective: Implementing ChatGPT can be much more cost-effective than hiring additional staff, as it takes the place of routine tasks, benefits, training and other costs.
    • Scalability: ChatGPT can be scaled up or down based on the needs of the business, making it a flexible solution for large corporations or small businesses.
    • Multilingual support: At its core, ChatGPT is a language processing tool, and it can be configured to support multiple languages. This makes it an ideal solution for businesses with a global presence.
    • Increases accessibility: Its automotive nature makes it easier for customers and employees to access information and assistance.
    • Improves data accuracy: ChatGPT can reduce the risk of human error by automating data entry.
    • Enhances decision-making: The real-time data analysis that ChatGPT provides can help businesses make informed decisions and stay ahead of the curve.
    • Reduces response times: ChatGPT provides 24/7 assistance, reducing response times and improving the overall customer experience.

    Related: Here’s How Your Business Can Use 3 Popular AI Content Creation Tools

    Cons of ChatGPT in business

    Technology provides many opportunities for businesses; however, it is not flawless. There are always drawbacks to consider when working with artificial intelligence.

    • Technology dependence: This is what many people fear. ChatGPT can lead to a reliance on technology and potentially reduce the need for human input and creativity. Business owners need to remain aware of these concerns to ensure their employees feel valued.
    • Privacy concerns: Entrusting sensitive data to technology is always nerve-wracking. While ChatGPT is secure, there is always a risk of data breaches. ChatGPT requires access to sensitive business data, so business owners must ensure that they have proper security measures to protect that information.
    • Technical skills: ChatGPT cannot set itself up and is not always a simple integration. To use ChatGPT in business, owners must consult their tech department or hire an expert.
    • Creativity limitations: While ChatGPT can generate new ideas and concepts, it will never replace the human creativity essential for specific tasks.
    • Bias: Artificial intelligence is only as impartial as the data it’s trained on. Business owners must understand this and use unbiased data to train ChatGPT.

    What does the future of ChatGPT in business look like?

    ChatGPT has the potential to be transformative in the business landscape. With its ability to automate routine tasks, provide real-time data analysis, support multiple languages and improve data accuracy, ChatGPT could change the way time and resources are allocated.

    While there are possible challenges to overcome when implementing ChatGPT, such as tech support and privacy concerns, the benefits of using AI could outweigh the cons for your business.

    The future impact of ChatGPT will likely depend on how quickly and effectively businesses adopt the technology and integrate it into their operations. However, ChatGPT and similar AI software will likely play a significant role in shaping the future of business.

    Whether you’re looking to improve customer satisfaction, drive innovation or stay ahead of the competition, ChatGPT is a solution that businesses, large and small, should consider to meet their long-term goals.

    Ready for more information on AI, ChatGPT and business? Visit Entrepreneur.com for resources.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | 5 Top Green Energy Stocks To Look Out for in 2023

    Entrepreneur | 5 Top Green Energy Stocks To Look Out for in 2023

    [ad_1]

    If you’re ready to make new investments and tap into the world of green energy, some outstanding stock and ETF options might be the right fit for your portfolio.

    Keep reading to learn about green energy, its growth in the last year and the top stocks to look out for in 2023.

    The 5 top green energy stocks to look out for in 2023 are:

    1. Brookfield Renewable Partners (NYSE:BEP).
    2. NextEra Energy (NYSE:NEE).
    3. Algonquin Power & Utilities (NYSE:AQN).
    4. Enphase Energy (NYSE:ENPH).
    5. Bloom Energy (NYSE:BE).

    Keep reading to learn more about green energy and why you might want to invest. We’ll also provide details on the top 5 choices for renewable energy stocks and the incentives for investing in them.

    Related: 3 Clean Energy Stocks to Buy for a Green Future

    What is green energy?

    The country’s electricity supply comprises three types of power: conventional power, renewable energy and green power. While they all work to supply power, they do not function similarly.

    Conventional power

    Conventional power is that which provides energy through the use of fossil fuels, including oil, natural gas and coal. These resources can only be accessed through drilling, extraction or mining.

    All these processes are harmful to the environment because they emit greenhouse gasses that contribute significantly to air pollution and climate change. That’s why a global energy transition seems to be taking place.

    Related: Michael Bloomberg Wants to Wean the World from Coal by 2040

    Renewable energy

    Renewable energy uses fuel sources that do not diminish because they restore themselves. Renewable energy sources include:

    • Solar energy.
    • Wind power.
    • Marine energy.
    • Hydrogen.
    • Hydropower.
    • Eligible biomass (organic plant and waste material).
    • Geothermal sources (the earth’s heat).

    Renewable energy sources are certainly more beneficial than fossil fuel sources; however, it is not yet a perfect science. The hydroelectric sources used to produce renewable energy often negatively affect some environments, like fisheries and specific land use.

    Green power

    Green power is a term that is a part of renewable energy but takes it one step further. Green energy uses the same energy sources as renewable energy to produce power. However, for a resource to qualify as green power, it must be power generated in a surplus.

    This means that for something to be green power, it must exceed renewable energy’s mandates and requirements. Green power helps to reduce energy production’s carbon footprint and maintains a zero-emissions profile.

    Related: There’s No Future in Technology or Sustainability Unless These 4 Things Change

    Why consider investing in green energy

    In 2015, the Paris Agreement was enacted by members of the United Nations. Although the United States dropped out of the agreement in 2020, the nation rejoined in 2022. The pact reflects countries’ promise to reduce greenhouse gas emissions to combat climate change.

    Every five years, nations must review and report their progress and practices. Because this agreement is legally binding, countries must take actionable and measurable steps toward lowering carbon emissions.

    With the Paris Agreement in play and 73% of global greenhouse gasses coming from transport, industry and buildings, more and more companies are changing their operations policies and putting the environment at the forefront of their mission.

    Right now, roughly 5% of global energy is produced using clean energy, but that percentage must achieve 60% by 2050 to reach the net zero goal. That goal is going to require investment — $100 trillion, according to the International Renewable Energy Agency (IRENA).

    Green energy has already become a more valuable investment, as it has grown from under $50 billion per year in 2004 to $300 billion per year in 2018. If there was a time to follow the money, this could very well be it.

    Related: Are These Green Energy Companies Right For Your Portfolio?

    5 top green energy stocks to look out for in 2023

    1. Brookfield Renewable Partners (NYSE:BEP)

    BEP is one of the world’s biggest publicly traded, pure-play renewable power platforms. They also are a publically traded company with potentially high-yield dividend stocks.

    • Focus: hydroelectric, wind, solar and storage facilities.
    • Locations: North America, South America, Europe, Asia.

    While Brookfield Renewable Partners L.P. has been trending downward 40% since its peak in January 2021, the stock is still predicted to rise. This is due to its new partnership with Cameco and its operating margin of 27% (70% better than its peers).

    2. NextEra Energy (NYSE:NEE)

    NEE, based in Florida, is the world’s largest utility company, with a market value of $152.37 billion.

    • Focus: wind, solar power plants, storage, green hydrogeninitiatives.
    • Locations: United States.

    While NextEra Energy’s stock has also experienced flat trading in the last two years, experts think it might be traders trying to establish a baseline before the predicted upswing in 2023.

    The company is known to have a steady balance sheet, cash flow and disciplined managers, as well as a net margin of 19.3%, ranking it above 84% of its peers.

    3. Algonquin Power & Utilities (NYSE:AQN)

    AQN is a utility and renewable energy company with over $16 billion in assets.

    • Focus: renewable wind turbine power, hydro, thermal and solar power.
    • Locations: North American, international.

    Wall Street has turned on AQN recently; however, it still has enormous growth potential. While the stock currently sits 58% under its peak metric and the 9.4% dividend yield might be at risk, the stock price target of $11.88 indicates a 55.5% upside potential.

    4. Enphase Energy (NYSE:ENPH)

    ENPH is an American technology company based in Fremont, California.

    • Focus: solar micro-inverters (for solar panels), battery energy storage and (primarily residential) electric vehicle charging.
    • Locations: United States.

    While investors in Enphase Energy do ultimately benefit from rolling blackout situations, the dividends pay out. It outperforms 89% of its peers, having a 45% three-year revenue growth rate. In addition, the company has seen a return on equity of 60%.

    5. Bloom Energy (NYSE:BE)

    BE is a company headquartered in San Jose, California, that has transformed the electricity space with its solid oxide technology.

    • Focus: converting natural gas, biogas or hydrogen into electricity without combustion, resulting in zero to low CO2 emission.
    • Locations: United States.

    Bloom Energy has given up 22% of its equity value and holds a market cap of $3.4 billion. With these numbers, BE offers many areas of investing potential. Some experts note the company as undervalued, meaning that it may provide great dividends for someone who gets in while shares are more affordable.

    For example, Bloom Energy’s three-year cash flow growth rate is 79% higher than its peers at 37.7%.

    Related: Is Renewable Energy Worth Your Investment?

    How you can get started with green energy stocks

    If you’re interested in investing with NASDAQ options in the energy sector, renewable energy provides many opportunities for the future.

    A worldwide movement toward zero carbon emissions will take tremendous dedication from public and private companies to operate more intentionally and make changes that involve clean energy practices.

    Although it holds much potential, the energy market, like anything else, can be unpredictable, so do thorough research and watch your clean energy stocks closely.

    For more information on how to make headwinds with clean energy, critical elements of the stock market and more, visit Entrepreneur.com.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | How Will ChatGPT Change Education and Teaching?

    Entrepreneur | How Will ChatGPT Change Education and Teaching?

    [ad_1]

    Technology has evolved education in so many ways over the years. It has given greater access to resources for students and teachers, but it has also created more significant inequities and distractions in the classroom. For better or worse, technology in the classroom is here to stay, and more tech is being introduced all the time.

    OpenAI, an artificial intelligence research and development company, introduced ChatGPT to the public in 2022. ChatGPT is a free tool that anyone with a device and internet can use — making it widely accessible, especially for students who, at this point, are all digital natives.

    So how will ChatGPT change education, teaching and the future of schools? Keep reading for everything you need to know.

    Related: How Conversational AI Is Shaping the Future of the Education Sector

    What is ChatGPT?

    ChatGPT is an AI computer program that uses its intelligence to receive, analyze and produce a response that mimics natural human language.

    The program uses a transformer-based neural network with a massive database that the AI uses to analyze the input information and create a response. When a human user inputs questions or commands into ChatGPT, the AI processes the text and generates the answer based on the neural network data.

    Related: What Is ChatGPT? Google, Siri and Even ChatGPT Are Confused About Its Existence

    ChatGPT can have thorough conversations, admit errors and even write essays. While it might be a valuable tool because of its depth of knowledge, many in education wonder how ChatGPT will affect the ethics, effort, credibility and overall future of learning and teaching.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    How can teachers use ChatGPT?

    1. Extra resource

    Think of ChatGPT like Google without having to sift through answers. For example, if a teacher is giving a lesson on the Revolutionary War and there is a class discussion about why the war was started, Google would provide thousands of results for students to sift through.

    However, ChatGPT would provide a fast, concise, straightforward answer that students could read in real-time. ChatGPT can supplement discussions and give the teachers real-time answers in this way.

    2. Assessments

    ChatGPT can create assessments. Teachers can input information into the AI program and provide context, and ChatGPT will output a result. While it might take some tweaking, it can be a great starting point for teachers to use when creating assessments from scratch.

    3. Grammar and writing

    In the age of social media and text language, grammar and writing can be difficult for teachers to get across to students. ChatGPT provides instant feedback for students, which can help them improve their writing skills.

    While AI should not replace a teacher’s lessons, it can serve as a practice tool for teachers to use in the classroom and a way to switch it up and provide something new for students.

    4. Automation

    Automation is everywhere and can help teachers streamline one of their most time-consuming tasks: grading. ChatGPT can grade and provide feedback on assignments, giving teachers more time to create engaging lesson plans and focus more attention on students.

    Related: Artificial Intelligence Can be a Game-Changer for Education, Here are 5 Reasons Why

    How can students use ChatGPT?

    1. Help with homework

    ChatGPT is another resource students can use to get quick answers. You’ve probably seen students press the iPhone button and say, “Hey Siri….” Siri answers right away. ChatGPT is the same concept. For quick answers that they won’t have to sift through, ChatGPT can be great for homework.

    2. Writing skills

    There are several writing help tools out there, like NoRedInk and Grammarly. ChatGPT functions in a similar way. A student can type in a sentence and ask ChatGPT to correct it for them to see how it can be improved.

    3. Feedback

    Because ChatGPT is equipped with data analysis, a student could entire an essay into the text box and ask ChatGPT to provide feedback.

    This gives the student time to make their own improvements before submitting the assignment. Also, a student can input a test into ChatGPT, and the AI can identify what areas the student needs to work on.

    4. Research

    ChatGPT is highly intelligent and is equipped with vast resources. That said, its database consists of internet sources, some of which are inevitably inaccurate.

    This means students should use ChatGPT as a Wikipedia-type source. It can be a great way to build general knowledge and serve as a jumping-off point, but it cannot actually be used as a citable source.

    What are the pros and cons of ChatGPT in the classroom?

    Some teachers believe this artificial intelligence is gunning for their jobs. Still, others are embracing it as a tool for grading and another way to teach children how to interact with technology. Take a look at the pros and cons of ChatGPT in education.

    Pros

    The pros of using ChatGPT in education include the following:

    • Fast access to information: ChatGPT provides a wide range of topics in real time.
    • Personalized learning: Students can tailor questions to their interests and even ask follow-up questions so ChatGPT will delve deeper into that interest.
    • Supplemental resource: With a quick search through its database, ChatGPT allows teachers to have a well of information at their fingertips.
    • Language practice: Students can practice, receive feedback and ask for help with the AI program.
    • Accessibility: Teachers have to maintain a work-life balance, which means they cannot answer emails at all-night hours. Students can turn to ChatGPT for information 24/7, especially when their teacher is unavailable.

    Related: The New World Of AI-Based Adaptive Education

    Cons

    The cons of using ChatGPT in education include the following:

    • Accuracy limitations: ChatGPT is not 100% accurate because its data is pulled from the internet.
    • Lack of context: ChatGPT is intelligent but can misunderstand context, leading to incorrect output.
    • Lack of critical thinking: One of the most valuable things students can develop is critical thinking. If the answers are always at their fingertips, they will not have to think for themselves.
    • Lack of original thought: ChatGPT can produce whole essays. If a student has ChatGPT write their essay for them, it is not only a lack of original thought; it is plagiarism. This is one of the most significant concerns surrounding ChatGPT, and plagiarism checkers are scrambling to catch up.
    • Possible bias: ChatGPT is trained in data, and if that data is biased, so is the machine.
    • Technology dependence: We’ve already seen it happen — students (and some teachers) can’t be away from their phones. The more technology that’s introduced, the more reliant humans become. With such an easy search tool, it can become a habit to use ChatCPT as a crutch instead of a tool.

    Related: Princeton Student Builds ChatGPT Detection App to Fight AI Plagiarism

    The future of ChatGPT in education

    ChatGPT is an artificial intelligence that does have the power to change education. The industry has yet to find out whether it’s for better or worse.

    While it can be a valuable tool for teachers and students, it can also be an easy way to plagiarize and cause an over-reliance on technology.

    As teachers and students learn more about ChatGPT, hopefully, the good outweighs the bad, and AI will help improve education day by day.

    Are you interested in finding out more? Head to Entrepreneur.com for all things artificial intelligence, education and more.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | What Are ChatGPT’s Potential Impacts on Banking?

    Entrepreneur | What Are ChatGPT’s Potential Impacts on Banking?

    [ad_1]

    Artificial intelligence has made progress in leaps and bounds, and one of the newest programs in everyone’s Google search is ChatGPT. In 2022, OpenAI, an artificial intelligence research and development company, opened ChatGPT to the public.

    Since its launch, it is on the way to surpassing 100 million active monthly users, a feat that took TikTok nine months to accomplish.

    With so much hype, many industries are turning to the new AI to see how it can work for them. And because of its capabilities, there is a place for ChatGPT in just about every industry.

    This tool has the potential to make an impact everywhere, including the banking industry. Keep reading for more on ChatCPT and its potential impacts on banking.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    What is ChatGPT?

    To better understand how ChatGPT can impact banking, it is crucial to know how it works. ChatGPT is an artificial intelligence computer program that can intake, comprehend and produce a response using human-like language rather than giving an answer that sounds like a robot.

    The program is equipped with a transformer-based neural network with extensive data and information up to 2021. This means that when a human user inputs a command or question, the AI intakes it, processes it, analyzes it through its deep neural network and produces an output in a text pattern that mimics human diction.

    ChatGPT can have entire conversations, admit mistakes, challenge incorrect premises and write essays, scripts, articles and headlines. Because of its intelligence and massive database, ChatGPT can serve many industries — even banking.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    How can ChatGPT be used in the banking industry?

    As a patron, who you bank with is a personal decision that requires much consideration. On the other side, the banking industry is constantly seeking ways to stay ahead of its competitors by creating the best customer experience possible and the most operational efficiency for its employees.

    ChatGPT can offer intelligence to parts of the experience, including automation, customer support and personalization. Keep reading for more details on each.

    Related: We’re One Step Closer to the Era of Open Banking. Here’s Everything You Need to Know.

    Automation

    Automation is a feature many platforms offer to offer streamlined customer processes and give time back to employees.

    Routine tasks like online banking no longer need to be done manually, as artificial intelligence like ChatGPT can take care of that. From account balance inquiries to bill payments to transfer requests, banks can utilize ChatGPT to reduce the workload for their employees.

    Customer service

    Chatbots have become a more common form of customer service, handling the more straightforward tasks that customers may need. Banks can integrate ChatGPT into their customer service system to provide real-time answers that can reduce wait times and improve the overall experience.

    Often banks experience high volumes of inquiries that are too much for their agents to handle, but ChatGPT can reduce that volume and leave more time for human service agents to answer the more complex inquiries.

    Related: 3 Brands Crushing Instant Customer Service

    Security

    Above all else, customers want banks that offer high-level security. While ChatGPT certainly can’t handle all security measures, it can serve as another level of protection.

    ChatGPT has incredible analysis skills and can be used to help human analysts detect fraud through its massive neural network data. ChatGPT can also authenticate users, verify information and monitor activity.

    Related: Here’s How Your Business Can Use 3 Popular AI Content Creation Tools

    Personalization

    Customers love to feel like they are taken care of individually. Because of ChatGPT’s ability to analyze data, it can help banks offer personalized services to their customers. ChatGPT will analyze customer data and offer financial and product advice.

    For example, if a customer is looking to apply for a new credit card, ChatGPT can analyze their spending habits, preferences and financial situation and recommend the credit card that will work best for them.

    Related: Conversational AI Is a Revolution That’s Just Getting Started. Here’s How It Can Boost Your Business.

    Processing

    ChatGPT can help automate the underwriting process for documents like loans and others needing approval. ChatGPT can verify customer information to calculate eligibility and assess risk.

    Instead of a human having to do this manually, employees will have more time to work with customers once they know what the customer is eligible for.

    Market research

    Banks need to know what their customers want to keep them around. Market research is an essential part of that process to stay up-to-date on consumer preferences and trends.

