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Ever wondered who your neighbors were? Looking for a lost pet? Maybe you just want to find a babysitter for Saturday night. While asking for recommendations on Facebook is one way to handle that, you may not live near most of your friends. That’s where Nextdoor comes in: this handy app not only helps you connect with your neighbors on a community level, but lets you reach out to people who live near your home.

Nextdoor App? What’s That?

Nextdoor was created in 2010 as a social network for neighbors. The idea was to connect neighbors and neighborhoods, thus drawing people together, as resources for each other.

How Do I Get On Nextdoor?

In order to register with Nextdoor, you have to provide your real name and verify your home address. Verification methods can include a credit card, or confirming a code that’s either mailed or phone to the new user.

Once verified, you can post messages to neighbors in your community, as well as nearby apartment communities. You can also reply to other messages. Can’t find anyone you know on the app? It even provides you the ability to send postcards to non-registered neighbors to get them on board.

What Can I Use Nextdoor For?

  • Lost Pets: Let’s face it — pets get out and it’s tough to track them down. Nextdoor can help you to alert your neighbors to keep an eye out.
  • Items to Sell: That horrible chest of drawers you’ve been dying to get rid of may just be someone else’s treasure. Try advertising your unwanted stuff on Nextdoor and make some extra cash.
  • Recommendations: Need a cleaner? How about a babysitter for that date on Friday night? Your neighbors in the know can help you find a reliable source.
  • Questions: Unsure and new to the area? Ask your neighbors to let you know the best commute route to downtown, or about that free shuttle bus nobody told you about.
  • Crimewatch: Many police departments are posting local crime tips on Nextdoor. Neighbors also tend to report suspicious activity. Take a look to be aware of what’s going on.

If you’re a bit too shy to go and introduce yourself to your neighbors, the Nextdoor app can be a great way to engage with your community. Try planning a pool party or potluck, or simply as where the best dry cleaner in the area is. This handy app can make sure you stay connected.

Are you friendly with your neighbors or are you just on a “nodding acquaintance” basis? Is getting to know your neighbors worthwhile? Let us know on social today!

Apache is functioning normally

Today we bring back the ever-popular reader case study series with an interesting twist.

First of all, our subject is a new reader, with sizable financial baggage from earlier decades, but plenty of potential for improvement. Equally notable is the fact that I have enlisted some outside help for the research and analysis.

During a recent trip, I ran into another blogger named Jacob Wade who, quite amazingly, actually likes  budgets. In fact, he feels so strongly about it that he named his financial blog iheartbudgets.net. We got to talking, and he enthused about how much he likes analyzing and solving detailed financial problems for other people.

“Oh boy, do I have a job for you”, I said. “I get emails from people with detailed financial problems every day, and although I still read every one, it pains me not to have time to respond to many of them.”

Could Jacob’s enthusiasm be used to all of our advantage? I sent him a sample case study to test out his chops. I was pleasantly stunned by the results – he did a great job, and offers advice that even I would consider hard-hitting. Let’s dig into our dear reader’s story, then you’ll see the analysis with some joint recommendations by Jacob and myself.

[contents edited for length]

Dear Mr. Money Mustache,

I’m a recent reader of your blog, courtesy of your interview with Jesse at You Need A Budget, which is the budgeting software I’ve been using. I know that you’re all about retiring early, but I’m wondering what advice you’ve got for someone who wonders if they’re ever going to be able to retire at all!  Much of what you recommend we can still put into place, I know, and we are in the process, but I am unsure if our advanced age changes any of those tactics and strategies.

I’m not going to bother to tell you all the mistakes we’ve made in 27+ years of marriage and raising five kids.  I’m sure you know the drill, since we lived the basic “American Dream.”  We are now 53 years old. My question now is “What’s the best we can do at this point?”

This is where we are:

  • We have a home with a mortgage/equity loan that’s about $20,000 less than the list value of the house.
  • Our credit scores are low, partly due to not having any credit cards for the last ten years to show a history, and partly due to having late payments due to temporary unemployment, among other things.
  • We are the “OMG your hair is on fire” commuters; 45 minute commute for me, 55 for husband, we live in the middle of nowhere, and real estate in our area is not selling.
  • 4 of 5 of our kids are still in college, two live with us and commute, the (recent) graduate lives with us and has an entry-level job since he can’t find work with his degree.  Our commuters travel by bus 30 minutes to the WEST of us to go to school, we travel EAST to go to our jobs. Our employed graduate also travels west to his job, in the same town where the other two go to college. This makes moving a little bit more complicated.
  • Retirement: We both qualify for Social Security; however, I have met only the minimum number of quarters since I took 17 years off to home school our five kids, and my estimated benefit at age 67 is $524 a month. I have now been teaching at a charter school since 2006, and contribute to Massachusetts Teachers’ Retirement. I would need to work and contribute to that fund until the spring of 2026 to be fully vested.
  • My husband’s estimated Social Security benefit at age 67 is about $2000 a month. He has $20,000 in a 401K with his current employer, and two smaller accounts with former employers, one with a balance of about $4000, and one with roughly $500. I contributed briefly at work to a TIAA-CREF fund, and the balance is about $1000.
  • I have a newly minted Master’s Degree, which I was required to get in order to keep my teaching license, leaving me with loans of about 22,000.
  • Commuter son and husband have a Nissan Sentra and a Toyota Yaris, both paid for.  I am driving our 2005 Dodge Caravan, which is on its last legs at 180K miles with beaucoup mechanical issues.
  • We live in Massachusetts, so are among those few who still use oil for heat and hot water; we have electric appliances.
  • We own term life insurance policies, and have health insurance through my husband’s employer (a health insurance company).
  • We owe back taxes to the IRS and Mass DOR, and have had our paycheck withholdings changed recently to avoid this in the future.
  • Not necessarily in the same vein, but relevant – I am a Yankee who would love to penny-pinch, and my husband is a free spender who loves to buy things on sale and as little “rewards” for himself and others, and chafes at the yoke of a budget.  He is (grudgingly) on board with me now. We rarely disagree about anything except money.  🙂

I guess that’s a grim enough picture for now; as you can see, our situation is a giant Charlie Foxtrot*.
I know you get tons of email; perhaps this one will be just different enough to intrigue you – maybe you can Mr. Money Mustache even the old and desperate!

Thanks,
CF in MA

Mr. Money Mustache’s Observations:

This story is a great example of what happens when you live a good, honest life, but just don’t get around to doing the math. Other than the $1200 of oil and gas that goes up in flames each month, the rest of this budget looks fairly moderate for a large household. But there is no way to cheat the numbers. Children cost money to raise, and if you want to raise a large number of them on an average income, something else has to give.

And most people don’t realize that car-commuting (even a 10-minute ride) is spectacularly expensive, so your 45-minute double commute is astonishing. A 2005 vehicle that is “on its last legs?”. I bought my 2005 car four years ago with 57,000 miles and it just cracked 80k this year. It is still brand-new and has many decades of life left! Commuting in a VAN? I use my van when I need to carry home 1200 pounds of steel beams I found on Craigslist for my house rebuilding project – not when I need to transport  one lightweight human across a vast distance!

Finally, while supporting adult children and “treating” oneself are nice options to have, from a financial perspective you don’t actually have these options. This is what has caused the long-in-the-making financial emergency.  The great news is that you can dig out of this hole much more quickly than you sank in.

So let’s move on to Jacob’s analysis:

Assets:

Home – $235,000
Retirement Fund Savings (401k and MTR) – $45,000
Cars – $7,000

Debts (Balances):

Mortgage – $167,000 at 3.5%
HELOC – $25,000 at 4%
Student Loans – $22,000 at 6.8%
Dell Loan – $2,500 at 16.66%
Personal Loan – $650
Staples CC – $500

Goals:

To retire ever
Budget:

OLD NEW Comments
Total Income $ 7,200.00 $ 7,200.00
Total Expenses $ 7,161.00 $ 3,504.00
Projected Ending Balance $ 39.00 $ 3,696.00 — Much better!
Donations
Other $ 110.00 $ 110.00
Total Donations $ 110.00 $ 110.00
Bills
Mortgage $ 1,330.00 $ 1,000.00 The goal is to be able to actually stop working at some point, so aggressive measures need to be taken. I suggest selling the house and moving MUCH closer to work (within 5 miles of both if possible). If possible, find something for $1,000 a month (about $130,000 15-year loan) or less.
Electric $ 200.00 $ 100.00 You can lower your electric bill if you implement the changes suggested in this MMM article. You stated that you have started hang drying clothes, now it’s time to move on and get all CFL’s bulbs and watch the A/C.
Oil Heating $ 700.00 $ 200.00 This bill is KILLING your budget. When you re-locate to a location closer to work, look for a natural gas furnace or another home with low heating costs. Otherwise you will literally waste $86,500 over the next 10 years on this. It’s not worth delaying retirement AN ENTIRE YEAR to pay for this inefficient heating method.
Cell Phone Sprint $ 320.00 $ – When moving, you are going to need to drop the cell phone family plan. I didn’t see a line for reimbursement for this, and you cannot afford an extra $275 a month to pay for your family’s cell phone usage. Move everyone to Republic Wireless and only pay for the adult plans.
Cell Phone Republic Wireless $ 23.00 $ 46.00 Looks like you got started with one line, just double it up here.
Netflix/Hulu/Other $ 40.00 $ 40.00 MMM: Huh? Netflix is $7.99/month. Between library books, learning new skills, and this, you will have plenty of entertainment.
Car Insurance $ 155.00 $ 90.00 Shop this around. We pay $78 for liability on our two used cars, there’s no reason you need to pay any more than $90 a month for basic coverage. Since you have a used car, all the extra insurance is not necessary to cover scratches and dings and the like. (MMM Note: mine is $30/month for two cars and two drivers)
Internet $ 70.00 $ 70.00 Also worth shopping around – in your new area the competition might be better.
Land Line $ 35.00 $ – Land line is not needed. (unless there’s a business need for this)
Garbage $ 20.00 $ 20.00
Medical $ 182.00 $ 182.00
Student Loan 1 $ 293.00 $ 293.00 We’ll address this debt below.
Student Loan 2 $ 130.00 $ 130.00 We’ll address this debt below.
Life Insurance $ 91.00 $ 91.00
Personal Loan $ 90.00 $ 90.00 We’ll address this debt below.
Dell Loan $ 160.00 $ 160.00 We’ll address this debt below.
IRS and State Taxes $ 700.00 $ – You stated in email that this balance is now at $0
Paypal Loan $ 160.00 $ – You stated in email that this balance is now at $0
ADT Security $ 50.00 $ – Not necessary. Here’s a direct quote from MMM: “These are a silly invention – the Timeshare Condos of the suburbs. Drop it, live free, and save $(50)”
Homeowner’s Insurance $ 55.00 $ 55.00
Total Bills $ 4,804.00 $ 2,567.00
Other Expenses
Food $ 900.00 $ 400.00 Check out MMM’s advice here. You can reduce this bill to $400 a month easily and eat VERY well with a though-out meal plan and some smart shopping.
Gas $ 575.00 $ 150.00 Since we have cut your commute down to only a few miles, your gas bill should be VERY low ($50 a month or less). I padded it a bit to drive out and visit family.

MMM Note – and remember that “Gas” should never be used as an approximation of the true cost of commuting. You need to triple this number at least, just to account for the direct car costs. Adding in life costs, the bill is much higher again.
Eating Out $ 15.00 $ – While you’re in debt, this is a luxury that cannot be afforded. Take care of the DEBT EMERGENCY first, and then add this back in.
Spending Cash $ 25.00 $ – Same as eating out.
Personal Items $ 85.00 $ 85.00
Household Items $ 62.00 $ 62.00
Clothing $ 60.00 $ 15.00 You don’t need $60 of new clothing a month. $15 a month should take care of any clothing necessities with thrift shops, consignment stores and garage sales. Also leverage family and friends to organize a clothing swap (read: FREE CLOTHES) if additional garb is required.
Misc $ 40.00 $ 40.00
Car Maintenance $ 50.00 $ 50.00
Total Other Expenses $ 1,812.00 $ 802.00
Savings Buckets
Christmas $ 25.00 $ 25.00
Emergency Fund $ 410.00 $ – This will be addressed below.
Total Savings Buckets $ 435.00 $ 25.00
Total Expenses $ 7,161.00 $ 3,504.00

Jacob goes on to write,

Dear CF,
Thank you for exposing your budget to all of us financial voyeurs.

There is a LOT going on here, and a lot to address below. The goal here is to make every hour of work from now until retirement count. So let’s get to it:

Housing: I won’t pull any face punches here. You need to move. Your heating bill and commute are absolutely killing your financial situation, and you will NOT retire anytime soon if you stay there. There is $980 potential savings PER MONTH or more in this transition (including commute and utilities), as well as cutting your commute time down to almost nothing, saving time and stress. This move is to help you take a sharp exit off the highway of Never Retiring Wastefulness and allow you to not work until you die.

In emails, you stated the house needs about $8,000 of updates to rent or sell. Since you have about $2,000 of other monthly savings lined up in this budget, you should be able to have this taken care of within four months, and be moved out in six or seven months. Savings on mortgage is at least $330 per month.

You also stated needing a replacement car soon. Please read this MMM post and PAY CASH for your next used-car purchase.