    ChatGPT can conduct surveys and questionnaires to gather insights, then analyze that data to generate helpful feedback for bankers to make decisions.

    Email marketing

    You might consider a bank as a marketer, but think about it: Don’t you always receive offers and advertisements from your bank? No matter the size of the bank, they do have marketing teams tasks with customer communication.

    ChatGPT can generate personalized email campaigns based on customer behavior and known preferences through analyzed data. Whether subject line optimization, email segmentation, A/B testing or body copy, ChatGPT can produce that information to make for a more straightforward writing process.

    Related: The Complete Guide to Effectively Using AI Writing Tools in Content Marketing

    Role-playing

    Based on that market research, ChatGPT can also help influence email marketing and how bankers speak to customers. Because of its language processing ability, ChatGPT can actually mimic situations.

    For example, a banker could ask ChatGPT, “How would a doctor like to be notified that we have placed a hold on their checking account?” The AI would intake that question, delve into its neural network and produce an answer that provides suggestions on how to deliver the information and through which methods the information should be delivered.

    Social media management

    Nowadays, most companies have social media. And in social media, there is so much room for automation. ChatGPT can be implemented in banking’s social media practices through scheduling, advertising and analysis.

    ChatGPT can optimize social media posts based on audience behavior, preferences and peak usage times for scheduling. In advertising, ChatGPT can analyze data and recommend the best ad formats and creative elements for a bank’s campaign.

    As for analysis, the AI will analyze data and provide insights on customer behavior, preferences and trends to provide actionable insights for creating a stronger strategy.

    Risk management

    Customers entrust their bank to make smart decisions with their money. Banks must be able to identify potential risks and market trends. Banks can undoubtedly use AI for this task, as technology can analyze massive amounts of data in real time.

    ChatGPT is an AI program that can help with risk management because of its massive data pool.

    Related: How AI Is the Next Step In the Digitization Of the Finance Sector

    What are some cons of using ChatGPT in the banking industry?

    While ChatGPT can certainly be a considerable resource for the banking industry, there are certain drawbacks that banks should watch out for:

    1. Cost: While ChatGPT is free, the cost of implementing it into a banking system would not be. Banks must consider how much it would cost to integrate, train and deploy, maintain ongoing operational costs and keep up with regulatory costs. ChatGPT is a great resource, but it might not be accessible to smaller banks with a tighter budget.
    2. Security: OpenAI, the creator of ChatGPT, has taken immense measures to ensure the security and privacy of ChatGPT users. However, banks need to take their own course of action in addition to ChatGPT to safeguard the security of its users. This can be seen as an extra task and worry for banks, making the process less efficient.
    3. Limited human interaction: While automation certainly has its perks, it does reduce the need for human labor.

    For people who prefer to speak with a human, it can be frustrating to go through many steps with artificial intelligence until the system allows them through. In addition to that, the implementation of AI means less need for humans, making the job market that much smaller.

    1. Technology dependence: Technology is an incredible tool, but there is never a whole substitute for humans. The reliance on ChatGPT can lead to dependencies that might cause oversights and blind decision-making that could result in mistakes on the bank’s part.
    2. AI limitations: While ChatGPT does have extensive uses, it does have its limitations. The AI program might not be able to understand the context of a situation or provide solutions to overly complex issues.

    In addition, ChatGPT’s database only has access to information until 2021, so any new laws or trends cannot be added to the AI’s considerations. While ChatGPT is highly intelligent, its database is the Internet, where not everything is accurate. Therefore, there is no 100% guarantee of accuracy when using the tool, so banks must verify accuracy.

    Related: There is a New “Conventional Wisdom” Needed in Personal Finance

    The future of ChatGPT in the banking industry

    As the artificial intelligence program continues to evolve, it has continued potential to improve several aspects of the banking industry.

    With customer service being a high priority, the ability to provide 24/7 assistance is something banks can use to set themselves apart from their competition. ChatGPT’s advanced algorithms can analyze large amounts of data and provide customers with real-time information and suggestions.

    If a bank can offer that service to its customers or if that information can help bankers make decisions, that is another huge advantage for the future of banking. Finally, ChatGPT’s potential to reduce risk is a big motivator for banks to look into implementing the technology. The more secure a bank is, the more likely customers will gravitate toward it.

    With artificial intelligence impossible to ignore, there are many future impacts ChatGPT can make in the banking industry.

    Are you interested in finding out more? Head to Entrepreneur.com for all things artificial intelligence, banking and more.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | How Can Marketers Use ChatGPT? Here Are the Top 11 Uses.

    Entrepreneur | How Can Marketers Use ChatGPT? Here Are the Top 11 Uses.

    [ad_1]

    Technology and artificial intelligence (AI) have infiltrated almost every industry imaginable. For better or worse, AI is here to stay — and it’s only getting smarter.

    In 2022, OpenAI, an artificial intelligence research and development company, created a tool called ChatGPT. This tool has the potential to change even more about each industry as we know it today, even the marketing and advertising industry.

    Keep reading to find out how.

    What is ChatGPT?

    ChatGPT is an AI computer program that uses its intelligence to intake, comprehend and produce a response that mimics the natural diction of human language.

    The program uses a transformer-based neural network that works off of so much data that the AI can analyze that information and create a response from it. When a human user converses with ChatGPT, the AI processes the human text and generates the answer based on the data it has access to.

    The technology also considers context, syntax and word associations, which is how it can produce responses that mimic human speech and writing.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    Whether it’s questions, answers, essays or entire conversations, this technology is meant to carry on as a human would.

    ChatGPT can also:

    • Answer follow-up questions.
    • Admit mistakes.
    • Challenge incorrect premises.
    • Reject inappropriate requests.

    Because of its human-like capabilities, ChatGPT has countless uses.

    Top 11 ways marketers can use ChatGPT

    1. Content creation

    One of the biggest tasks for marketers is content creation. How can they grab the attention of consumers? What are the most significant trends? Or better yet, how can they create a trend?

    While it takes an exceptional marketer to have an accurate pulse on the culture, ChatGPT can certainly make content creation smoother. ChatGPT can write product descriptions, headlines, blog posts, call-to-actions and other written content and make it sound just like a human.

    Marketers can create compelling content in a fraction of the time with the assistance of ChatGPT, including:

    • Blog posts: Marketers can enter keywords and specific requirements into ChatGPT, and the AI model will create high-quality, original content that is SEO-friendly and engaging for the target audience.
    • Social media posts: ChatGPT can generate social media posts for various platforms, including Facebook, Twitter and LinkedIn. The AI technology will search its database for trending words and optimize short, quippy captions or longer, blog-style captions for the user.
    • Video scripts: ChatGPT can generate video scripts for marketing and promotional videos. Whether it’s a commercial or a full-length feature, ChatGPT can do it. Remember that the AI software will likely ask several follow-up questions about information and style, but it is possible.

    Related: Here’s How Your Business Can Use 3 Popular AI Content Creation Tools

    2. Lead generation

    Because of its linguistics capabilities, ChatGPT can carry on interactive text-based conversations to problem-solve with site visitors.

    During these conversations, ChatGPT is not only helping customers, but it is also gathering information that can be used for lead generation and lead nurturing. Marketers can also use ChatGPT to engage with website visitors and valuable segmentation information.

    More specific uses include:

    • Chatbots: Marketers can use ChatGPT to build chatbots for their ecommerce sites and social media platforms. Chatbots can engage with visitors, just like humans, to provide information about products and services and collect contact and preference information for lead generation purposes.
    • Lead scoring: ChatGPT can be integrated into a lead scoring system to help identify and prioritize high-quality leads. Generally, this takes some kind of lead scoring matrix or program; however, ChatGPT analyzes a visitor’s interactions with a website, social media or chatbot and assigns a score based on whichever factors the marketer would like.
    • Targeted email campaigns: Because ChatGPT can store and analyze so much data, it can generate personalized email campaigns based on a consumer’s behavior and interests. By analyzing a customer’s interactions with the website, social media or chatbot, ChatGPT can generate highly targeted emails to help increase the effectiveness of email campaigns and conversions.

    3. Email marketing

    ChatGPT will generate personalized email campaigns based on customer behavior and preferences. Marketers can utilize AI to ensure emails are tailored to each customer based on interests and buzzwords. The best ways to do this include the following:

    • Subject line optimization: A subject line is the first thing a recipient sees. It either pulls them in or gets sent to the trash. ChatGPT can test, generate and provide recommendations for various subject lines to find the best-performing ones for a specific audience.
    • Email segmentation: ChatGPT can analyze consumer behavior, identify common patterns based on interaction and segment email lists based on recipient behavior, preferences and interests.
    • A/B testing: Marketers use A/B testing to analyze the performance of different email variations from subject line to format. ChatGPT can optimize email campaigns by analyzing the performance of different email variations and providing recommendations on which are likely to be the most effective for a particular audience.

    Related: The Complete Guide to Effectively Using AI Writing Tools in Content Marketing

    4. Customer service

    ChatGPT is an excellent resource for providing 24/7 customer support, so your ecommerce site is available to consumers no matter their time zone or shopping needs. Train ChatGPT as a chatbot to answer FAQs, support requests and more needs like:

    • Automated Chatbots: ChatGPT can handle simple and routine customer service inquiries, such as order tracking, account information and product information.
    • Self-Service: ChatGPT can provide customers with self-service options for resolving their issues like referrals to FAQs, tutorials and videos.
    • Multi-Language Support: It can be difficult to find customer service agents who speak more than one or two languages, and customers from all backgrounds need assistance. ChatGPT is a customer service representative that speaks multiple languages, making it easier for companies to serve customers globally.

    ChatGPT will help with time and resources, as the AI can help sites assist more customers and provide cheaper labor for companies. In turn, this frees up time for human employees to focus on customers with more complex needs.

    While this might not seem like a form of marketing, nurturing return consumers helps ensure that they have a positive experience with your brand.

    Related: 3 Brands Crushing Instant Customer Service

    5. Social media management

    Many brands have turned to automation for social media. There are several platforms out there that handle scheduling, streamlining and optimization. ChatGPT will complete those same tasks, including:

    • Scheduling: ChatGPT can be used to optimize the scheduling of social media posts based on audience behavior, preferences and peak usage times.
    • Analysis: The program can analyze data and provide insights on consumer behavior, preferences and trends to provide actionable insights for creating a stronger strategy.
    • Advertising: ChatGPT can analyze data to recommend the best ad formats and creative elements for a company’s campaign.

    6. Personalized recommendations

    Customers want to feel like an individual and also appreciate guidance when it comes to any shopping need. ChatGPT can collect data that shows customer preferences and use that to make personalized recommendations on products and content.

    You can also integrate AI to be interactive, with quizzes and games, so customers can have a positive and engaging experience. Based on collected data, ChatGPT will recommend:

    • Products: Using browsing and purchase history, ChatGPT can recommend products most likely to interest the customer.
    • Content: ChatGPT can use data and behaviors to understand a customer’s preferences and recommend content like recommending articles, videos and podcasts.
    • Advertising: The AI program can personalize online advertising to increase the likelihood that a customer will be engaged enough to purchase.

    7. Voice assistance

    The more inclusive and accommodating a business can be, the better natural advertising it gets.

    Integrate ChatGPT into voice assistants, like Amazon Alexa or Google Home, to provide a more inclusive customer service experience.

    • Customer service: A voice assistant to provide customers with an automated and conversational customer service experience.
    • Product information and recommendations: Product information and recommendations created by ChatGPT can be synced with the device’s voice reader to help customers find the right products and services based on their needs and preferences.

    Related: The New Microsoft AI Tool Can Mimic Anyone’s Voice

    8. Market research

    Market research is essential for any advertising team because to stay in the loop with the audience, you must know their interests. ChatGPT can streamline the market research process by:

    • Conducting surveys: ChatGPT can conduct surveys and questionnaires to gather insights from target demographics. It can even create custom questions for individual consumers based on current data to drive future decisions.
    • Analyzing feedback: The program can analyze customer feedback, measure it against critical trends and generate a detailed report so marketers can better understand customer preferences and perceptions.

    Related: Top Four Data Analytics And AI Trends That Will Drive Businesses In 2023

    9. Onboarding and training

    Due to ChatGPT’s language processing tool, the software can drive engaging conversations. If a company has employees complete independent or virtual training, employees might have several unanswered questions during the process.

    By integrating ChatGPT into the process, future marketers will be able to have immediate answers to their questions during the onboarding process. They can even ask follow-up questions because of ChatGPT’s dynamic usage.

    Other uses for ChatGPT include:

    • Personalized learning paths: Based on a new marketer’s skills and experience, ChatGPT will create customized learning paths.
    • Interactive scenarios: ChatGPT can generate interactive scenarios and even role-playing exercises, allowing new marketers to practice their skills in a controlled, low-stakes environment.
    • Marketing terminology and processes: Every company has its own vocabulary, as well as commonly used industry acronyms. ChatGPT can explain terminology and processes simply and engagingly by generating definitions and explanations of marketing terms and concepts.

    10. Search engine optimization

    SEO refers to the amount of web traffic your ecommerce business gets and the relevance of that traffic to your business. SEO is a tremendous tool that can help you grow your search engine results to acquire and retain existing customers, and ChatGPT can help with that.

    • Keywords: The AI will search its widespread database to generate a list of relevant keywords based on a given prompt or topic. Marketers can then use those keywords to optimize content and copy.
    • Meta descriptions: Relevant meta descriptions help improve the click-through rate on search engine results pages. ChatGPT uses its data to generate meta descriptions that can improve those rates.
    • Link building: Links are all about being strong, relevant and ethical. ChatGPT can generate links to improve an ecommerce site’s search engine ranking.

    Related: Conversational AI Is a Revolution That’s Just Getting Started. Here’s How It Can Boost Your Business.

    11. Data Organization

    There is so much data that tracking marketers must organize to stay at the forefront of their audience’s needs. Often, the easiest way to keep track of data is through a spreadsheet like Excel or Google Sheets.

    However, if marketers have yet to be trained in spreadsheet formulas, it can be a very frustrating and time-consuming practice to be tasked with. ChatGPT can take that frustration away.

    By entering customer information, research results, budgets and customer feedback, ChatGPT can generate lists of data in spreadsheet form.

    ChatGPT cannot create the spreadsheet itself, but it can organize the information for the marketer. It can also follow commands to help marketers complete spreadsheet formulas.

    For example, a marketer can type a command into ChatGPT like “Show me a Google Sheet formula that copies all rows from sheet2 where column B contains the word ‘jeans.’” ChatGPT would then produce that formula for the marketer to apply to the spreadsheet and further organize data.

    What can’t ChatGPT do for marketers?

    With so many ways marketers can use ChatGPT, it almost makes the job seem obsolete. However, there is still no genuine replacement for humans, their drive and their creativity.

    Even though ChatGPT is one of the most advanced artificial intelligence language programs, it does have its limitations.

    1. ChatGPT cannot perform physical tasks, like handling physical products, conducting in-person market research or contributing personality to team meetings.
    2. While ChatGPT is incredibly intelligent, its database is the Internet — and not everything you read online is true. Therefore, there is no 100% guarantee of accuracy when using the tool. Marketers should always verify the accuracy of their interactions with ChatGPT.
    3. There is no substitute for human decision-making. ChatGPT can analyze endless data and make calculated recommendations, but there is no replacement for the gut instinct of a marketer.

    Related: Professionals In This Industry Already Can’t Imagine Life Without ChatGPT: ‘I Can’t Remember the Last Time Something Has Wowed Me This Much.’

    How you can utilize ChatGPT

    ChatGPT is a powerful AI program that marketers can use to enhance the efficiency and accuracy of their campaign efforts.

    From lead generation and content creation to customer support and search engine optimization, ChatGPT is a tool that marketers can implement to save time, effort and money while still producing high-quality ideas.

    Are you interested in learning more about where artificial intelligence is heading? Visit Entrepreneur.com for everything you want to know.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | ChatGPT: What Is It and How Does It Work?

    Entrepreneur | ChatGPT: What Is It and How Does It Work?

    [ad_1]

    ChatGPT has recently taken the news cycle by storm. The artificial intelligence language processor was launched for public use in December 2022 and gained popularity faster than juggernauts like Instagram and TikTok.

    Since its introduction to the public, ChatGPT has reached 57 million active monthly users and is expected to have surpassed 100 million in January — a feat it took TikTok nine months and Instagram two and a half years to do.

    With so much frenzy swirling around the program, you may have several questions about the technology. What is it? How does it work? Can anyone use it? Is it coming for everyone’s jobs? Keep reading for the full rundown on ChatGPT.

    Related: What Is Artificial Intelligence (AI)? Here Are Its Benefits, Uses and More

    What is ChatGPT?

    ChatGPT is an artificial intelligence program developed by a company called OpenAI. In 2015, Elon Musk, Sam Altman, Greg Brockman, Ilya Sutskever and Wojciech Zaremba founded OpenAI, an artificial intelligence research organization. OpenAI has other programs, but ChatGPT was introduced in 2018.

    ChatGPT is based on GPT-3, the third model of the natural language processing project. The technology is a pre-trained, large-scale language model that uses GPT-3 architecture to sift through an immense pool of internet data and sources to reference as its knowledge base.

    This AI is a well of knowledge, but its ability to communicate is what sets it apart from other technology.

    It has been fine-tuned for several language generation tasks, including language translation, summarization, text completion, question-answering and even human diction.

    ChatGPT is a transformer-based neural network that provides answers and data with human writing patterns. The AI has been programmed with endless amounts of text data to understand context, relevancy and how to generate human-like responses to questions.

    Other fast facts about ChatGPT include:

    • ChatGPT is large-scale. It has over 175 billion parameters, making it one of the largest language models ever.
    • ChatGPT is pre-trained. The program has a “set it and forget it” quality, meaning all the legwork to make it function has already happened.
    • ChatGPT is capable of multitasking. The program has more than one language function, so it can simultaneously juggle translation, summarization and answering questions.
    • ChatGPT responds in real time. Like a chatbot you’d find while online shopping, ChatGPT responds very quickly after you ask it a question or complete a task.

    Essential terminology

    When it comes to high-level AI, there are several terms used to explain how the technology works that need explaining themselves.

    See below for a list of key terms that will help during the rundown of ChatGPT.

    1. Artificial intelligence: AI is a sector of computer science that focuses on building systems that can perform tasks as humans do. Typical forms of AI include speech recognition, language translation and visual perception.
    2. NLP: Natural Language Processing is a subsection of AI dedicated to the interaction between humans and computers using language. Through algorithms and models, NLP can analyze, comprehend and use language with human diction.
    3. Neural network: A neural network is a machine learning algorithm that functions like a human brain. Just as the brain has pathways where information is stored and functions are carried out, AI uses neural networks to mimic that process to problem-solve, learn patterns and collect data.
    4. Transformer: A transformer is a structure within the neural network meant for NLP tasks that use mechanisms to analyze input and generate output.
    5. GPT: A generative pre-trained transformer is a transformer-based language developed by OpenAI, which is who gave it the name. This is the first version of the language processor and generator part of the program that is unique to OpenAI, as it can generate text in a human-like way.
    6. GPT-3: This stands for Generative Pre-trained Transformer 3, based on the Transformer network architecture developed by OpenAI. It is the most dynamic version of GPT to date, as it has self-attention layers that allow the program to multitask, adjust in real time and generate a more authentic output.
    7. Pre-training: This is just what it sounds like — it’s the work OpenAI had to do to train the neural network to work how it wanted it to before it was ready for public consumption.
    8. Fine-tuning: This part of training comes after pre-training. The program takes one task and trains it even further on a smaller, more specific task on more particular data. This is why ChatGPT can work so thoroughly.
    9. API: An application programming interface is how the program remains uniform. It is a routine and guide for how each application is built. This allows new additions to the system to be integrated successfully.