Food: If you are feeding a flock of adult children, they are going to have to chip in. There is no reason you two people can’t eat VERY well on $400 per month, and with proper planning, that could be $300. So many people cannot save enough to retire but are actually just eating their retirement meal by meal. For reference, the extra $500 a month spent on food would cost you over $86,000 over the next 10 years, and cause you to work an additional year for that inefficiency. Nothing tastes THAT good. Savings of at least $500 a month.

Debt: This debt is to be treated as a radioactive plutonium. You must neutralize it ASAP, and this will be your first priority. Here’s how I suggest you tackle it with your extra $3,700 a month.

Dell Loan – $2,500 at 16.66% (gone in month 1)
Personal Loan – $650 (gone in month 1)
Staples CC – $500 (gone in month 1)
Student Loans – $22,000 at 6.8% (gone in month 7)

With all the expenses saved from the above changes, you can kill this debt COMPLETELY in 7 months. The first 3 debts will be gone in the first month! Now you have another $673 a month to invest.

Investments: Once your consumer debt is gone, you will have about $4,400 a month to invest in index funds to get you to retirement. Investing this at 7% for the next 12 years with your starting balance of $45,000 puts you at about $1,100,000 at age 66.

Your annual expenses with the above budget are about $42,000 per year, and using the rule of 4%, this money would provide you with $44,000 annually. You can retire!

This quick plan comes with a major safety margin:

  • the $2,000 per month of Social Security your husband can begin drawing at age 67
  • whatever you get from the teacher’s Retirement Fund
  • the fact that your new mortgage will be paid off in 15 years, dropping the future budget

Conclusion: Yes, this is a lot of change. No, moving won’t be easy, and figuring out the details of your kids housing and all that is going to be a challenge. But the status quo is what got you here, and changing the flow of money is what will get you out.

Comments: What would YOU do in CF’s position? Can she recover and earn a solid retirement in a timely manner?

MMM Note: Thanks again to my new friend Jacob for all of the help on this one, and you may see a few more case studies around here if we’re lucky.

*I think this is a witty polite way of saying “CF”, which of course means “Clusterfuck”. I thought this was a skilled use of swearwords, and it is one of the reasons I decided to take this case study. 

Source: mrmoneymustache.com

Apache is functioning normally

A new study from the Urban Institute reveals that women are better at paying the mortgage despite receiving less favorable terms than men.

This despite the fact that they receive higher mortgage rates because of weaker credit profiles, which logic tells us would lead to higher default rates.

Single Women Hold a Fifth of All Mortgages

On average, just over a fifth of all mortgages consist of a female-only borrower, and it is this group that pays the most for a mortgage.

Using HMDA data for mortgages originated between 2004 and 2014, the researchers found that the average mortgage rate for a female-only borrower was 5.48% versus 5.41% for male-only borrowers.

It was also higher in situations where a female had a male co-borrower (5.25%), compared to 5.12% when the male had a female co-borrower (the most common scenario).

But it appears lenders made out (or messed up) because females displayed lower default rates than their male counterparts.

Women Default Less on the Mortgage

The default rate for female-only borrowers between 2004 and 2007 was 24.6% compared to 25.4% for male-only borrowers.

From 2008-2010, the default rates were 9.6% versus 9.7%, respectively, and the same pattern held steady from 2011-2014.

In case you were wondering, default rates for couples are “considerably lower” than sole borrowers, as you can see above.

For the record, women-only borrowers also get denied the most.

Why Do Women Pay More for Their Mortgages?

So we know women default less than males and also get denied more often for mortgages, but why are they paying more for these mortgages?

Well, one issue is that female-only mortgage borrowers tend to have lower credit scores. Additionally, more of the mortgages doled out to female-only borrowers have been defined as subprime, which is a FICO score below 620.

Perhaps more importantly, more than one-third of female-only borrowers are minorities, and nearly half live in low-income communities.

The good news is that the single women only overpay by an average of $150 per loan. The bad news is they shouldn’t have to pay anything extra. And worse, women are denied mortgages despite “superior payment performance.”

The Urban Institute says this means the risk measures in place today aren’t adequate, and are effectively leading to disparate denial rates.

It sounds like the FICO score is under fire again…it was during the most recent housing crisis too. Essentially, lenders relied too heavily on credit scores and got burned in the process.

In this case, it seems women aren’t getting the credit they deserve because they’re performing better than their credit scores indicate.

Interestingly, women tend to put down more than men as a form of risk aversion – they’re also less likely to apply for an adjustable-rate mortgage, likely for the same reason.

The female-only loan-to-value ratio (LTV) averaged 75.07% over the full sample period compared to 77.63% for male-only borrowers.