    How does ChatGPT work?

    ChatGPT uses a vast neural network to produce the human-like language through which it communicates. But how does that process happen?

    Take a look below for a step-by-step breakdown of the process:

    1. Input processing: The human user types commands or questions into ChatGPT’s text bar.
    2. Tokenization: The text inputted is tokenized, meaning the program divides it into individual words to be analyzed.
    3. Input embedding: The tokenized text is put into the neural network’s transformer portion.
    4. Encoder-decoder attention: The transformer encodes the text input and generates a probability distribution for all possible outputs. Then that distribution generates the output.
    5. Text generation and output: ChatGPT generates its output answer, and the human user receives a text response.

    What are ChatGPT’s capabilities?

    ChatGPT has extensive capabilities that will likely change the landscape of many industries.

    The artificial intelligence program can complete tasks like:

    • Text generation.
    • Text completion.
    • Question-answering.
    • Summarization.
    • Text translation.
    • Conversational AI.
    • Sentiment analysis.
    • Named entity recognition.
    • Part-of-speech tagging.

    Keep reading to find out more about each capability.

    Related: The Complete Guide to Effectively Using AI Writing Tools in Content Marketing

    Text generation

    ChatGPT is nothing without its text generation, as that is how it communicates with its human users. The program uses its pre-trained database to intake inputs and prompts and generates the appropriate response in a natural, human-like text structure.

    Text completion

    If you’ve ever wished to have a friend or a sibling that could finish your sentences, ChatGPT might just be the way to go.

    ChatGPT can finish your inputted sentence based on content and meaning if you supply the beginning. It might not always be the ending you wanted, but the capability is there.

    For example, if you typed a command asking to finish the sentence, “The rainbow is….” You might be thinking, “The rainbow is beautiful.” But ChatGPT might respond, “Red, orange, yellow, green, blue, indigo, violet.” This is because it pulls from its pre-trained knowledge to find the answer. It might not be able to read your mind, but it can read its data.

    Question-answering

    ChatGPT can answer every question that is part of its pre-trained knowledge. This will include world knowledge and general facts.

    The program can also answer questions in the format that you like. So based on your preference, you can command ChatGPT to answer in bullet points, a list or short answers.

    Related: Professionals In This Industry Already Can’t Imagine Life Without ChatGPT: ‘I Can’t Remember the Last Time Something Has Wowed Me This Much.’

    Summarization

    If you input a long text into ChatGPT and command it to summarize the information, it will do so. You should not expect ChatGPT to summarize full-length novels, but a few pages of text is possible as it can handle up to 4095 tokens.

    Text translation

    Just like Google Translate, ChatGPT can translate from one language to another, including:

    • English.
    • Spanish.
    • French.
    • German.
    • Italian.
    • Portuguese.
    • Dutch.
    • Russian.
    • Chinese.
    • Japanese.
    • Korean.
    • Arabic.

    The program uses its neural networks to form syntax and structures like when outputting English. And much like Google Translate, it is not a perfect science. While the AI is incredibly advanced, it may miss some grammar, semantics and other details of foreign languages.

    Conversational AI

    One of ChatGPT’s biggest highlights is that it can respond in human-like, conversational language.

    This is a helpful way to receive and digest the output. It can also be useful for companies with ecommerce sites that want to integrate conversational interfaces for chatbots, virtual assistants and other applications.

    Related: Conversational AI Is a Revolution That’s Just Getting Started. Here’s How It Can Boost Your Business.

    Sentiment analysis

    ChatGPT can actually determine sentiment or human feeling when analyzing text. For example, when a customer leaves a review on an ecommerce site, ChatGPT can analyze the text and determine if it is positive, negative or neutral.

    This can be extremely useful for companies completing market research to gather data on their products and services.

    Related: Top Four Data Analytics And AI Trends That Will Drive Businesses In 2023

    Named entity recognition

    ChatGPT can identify the names of people, organizations and locations. Keep in mind that ChatGPT’s neural network lexicon only spans until 2021, so anything that exists after that will not be accessible.

    Parts-of-speech tagging

    The grammar engine of your dreams has arrived. ChatGPT is all about language, which means it’s an expert on parts of speech. If you need a refresher on nouns, verbs, adjectives and sentence structures, ChatGPT is a great resource.

    How can different industries use ChatGPT?

    Many people are raising concerns that ChatGPT and other artificial intelligence programs will take human jobs. While that might be true to an extent, AI can also make workstreams more efficient and create a smoother process when used correctly. See below which industries can benefit from ChatGPT and how you can implement it.

    Customer service

    ChatGPT is a way to provide 24/7 ecommerce site support for consumers. Train ChatGPT as a chatbot to answer FAQs and support requests.

    ChatGPT will help with time and resources, as artificial intelligence can assist more customers and provide cheaper labor for companies. In turn, it gives time back to human employees to focus on customers with more complex needs.

    Related: 3 Brands Crushing Instant Customer Service

    Education

    ChatGPT has been a hot topic when it comes to education. While you can use it for good, like educational chatbots, personalized assistance and feedback, it can also provide an easier way for students to plagiarize essays and other school work.

    Related: OpenAI Rolls Out New Feature to Help Teachers Crack Down on ChatGPT Cheating — But Admit the Tool Is ‘Imperfect’

    Healthcare

    Healthcare is an industry that has grown increasingly reliant on chatbots to assist patients with health concerns, information and advice and connect them to the best healthcare provider.

    More than any other industry, humans must double-check the reliability of ChatGPT’s information to ensure safety.

    Marketing, media, publishing

    ChatGPT can cover a significant amount of ground in marketing.

    Marketers can utilize the program for several operations, including:

    • Content creation.
    • Lead generation.
    • Email segmentation, optimization and A/B testing.
    • Social media management.
    • Market research.
    • Search engine optimization (SEO).
    • Data organization.

    Related: Here’s How Your Business Can Use 3 Popular AI Content Creation Tools

    Are there any programs similar to ChatGPT?

    There are many AI programs constructed by many different companies that operate in a similar way to ChatGPT. Some of the most notable ones include:

    • Chatsonic.
    • Chinchilla.
    • Bloom.
    • Megatron Turing NLG.
    • Jasper.
    • Replika.
    • FaceApp.
    • Elsa.
    • Socratic.

    Related: The New Microsoft AI Tool Can Mimic Anyone’s Voice

    What are some limitations of ChatGPT?

    Although ChatGPT is one of the most advanced AI NLPs, it has its limitations.

    Bias

    ChatGPT might have biases embedded in its training data, like any other machine learning model. This can be biased, including gender bias, racial bias and ageism.

    Data privacy

    With any technology, there can be privacy concerns that come with it. ChatGPT was built off of massive amounts of data input, which means that anyone who contributed to the data training process is possibly vulnerable, as that data is now forever stored and could also be used.

    Misinformation

    While ChatGPT is incredibly intelligent, its database does include the Internet — and not everything online is true. Therefore, there is no unwavering guarantee of information accuracy when using ChatGPT.

    Language understanding

    Again, ChatGPT is highly intelligent but can still struggle to understand certain words, sentences and questions, which can lead to off-topic responses.

    Lack of common sense and personability

    No matter how smart artificial intelligence is, common sense and personality are human qualities. And while ChatGPT is trained in sentiment, there are still limitations to certain human experiences, goals and understandings.

    What should you know about ChatGPT?

    ChatGPT is a powerful AI program that proves another step forward in natural language processing. Perhaps its most impressive ability is generating human-like output after analyzing the human input.

    From language translation and text summarization to research and automation, ChatGPT has several uses that can be applied to various industries. Keep in mind that, like any technology, ChatGPT has its limitations, so it’s always best to check its work and have a backup plan.

    If you’re interested in learning more about where artificial intelligence and where it’s heading, visit Entrepreneur.com for everything you need to know.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Entrepreneur | Understanding the Time Value of Money With Formulas and Examples

    Entrepreneur | Understanding the Time Value of Money With Formulas and Examples

    [ad_1]

    In corporate finance and valuation, experts and self-taught learners rely upon various guiding principles. One of those core principles is the time value of money.

    Whether you’re a professional in the finance industry, an entrepreneur breaking ground on a new business venture or simply wanting to educate yourself on personal finance, understanding the time value of money is critical.

    Related: How to Calculate the True Monetary Value of Your Time

    What is the time value of money?

    The time value of money is the concept that the value of money today is worth more than the value of that same lump sum in the future, assuming you put today’s money to good use. Three reasons make this principle reliable.

    1. Opportunity cost

    Opportunity cost, also known as implicit cost, compares the value of money today versus a future financial payment. In other words, the money you have today can be invested and increase in value over time.

    On the other hand, if you wait for a future payment, that money will not have the same amount of time to accrue interest as the money you receive and invest today. Today’s cash provides immediate purchasing power, so put that money to good use.

    Related: How to Get the Most Out of Every Opportunity

    2. Inflation

    Inflation has been a hot topic as of late. Inflation is the measure of the rise in the personal consumption expenditures price index, which indicates the expenses of goods and services over a certain period.

    With inflation being a real and present obstacle in a post-pandemic world, this factor is more relevant than ever.

    The money you have today may not go as far in the future. Inflation may erode the purchasing power your money has over time, so the amount of money you have today is worth more than that amount may be worth in the future.

    For example, if you have ten dollars in your pocket today, you can see a movie in the theater. However, that same ten dollars in your pocket might not cover the cost of a ticket two years down the line.

    Therefore, if you’re looking for a way to spend that ten dollars, you should go to the movie theater today.

    In 2022, inflation rates were up to 8.8%. And while economists expect that number to decline to 6.5% in 2023 and 4.1% in 2024, history shows slowed deflation speed when rates exceed 8%, as they did in September 2022.

    In addition, if you plan to invest the amount of money you have today, inflation must be factored in to calculate your actual return on investment (ROI). To calculate that factor, take the percentage return your money earns and subtract the inflation rate.

    Related: Americans Aren’t Saving Money Right Now — and It’s Not Just Because of Inflation

    3. Uncertainty

    The money you have in your hands now is worth more than the hypothetical money you might receive in the future. Until you have the money, it is not yours. You can only make investments or plans with the money you have.

    The uncertainty factor is a reminder that anything can happen, so sometimes, it is better to plan for the future instead of planning in the future.

    Related: 3 Ways to Overcome Uncertainty About Your Business’ Future

    Time value of money

    There are two critical factors in the equation to solve for the time value of money: the present value of money and the future value of money.

    The future value is based on the idea that you will invest the present-day sum of money; it predicts how much a set sum will be worth at a set date. The present value formula calculates a future amount using a present-day amount.

    The future value formula is:

    • FV = PV x [ 1 + (i / n) ] (n x t)

    The variables included in TVM formulas include:

    • FV = Future value.
    • PV = Present value.
    • i = Interest rate or rate of return that can be earned.
    • n = Number of compounding periods of interest per year.
    • t = Number of years.

    Example of how to apply the future value formula by hand

    To provide a simple example, let’s say a piece of real estate you’ve been looking to sell has caught the interest of a buyer. The potential buyer offers you $20,000 to purchase it today but also offers to pay you $500 more if they can buy the same property in two years.

    Even though a higher payment sounds better, based on the time value of money principle, $20,000 today is worth more than $20,500 in two years.

    You decide to stick to this principle and make today’s money work for you. You take the $20,000 the real estate buyer offered you today and deposit the lump sum into a savings account with a 2% compound interest rate each year.

    To calculate how much money your investment can make you, plug in the correct variables and use the future value formula.

    • FV = 20,000 x [ 1 + (.02 / 1) ] (1 x 2)
    • FV = 20,808

    By this logic, the $20,000 the real estate buyer pays you today will be worth $20,808 in two years if you invest it according to plan.

    However, if you take the two-year offer of $20,500, you will lose out on $308 of interest from your savings account. Again, just because the future offer sounds like more does not mean it will end up being more.

    Related: There’s a New Way to Tap Your Home’s Equity Without Loans or Monthly Payments

    Example of how to apply the future value formula by a data processor

    If by-hand calculations aren’t something you look forward to, you can also find future values using tools like Microsoft Excel and Google Sheets.

    To calculate via data processor, use:

    • =PV(rate,nper,pmt,FV,type)

    In this formula, the variables are:

    • Rate: Equates to the “i” in the manual formula — the period’s rate of interest or discount rate.
    • Nper: Equates to the “t” in the manual formula — the number of periods in which payment occurs for a given cash flow.
    • Pmt or FV: Equates to the “FV” in the manual formula — the payment or cash flow to be discounted. It’s not necessary to include values for both pmt and FV.
    • Type: Time period when the payment is received — use one for the beginning of the period, use 0 for the end.

    The time value of money and net present value

    A closely related factor you might come across as you calculate the time value of money and how it pertains to investment opportunities is the net present value. When you decide to invest, the hope is that you will receive an ROI.

    In addition, a solid ROI not only exceeds the amount of your investment but can also make up for any potential losses due to the TVM.

    The net present value is an equation that predicts future investment growth to today’s dollars. Net present value accounts for the time value of money and the declining value of future money in order to show the ultimate value of your investment.

    Related: What Should You Aim for in ROI? And Mistakes to Avoid

    The time value of money and annuities

    An annuity is the dollar amount you can receive in a lump sum or at a fixed monthly amount. Annuity generally comes into play in real estate, retirement and pensions. A standard financial calculator can provide the answer to these formulas.

    The formula for annuity varies based on whether you’re trying to calculate:

    • Ordinary annuities: Payment made at the end of the recurring period.
    • Annuities due: Payment made at the beginning of the recurring period.
    • Perpetuities: Annuities that last indefinitely.

    When it comes time to figure out how you’d like to handle annuities, the formulas function similarly to the time value of money formula to ensure you’re making the best financial decision.

    Related: Annuity Options for Retirement Savings – No Fuss, No Jargon, No Gimmicks

    What the time value of money can mean for you

    The time value of money is an important concept, as it can help you make future financial decisions. It can also aid in calculations and considerations in other areas of finances, like annuities.

    As you continue to grow your investment portfolio, remember: Money in your hand today is worth more than that same lump sum in the future. Why? Opportunity cost, inflation and uncertainty.

    For more on budgeting and decision-making strategies in personal finance, visit Entrepreneur.com.

    [ad_2]

    Entrepreneur Staff

    Source link

  • What Is Sustainable Fashion? Everything You Need To Know.

    What Is Sustainable Fashion? Everything You Need To Know.

    [ad_1]

    At its base level, sustainability refers to practicing productive habits that contribute toward a cleaner, healthier environment to combat climate change. Anyone can practice sustainability, even the fashion world.

    Is there fashion that is not sustainable? How can such a large industry operate sustainably? What would that look like? Keep reading to find out more.

    The evolution of the fashion industry: From handmade to fast fashion

    The fashion industry is unavoidable. Some struggle to access clothing, some wear it out of necessity and others use it as a luxury or form of expression. No matter the situation, the fashion industry touches everyone’s lives and has for centuries.

    There was a time when people made clothes by hand, often with fabric and a needle.

    As times evolved, people began to turn to local artisans and craftsmen for clothing throughout different seasons of the year. Once the Industrial Revolution hit in the 1800s, everything changed.

    The widespread use of machines to create clothing made it faster and more accessible to more classes than ever before. Eras and decades became known for iconic looks that are cemented in history.

    The one evolution that affected fashion even more than the Industrial Revolution was the internet boom of the late 90s and early 2000s. Ecommerce changed the fashion landscape forever, and fast fashion burst onto the scene — leaving its mark on the environment.

    Related: Emerging And Sustainable Fashion Industry In 2022

    Fast fashion and its environmental impact

    Fast fashion: The rundown

    Fast fashion is the business model that mass produces clothes — generally, copycats of runway looks — through a cheap and expedited supply chain to get the latest styles into the hands of buyers as quickly as possible.

    Due to the swift production process, workers are often exposed to poor working conditions, cheap labor and toxic materials.

    The fast fashion industry has shouldered much blame for adverse environmental effects. While this part of the industry is not innocent, what has happened with fast fashion is a trickle-down effect from the luxury industry.

    The trends that are made in fast fashion are simply copycats of runway looks. Once a look premiers on the runway, fast fashion companies mass-produce copycat looks at a fraction of the price in a matter of weeks.

    The problem? These clothes are produced with cheap fabrics, like polyester, and are colored with toxic textiledyes.

    Fast fashion: Polyester and pollution

    Polyester is a synthetic fabric made chiefly from petroleum, a fossil fuel that releases harmful carbon emissions. It is now the most commonly used textile fiber in the world, surpassing cotton.

    Polyester is no small player in the fashion industry — the market for this material is projected to reach $174.7 billion over the next ten years.

    In addition to that, polyester is not easy to manufacture. It takes a considerable amount of energy to produce, and in 2015, a reported 282 tons of carbon dioxide were used during polyester production.

    This mass production of harmful materials makes the fashion industry the world’s second-largest contributor to air and water pollution.

    The entire industry is part of a chain reaction that begins with toxic materials that shed microfibers and microplastics into water and air, causing harmful pollution to humans, animals and the entire ecosystem.

    Related: Is Air Pollution Making You Dumb?

    Fast fashion: Here today, in a landfill tomorrow

    Because fast fashion is produced so quickly, trends change rapidly. When it’s time to trade in a new trend for the old, the lifecycle of a piece of clothing does not simply end.

    According to the EPA, U.S. clothing waste amounted to 13 million tons in 2018. Up to 70% of that waste ended up in landfills rather than being recycled. This waste comes from both companies and individuals.

    What is sustainable fashion?

    Unsustainable fashion is a massive portion of the industry. However, some companies have moved toward more sustainable practices to contribute positively to the world’s environment.

    Sustainable fashion, or “slow fashion,” is an umbrella term that includes companies, products, employees and practices.

    It refers to practices geared towards paying a proper living wage to garment workers, reducing the carbon footprint and eventually achieving net zero operations to positively affect the environment and society.

    A carbon footprint is the level of harmful greenhouse gasses any entity produces. To achieve net zero, operations must eliminate dangerous products that produce greenhouse gas emissions and contribute to climate change.

    Related: Is Sustainability the Future Of Modern Fashion Industry?

    4 reasons sustainable fashion matters

    1. Creates less waste

    Waste would decrease significantly if the entire fashion industry moved to more sustainable practices. The issue with fast fashion is that low-quality materials, like polymers, are weakened with wash and wear.

    Once this clothing is used, it cannot be upcycled and turned into a new piece of clothing. As these materials decompose in landfills, which can take up to 200 years, they produce a greenhouse gas called methane.