Still, they wind up with higher loan size/income ratios relative to single men.

The takeaway here is that weaker credit scores don’t translate perfectly to higher default rates, but mortgages are still priced higher for lower-credit score borrowers.

Just another reason to stay on top of your credit scores to ensure you receive the best pricing out there, regardless of how good a borrower you turn out to be.

(photo: amboo who)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Save more, spend smarter, and make your money go further

Whether you’re getting married, putting your teen behind the wheel for the first time, or buying your first home, a big life change can have a ripple effect on your finances.

While it might not be top of mind, one of those effects could be your car insurance. There’s a lot more that goes into calculating your rates than the standard questions about age, gender, and driving record. When you hit a major milestone in life, your new status can impact those rates in unexpected ways.

Here are five events that might trigger a change in your insurance.

1. Getting Married

Good news for honeymooners: in most cases, being married will lower your car insurance rates! Adding a partner to your insurance could spell savings for your household, especially for younger couples. It turns out that married people are less likely than single people to get into accidents. Ah, the perks of true love.

2. Buying a Home

One of the biggest milestones in life is buying your first home. While homeowners coverage is a must, becoming a homeowner might actually affect your car insurance, too.

Like married people, homeowners tend to see better rates on car insurance. Those savings could be even higher when you bundle your auto and homeowners policies with the same insurer (not to mention more convenient).

Buying a home also means that you might want to take a look at boosting your auto coverage. Look for polices that protect your assets and take care of legal costs-bodily injury, uninsured/underinsured motorist bodily injury and property damage are your best options. As you build up equity in your home, you’ll want to make sure your investment is safe, no matter what happens.

3. Adding a Teen Driver

As nervous as you may be to see your teenage child in the driver’s seat for the first time, you’ll feel better when they’re protected under your insurance policy.

Teen drivers need to be covered as soon as that driver’s license is in their hands. Your rates will probably increase, because this age group has much higher accident rates than older drivers, which makes them riskier to insure.

However, there are a few things you can do to help keep your rates low. For instance, when you add your teen to your policy, check to see if you qualify for a multi-driver discount. Likewise, if your teen has his or her own car, you could get the multi-car discount. Good students can help lighten the load as well. Many insurers offer discounts to young drivers who keep their grades up.

4. Getting Divorced

If you and your spouse are parting ways, it’s important to make sure both of you-and any dependents you might have-are still covered.

Once you’ve divvied up the cars, you and your ex will need to get separate policies. The change in circumstances makes this a good time to comparison shop, especially because you may be losing out on discounts you enjoyed as a married couple (for instance, a multi-car discount).

If you’ll be sharing custody of teen drivers, check with your insurance company to find out whether you both need to list your teen on your policy-and factor that into any quotes you get.

5. Getting a Raise

Now that you’ve got a little extra cash in your pocket (and perhaps some financial benefits, like stock), it’s time to take another look at your policy. Consider upping some of your coverages, like bodily injury and property damage, to make sure that if an accident happens, your income (and growing savings) will be protected. These policies cover medical bills as well as legal fees if someone involved decides to sue. Putting a little extra money toward your premium today can pay off big time down the road.

During a major life event, there’s a lot to think about. If you need help figuring out how to handle the big changes (insurance-wise, that is), talk to your insurer to make sure you’re adequately protected-and getting the best deal possible.

Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the industry, focused primarily on underwriting, pricing, and product innovation. You can follow him on twitter @Erictheactuary.

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Source: mint.intuit.com

Apache is functioning normally

As you increase your interest in building wealth and investing, you might be looking to take your knowledge to the next level. And as you consistently work on your investing strategy and expand your interests, there will be more to understand and manage.

While I’ve never been into active day trading stocks, buying and holding onto individual stocks should conservatively be in your portfolio. Meaning, you should have some exposure to great individual stocks, but only be a fraction of your overall portfolio to minimize risk.

What percent of individual stocks you have in your portfolio is a personal choice based on your goals and current finances. However, I like to look at it as being between 1-5% max of my portfolio.

However, most people do not have the time or knowledge to research every potential investment or find great individual stocks that are out there. But one option you have is to sign-up for The Motley Fool’s Stock Advisor program.

In This Article

What is The Motley Fool?

The Motley Fool was founded in the early 90s and has continued to be a leader in the financial space. Currently, the company is led by the founders (and brothers), David Gardner and Tom Gardner.

The company has its headquarters in Virginia, but they have offices around the world and employ hundreds of people. Their website covers the latest stock market news, numerous blog posts, and guides around investing, detailed guides, podcasts, and much more.

I think their about page sums up their approach to investing, business, and work culture nicely.

Here is a quick snippet:

“We believe in treating every dollar as an investment in the future you want to create. We believe that investing in great businesses, for the long term, is the most effective path to wealth. We believe in the power of a community to learn and grow together. We believe in keeping score and being transparent in our investment performance. We strive to fulfill our purpose by truly serving every Fool, from our employees to our members to our community.”

What is the Stock Advisor Program?

While The Motley Fool offers a plethora of free content, guides, and news — one of the staples of the company is its Stock Advisor Program.

The Stock Advisor program is a membership service that offers stock picks and various recommendations to their subscribers to help them invest wisely. And the goal of the program is to make it easy for beginner investors to get started picking the right stocks and improving their results.

What the program includes is Tom and David Gardners insights, research reports, and all the information as to why they are choosing certain stocks.

While they are looking to help you beat the traditional returns, these are not “get rich quick” options. Instead, these are stocks you should invest for the long-term that have great fundamentals.

What stands out about their recommendations, is these are not “pump and dumps” or junky penny stocks. Instead, they are legit companies that show various indicators of strong potential results over time.

And currently, the Stock Advisor program has over 600,000 active members using their services and accessing their stock market picks. So let’s explore more about the Stock Advisor program in this Motley Fool Review below.

How The Motley Fool Picks Their Stocks

While I won’t get into every little detail, I think it’s essential to cover the basics of their stock-picking approach and what investors get to see.

What’s cool about The Motley Fool’s approach to stock pick investing is its blend of strategy and information. They aren’t just throwing random stocks out there, getting paid to push a stock, or choosing a hot industry.

Their entire philosophy revolves around picking solid businesses based on current results, future potential, current management, market factors, trends, and other business signals.

This interview of co-founder David Gardner is from 2014 but goes into their process for stock picking and a bit about their Stock Advisor service.

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Here are just some past recommendations they had made to their members, before the stocks took off: Hasbro, Bookings, Disney, Amazon, Costco, eBay, United Health, and Netflix. Many of which, their first recommendations, came in the early 2000s before any big price gains.

Quite the track record and it gives you an idea of the kind of companies and stocks they look at for their members.

What members get in the Stock Advisor Program

As a member of their Stock Advisor Program, you can expect the following:

  • Two new stock picks each month – That is the team’s latest stock recommendations based on their analysis that is delivered monthly
  • The best buys for right now – The Motley Fool will provide ten timely recommended buys from over 300 various stocks.
  • Starter Stocks – These are identified stocks that should be considered as the foundation of your portfolio.
  • Their newsletter – The Stock Advisor newsletter comes with fundamental analysis, the positives and the potential negatives of the picks, and more. It helps you understand the reason for their choices, and figure out which stocks are best for you.
  • Additional community and investing resources. While The Motley Fool has numerous free content, guides, and podcasts — they offer members exclusive materials that the general public readers will not have access to.

Another important feature for members, is they get access to a record of all the recommendations The Motley Fool has ever made. That means access to all their winners and losers in their investment picks.

I like this transparency because you can quickly access all the information, why it was recommended, and the results since the recommendation.

Personally, it’s great to see that they do not hide any picks that maybe did not perform as well. No financial company, investor, or advisor will have 100% accuracy.

The stock market and companies can do many unexpected things, so there is no way anyone should not have any losers or “low performers.” Instead, you want to see that the winning recommendations are more consistent with strong returns.

Motley Fool Review: Pros and Cons

Now that you understand The Motley Fool’s service for investors, what you get, and how it works — what are the pros and cons of being a Stock Advisor member?

Pros of The Motley Fool

  • Founders and analysts have decades of stock marketing and investing experience.
  • Tons of in-depth content, news, resources, tools, and services.
  • Proven track record of results for their members in the Stock Advisor.
  • It takes the burden of detailed research and analysis. Making it easier for you to make decisions about stocks
  • Stock Advisor subscription costs $99 for a one-year membership and protection by their 30-day membership-fee back guarantee. You can cancel within 30 days and get 100% of your money back.

Cons of The Motley Fool

  • Purely investing in individual stocks is still risky, as there is no guarantee a stock will win long-term or the company will have enormous growth over the years.
  • These are recommendations, so you still need to do your due diligence. While the recommendations come with detailed information, risks and rewards, and more — you still should read and understand the stocks before just investing because they said they were good picks.
  • You must be prepared before. That is not to get rich quick, and you can still lose money. Understand your goals, what you can risk, and what you are willing to hold during rough times if The Motley Fool is recommending that.