    If the fashion industry used more sustainable materials for clothing, discarded clothing could be reproduced into a different garment and continue that lifecycle rather than starting all over.

    2. Reduces harmful emissions

    Often when emissions are involved, what might come to mind are factories that have visible smoke coming out of them. While that is not the wrong picture, it is not the only picture.

    The fashion industry produces a vast carbon footprint because of how much energy it takes to create the raw materials and the materials used.

    Some startling numbers about the fashion industry’s operations include:

    • 70 million trees are cut down each year.
    • 1.2 million metric tons of CO2 are produced each year.
    • 70 million barrels of oil are used each year.

    Sustainable fashion is vital because natural fabrics made from biodegradable materials do not require using so many resources.

    3. Conserves water

    The unsustainable part of the fashion industry not only uses an excessive amount of water but has also been proven to pollute water.

    The industry uses 93 billion metric tons of water each year, and on top of that, the pesticides used to make clothing are often found in nearby runoffs that pollute local water, which then makes its way into lakes, rivers and oceans.

    Sustainable fashion reduces this pollution by:

    • Creating water budgets that limit water usage during production.
    • Prioritizing organic, non-toxic, natural materials that do not need water or contribute toxins to runoffs.

    4. Preserves the ecosystem

    Once toxic chemicals make it into the water, it affects the whole ecosystem. Animals that drink the contaminated water may become sick, and the animals that eat those animals might become ill. This continues through the food chain until those now toxic animals also reach a human dinner table.

    Sustainable fashion brands are doing what it takes to use chemical-free, sustainable fabrics and better monitor their water pollution.

    In addition, many brands have also vowed to remain vegan and cruelty-free, meaning they use leather and fur alternatives so that no materials come from animals to preserve the ecosystem’s biodiversity.

    3 ways the fashion industry can become more sustainable

    The fashion industry must do its part to create sustainable clothing and help promote healthier habits for a better planet. The good news is that many strategies can help companies play their part.

    1. Watch the waste

    15% of fabric is wasted, simply ending up on the floor and getting discarded. Many designers are implementing new practices to combat overproduction.

    These strategies include:

    • Geometric concepts that use every inch of fabric.
    • Creating garments out of the scraps.
    • 3D virtual sampling.
    • AI product image analytics.
    • Mobile body scanning to fit more body types.

    2. Be intentional with materials

    Technological advances and discoveries continue to make many more resources available for sustainable use. Many designers and companies have committed to using sustainable materials that are both recyclable and much more sustainable in the manufacturing process.

    You can receive specific certifications for recycled, low-waste, biodegradable or otherwise sustainable materials.

    Sustainable materials include:

    • Hemp.
    • Ramie.
    • Regenerative cotton (and some organic cotton).
    • Textiles from agricultural waste.
    • Cupro.
    • Fibers from kapok tree pods.
    • Kelp.
    • Microbial bioleather.
    • Other biodegradable textiles using synthetic biology.

    Related: Technology Provides a Solution To Pace Down Plastic Pollution

    3. Upcycle, thrift and rent

    Upcycling, in any context, means reusing and repurposing materials to make something new. The fashion industry refers to repurposing used garments or garment materials to create an entirely new piece of clothing.

    Upcycling fashion can be eco-friendly by reducing waste, reusing materials that might otherwise decompose in a landfill and reducing toxic emissions caused by manufacturing and transport.

    Related: All That Litters Can Be Gold, According to McDonald’s. The Fast Food Chain Is Designing Jewelry — With Your Trash.

    One of the great hopes of the future is the love that Gen Z has for thrifting. Thrifting is no new concept; however, much of the Gen Z generation has taken to it in another move toward being an environmentally and socially conscious generation.

    Many members of Gen Z report loving the secondhand thrifting process not only because it is an affordable form of expression (think third-hand t-shirts from the 80s that are just now coming back into style), but because it is a way to fight back against fast fashion.

    Renting clothes is a concept that has become more popular in the last couple of decades, so data has gone back and forth on whether it is a more sustainable option.

    While it does mean that clothing has a longer lifespan, it also means more transportation which leads to toxic emissions. However, in 2021 Rent the Runway, a popular rental site, reported that through their operations over the last decade, they were able to:

    • Displace production of 1.3 million new garments.
    • Save 67 million gallons of water.
    • Save 98.6 million kilowatt-hours of energy.
    • Eliminate 44.2 million pounds of CO2 emissions.

    Related: Renting Is Back in Style

    The most sustainable fashion brands

    If you’re interested in shifting your shopping as a consumer or creating more sustainable practices for your retailer business, check out some big brands that aren’t just greenwashing — they’re paving the way in sustainable fashion operations.

    1. Patagonia

    Patagonia has made sustainable fashion its mission. One of its most significant initiatives is its self-imposed Earth tax, which allocates 1% of its sales back to the environment through nonprofits and environmental groups.

    The company is also dedicated to producing less waste, using less water, consuming less energy and recycling or upcycling gear.

    2. Naadam

    This brand focuses on creating luxury cashmere sweaters made from 100% renewable or recycled sources. Naadam is also dedicated to being transparent with its customers in practicing sustainability.

    3. Allbirds

    Allbirds is a shoe company committed to comfortable products with the environment in mind. They have two big goals: to cut their environmental footprint in half by 2025 and be as close to carbon neutral as possible by 2030. Allbirds uses sustainable materials that include:

    • Wool.
    • Tree.
    • Sugar.
    • Trino.
    • TrinoXO.

    Why sustainable fashion matters for you

    While the fashion industry has a long way to go, brands are doing their part to participate in ethical fashion. Sustainability takes commitment, hard work and often completely altering operations.

    However, there are science and systems of operations that promote sustainable practices. Consumers and companies must work together to reduce waste and promote sustainable fashion practices to make a better environment for everybody.

    Ready to learn more about sustainability? Check out Entrepreneur.com for information on pollution, the environment and more.

    [ad_2]

    Entrepreneur Staff

    Source link

  • What Causes Inflation? Everything You Need To Know

    What Causes Inflation? Everything You Need To Know

    [ad_1]

    In the last two years, inflation has been a word on everyone’s minds. It seems unavoidable, whether you’re at the gas pump, the grocery store, or really anywhere else.

    So why is this happening? And what causes it? Keep reading for all you need to know about inflation.

    What is inflation?

    Inflation measures the rise in PCE (personal consumption expenditures price index) or the expenses of goods and services over a certain period.

    Generally, inflation rates are measured by year and examined on a broad scale of a country’s overall goods and services. However, inflation can also be measured using shorter or longer periods and can focus on one particular industry or product.

    Related: What New Entrepreneurs Should Know Amid Rising Inflation

    How is inflation measured?

    The measure of inflation follows a formula called the consumer price index. The consumer price index assesses the cost of living and how it changes over time.

    The CPI formula takes the value of the market basket from a particular year, divides it by the value of the market basket from the base year, and multiplies that by 100 to produce a percentage.

    • Consumer Price Index = Value of Market Basket in Particular Year / Value of Market Basket in Base Year x 100

    Once the CPI is calculated, the Inflation Rate Formula comes in. The Inflation Rate Formula involves two key variables.

    • A = CPI starting cost
    • B = CPI ending cost

    Keeping those two variables in mind, the Inflation Rate Formula is as such:

    To carry out this formula, begin by subtracting A from B to determine the price change for the good or service. Next, divide that result by A to achieve a decimal number. Multiply that decimal number by 100 to produce a percentage. That percentage change is the result and the rate of inflation.

    Types and causes of inflation

    Inflation is not always caused by just one thing. Several economic factors dictate inflation rates. Because of this, there are different types of inflation.

    Demand-pull inflation

    Demand-pull inflation occurs when an economy’s aggregate demand exceeds the aggregate supply. Demand-pull inflation comes into play when there is a higher demand than there is supply.

    While inflation is not something people generally look forward to, it can be a sign of a healthy economy. Aggregate demand indicates high employment rates and higher levels of disposable income.

    When workers have more disposable income, luxury and necessary spending rates increase, driving demand.

    There are a few leading causes that trigger demand-pull inflation:

    • Household spending: When consumers feel comfortable enough to make discretionary purchases, it throws off the consumer price index because it is a new factor in the economic ecosystem. The general rule is that when consumer demand increases suddenly, the cost will follow the same pattern.
    • Business spending: Business spending is dictated by an economy’s gross domestic product (GDP). When the economy is healthy due to consumer spending, businesses increase production to keep up with that spending. The aggregate demand of consumers creates price increases for goods and services.
    • Government spending: During a recession, a government’s central bank will often try to kickstart the economy by dedicating monetary policy funding to new infrastructures and programs to create more jobs. While this is meant to help an economy, it also brings new market capital and drives prices up.
    • Foreign investment: Foreign investment is most prevalent when one country’s exchange rate is more favorable for buyers in another country. This means that if a large portion of buyers from one country finds affordable properties in another country, that will cause demand-pull inflation in that country’s market.

    Related: Inflation Is a Different Beast for Entrepreneurs. Here’s How to Protect Yourself

    Cost-push inflation

    Cost-push inflation happens when an aggregate supply of goods and services experiences a decrease. An increase in raw materials generally causes this decrease in production cost or the labor it takes to produce those goods and services.

    There are a few leading causes that trigger cost-push inflation:

    • Labor market: Salaries, healthcare and other benefits qualify as labor expenses. When unions negotiate wage increases or a government mandates new benefit requirements from employers, those new expenses can trigger cost-push inflation.
    • Capital: Capital is essential for any business, and it is common for companies to borrow money supply. However, the problem arises when investors limit their funding, or a business must pay an increased interest rate because those factors cause that business to increase the price of its products.
    • Land expenses: Environmental events like natural disasters can affect inflation and the cost of rent and construction for a business.
    • Entrepreneurship: When a new business begins or an existing business decides to scale, many costs are involved. Company costs like raw goods, rising wages and workspace all cause an increase in product prices, which can result in inflation.

    Built-in inflation

    Built-in inflation is the natural inflation that happens over time. As the prices for goods and services rise, people expect higher wages with those prices to afford rising costs of living.

    Related: How To Negotiate Renewed Contracts During Periods of Inflation

    Inflation throughout history

    The Covid-19 pandemic threw the economy for a loop, and now the world’s economy is experiencing aftereffects in many areas, especially inflation.

    As the supply chain of major industries like retail, real estate, auto and travel race to catch up to the increased demand, prices are being driven up.

    This is not the first time in history that inflation hikes. To prepare for what might lie ahead, look at inflation trends throughout U.S. history.

    Related: How Does Inflation Affect Real Estate? Here’s What You Need to Know

    July 1946 – October 1948

    During World War II, the job market shifted, and people were conservative with their spending. However, once the war ended, the economy experienced a boom that it was not prepared for.

    Demand was more significant than supply as people became liberal with purchases they had not been able to make during war times. Because of this rapid shift, inflation rose to over 20 percent.

    December 1950 – December 1951

    As the Korean War began in June 1950, people were accustomed to wartime mandates. Families raced to purchase necessities to prepare for rations and supply shortages, significantly increasing demand.

    Once the war ended, people seemed to have learned from the late forties situation and did not rush to buy post-war like they did the first time. Because of this more reserved behavior, prices rose but not nearly as much as they had a few years prior.

    March 1969 – January 1971

    The economy and job market were booming during this period, increasing prices. Because inflation was so drastic, the government stepped in and mandated a wage and price freeze.

    April 1973 – October 1982

    The seventies brought the U.S. the most prolonged period of inflation to date. An oil embargo followed by a decline in oil production during the Iran-Iraq War caused lasting inflation rates.

    Again, the Federal Reserve (sometimes referred to as “The Fed”) had to step in. That meant increased interest rates to level out the inflation rate.

    April 1989 – May 1991

    The first Gulf War brought much uncertainty in the supply chain and relations. This trepidation drove up crude oil prices, leading to a short inflation period.

    July 2008 – August 2008

    While this was a short-term period, it took a considerable toll on the economy. Exponential rises in gas prices shot the CPI up five percent over these two months. The cost of crude oil doubled in only a year from $70 to $140.

    Pros and cons of inflation

    Inflation means rising prices, so how could there be positives to that? Like anything else, there are pros and cons to inflation.

    Pros of inflation

    • Enhanced economic growth: During inflation periods, businesses often experience higher demand, which causes them to increase production to keep up. To keep up with increased production, companies must hire more workers or provide current workers with more hours, leading to a healthier job market.
    • Provides for wage adjustment: Inflation creates a type of “new normal,” which allows companies to adjust the prices of goods and services and employee wages.
    • Better borrowing: Many people are given wage increases due to inflation. However, loan interest rates that were established before inflation do not increase. This means that employees who receive raises have more financial capital and might be able to pay off their loans faster or at least with less pressure.
    • Increased employment rates: Because goods and services become more expensive, businesses have more revenue to put back into their company with more jobs and production.

    Cons of inflation

    • Impacted savings: As goods and services become more expensive, a gap can often occur as the rest of the economy levels out. If living costs rise but wages do not, it becomes increasingly difficult for people to save.
    • Decreased investments: When there is uncertainty in an economy, investors become more tentative with their money. Investors also want their money to go as far as possible, and inflation slows that process.
    • Less competition: The economy needs competition. However, with countries that use the same currency, it can be challenging to evaluate currency value if one experiences inflation but the other does not. This slows the import and export system and ultimately slows the economy.
    • Disadvantages for pensions and minimum wage: During periods of inflation, the minimum wage is generally the last to experience a raise. Because the government controls the minimum wage, it is up to them to raise it rather than the employer. In addition, those who receive pensions on a fixed rate will receive the same amount of money even though inflation will affect how far the dollar goes.

    Related: This Is the Living Wage You Need in All 50 States

    Where inflation hits the hardest

    While no city has remained immune to inflation, some areas have been hit much harder than others.

    Some of these cities were becoming more affordable before the pandemic. However, the economy experienced such a shift during the pandemic years that most have experienced a yoyo effect.

    And it’s not only expensive cities that have continued to become more expensive; rather, some formerly affordable cities have experienced the most change. Take a look at the 15 cities that have experienced the highest rate of inflation based on the CPI change in the last year.

    1. Anchorage, Alaska

    • Score: 100.00
    • CPI change: 12.40%

    2. Phoenix – Mesa – Scottsdale, Arizona

    • Score: 68.38
    • CPI change: 12.30%

    3. Atlanta – Sandy Springs – Roswell, Georgia

    • Score: 56.22
    • CPI change: 11.50%

    4. Seattle – Tacoma – Bellevue, Washington

    • Score: 50.51
    • CPI change: 10.10%

    5. Baltimore – Columbia – Towson, Maryland

    • Score: 50.13
    • CPI change: 10.60%

    6. Miami – Fort Lauderdale – West Palm Beach, Florida

    • Score: 49.36
    • CPI change: 10.60%

    7. Houston – The Woodlands – Sugar Land, Texas

    • Score: 48.28
    • CPI change: 10.20%

    8. Detroit – Warren – Dearborn, Michigan

    • Score: 45.58
    • CPI change: 9.70%

    9. Tampa – St. Petersburg – Clearwater, Florida

    • Score: 45.22
    • CPI change: 11.20%

    10. Philadelphia, Pennsylvania – Camden, New Jersey – Wilmington, Delaware

    • Score: 32.57
    • CPI change: 8.80%

    11. St. Louis, Missouri

    • Score: 29.95
    • CPI change: 8.40%

    12. Dallas – Fort Worth – Arlington, Texas

    • Score: 27.65
    • CPI change: 9.40%

    13. Riverside – San Bernardino – Ontario, California

    • Score: 26.73
    • CPI change: 9.20%

    14. Chicago – Naperville – Elgin, Illinois

    • Score: 26.42
    • CPI change: 8.80%

    15. Denver – Aurora – Lakewood, Colorado

    • Score: 22.87
    • CPI change: 8.20%

    Inflation expectations: How much longer will it last?

    As history shows, inflation is an expected result after a considerable economic disruption. The pandemic was certainly a significant disruption, and the world’s economy is still experiencing aftereffects.

    In addition to the pandemic, other world events have had additional effects on the world’s economy. So, how much longer will inflation last?

    The economy has been relatively unpredictable in the wake of these events, and economists continue to gather and study data to offer predictions on what people can expect.

    The World Economic Forum’s data shows that in 2021, global growth was forecast at six percent, and it slowed to about three percent in 2022. Global growth is expected to slow even more in 2023 at just under three percent. As for inflation, deflation may be coming.

    Rates are expected to decline from just under nine percent in 2022 to six and a half percent in 2023 and four percent in 2024.

    However, economists also take history into account. While inflation rates are predicted to decline, a key caveat in the equation is the eight percent threshold.

    History indicates if inflation exceeds eight percent, which it did in September 2022, high inflation can take much longer to decline.

    What you can do to prepare for inflation

    With no clear answer about when inflation will recede, it can’t hurt to put a few precautions in place. Take a look below for four strategies experts recommend to help you prepare for higher inflation.

    1. Budget accordingly.

    You don’t have to change your whole lifestyle, but if there are little things you can cut out to save extra cash, now is the time.

    Whether combating food prices by cooking at home one extra night a week or pausing a subscription you don’t use that much, focus on the essentials for the time being.

    2. Create and maintain an emergency fund.

    Now is a great time to start if you don’t already have an emergency fund. Those small luxuries you just cut out? Input them into the fund and save them for a rainy day in preparation for hyperinflation.

    Related: 6 Best Savings Accounts Of 2022

    3. Invest.

    If you’re savvy with the stock market or have always wanted to get involved, study and find a suitable investment. If you don’t think that’s the right fit, take that emergency fund and convert it into something like a high-yield savings account that will build better interest over time.

    Related: 6 Best Investments For Inflation

    4. Keep a close eye on debt.

    From student loans to personal finance, sometimes debt can be unavoidable. However, the key is not to get in too deep.

    If you have to take on debt, make sure that you have a payback plan and that you are not committing to high-interest debt that will be more difficult to pay off in the long run.

    Related: 3 Strategies To Protect Your Business From Inflation

    What does inflation mean for you?

    Several factors cause inflation; unfortunately, those factors currently affect the entire world.

    While some hope inflation will recede in the coming year or two, other elements might slow that process. In either case, it is always prudent to prepare some backup funds if you ever need them.

    Explore the rest of Entrepreneur.com if you’re looking for more information on professional-impacting topics like the economy, unemployment rates or investing.

    [ad_2]

    Entrepreneur Staff

    Source link

  • What Is NFT Art? Everything You Need To Know

    What Is NFT Art? Everything You Need To Know

    [ad_1]

    NFTs are a relatively new concept that burst onto the scene with the metaverse development. NFT stands for non-fungible token. When dealing with economics, fungible assets refer to readily interchangeable units, such as money and currency.

    For example, you could exchange four American five-dollar bills for one American twenty-dollar bill, which would hold the same value. However, any non-fungible asset has unique properties that cannot be interchanged with anything else.

    NFTs are assets that can be purchased or sold, just like any other object or property, but they are unique intangible objects. NFTs are digital assets bought, sold and traded within the metaverse.

    NFTs are not just one form — even though they are not traditional art, they now very much exist in the art world. But how can something digital and intangible be art? Keep reading to find out more.

    Related: Here’s a Beginner’s Guide to Crypto, NFTs, and the Metaverse

    NFTs: A brief history

    To better understand NFT art, knowing how non-fungible tokens developed in the first place is helpful.

    2012: The inception

    While there are a few different ideas of who first invented NFTs, the movement started in 2012-2013. Many agree that Colored Coins were the first NFT to exist. Colored Coins were introduced as part of a bitcoin and can be a tiny currency representing multiple assets.

    Colored Coins’ biggest flaw was the reliance on people to agree on its value. Colored Coins were not a perfect science, but they did open up a whole new concept in NFTs.

    2014 – 2016: Trading cards and memes

    After Colored Coins paved the way, several others realized the potential of blockchains. Blockchains are virtual ledgers that record transactions via virtual code. Transactions are recorded in the block, and the chain keeps track of everything.

    Each cryptocurrency user has a unique blockchain that serves as their digital ledger. Blockchain technology is meant to prevent fraud in the world of cryptocurrency.

    During this timeframe, several more companies tried their hand at NFTs.

    • Counterparty: This NFT platform allowed users to build projects and assets, like trading cards and memes, on top of the Bitcoin blockchain through a decentralized exchange. Eventually, Counterparty partnered with the popular trading card game Force of Will, which showed the industry how valuable NFTs could be.
    • Rare Peeps: Rare Peeps introduced memes to a scene once dominated by trading cards. The platform became so popular that unique NFT memes were eventually traded on multiple blockchains, including Bitcoin (BTC) and Ethereum (ETH) blockchain.

    Related: Justin Bieber, Paris Hilton, and Serena Williams Among 37 To Face Lawsuit For Endorsing Bored Ape Yacht Club NFTs

    2017: Cryptopunks and CryptoKitties

    Cryptopunks was the next stage in the evolution of blockchain entertainment. Rather than only dealing in memes, creators produced characters that users could own as avatars. There were only 10,000 available characters, and the low supply drove up demand as people bought and traded the unique animations.

    Around the same time, CryptoKitties came to the scene not only as stock characters but as a virtual game through which players could adopt, raise and trade virtual cats. The highest-priced cat characters sold for over $100,000.

    Related: Why NFTs Will Shape the Future of Gaming

    2018 – Present

    With more and more digital items like animations, video games, gifs and memes available to crypto fans, NFT marketplaces and ideas continued to develop. Some of the biggest NFT marketplaces include:

    • OpenSea.
    • Rarible.
    • Nifty Gateway.
    • Solana.
    • SuperRare.

    These marketplaces hold endless opportunities for people with all kinds of interests. From real estate to purchasing an NFT version of Jack Dorsey’s first Tweet, there is something for everyone.

    And once people realized how valuable images could be, the art community became interested as a new craze began.

    Related: Multi-Billion Dollar Real Estate Developer to Tokenize Over $3MM Worth of Real Estate

    What is NFT art?

    Much like any item in NFT form, NFT art is digital art that is tokenized in the blockchain. The artwork is entirely digital, meaning that investors ultimately buy, sell and trade in the metaverse.

    Just like there is only one original with physical art, NFT art only has one original. Even though it is relatively easy to copy with downloads and screenshots, only the original holds the unique value. Just how much money is in the NFT art world? Keep reading to find out.

    Related: How NFTs Have Changed Digital Art Forever

    10 top-selling NFT artists

    NFT art has taken the art community by storm. Although buyers and sellers never actually touch the art they own, they are still willing to pay top dollar to have unique pieces made by digital artists.

    Many of these artists use social media to publicize their work, while others stick to the NFT markets. See the list below to see which artists have made the most revenue from this new movement.

    1. PAK

    At $291,732,674.58, PAK is the highest-grossing artist in the world of NFTs. Only a little is known about the artist, as they have remained anonymous throughout their time in digital media.

    However, one of their most famous and highest-selling pieces is a commentary called Clock, a digital counter representing the number of days Julian Assange, the WikiLeaks founder, has served in prison.

    2. BEEPLE

    Until PAK surpassed him, Beeple held the record of highest-selling NFT art. Everydays: The First 5000 Days sold for $69,346,250.00 at a Christie’s auction house session. This auction is primarily credited with putting NFT art on the mainstream media map, and it also marked the first auction that sold cryptoart and accepted cryptocurrency payments.

    3. SNOWFRO

    SNOWFRO is an artist and the founder of Art Block, a generative art platform that allows artists to present and sell their art NFTs like a digital art gallery. As an artist, his highest-selling piece sold for $8,129.59, and his total artwork value is $71,428,522.72.

    4. TYLERXHOBBS

    Tyler Hobbs is an NFT artist who aims to provide positive messaging in his art. His highest-selling piece, Incomplete Control, sold for $81,227.67 and told the story of letting go, allowing yourself to breathe and accepting the imperfections of life and self. TYLERXHOBBS has found success in his mediums of algorithms, paint and plotters.

    5. XCOPY

    This artist has grossed $55,620,220.68 in NFT sales with his 9,575 pieces of NFT art that primarily focus on dystopian themes. His images include movement rather than remaining still on a screen.

    6. DMITRICHERNIAK

    DMITRICHERNIAK lives in the abstract part of the NFT space. His highest-grossing digital file sold for $2,682,000.00 and showed the digital art world how colorful, geometric and modern NFT projects could be.

    7. HACKATAO

    This artist creates physical and digital art pieces, and their work reflects that duality with themes of society and its changes involving human behaviors and the metaverse. At $29,003,737.04 in earnings, the digital art community seems to resonate with the artist’s work.

    8. FEWOCIOUS

    This teenager is ahead of the game with $28,123,807.25 in earnings. They have used social media to leverage their work to over 100,000 followers across platforms. FEWOCIOUS lives in the pop surrealism space and has big plans for the future.

    9. TREVOR JONES

    Trevor Jones began working as a physical artist on canvas, but he quickly became fascinated with NFT art and started moving into QR codes and augmented reality.

    Jones has seen tremendous success, as his highest-selling work earned him $368,856.40, which helped his total artwork value reach $23,472,483.23.

    10. MATTDESL

    MATTDESL’s work is full of geometrical shapes, landforms, small strokes of color and 3D moving images. His total artwork value is up to $55,620,220.68, and his highest-selling work, Meridian, sold for $14,427.69.

    Related: The Future Of The Books Industry? Author Publishes First Novel NFT

    What can NFT art mean for you?

    The metaverse has something for everyone. While digital artwork certainly lives in a higher price range for your digital wallet, looking at NFT artwork is still just as accessible as looking at a physical piece of art in a museum.

    NFT collections in the art market have grown as new artists emerge each day with works of art that appeal to all genres. Whether you love real-world art or are interested in finding a new medium, NFT art is certainly something to see for yourself.

    Ready to learn more about NFTs and the metaverse? Visit Entrepreneur.com.

    [ad_2]

    Entrepreneur Staff

    Source link

  • ETF vs. Mutual Funds: What Are the Differences?

    ETF vs. Mutual Funds: What Are the Differences?

    [ad_1]

    Disclaimer: This article is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other financial professional to determine what may be best for your individual needs.

    When it comes to investing, there are many different options to choose from. Two of the most popular types of investments are ETFs and mutual funds. But what are the differences between these two investment options–and which is right for you?

    Here, you’ll get a full breakdown of the key differences between ETFs and mutual funds, so you can decide which type of investment is best for you.

    What are ETFs and mutual funds?

    Both types of investment products offer benefits and drawbacks, so it’s essential to understand how they work before you invest.

    ETFs (exchange-traded funds) are baskets of stocks bought and sold on an exchange.

    On the other hand, mutual funds are managed by investment professionals who buy and sell stocks according to a defined set of criteria.

    You can use ETFs and mutual funds to invest in various assets, including stocks, bonds, and commodities. They also offer an affordable path to diversification through real estate.

    However, ETFs tend to be more transparent than mutual funds, meaning you can see individual stocks in the basket. Mutual funds are also more expensive to manage than ETFs. As a result, mutual funds typically have higher fees than ETFs, including a load (a fee paid to brokers for their efforts) and management fees (paid to the investment management firm).

    When deciding which type of product to invest in, consider your financial goals and risk tolerance. An actively managed ETF may be a good choice if you want lower costs while diversifying your portfolio. However, if you’re willing to pay for a portfolio manager, an actively managed mutual fund may be a better option.

    Related: Why ETFs Are A Good Choice For A Properly Diversified Portfolio

    How are ETFs and mutual funds structured?

    ETFs and mutual funds are both structured as investment vehicles that allow investors to pool their money together to buy a basket of individual securities.

    A fund manager typically manages mutual funds, while ETFs are usually passively managed, meaning they track an underlying market index. Both types of funds can be bought and sold on stock exchanges and are typically aimed at outperforming benchmarks like the S&P 500 index.

    One key difference between ETFs and mutual funds is that ETFs trade like stocks, meaning they can be bought and sold on a stock exchange throughout the day.

    On the other hand, mutual funds are priced only once per day after the markets close. If you want to sell your fund shares in a mutual fund, you must wait until the day’s end.

    The market price of an ETF often differs from its net asset value (NAV), which is the value of the ETF shares and underlying securities calculated at the end of the trading day. Mutual funds don’t have this discrepancy, giving them a lower liability to the short-termintradayfluctuations of the stock market.

    How are ETFs and mutual funds taxed?

    When creating an investment strategy for index ETFs and mutual funds, one must consider how they are taxed. While both types of investments are subject to capital gains tax, there are some key differences to understand.

    ETFs are generally taxed at a lower rate than mutual funds, as they are not subject to the same level of turnover. In addition, ETFs tend to have a lower expense ratio than mutual funds, making them a more efficient investment.

    Expense ratios, essentially, are fees that cover administrative costs associated with portfolio management — ETFs, which track market indexes, are less work to run on the administrative side, which is why their expense ratios tend to be lower.

    Remember that you should make all investment decisions with a financial advisor. Taxes are just one factor when investing in ETFs and mutual funds.

    What are the key similarities between ETFs and mutual funds?

    ETFs and mutual funds share several similarities, and each can significantly benefit the investor.

    You can use both investment types to:

    • Diversify your portfolio
    • Access different asset classes (groups of investments with similar characteristics, subject to the same regulations; i.e., equities, currency, fixed-income, commodities, real estate)
    • Save for retirement
    • Reinvest your dividends

    Whichever type of investment you choose, research and consult with a financial advisor to ensure it’s the right move.

    What are the primary differences between ETFs and mutual funds?

    Now that you know the basics of ETFs and mutual funds, it’s time to take a closer look at the key differences between these two investment products.

    Here are seven of the most important differences to keep in mind:

    1. ETFs are bought and sold on an exchange, while mutual funds are not.
    2. Mutual funds are more expensive to manage than ETFs.
    3. ETFs typically have lower fees (such as management fees and redemption fees) than mutual funds.
    4. ETFs offer more transparency than mutual funds.
    5. Mutual fund managers make all investment decisions, while with ETFs, you can see which stocks are in the basket.
    6. Both ETFs and mutual funds are subject to capital gains tax. A capital gains tax is a tax on the profit an investor makes once an investment is sold.
    7. ETFs are generally taxed at a lower rate than mutual funds.

    There is no right or wrong answer when deciding between ETFs and mutual funds. It ultimately depends on your financial goals and risk tolerance.

    The benefits of ETFs

    For the average investor, exchange-traded funds (ETFs) offer many advantages over traditional mutual funds. ETFs are typically more transparent than mutual funds, meaning investors can see what they hold.

    Additionally, ETFs tend to be tax efficient, as they only generate capital gains when sold. This is in contrast to mutual funds, which are subject to annual capital gains taxes.

    Related: The Difference Between Direct Indexing and ETFs

    Furthermore, ETFs often have lower expense ratios than mutual funds or index funds, making them more affordable for investors. Finally, ETFs tend to be more liquid than mutual funds so you can buy and sell them more easily. And ETFs can be even more attractive for investors who prefer active management.

    The benefits of mutual funds

    Exchange Traded Funds (ETFs) have become a popular investment vehicle for many investors. But mutual funds still offer some distinct advantages that make them worth considering.

    One of the most significant advantages of mutual funds is that they offer professional management. This is particularly important in markets subject to high volatility, where having a reputable fund company making investment decisions can help minimize losses and maximize gains.

    Related: Which Mutual Fund Plan Should You Choose – Regular or Direct?

    Additionally, mutual funds typically offer a higher level of diversification than ETFs. By investing in various asset classes, mutual funds can help reduce risk and improve returns over time. And mutual funds typically have lower fees than ETFs, which can lead to better returns.

    When is it best to use an ETF or a mutual fund?

    When it comes to investing, there are many different options to choose from. ETFs and mutual funds are two of the most popular choices. So, how do you know which one is right for you?

    Generally speaking, ETFs are more efficient than mutual funds. They have lower expense ratios and are more tax-friendly. You can also trade ETFs throughout the trading day, while mutual fund trades are only executed once per day (after the markets close).

    On the other hand, mutual funds often have a longer track record than ETFs, which can make them more appealing to some investors. Not to mention mutual funds usually provide greater diversification than ETFs. Further, some investors prefer the hands-off approach of mutual funds, where they don’t have to manage their investments actively.

    Related: Mutual Funds: Thing You Should Know Before Investing

    Ultimately, your best choice will depend on your individual investment goals and preferences.

    If you’re looking for a low-cost investment that you can actively manage, an ETF may be a good option. A mutual fund may be the better choice if you want a hands-off investment with a long track record.

    Comparing costs between ETFs and mutual funds

    When comparing costs, ETFs typically have lower expense ratios than mutual funds. This is because ETFs are passively managed, so they don’t require a team of fund managers to make decisions about buying and selling stocks. However, ETFs can also incur other costs, such as brokerage fees and bid-ask spreads (the amount by which the ask price exceeds the bid price).

    On the other hand, mutual funds are actively managed, meaning they have higher expense ratios. But since mutual funds are bought and sold directly through the investment company, there are no additional transaction costs.

    So when it comes to cost comparison, it depends on the type of fees you’re looking at. If you’re focused on expense ratios, then ETFs may be the better choice. But if you’re looking at total costs — including transaction fees, operating expenses, and trading commissions — then mutual funds may be a better option.

    Related: Why You Should Invest in Mutual Funds vs. Individual Stocks

    ETF vs. mutual funds: Which is right for you?

    ETFs and mutual funds are popular investment vehicles. They both have unique benefits as well as drawbacks.

    Regarding costs, ETFs tend to be cheaper than mutual funds. However, there are some instances where it may be better to invest in a mutual fund instead of an ETF.

    Ultimately, the best way to decide whether or not an ETF or a mutual fund is right for you is to continue researching and consult a financial advisor. Both vehicles can help you achieve your investment objectives if you approach them strategically.

    For more informational articles like this one, explore Entrepreneur’s Money & Finance articles here.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Are Basic Industries a Good Career Path?

    Are Basic Industries a Good Career Path?

    [ad_1]

    As a child, most people were asked what they wanted to become when they grew up. It’s a tough decision. Finding the right combination of talent, passion, practicality and job security is no easy feat.

    You might discover basic industries as you decide what industry you want to enter. The field provides several options, so it can take some exploration.

    Keep reading for the need-to-know information on basic industries, what it entails and whether or not it is a good career path.

    Related: 3 Traditionally Offline Industries That Are Going Online

    What are basic industries?

    A basic industry is one that manufactures materials and provides those materials to other industries. Basic industries are integral to a country’s economy, as they supply, process and develop the vital raw materials it needs to operate.

    Types of basic industries

    Jobs in basic industries are often labor-intensive and require various technical skills and qualifications. See some of the sectors below to see if a career path in basic industries might be interesting to you.

    Agriculture

    Agriculture falls under the supersector of natural resources and mining. Jobs in this sector entail crop growing, animal raising, timber harvesting and fish and animal harvesting. Any of these actions must occur on a farm, ranch or the natural habitat of the plant or animal.

    This industry is irreplaceable, as it is the beginning of the food supply chain, which is the process by which food gets from its raw form, to distribution to people’s home tables.

    Common locations for jobs in this sector include:

    • Farms
    • Ranches
    • Dairies
    • Greenhouses
    • Nurseries
    • Orchards
    • Hatcheries

    While it is not absolutely mandatory to have a degree to enter the field of agriculture, many workers study the major in college and prepare for their careers as early as middle school through programs like the Future Farmers of America (FFA) and 4-H.

    Those who do study agriculture in higher-education complete majors including:

    • Animal sciences
    • Agriculture production and management
    • General agriculture
    • Plant science and agronomy
    • Agricultural economics

    The top 10 universities in the United States for Agricultural Sciences include:

    1. University of Massachusetts Amherst
    2. Cornell University
    3. University of California, Davis
    4. University of Florida
    5. Harvard University
    6. University of Illinois, Urbana-Champaign
    7. Michigan State University
    8. Purdue University, West Lafayette Campus
    9. University of Wisconsin, Madison
    10. Iowa State University

    Whether or not you’re considering pursuing an agricultural degree, you might be interested in some information on workers who enter the field.

    Key career statistics about the agriculture workforce:

    • Employment: 627,210
    • Median wage: $52,000
    • Percentage of part-time employees: 13%
    • Percentage employed with occupations requiring a bachelor’s degree: 42%
    • Percentage employed with an advanced (post-bachelor’s) degree: 27%

    Common titles in the agricultural field:

    • Veterinarians (Doctoral or professional degree required)
    • Postsecondary teachers (Doctoral or professional degree required)
    • Soil and plant scientists (bachelor’s degree)
    • Sales representatives for wholesale and manufacturing (high school diploma or equivalent)
    • Crop, nursery and greenhouse farmworkers and laborers (no formal educational credential)
    • Retail salesperson (no formal academic credential)
    • Farmers, ranchers, agricultural managers (high school diploma or equivalent)
    • First-line supervisors of retail sales workers (high school diploma or equivalent)
    • Chief executives (bachelor’s degree)

    Related: How Technology is Fighting Agriculture’s Unsettling Age Problem

    Steel and metals

    With the rise of the Industrial Revolution in the 18th century, metal and steelwork became a considerable part of the world’s mechanical ecosystem. The technological advances shifted much of the focus from agriculture to industrial.

    While agriculture will likely always be necessary, steel and metalwork has continued to evolve with modern technology and is a thriving industry today.

    Steel and metal work jobs exist all over the country; however, five states have the highest employment of structural iron and steel workers.

    The top five states, their employment numbers, mean hourly wage and annual mean wage as of 2021 are:

    California

    • Employment: 7,850
    • Hourly mean wage: $34.07
    • Annual mean wage: $70,870

    Texas

    • Employment: 7,240
    • Hourly mean wage: $22.00
    • Annual mean wage: $45,760

    New York

    • Employment: 4,400
    • Hourly mean wage: $43.41
    • Annual mean wage: $90,280

    Florida

    • Employment: 3,710
    • Hourly mean wage: $22.78
    • Annual mean wage: $47,380

    Ohio

    • Employment: 3,320
    • Hourly mean wage: $29.60
    • Annual mean wage: $61,570

    The five parts of the industry with the highest employment rates are:

    • Foundation, structure and building exterior contractors
    • Nonresidential building construction
    • Fabricated metal product manufacturing (3323 and 3324 only)
    • Building equipment contractors
    • Other specialty trade contractors

    Generally, the steel and metal industry has positions requiring a high school diploma, an equivalent degree and a subsequent apprenticeship.