Is the Motley Fool Stock Advisor Worth It?

The Stock Advisor service from The Motley Fool is worth it if you are very interested in individual stock investing and looking to have more of the research done for you in advance. It’s also a good option if you plan on managing your portfolio and have a hands-on approach to investing.

Is the Stock Advisor Program Good for New Investors?

The Motley Fool Stock Advisor program can be a great and affordable choice for new investors that have long term goals and want to mix in individual stocks to their portfolios. Even though the Stock Advisor program has a strong track record, it’s important to understand the risks and do your research on stocks they recommend.

What Type of Investor is Motley Fool Best For?

Motley Fool’s Stock Advisor service is best for new investors and experienced investors looking to have an advantage over others and boost their portfolio returns. The recommendations are also best suited for long-term investors who want to mix in individual stocks that have the potential for higher traditional returns.

If any or a few of these points speak to you personally, then the program can be a great option if you:

  • Are long-term investor (buy and hold for 2-5+ years)
  • Like individual stocks and prefer them over mutual funds
  • Are you looking to add new stocks to your portfolio monthly or annually beyond index fund investing, bonds, etc.

Is The Motley Fool Trustworthy?

The Motley Fool is trustworthy and legit. Compared to other similar products or newsletters on the market, the company is not promising what they can’t deliver. Nor are they doing anything that would be considered fraud.

As someone who works in marketing, I will say they may come off a bit scammy with their aggressive sales tactics; however, their track record and quality content show they are legitimate.

There are also many scams and newsletters of people trying to lure readers into stocks with the promises of massive returns. If you see those, runaway! Most are paid to select these stocks to send them out to readers, and most are junk or hold no real value.

Fortunately, The Motley Fool does their homework, has a proven track record, and helps you build a nice portfolio of some individual stocks to help you make money while you sleep.

They may have aggressive marketing or sales tactics, which I tend not to like. But, since they are transparent and have proven results, I don’t judge them as much on those tactics since they can back it up (unlike most stock picking newsletters).

This article originally appeared on Your Money Geek and has been republished with permission.

Source: debtdiscipline.com

Apache is functioning normally

A lot of times if you’ve been doing something for a while, you tend to take things for granted.

I got a call from a prospective client, someone I’ve known for several years. They called to ask me a question that I just figured everybody knew.

It was such a basic question when it comes to my profession that, like I said, I just took for granted and thought that everybody knew how to do it. The question was,

“How do I buy stock or how do I invest into stocks?“

I came to the conclusion that if they didn’t know the answer, most likely a significant portion of the readers don’t as well, so I’m going to take a minute and address some of the different ways you can get started buying stocks.

Table of Contents

5 tips to get you started buying stock online

To give you some background on the person that called, they were in a 401K so they were investing for their retirement, but they never actually had gone out to invest into individual stocks.

There was a certain stock that they were hot on and thought that they could make some money on so they wanted to go buy it. I gave her a few different places that she could go to do her own research and buy the stock.

If you are itching to invest your money, make sure to check out our great reviews on different ways to invest such as our Motif Investing Review.

Pour Your Foundation

First, if you’re looking to buy stocks, make sure that you’ve got a foundation set. I always hate it when people call me and they want to start investing in individual stocks and yet they don’t have anything saved in retirement.

  • They don’t have a 401K.
  • They don’t have an IRA.
  • They don’t have anything.
  • They don’t have an emergency fund, yet they want to start investing and playing in the stock market.

That’s one of my biggest pet peeves. It’s like a house, right? With a house, you have to build a foundation first. You don’t start putting on the roof or start doing the inner accessories like the big screen TV and the couches before you have the framework or foundation down.

Make sure you have those in place first before you go out and start buying stocks. That’s my entry disclaimer, but I just wanted to get that out there first.

Buying Stocks Online

Now if you’re ready to start buying stocks and you feel comfortable doing this, you have a couple of different areas online you can go to. The first place you can go is any discount broker. Think Ally, and I’m sure there are countless others, but these places are good. For starters, they’re very, very inexpensive.

Sometimes you can open accounts and trade for free. Others, to execute the trade to actually buy the stock, you may pay as little as $4.95 on up to 15 bucks per trade. That’s pretty reasonable, especially if you’re only going to be doing a few trades here and there. Some of them, and I’m not familiar with all the rules, but they may charge you an annual fee if you don’t do a lot of trading.

Definitely read all the fine print and rules before you engage in buying stock from an online discount broker. If it’s something where you’re going to buy a few stocks here or there, that could be a viable option.