    Apprenticeships allow prospective steel and metal workers to learn necessary skills and knowledge through hands-on experience and training. Many technical schools or contractor associations provide apprenticeships.

    Apprenticeships in the steel and metal field can equip students with skills like:

    • Metal framework construction
    • Reinforcing and installing metals and measuring
    • Cutting and laying rebar
    • Basic math skills
    • Basic sketching skills

    If you are considering an apprenticeship in this industry, be prepared to dedicate your time and attention. Apprentices complete around 144 hours of technical training and 2,000 hours of real-world job experience.

    Related: 3 Stellar Steel Stocks to Buy Now

    Mining, quarrying, oil and gas extraction

    The mining, quarrying and oil and gas extraction industries fall under the natural resources and mining supersector.

    A miner’s job includes actions like:

    • Quarrying
    • Well operations
    • Beneficiating: crushing, screening, washing and flotation
    • Preparation at a mine site

    During these job performances, miners seek to extract naturally occurring mineral solids like coal, ore and liquid minerals like crude petroleum.

    There are approximately 593,300 workers in this industry and 5.7% of workers are members of a union.

    Five occupations and their mean salaries in this industry include:

    1. First-line supervisors/managers of construction trades and extraction workers: $88,290
    2. Helpers — extraction workers: $42,930
    3. Mining and geological engineers, mining safety engineers: $100,000
    4. Operating engineers, construction equipment operators: $52,000
    5. Roustabouts — oil and gas: $44,890

    For all other hourly employees, the average hourly earnings are approximately $33.85 per hour.

    To begin work in the mining industry, you must undergo training to prepare. The National Mine Health and Safety Academy is located in Beaver, West Virginia and holds in-person courses for prospective mining professionals.

    The institution also provides materials and resources for trainees who prefer to complete their training at their local training program.

    The job requirements are different if you are interested in the mining sector and are drawn toward geological engineering.

    Although geological engineers often work alongside miners, their roles are different. Geological engineers identify risk factors and terrain at worksites to ensure health and human safety.

    Geological engineers need, at minimum, a bachelor’s degree in a major like:

    • Chemistry
    • Fluid Mechanics
    • Physics
    • Math
    • Lab Work
    • Field Experience

    The top 10 U.S. universities for geosciences are:

    1. California Institute of Technology
    2. University of Colorado, Boulder
    3. Columbia University
    4. University of Maryland, College Park
    5. University of Washington, Seattle
    6. Harvard University
    7. University of California, Irvine
    8. Princeton University
    9. University of California, Los Angeles
    10. Massachusetts Institute of Technology (MIT)

    In addition to higher education, you will likely need to complete an internship or fellowship to gain real-world experience in the geological field of your choice.

    There are also types of geological engineers that need to complete additional licensing to be qualified for positions.

    Related: 4 Oil and Gas Stocks to Buy Before the Winter Freeze

    Chemicals

    Chemical manufacturing is a subsector of the manufacturing sector. This subsector takes organic and inorganic raw materials and transforms them into products through a chemical process.

    Groups in the chemical manufacturing industry include:

    • Basic chemical manufacturing
    • Resin, synthetic rubber and artificial synthetic fibers and filaments manufacturing
    • Pesticide, fertilizer and other agricultural chemical manufacturing
    • Pharmaceutical and medicine manufacturing
    • Paint, coating and adhesive manufacturing
    • Soap, cleaning compound and toilet preparation manufacturing
    • Other chemical products and preparation manufacturing

    Occupations in the chemical manufacturing industry and their salaries include:

    • Chemical equipment operators and tenders: $52,470
    • Chemical technicians: $57,140
    • Chemical engineers: $105,550
    • Chemists: $83,960
    • Mixing and blending machine setters, operators and tenders: $42,820
    • Packaging and filling machine operators and tenders: $37,980

    While some of the occupations on this list require higher-education degrees, others do not. For example, becoming a chemical technician requires a high school diploma or GED equivalent.

    In addition, a chemical technician must have prior experience in the sector, a HazMat certification, likely a forklift certification and general skills.

    On the other hand, a chemical engineer requires a bachelor’s degree, Fundamentals of Engineering (FE) certification, a master’s degree, a Professional Engineering (PE) certification and a state license.

    The top skills required by chemical engineers include:

    • Technical skills
    • Mathematics
    • Analytical skills
    • Critical-thinking skills
    • Creative thinking

    The top 10 U.S. universities for chemical engineering are:

    1. Massachusetts Institute of Technology (MIT)
    2. Georgia Institute of Technology
    3. University of Delaware
    4. University of California, Berkeley
    5. Stanford University
    6. University of Illinois, Urbana-Champaign
    7. California Institute of Technology
    8. University of Texas, Austin
    9. University of Minnesota, Twin Cities
    10. University of Wisconsin, Madison

    The states with the highest employment level and their corresponding annual hourly wage and annual mean wage are:

    Texas

    Annual hourly wage: $79.07

    Annual mean wage: $164,470

    Pennsylvania

    Annual hourly wage: $49.26

    Annual mean wage: $102,450

    California

    Annual hourly wage: $46.60

    Annual mean wage: $96,920

    Michigan

    Annual hourly wage: $52.72

    Annual mean wage: $109,650

    New Jersey

    Annual hourly wage: $59.28

    Annual mean wage: $123,300

    Related: From Salt To Sustainability: How Tata Chemicals Is Driving Growth On the Back Of Innovation

    Textile mills

    Textile mills are a subsector of the manufacturing sector. Textile mills take a natural or synthetic basic fiber and transform it into a product that is manufactured further into items used for industrial or individual use.

    Textile mills transform materials into items like:

    • Apparel
    • Sheets
    • Towels
    • Textile bags

    Textile mills consist of three different types of mills, which are:

    • Fiber, yarn and thread mills
    • Fabric mills
    • Textile and fabric finishing and fabric coating mills

    Common occupation titles in textile mills and their mean salaries include:

    • First-line supervisors/managers of production and operating workers: $59,450
    • Inspectors, testers, sorters, samplers and weighers: $33,960
    • Textile bleaching and dyeing machine operators and tenders: $31,620
    • Textile knitting and weaving machine setters, operators and tenders: $34,250
    • Textile winding, twisting and drawing out machine setters, operators and tenders: $32,110

    Related: Future of Textile Technology and Apparels Trend

    Utilities

    Utilities are a subsector of the trade, transportation and utilities supersector. The utility sector has several different establishments and services that go with those establishments.

    Industry groups in the utilities subsector include:

    • Electric power generation, transmission and distribution
    • Natural gas distribution
    • Water, sewage and other systems

    Utility establishments and their services include:

    • Electric power: Generation, transmission and distribution
    • Natural gas: Distribution
    • Steam supply: Provision and distribution
    • Water supply: Treatment and distribution
    • Sewage removal: Collection, treatment and disposal of waste through sewer systems and sewage treatment facilities

    Common occupation titles in utilities and their mean salaries include:

    • Control and valve installers and repairers, except mechanical door: $77,160
    • Electrical engineers: $110,230
    • Electrical power-line installers and repairers: $87,660
    • First-line supervisors/managers of mechanics, installers and repairers: $105,750
    • Meter readers, utilities: $58,120

    Electrical engineering may stand out to you as a potential occupation in the basic industries. To become an electrical engineer, you will need a bachelor’s degree and participation in an internship or other practical experience.

    The top 10 U.S. universities for electrical engineering are:

    1. Massachusetts Institute of Technology (MIT)
    2. Stanford University
    3. University of California, Berkeley
    4. California Institute of Technology
    5. Georgia Institute of Technology
    6. University of Illinois, Urbana-Champaign
    7. University of Michigan, Ann Arbor
    8. Carnegie Mellon University
    9. Cornell University
    10. Purdue University, West Lafayette

    Related: 3 Utility Stocks to Weather Market Storms

    Paper

    Paper manufacturing is a subsector of the manufacturing sector. The paper manufacturing subsector is also made up of converted paper products, paper and pulp.

    Pulp is a raw material generally made from cellulosic (vegetable) fibers or other materials like minerals, artificial fibers, rags, straws, grasses and bark. Paper, pulp and converted paper products are grouped because they are part of a vertically connected process.

    This process includes three parts:

    1. Pulp manufacturing: Separating the cellulose fibers from other impurities in wood or used paper
    2. Paper manufacturing: Matting fibers into a sheet
    3. Converted paper products: Paper and other materials are cut and shaped with techniques that include coating and laminating activities

    Occupations integral to the paper manufacturing industry and their mean salaries include:

    • Cutting and slicing machine setters, operators and tenders: $44,150
    • First-line supervisors/managers of production and operating workers: $75,050
    • Industrial production managers: $119,980
    • Industrial truck and tractor operators: $42,780
    • Paper goods machine setters, operators and tenders: $45,430

    Industrial truck and tractor operators make up approximately 758,290 jobs in the U.S. workforce. This occupation is vital to the industry.

    To become an industrial truck and tractor operator, you must fit job requirements like having a high school diploma or GED, a relevant driver’s license and a completed apprenticeship or other practical experience.

    Related: 3 Reasons Why Paper Packaging Can’t be Beat

    Pros and cons of working in basic industries

    Like any other industry, every job title has pros and cons. See below for more information about the ups and downs of working in basic industries.

    Pros of working in basic industries:

    • Job stability: Basic industries are only attractive to some. While it takes a particular dedicated type of worker to embrace a basic industry job, that also means plenty of job opportunities and a high level of job stability for those in the industry.
    • Low barrier to entry: There are thousands of jobs in basic industries that do not require higher education. Instead, many occupations require practical experience or certifications, which are much more affordable than college degrees.
    • Training opportunities: Once a worker enters the field, there are many adjacent jobs for which their employer may provide training. Technology is constantly evolving, so there are many training opportunities for workers to learn how to operate new technologies.
    • Opportunity for growth: Basic industries are niche, so there are many opportunities to train and grow in that environment.

    Cons of working in basic industries:

    • Labor-intensive jobs: Basic industry jobs can be tough on the body and the mind. They are the opposite of desk jobs — workers must constantly move, lift and operate heavy machinery. The environment often has high stakes and long work hours, which can affect mental health.
    • Workforce based on the economy: While many basic industry jobs are essential and ineffective by the economy, others might be subject to furloughs or layoffs in an economic downturn.
    • Possible hazardous working conditions: Some basic industry occupations are subject to unsafe working conditions like chemicals, pollutants and other dangerous situations with locations and machinery that often contribute negatively to personal and environmental health.

    Basic industries and the environment

    It’s no secret that industrial practices have damaged the environment and contributed to climate change. The Industrial Revolution was one of the most significant inciting incidents to the manufacturing industry boom.

    At the time, people had no idea the long-term effects fossil fuels from large manufacturing plants would someday have on the planet. While so many improvements have been made, industrialization’s carbon footprint from basic industries still occurs today. Keep reading for specific environmental impacts from basic industries.

    Water pollution

    Water pollution occurs when natural or manufactured chemicals contaminate a water source.

    While some water pollution can be identified as murky, odorous or containing trash, the even more dangerous situation is when contaminated water looks completely safe. Natural gas and oil leaks, generally from human activity, cause water pollution.

    Air pollution

    Air pollution occurs when natural or manufactured hazardous substances contaminate the air. Sometimes, air pollution can be seen, like smog; however, other times, the air might look normal.

    According to the World Health Organization, 99%of the world’s population breathes in air contamination, such as particulate matter, carbon monoxide, nitrogen dioxide or sulfur dioxide. Too much inhalation of any of these chemicals can cause serious health issues.

    Soil pollution

    Soil pollution comes from contaminated soil and can harm people or animals who touch, breathe or ingest its toxic properties. It might not seem like soil contamination would affect a large amount of society; however, contaminated soil can be a massive detriment to the entire ecosystem.

    Contaminated soil can generate pests and diseases. The animals who eat those pests or the soil are then eaten by larger animals up the food chain.

    This is not only harmful to the animals affected but to the humans who consume those animals that now contain bacteria. Contaminated soil can affect the health and food security of the entire planet.

    Global warming and climate change

    Greenhouse gases, like carbon dioxide and methane, are emitted from landfills and agricultural industries, which ultimately causes global warming.

    Climate change is caused by global warming, as temperatures shift and weather patterns change. These changes affect the entire planet’s ecosystem.

    Top sources of greenhouse gas emissions

    Six significant industries contribute to greenhouse gas emissions. Three of those six are basic industries, including utilities, agriculture and other basic industries. Look below to see where the manufacturing industry ranks compared to the other greenhouse gas emitters.

    • Utilities: 25%
    • Other basic industry: 24%
    • Commercial and residential: 13%
    • Land use and forestry: 13%
    • Agriculture: 11%

    How can basic industries reduce their carbon footprint?

    As the world learns more about climate change and prevention, basic industries can adopt strategies to do their part in cleaning up manufacturing practices.

    Waste management

    Hazardous waste is a huge contributor to pollution and must be treated and discarded properly to protect the ecosystem. Basic industries can practice strict and clean waste management strategies, including treatment, transportation and disposal, to help reduce their carbon footprint.

    Recycle, reduce, reuse

    How basic industries treat, transport and dispose of recyclable materials matters. Making sure recyclables are separated is the first step. Large manufacturing plants can also practice upcycling by reusing materials or finding alternative uses when possible.

    Mitigate greenhouse gasses

    Making the switch to clean and renewable energy is a massive step toward reducing greenhouse gas emissions. In addition to that, gas capture programs can reduce overall gas waste.

    More intelligent land use

    Before large plants build locations, they should consult ecological experts to ensure the site does not threaten or destroy nearby wildlife. Sites should also have emergency plans in place should a fire, oil spill or another accident occur.

    Current technology

    Technological advances have produced much cleaner, safer and more efficient machinery. Basic industries can implement these new technologies to reduce their carbon footprints and improve energy efficiency.

    One of the most significant switches to consider is utilizing renewable energy, like sun, wind or water.

    Promoting environmental awareness

    For industries to grow in this area, they must stay current with environmental education.

    Two ways to stay up-to-date include performing environmental impact assessments and studying ecological changes. Employee training and company policies are other ways to raise industry-wide awareness.

    Related: 5 Ways Technology Can Help Tackle Air Pollution

    Companies that care

    Each year, more and more companies in various industries pledge to reduce their carbon footprint. The United States Environmental Protection Agency (EPA) created the Green Power Partnership Fortune 500® Partners List, highlighting companies that have adopted green power resources to conduct operations.

    Below, you will find eight companies in primary industries that have made commitments and the green power resources they utilized the most.

    8 basic industries companies committed to green power

    1. Owens Corning: Solar, wind
    2. The Boeing Company: Small-hydro, solar, wind
    3. Crown Holdings, Inc./USA Beverage Division: Wind
    4. Cummins Inc.: Solar, wind
    5. Lockheed Martin: Various
    6. Textron Aviation: Wind
    7. General Dynamics Land Systems/Central Office: Wind
    8. General Dynamics Land Systems/Scranton: Various

    The bottom line: Are basic industries a good career path?

    Basic industries are widespread, have a low barrier to entry and many are essential occupations. If you are looking for a career that generally offers solid job security and plenty of opportunity for growth, basic industries can be a good career path.

    One drawback to working in basic industries is the health and environmental risk that comes with the territory. Because many sectors of basic industries involve manual labor, there can be dangerous jobs you must complete or hazardous materials you must work with.

    When choosing the right industry for you, it is essential to weigh all the details and logistics of each occupation. However, if you conclude that working in basic industries has more pros than cons, then basic industries is a good career path for you.

    For more information on job searches and other industries, visit Entrepreneur.com.

    [ad_2]

    Entrepreneur Staff

    Source link

  • What Is Gap Insurance and How Does It Work?

    What Is Gap Insurance and How Does It Work?

    [ad_1]

    If you’re like most other entrepreneurs, you’re always seeking to protect your business (and your finances).

    One way to do that is to purchase gap insurance, a type of coverage that helps pay the difference between what you owe on your car loan and what your car is worth if it’s totaled in an accident.

    Here’s everything you need to know about how gap insurance works, how much it costs, and more.

    Gap insurance defined

    Gap insurance is a supplementary type of car insurance that covers the gap between what you owe on a financed or leased vehicle and the car’s actual market value if it’s totaled in an accident.

    This type of coverage can be valuable if the amount left on the auto loan or lease becomes more significant than the actual cash value due to fluctuations in depreciation rates.

    If your vehicle is stolen and not recovered, gap insurance can also help you compensate for the difference between what you paid and its current value at the time of theft.

    Ultimately, gap insurance can be an essential tool to help you meet your financial obligations even when your regular policy doesn’t apply.

    Remember that gap coverage only applies when conventional car insurance coverage doesn’t fully service your financial needs. Knowing how gap insurance works is key to understanding whether it makes sense for your situation.

    Moreover, gap insurance is available on some health insurance plans, but it’s more commonly known as “supplemental insurance” in that setting.

    Related: 3 Things to Know About Buying Health Insurance

    What are the benefits of gap insurance?

    Gap insurance is a valuable option for many car owners needing an extra layer of financial protection. Say, for instance, that your car is totaled in an accident and is worth $3,000 less than the remaining loan balance.

    Gap insurance can help make up the difference. It can also be beneficial when trading in a vehicle with negative equity, as it can help to offset some of those costs when rolling them over into another loan or finance agreement.

    Sometimes, car insurance companies pay out in cases where there has been a significant depreciation due to age or mechanical issues. Many collectors purchase gap insurance because even a slight devaluation can significantly harm their investment.

    Gap coverage isn’t necessary for everyone, but could offer a helpful security net by giving you the peace of mind that you’re covered in the event that anything should happen to your vehicle.

    What are some other examples of gap insurance in action?

    Gap insurance is worth considering if you finance or lease a vehicle with a high-interest loan. Say that you purchase a new car that costs $30,000 and is financed over six years at 5% interest.

    This means you’d pay $34,786.65 throughout the loan, plus taxes and fees. If you totaled the vehicle shortly after purchasing it, it’s likely that the value of the vehicle has already significantly dropped just from you driving it off the lot. Gap insurance could cover (or help cover) the remaining debt you still owe on the loan if the insurance payout is less than what you still owe.

    In another example, let’s say you’re trading in a car with negative equity. The car is worth $10,000, but you owe $15,000 on the loan.

    If you were to trade it in for a new car and roll that debt into a new loan or finance agreement, gap insurance could help cover the remaining $5,000 so that you don’t have to pay out of pocket.

    Related: Auto Insurance — Entrepreneur Small Business Encyclopedia

    Gap insurance vs. comprehensive insurance

    Gap insurance and comprehensive insurance are two different types of car insurance. Remember that gap insurance covers only the gap between what your car is worth and the amount you still owe on it; it won’t pay out to fix damages.

    On the other hand, comprehensive insurance covers damage to your car typically not related to actually driving, whether it’s from a tree branch falling on it, fire, theft, or something else (depending on your policy). It won’t pay out for any damage related to a collision with another vehicle.

    Comprehensive insurance provides full coverage when combined with collision coverage. However, insurance providers typically won’t pay out more than the car’s current market value in either case.

    This is where gap insurance comes in. Gap insurance takes your coverage one step further by filling in the deficiency between what your comprehensive policy covers and your remaining loan balance. This is why gap insurance is an optional coverage that you can add to a comprehensive or collision policy.

    Related: How This All-Digital Provider Is Modernizing Car Insurance

    How much does gap insurance cost?

    The cost of gap insurance coverage depends on your unique situation. A policy typically costs between $400 and $700 when you get it from a car dealership and $20 to $40 when it’s part of an existing car insurance policy.

    But is gap insurance worth it for your used car or new vehicle? Several factors will dictate the specific price and whether you should purchase it.

    Vehicle depreciation.

    First and foremost, what’s the average depreciated value of the car? Newer vehicles depreciate at a much faster rate than older ones. New cars typically experience the highest costs for gap insurance due to their rapid depreciation.

    The specific policy.

    Factors like coverage duration and policy type can also impact the overall cost of gap insurance. Most policies last between 12 and 72 months, but some offer up to 84 months.

    Standalone policies don’t benefit from some of the discounts associated with insurance packages, meaning they’re usually more expensive. Gap insurance costs will also consider any specific deductibles and annual premiums related to the policy.

    Related: 8 Tricks for Solopreneurs To Cut the Cost of Auto Insurance

    How to get gap insurance.

    Gap insurance is an essential form of financial protection for both car owners and lessees. Fortunately, obtaining it isn’t difficult; you can typically go through your existing auto insurance provider or purchase a standalone policy through a third-party provider.

    If you’re buying a new vehicle, most car dealers offer gap insurance policies that you can customize to meet your needs. Gap insurance often provides additional benefits, such as rental car reimbursement or payment for certain charges when your vehicle is declared a total loss because of theft or accidental damage.

    Be sure to ask about these features when shopping for a gap insurance policy so that you know what extras are included in your coverage.

    No matter where you decide to buy your policy, having gap insurance on hand can help ensure that you have enough money available when unforeseen circumstances arise and you need it most.

    Should you purchase gap insurance?

    While it’s not required, gap insurance can give you peace of mind in knowing that you’ll be covered in the event of a total loss. Here are a few tips to help you decide if gap insurance is right for you.

    Consider your car’s value.

    If you’re driving a used vehicle that isn’t worth much, gap insurance may not be necessary since the amount you owe is likely to be less than the value of your vehicle.

    However, if you’re financing a brand-new car, it’s a good idea to consider gap insurance since new cars depreciate quickly and could be totaled before they’re paid off.

    Think about your deductible.

    Your auto insurance policy will likely have a deductible, which you’ll need to pay out-of-pocket before your coverage kicks in. Gap insurance may not help much if you have a high deductible because you would need to cover a significant portion of the loss yourself.

    If your deductible is low, gap insurance could save you from paying a large sum of money to replace your totaled vehicle.

    Determine if you qualify.

    Only some qualify for gap insurance. Often, you must have collision insurance and comprehensive coverage on your vehicle to qualify, and your lender must require it. Check with your insurer or lender to find out if you are eligible.

    Weigh the cost

    Like any type of insurance, there’s a cost associated with gap insurance. The price usually depends on factors like the make and model of your car and how much coverage you want.

    Ultimately, the best way to determine your ideal gap insurance costs for a particular vehicle is to compare rates from various auto insurance companies. Doing so allows you to find the price point that best fits your budget and keep your car secure in case of an accident or other damage down the road.

    Related: Find the Best Car Insurance Rates in Your Area with ‘The Zebra’

    What can gap insurance do for you?

    Gap insurance can be a lifesaver when you experience an unexpected car accident. If your vehicle is totaled and the cost of repairs is more than the value of your car, gap insurance will cover the difference.

    It’s essential to remember that not all policies offer gap coverage, so be sure to ask your agent about your eligibility.

    The average cost for gap insurance is just $20 to $40 per year when added to an auto insurance policy, making it an affordable option considering the potential payout.

    You can get gap insurance from most major insurers or through organizations like AAA. If you purchase a gap insurance plan, research to find one that meets your needs.

    For more information on insurance and business trends, visit Entrepreneur.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Cyclical Unemployment: Causes, Examples & More

    Cyclical Unemployment: Causes, Examples & More

    [ad_1]

    Unemployment has many types, causes, and specific features. While the pandemic and its aftermath created considerable economic shifts, unemployment has always ebbed and flowed for several reasons.

    With the word “recession” in the air, you may wonder where cyclical unemployment falls on the spectrum and what it entails.

    Read on for more about:

    • Definition and cyclical unemployment examples
    • Causes of cyclical unemployment
    • Ways to prevent cyclical unemployment

    What is cyclical unemployment?

    Cyclical unemployment is the percentage of people without work during an economic cycle. Economic activity typically follows the fluctuations of the gross domestic product (GDP). When the GDP experiences a significant fall, layoffs and sometimes even a recession can follow.

    As economists study and predict trends toward cyclical unemployment, the government may employ its policymakers to create new fiscal policy and monetary policies to promote a more robust labor force and overall economic upswing.

    The stages of cyclical unemployment

    Because cyclical unemployment fluctuates and follows a pattern, it looks relatively similar each time it occurs. Read below for the stages of cyclical unemployment.

    1. A recession begins

    Recessions can be caused by many things — some from a burst in the economy, like the housing market crash of the Great Recession, and others are a slower burn of the business cycle.

    Either way, consumer demand is down, which makes jobs more scarce because there is a higher amount of people in the workforce than there is demand for goods and services.

    2. Layoffs occur

    When demand is down, there becomes less profit and an excess of workers. This results in companies having to lay off employees. This can result in more people collecting unemployment benefits, which puts an even more significant strain on the economy.

    3. The recession progresses

    As the economic downturn continues, cyclical unemployment rates continue to experience fluctuations. Throughout this time, economists analyze macroeconomics and microeconomics and their aggregate demand variables to predict trends and help the government create policies that may fuel the economy.

    Macroeconomics examines big-picture factors like:

    • National markets
    • Employment
    • Gross domestic product
    • Inflation

    Microeconomics examines little-picture factors like:

    • Individual markets
    • Supply and demand
    • Goods and services

    4. An economic upturn begins

    The upside to a recession is that the economy operates on a cycle, just like cyclical unemployment. This means that the economic contraction might eventually end, the economy can enter an upturn, and the quest for full employment may continue.

    During this period, the business cycle begins to self-correct, consumer demand can increase, or the Federal Reserve may provide incentives to boost the economy.

    5. Employees return to work

    In the final stage of the cycle, people begin to return to the workforce. Ideally, this can mark the beginning of lowered unemployment rates. However, other types of long-term unemployment can happen due to a changing economy and its after-effects.

    Cyclical unemployment vs. other types of unemployment

    While cyclical unemployment is a temporary state based on the economy, other types of unemployment have different causes and characteristics. Look at a few other types of unemployment below that can happen in addition to cyclical unemployment.

    Structural unemployment

    Structural unemployment occurs when the economy changes and the job market mismatches workers’ skills. This is generally caused by government policy changes or technological advances that replace human skills.

    Frictional unemployment

    Frictional unemployment happens when an employee leaves a position by choice and looks for their next venture.

    This can also refer to the gap recent graduates may experience before finding their first job. Because workers are financially stable enough to support themselves during this time of purposeful unemployment, it often indicates a healthy economy.

    Natural unemployment

    Natural unemployment is an indicator that inflation is on its way. Rises in the natural unemployment rate often result from a combination of structural and frictional unemployment, which may increase the cost of goods and services.

    Related: Everything We Know About Unemployment Benefits During the Coronavirus Pandemic

    10 examples of cyclical unemployment throughout history

    Cyclical unemployment is directly correlated with the cycles of an economic recession. Tracking the recessions throughout history can indicate the cyclical unemployment of the U.S. economy. See below for examples of each recession and the corresponding unemployment cycles since World War II.

    1. End of World War II: February 1945 to October 1945

    The war resulted in substantial economic growth for the United States, with a high demand for jobs to support the needs of the military. However, when the war ended and government spending dried up, the labor market collapsed, and the economy followed.

    Fortunately, this recession lasted less than a year as the manufacturing industry was able to adapt and create non-war related new jobs, especially for construction workers.

    2. Post-war consumer spending slows: November 1948 to October 1949

    During the war, there were government-mandated rations and restrictions. But when those were lifted, American citizens went wild with spending. However, after the spending craze slowed and soldiers struggled to find their new place in the workforce, the economy struggled to balance.

    4. Asian flu pandemic: August 1957 to April 1958

    In 1957, a pandemic in Hong Kong spread to India, Europe, and the United States. It killed over one million people and crushed U.S. exports by more than $4 billion, triggering another recession. During this time, unemployment surged to 6.2 percent.

    Related: What Does High Unemployment Have to Do with Your Investments?

    5. Foreign automobiles and recession: April 1960 to February 1961

    In the late 1950s, Americans adopted a growing interest in foreign cars, which was incredibly detrimental to the U.S. auto industry. This new fascination, combined with rising interest rates designated by the Federal Reserve, caused a recession.

    Related: 72% of Economists Predict a Recession Next Year — If We’re Not Already in One

    6. The oil embargo: November 1973 to March 1975

    In 1973 the Organization of Petroleum Exporting Countries imposed an oil embargo that caused gas prices to soar. This kicked off a spending cut by Americans to save money. This, combined with inflation, wage freezes, and layoffs, caused a stagnant economy and unemployment to rise to 8.8 percent.

    7. The double dip recession: July 1981 to November 1982

    There was a very short-term recession due to an energy crisis just before 1980, but this was much more detrimental. This recession was caused by the inconsistent and low levels of oil exports, which caused prices to surge.

    During this time, interest rates were not raised enough to slow down the rate of inflation until the Federal Reserve hiked rates to 21.5 percent. The spike created a ripple effect and drove statistics to a labor force with over 10 percent unemployed workers.

    8. 9/11 and the dot com crash: March 2001 to November 2001

    In the late 1990s, the Internet burst onto the scene, and many investors put everything into their new dot com ventures. Because of this, unestablished businesses were inflated to unsustainable levels, and the bubble burst in 2001.

    The dot com crash, combined with 9/11 and several corporate scandals, caused the first recession of the new millennium.

    9. The Great Recession: December 2007 to June 2009

    The Great Recession is the biggest financial collapse since the Great Depression. The heavy investments caused financial institutions to put into the mortgage market, specifically mortgage-backed securities.

    However, homeowners lost their homes, and investment banks collapsed when people defaulted on their loans. During this time, the stock market crashed, people lost their retirement funds, and 10 percent of Americans were unemployed people. The government had to pump $1.5 trillion worth of stimulus money into the economy to correct this mess.

    10. The COVID-19 recession: February 2020 to April 2020

    When the COVID-19 pandemic hit, the world faced a financial crisis. With lockdowns, job losses, and a massive decline in consumer activity, the economy lost 20.5 million jobs, and unemployment surged to 14.7 percent.

    The government quickly stepped in with stimulus money, approving $6 trillion in relief.

    Related: We Might Be Headed Toward a Recession, But a ‘Bigger Catastrophe’ Could Be on The Horizon

    What cyclical unemployment means for you

    Cyclical unemployment is the percentage of people without work during an economic cycle that generally predicts a recession. Throughout history, there have been multiple recessions that have caused unemployment rates to fluctuate.

    When cyclical unemployment happens, the government often uses a stimulus package to help boost the economy back into a more positive cycle.

    Now that you’ve seen causes and trends throughout history, you might be able to identify signs of cyclical unemployment in the present-day economy.

    For the most up-to-date information on the economy, finance, and the state of the workforce, visit Entrepreneur today.

    [ad_2]

    Entrepreneur Staff

    Source link

  • What Is Globalization in Business? Everything You Need To Know.

    What Is Globalization in Business? Everything You Need To Know.

    [ad_1]

    Globalization is the expansion of businesses all over the world due to advances in technology and transportation.

    Globalization includes an increase in the flow of:

    • Goods and services
    • Capital
    • People
    • International ideas

    While trade is no new concept, businesses can become a presence in more areas all over the globe than ever before. But how did this happen? And what business industries experience globalization? Keep reading to find out everything you need to know about globalization.

    Related: Has Globalization Benefited Our Entrepreneurs?

    History of globalization

    Globalization’s rich history began long before giant conglomerates such as Amazon and Google existed. There is a timeline of discovery, protectionism, liberalization, financial crisis, and economic development that can all be traced back to the BC era as the phenomenon of international trade developed.

    The Silk Road

    The Silk Road was the cultural phenomenon that made luxury goods accessible across countries in the first century BC through the fourteenth century AD. Silk was exported from China to Rome, meaning that many other countries were involved along the route.

    However, with an abundance of wars and conquerings and fallen empires changing accessibility of routes, the Silk Road could no longer sustain the turmoil or trade barriers, and ultimately collapsed despite its export efforts.

    The spice routes

    The spice routes flourished because they were tied to the spread of the Islamic religion. The prophet Mohammed was not only the founder of Islam but also a merchant who traded his spices as he preached across countries.

    This spread lasted from the seventh to the 15th century, beginning in the Arabian heartland and expanding to places like Spain, India, Indonesia, and Europe.

    The age of discovery

    From the 15th to the 18th century, explorers ventured out to new lands and began integrating resources of those new lands into their economies through trade.

    Countries began to establish global trade supply chains from the new land to their country to other countries, thus expanding the world’s economy.

    The first wave

    At the turn of the 19th century, the most advanced form of globalization began. The British Empire continued to expand its range, and the Industrial Revolution was in full swing.

    With technological advancement, the U.K. could manufacture goods in demand all over new parts of the world, including textiles and iron. Globalization grew exponentially over the next century and continued rapid expansion until the world wars.

    The World Wars

    World War I and World War II brought globalization to a halt. While war boosted the economy, it destroyed the cycle of a trade. By the end of the second world war, the gross domestic product fell to five percent, the lowest percentage in one hundred years.

    The second wave

    The end of World War II brought more peace and more trade. During the second wave of the Industrial Revolution, cars and planes were manufactured more than ever.

    Because of the increased access to transportation and the new free trade agreement, economic globalization boomed bigger than ever.

    Related: How Close Are We To a Recession? International Monetary Fund Says Economy Faces ‘Biggest Test’ Since WWII.

    The third wave

    The third wave of globalization occurred on the heels of the Soviet Union collapse and the creation of the World Trade Organization (WTO).

    The Internet began to take shape, transportation and communication technology became more manageable and accessible, and globalization seemed to make the world much smaller.

    The tech age

    America and China lead globalization in the cyber age. Ecommerce has grown significantly year after year and shows no sign of slowing down.

    As operations become more extensive and streamlined, manufacturing happens faster and faster. Deliveries can be made overnight, and trade seems to have no boundaries. Keep an eye out for how economists predict the impact of globalization in the coming years.

    Related: 2 Years Since Trade Deal with China, Tariffs Aren’t Working for American Businesses

    Types of global businesses

    An international business operates by selling or producing goods or services in more than one country. There are a few different types of global business, each with a unique form of operation.

    Transnational corporations

    This type of international corporation has offices in multiple countries, and each location is responsible for various organization departments.

    This means that one location might be focused on marketing, another on research, and another on distribution. Each site operates independently on its specific service, working towards one company goal.

    Multinational corporations

    This type of international corporation also has offices in multiple countries; however, each location has every department in every location — like a smaller version of its headquarters.

    Related: 5 Tips for Building a Successful Multicultural Company

    For example, Nike’s headquarters are in Beaverton, Oregon, with departments ranging from marketing to finance to market analysis. But Nike also has other full-service corporate locations in the Netherlands, Mexico City, and Los Angeles.

    Related: Brexit Is Just One More Problem European Entrepreneurs Have to Deal With

    Considerations global businesses must make

    Whenever a company moves into a new environment, there are cultural nuances and factors of national economies it must consider.

    Politics, policies, laws

    A business that operates over national lines must be aware of the legal requirements of the country it moves into. As the laws and trade policies in the country change, the company must stay aware and abide by them to remain compliant.

    Two key areas to focus on are human rights and labor laws, which vary from country to country. In addition, the business must keep up with current events and foreign affairs to keep the peace with its business operations and the country it is in.

    Related: Compliance with European Union Law by Online Businesses

    Environmental affairs

    When a company decides to move or start an office in an international location, it must research the environmental affairs in the new country.

    Countries worldwide have various operation requirements to preserve their environment, so being a proponent of sustainability is key to respecting the new country and climate change.

    Economics

    A business that moves into another country needs to be aware of the economic activity of its new territory. The company should research and watch international economic trends before deciding to relocate.

    Economic data to watch for includes:

    • Currency exchange rate
    • Degree of income inequality
    • Rate of inflation
    • Rate of unemployment
    • Gross domestic product (GDP)

    Cultural differences

    Other cultures have many differences and formalities that must be followed to keep positive working relationships with their citizens.

    For example, it might be customary in a country to exchange pleasantries before jumping into a business conversation. In addition to that, the business should have employees that speak the language, or translators readily available to show respect for the culture.

    Pros and cons of business globalization

    When making business decisions, weighing the pros and cons to make the most informed verdict possible is essential. Take a look at the pros and cons of business globalization to form your opinion.

    Pros of business globalization:

    The pros for a business and its economy include the following:

    • Increased economic growth: Technological advances, international exchange of goods, and other valuable information can improve a country’s income, living standards, and overall financial health.
    • More affordable production: A broader price range is available when more goods are available, making products more accessible to consumers.
    • Promotes international cooperation: Countries that trade goods and services form relationships and rely on each other for business ventures.
    • Promotes job opportunity: When businesses move into new countries, it means new jobs. Often companies move into countries where they can find cheaper labor, which can help the poorer country’s workforce strengthen.

    Cons of business globalization:

    The negative effects of globalization on a business and its economy include:

      • Inequality in economic growth and labor exploitation: The old adage “the rich get richer and the poor stay poor” applies to business globalization, as rich countries and multinational corporations often move into developing countries for cheap labor and lax workplace regulations, reaping the profits while paying incredibly low wages and offering dangerous workplace conditions.
    • A diminished number of local businesses: Businesses that can move into other countries likely have vast financial power, resources, and a well-known name attached. This means that when these companies move in, they fiercely compete for local businesses and often put smaller establishments in the industry out of business.
    • Increased potential for global recession: When countries start to form partnerships, it can cause interdependence on certain goods and services. If one country’s economy or labor force begins to decline, it can negatively affect the global market.
    • Potential for job displacement: When a business decides to move its production to another country, every worker who had a job at that location is suddenly out of work. If the company is large enough, it can negatively affect the country’s whole economy.

    Related: The United Nations Gave Elon Musk a $6.6 Billion Plan for Him to Personally Solve World Hunger. Will He Bite?

    What’s next for globalization in business?

    Globalization is the expansion of businesses all over the world due to advances in technology and transportation.

    Throughout centuries, the global supply chain has increased astronomically. As the world becomes more globalized, there is no telling where financial markets will end up.

    For more information on the global economy, visit Entrepreneur today.

    [ad_2]

    Entrepreneur Staff

    Source link

  • Types of Pollution and How to Reduce Them

    Types of Pollution and How to Reduce Them

    [ad_1]

    Pollution is a public health concern, and is considered to be any harmful material introduced to the environment. Many materials can cause such harm and are referred to as pollutants.

    Pollutants are pervasive, as much of what it takes for humans to live their daily lives contributes harmful materials to the environment. Some pollutants are natural but still cause harm to the world’s air, land, and water.

    Pollutants can be things like:

    • Volcanic ash
    • Trash and sewage
    • Factory runoffs
    • Car exhaust
    • Burning coal for electricity
    • Pesticides

    Environmental pollution is a problem all over the world. While it’s much more prevalent in urban areas, traces of pollutants can be found in the most natural of places due to air and water currents that can spread harmful materials across the globe.

    The frightening fact is that there is more than one type of pollution. The comforting part is that there are steps to slow and prevent pollution. Keep reading to find out more.

    Related: How to Get Funding and Grants for Green Startups

    What types of pollution are there?

    Air pollution

    Air pollution is any hazardous substance, natural or manufactured, that exists in the air. Air pollution can be invisible, but it can often be seen.

    If you’ve ever been to Los Angeles and driven the 405, gone on a hike, or sat on the beach and seen a hazy brown layer hovering above the city or the ocean, that is visible air pollution.

    This haze, often called smog, is not just a problem in Los Angeles; it’s a worldwide issue.

    Natural air pollution can come from:

    • Wildfire smoke
    • Volcanic eruption ash and gas
    • Methane gas from soil decomposition

    Manufactured air pollution can come from:

    • Vehicle emissions
    • Homes heated by fuel oils and natural gas
    • Manufacturing and power generation byproducts, especially coal-fueled
    • Chemical production fumes

    The chemicals that are most concerning as sources of air pollution are:

    • Particulate matter
    • Carbon monoxide
    • Ozone
    • Nitrogen dioxide
    • Sulfur dioxide

    The World Health Organization (WHO) reports that 99 percent of the world’s population breathes air above the recommended contamination limits. People in metropolitan areas are at higher risk; however, everyone is affected.

    One of the most problematic parts of air pollution is that the particles, themselves, are too small to be seen and can cause serious health problems upon inhalation.

    Health studies have found that air pollution is directly linked to the following:

    • Breast cancer
    • Non-Hodgkin’s lymphoma
    • Lung cancer
    • Cardiovascular diseases
    • Strokes
    • Pregnancy risks
    • Respiratory diseases
    • Dementia
    • Asthma

    Data suggests that air pollution is responsible for one in six deaths worldwide. That number continues to rise, and most deaths are considered premature.

    Related: Is Air Pollution Making You Dumb?

    Water pollution

    Polluted water is water that manufactured or natural chemicals have contaminated. Similar to air pollution, some water pollution can be visible, and some cannot.

    Some water pollution is easy to see, as the water is murky, contains trash, or gives off a foul odor. Other polluted water might look completely safe.

    Natural water pollution happens through natural gas and oil leaks into a water source. For example, Coal Oil Point Seep in California is a petroleum seep that leaks oil into the ocean — so much so that it creates tar balls that wash up onto the beach or decompose in the ocean.

    While nature contributes to water pollution, human activities have a much bigger hand in the problem.

    Manufactured water pollution includes:

    • Factory runoffs that create cyanobacteria
    • Mining and drilling that creates sulfuric acid
    • Oil spills that kill millions of animals
    • Radioactive pollution and solid waste
    • Buried chemical waste that causes cancer and birth defects
    • Untreated sewage that contaminates water and reduces fishery
    • Fertilizer with phosphorus and nitrogen causes cyanobacteria
    • Power plants that heat water and cause thermal pollution, which can ruin local river ecosystems
    • Plastic pollution, like bags that suffocate aquatic life
    • Toxic chemicals that contaminatemarine life, which humans then consume

    In addition to anthropogenic water pollution, acid rain can result from air pollution and water pollution. Acid rain is not just a term that sounds like the plot of an end-of-the-world sci-fi movie; it is an actual chemical process.

    When nitrogen oxide mixes in the air with sulfur dioxide and those two chemicals come into contact with a body of water, they combine and evolve into a type of acid. This is one of the ways that pollution is spread all over the world.

    When the chemicals fall as acid rain, wind can carry the pollutants worldwide. This is why some chemicals can be found in areas that should have no traces of them.

    Related: PVC Plastics Are Polluting Our Planet. This Startup Has a Solution.

    Noise pollution

    Noise might not be the environmental crisis you think of when considering pollution. And while it might not contaminate the air or water, that does not mean it doesn’t negatively affect society.

    Noise pollution is considered to be persistent, disturbing, or unwanted noise. It’s considered pollution because it is a phenomenon that affects the quality of life of those in the environment.

    If you live in a metropolitan area, you are likely more accustomed to noise pollution than those in rural areas. Like other types of pollution, noise pollution is connected to health issues.

    Noise pollution sources include:

    • Emission products
    • Cars, trucks, motorcycles, trains, transport equipment
    • Airplanes and helicopters
    • Construction and construction equipment

    Studies show that issues related to noise pollution include:

    • Stress-related illnesses
    • High blood pressure
    • Speech interference
    • Hearing loss
    • Disruption of sleep
    • Loss of productivity

    Related: How AI Is Poised to Help Humanity

    Light pollution

    Light pollution, also referred to as photo pollution, is an excessive amount of light that creates a glow in the night sky. Light pollution is another type of pollution that people might not consider because it is less widely spoken about.

    However, it can affect humans and animals. Like noise pollution, light pollution is much more common in city environments.

    Light pollution is caused by:

    • Car lights
    • Streetlamps
    • Offices, buildings, and factories
    • Outdoor advertising, like billboards

    While some light is necessary for safety, it can negatively affect the circadian rhythm of humans and animals. Interrupting the circadian rhythm causes a decrease in melatonin production, which is directly connected to sleep quality.

    Light pollution and its adverse effects on sleep are connected to:

    • Sleep deprivation
    • Fatigue
    • Headaches
    • Stress
    • Anxiety

    Because circadian rhythm is a characteristic all organisms possess, light pollution affects animals too.

    Animals base their migration patterns on seasons and the amount of light that guides them. Animals that live or migrate through areas with excessive light cannot see enough of the starlight or moonlight and can end up confused in their migration patterns.

    When animals fall far enough from the migration patterns that they are completely lost, they often die — ultimately affecting the circle of life.

    Related: The No-Excuse Approach to Sleep and Work Performance for Entrepreneurs

    Soil pollution

    Soil pollution is a type of land pollution involving contaminated soil that can harm those who touch it, ingest it, or breathe in its toxic fumes.

    Soil pollution can be caused by the following:

    • Chemicals from byproducts of industrial hazardous waste
    • Waste from homes, livestock, or municipal areas
    • Agrochemicals
    • Petroleum-derived products
    • Oil spills
    • Leaching from landfills
    • Fertilizers and pesticides
    • Irrigation with untreated wastewater
    • Land application of sewage sludge

    Soil is an integral part of the ecosystem, making its contamination dangerous from the ground up. Polluted soil can create new species of pests and diseases that can throw the balance of the current ecosystem out of hand. Animals who experience toxicity from contaminated soil are then eaten by other animals higher in the food chain, and the cycle continues.

    Polluted soil can affect humans, whether they eat plants or animals, because antimicrobial-resistant bacteria and genes can spread, which affects immune systems and the ability to fight off new pathogens.

    In addition to health issues, soil pollution significantly impacts food security. With so many people depending on crops for livelihood, crop depletion due to decreasing quality in soil has affected over 40 percent of the world’s population.

    Related: It’s Time to Put Our Soils First. Long-Term Global Food Production Depends on It.

    How to combat pollution

    Some of the facts about pollution seem bleak. However, while much destruction has been caused to this planet, there are steps to take to slow pollution.

    Ways to decrease air pollution

    There are several different ways, no matter your lifestyle, to do your part in increasing air quality. Look at the comprehensive list below to reduce air pollution through various scenarios.

    Day-to-day strategies include:

    • Buy products with the Energy Star label
    • Utilize carpools, take public transportation, bike, or walk
    • Follow gasoline refueling instructions, do not spill fuel, and always make sure your gas cap is tightened
    • Keep all vehicle engines properly tuned, and tires inflated
    • Use environmentally safe cleaning products, paints, and other products
    • Practice composting and mulching
    • Light gas logs instead of wood logs

    There are days when high ozone levels or high particle levels are expected throughout the year. Many people may feel health effects like itchy eyes, throat, and nose when this happens — somewhat like allergies.

    When high ozone days or particle days are predicted, it is essential to reduce your carbon footprint as much as possible.

    On high ozone level days, you can:

    • Choose a cleaner commute using the Google Maps feature or using rideshare options like public transportation, carpooling, walking, or bike riding
    • Conserve electricity by turning off the air conditioning or setting it to above 78 degrees
    • Complete any gasoline-powered equipment activities or chores in the evening or on another day
    • Avoid lighting a fireplace or using a wood stove
    • Avoid burning materials like leaves, grass, or trash

    Related: 5 Ways Technology Can Help Tackle Air Pollution

    Ways to decrease water pollution

    While individuals might not have any control over how factories and plants care for their water, people can do their part to promote clean water in everyday life.

    10 ways to decrease daily water pollution include:

    1. Install a toilet dam and low-flow toilet in your bathroom
    2. Regularly check your toilet for silent leaks
    3. Use a water-efficient showerhead, take shorter showers, draw less bathwater, and try not to run the water while brushing your teeth
    4. Compost scraps instead of running garbage disposal
    5. Keep a gallon of drinking water in the refrigerator instead of using cold tap water from the running sink
    6. Reduce the use of washing machines and dryers by running full loads, using cold water, and hang-drying clothes
    7. Use drought-resistant plants and grasses for landscaping and minimize the number of times per week for lawn watering
    8. Use a broom instead of a hose to clean pavement
    9. Wash your car less and use a car wash that cleans and recycles water instead of washing your car yourself
    10. Install porous pavement, like gravel, so rainwater can recharge groundwater supplies instead of running off a concrete driveway

    Ways to prevent noise and light pollution

    Again, noise pollution is something individuals might not have excessive control over, as most noise and light pollution is caused by large vehicles, planes, industrial activity, and commercial buildings.

    However, you can do your part to prevent noise pollution by being a kind neighbor (especially during nighttime) and ensuring your car muffler is functioning.

    Related: After Work Transitions When Working From Home

    Ways to prevent soil pollution

    The World Health Organization, United Nations, and other organizations are working to create prevention strategies for soil pollution to decrease health risks and increase food security.

    Soil pollution prevention strategies include:

    • Government regulations on soil pollution
    • Limiting contamination accumulation
    • Promoting sustainable practices of soil management
    • Issuing calls to action to restore world ecosystems

    What can you do to reduce pollution?

    The topic of global warming has been top-of-mind for many people and government organizations for years.

    Scientists are learning more about fossil fuels, different forms of pollution, and the effects pollution has on the environment and human health. World governments are working to communicate this information to their citizens.

    Pollution and its negative contributions to climate change can be seen in the everyday lives of individuals everywhere, from smog in the air to rainforest depletion to the melting of the polar ice caps.

    Global citizens must continue soaking in education and taking small steps to do their part in reducing personal use and activities of materials that can result in harm to the environment.

    These small steps might take some time to make into habits, but they can prove worth it in the long run.

    For more information on pollution, climate change, and what you can do to help, visit Entrepreneur today.

    [ad_2]

    Entrepreneur Staff

    Source link

  • ACH Payments: What Are They and How Do They Work?

    ACH Payments: What Are They and How Do They Work?

    [ad_1]

    If you’ve been looking into new ways to make electronic payments, you’ve likely encountered ACH payments.

    There are several different methods for electronic money transfers, but not all methods are created equally in terms of security, fees and convenience.

    For more information on ACH payments and how they work, keep reading for everything you need.

    Related: There is a New “Conventional Wisdom” Needed in Personal Finance

    What are ACH payments?

    ACH is the acronym for Automated Clearing House. An ACH payment is a store-and-forward system that electronically moves funds. ACH is a type of authorization that permits the lender to retrieve money from your credit card account, bank or credit union through an electronic process.

    For a payment to be authorized by the ACH, it must be a part of the Automated Clearing House Network. A financial institution member of the ACH holds credibility because it has been vetted thoroughly.

    ACH is a cost-effective way to move funds because it eliminates the middleman process of writing paper checks or completing a wire transfer.

    Millions of people use ACH payments every year, including:

    • Businesses
    • Individuals
    • Federal government
    • State government
    • Local government

    If you’ve ever received a direct depositpaycheck, made an online bill payment, or signed up for autopay, you’ve participated in an ACH transaction. Although you might not have heard the name before, ACH payments are one of U.S. citizens’ most common payment methods.

    Last year 29.1 billion payments adding up to $72.6 trillion, were reported by the National Automated Clearing House Association (NACHA). Those numbers are an 8.7%increase from 2020, and this year’s projections are higher than ever.

    Related: 25 Payment Tools for Small Businesses, Freelancers and Startups

    How ACH payments work: a step-by-step guide

    The ACH process is a system of electronic fund transfers from one entity to another. There are several involved parties, even though most work behind the scenes to complete the seamless transfer.

    1. Originator/client

    This entity, such as a consumer or business, has agreed to participate in transactions through the payment system. Originators must consent to the transaction before it can occur.

    2. Originating depository financial institution (ODFI)

    Once an originator consents to the transaction, their financial institution will receive their payment instructions and send that information to the ACH Operator. This includes payment type, amount and payment schedule.

    3. ACH operator

    The ACH operator is a central clearing facility that receives payment information and instructions from the ODFI.

    The Federal Reserve Bank and the Automated Clearing House are both ACH Operators. The ACH Operator performs the necessary settlement functions before the transaction can proceed.

    4. Receiving depository financial institution (RDFI)

    Once the ACH Operator has cleared the transaction, it is forwarded to the RDFI, the receiving financial institution. The RDFI’s job is to post the transaction into the receiver’s account.

    5. Receiver

    The receiver is the entity, such as a corporation or entity, which has authorized the originator to complete the ACH deposit into the receiver’s account.

    Third-party service provider

    While not always a part of the process, a Third Party Service Provider is an entity that carries out ACH Network duties for originators, ODFIs or RDFIs.

    Third-Party Service providers perform functions like:

    • Creating ACH files for an originator or ODFI
    • Acting as sending or receiving point for an ODFI or RDFI

    Third-party sender

    As a subsection of a third-party service provider, this entity transmits ACH deposits for originators with no ODFI contractual agreement.

    Types of ACH payments

    ACH credits

    ACH credits happen when the originator passes funds into the receiver’s account, the receiver’s account is then credited and the originator’s account is debited.

    This type of entry is considered an offset or settlement. The most common type of ACH credit is a payroll direct deposit.

    ACH debits

    ACH debits occur when the funds are pulled from the receiver’s account with the RDFI, the receiver’s account is debited, and the originator’s account is credited.

    This type of entry is also considered an offset or settlement. Common types of ACH debit are insurance premium payments and utility bills.

    ACH entries

    Depending on the receiver’s account type, an ACH entry is a consumer or non-consumer payment. It is up to the originator to determine the type of account, consumer or business, that they have secured for authorization.

    Account validation

    Before any entity can participate in ACH transactions, they must complete account authorization.

    Standard account authorization methods are:

    • Prenotifications with routing number and account number (a non-monetary entry that comes to the checking account or savings account before the first actual entry)
    • Social security
    • Proof of ownership
    • Proof of address

    Related: How to Maximize Your Social Security

    Types of ACH transactions

    When it comes to ACH transactions, there are both corporate, and consumer transaction types:

    • Corporate transactions happen between non-consumer entities, like businesses and corporations.
    • Consumer transitionsare between originators and individual consumers. Take a look below for more information on each.

    Corporate credit or debit (CCD)

    A CCD entry is either a single-entry, recurring ACH credit, or recurring ACH debit from a corporate account. It can hold one single addenda record.

    CCDs have many different uses for originators, which include:

    • Paying vendors
    • Concentrating funds from outlying accounts (cash concentration)
    • Funding payroll
    • Funding petty cash
    • Funding other disbursement accounts

    Related: How to Instantly Improve Your Small Business Payroll Management

    Corporate trade exchange (CTX)

    A CTX entry is a single-entry, recurring ACH credit or ACH debit. However, a CTX coming from a corporate account can support up to 9,999 addenda records. Corporate Trade Exchanges are generally used in partner trading correspondence.

    Prearranged payment and deposit (PPD)

    A PPD is a single-entry, recurring ACH credit or recurring ACH debit. These transactions happen between an originator and a consumer to make or collect an authorized payment.

    Internet-initiated/mobile entries (WEB)

    A WEB is a single-entry or recurring ACH debit. These transactions are digital, occurring when the consumer authorizes a transfer of funds with their online account or mobile device.

    Telephone-initiated transactions (TEL)

    A TEL is a single-entry or recurring ACH debit. These transactions are based on telephone authorization given by the consumer.

    Pros and cons of ACH payments

    Before you implement ACH payments into your business or opt-in for them in your personal life, make sure you have a complete picture of what they entail with their pros and cons.

    Pros of ACH payments:

    Benefits of ACH payments may include:

    • Convenience:ACH debit allows automatic recurring payments, which cuts paperwork and manual payments each pay period.
    • Accuracy: Using electronic automation reduces the margin for human error.
    • Cost: ACH processing fees are lower than credit card, debit card and wire transfer fees.
    • Security: The nature of ACH regulations and ACH payment confidentiality makes ACH transfers between accounts more secure than credit card payments and wire transfers.

    Related: Credit Card Industry Terms Defined

    Cons of ACH payments

    Drawbacks of ACH payments may include:

    • U.S. exclusive: In this regard, wire transfers have the upper hand, as ACH payments cannot be made to or from international bank accounts.
    • Payment processing times: Because ACH payments occur in batches and go through a clearinghouse, ACH credit transactions can take up to three business days to process. However, debit transactions must be processed the next day, and other transactions are eligible for same-day processing.
    • Transaction limits: Different banks have different guidelines for transaction amounts, but many have limits — per transaction, daily, weekly or monthly.
    • Potential for payroll fraud: While automation saves time and reduces human error, it does mean that a physical person is not checking payroll amount each month. This allows room for employees to wrongfully inflate their hours or create fraudulent accounts while going unnoticed.

    Related: I Know How To Easily Steal Money From Your Company’s Bank Account

    Should you implement ACH payments?

    Automated Clearing House payments are secure electronic payments authorized by the National Automated Clearing House Association. The ACH is a payment processor that can approve, vet, push, and pull transactions from business to business and business to individual.

    Implementing an ACH system can be a prudent payment method option to cut the hassle and boost the use of automated bank transfers, as long as you are not looking for a same-day processing option.

    Are you interested in additional research? Visit Entrepreneur.com for information on financial planning, business tips and more.

    [ad_2]

    Entrepreneur Staff

    Source link