Buying Individual Stocks Through Computershare.com

Another option if you’re comfortable making the purchases online is to actually buy it through the company itself. One website that has a lot of arrangements with a lot of different companies is Computershare.

When I have clients that have a share of stock that they either inherited or it was given to them, quite often computershare.com is the custodian. They will have to call them to liquidate it or to find out how many shares they own. Computershare just seems to be a common hub for a lot of these different companies.

How I’ve recently had some more relationship with Computershare was I wanted to buy stock for my kids, not so much as an investment, but more of a keepsake. I wanted to buy a share, put my son’s name on it as in the form of a custodial account. They had the actual certificate, something we could frame and put it on the wall and have a keepsake. I was having difficulty trying to find a certain stock that I wanted to buy. Sure enough I went through Computershare and they had an arrangement with that company so I’ll be doing that soon.

Computershare has a relationship with a lot of those companies. You can go to computershare.com and follow their links. I think you go to investor’s center and from there you can see some of the companies that they have an arrangement for. I think it’s over 500 companies. I’d have to check the website just to double check, but that’s another venue that you can go. I think it’s maybe a $15 transaction charge, so once again very minimal cost to do it. It’s another good, do-it-yourself, online arena where you can go to buy individual stocks.

Buying Stocks Direct From the Issuing Company

You can sometimes buy stock directly from the issuing company, without using a service like Computershare. This is mainly available with large, well-established companies. You can find out if the company offers the service by contacting their investor services department, which you can usually find on the company website.

One of big advantages to this is that the companies typically don’t charge any transaction fees, so you can buy the stocks at cost. And some companies will even allow you to sell your shares back to the company.

DRIPs. Some companies even offer programs known as Dividend ReInvestment Plans, commonly known as DRIPs. When you participate in this plan, your dividends are automatically reinvested in buying additional shares of the company stock. This is a way to build a long term position in a company that you are committed to holding an investment position in for a very long time.

Mutual Funds and Exchange Traded Funds (ETFs)

If you want to invest in the stock market, but you aren’t comfortable doing it with individual stocks, you can invest in a large number of stocks with a single investment in a mutual fund or an ETF.

There are several advantages to investing in funds:

  • You don’t have to select individual stocks, the fund manager takes care of that for you
  • Each fund represents a diversified portfolio of stocks; this is important because holding a larger number of stocks is less risky than owning just one or two
  • Transaction costs are much lower when you buy through a fund than if you try to assemble a custom-made stock portfolio
  • Your only decision with funds is deciding when to buy, and when to sell; since you can trade funds easily, you can move in and out of your positions quickly
  • Funds come in a variety of types, in which you can invest either in the general market, or in various sectors, such as energy and healthcare

Yet another advantage to investing in funds is that you can buy and sell them just as easily as you can trade individual stocks. You can buy them through a discount brokerage firm, as listed above. But you can also buy them through mutual fund families, such as Vanguard and Fidelity. Those are two of the largest mutual fund companies, but there are dozens of others to choose from.

Fund Families. Buying direct through a fund company – sometimes referred to as a “fund family” – is often less expensive than buying through a discount brokerage firm. That’s because within the fund family there are typically no transaction costs.

Index Funds vs. Actively Managed Funds. There are two general types of funds to be aware of, index funds and actively managed funds. Index funds invest in established investment indexes, such as the S&P 500. Index funds are more typical for ETFs. Since they invest in an index, the individual securities within the portfolio are traded only when the composition of the index changes. Since that is a relatively rare event, index funds have very little stock turnover, which means that their investment expenses within the fund are very low.

Actively managed funds are typically mutual funds. They tend trade a lot more than index funds, and have higher investment expenses. For this reason, index funds often outperform actively managed funds, and are probably the better choice for most investors.

Load Fees. You should also be aware that funds sometimes charge what are known as “load fees”. These are one time fees that are built into the fund, and they generally range between 1% and 3% of the value of the fund you’re purchasing. They can be charged upfront (known as front end loads) or upon sale (backend loads), and sometimes both on some funds.

Loads are high, which is why you should favor no-load funds. Not only are they less expensive to buy, but you’ll feel more freedom to close out your position whenever you choose, if you are not concerned by how much money you paid upfront in order to buy the fund in the first place.

Robo Advisors

If you want to invest in the stock market, but you aren’t comfortable doing it with individual stocks, or if you are unsure as to which mutual funds or ETFs to buy, you have one more option. A group of online, automated investment platforms have developed in recent years, commonly known as robo advisors.

These are investment platforms that will manage your investment portfolio for you, and do so for a lot less than the 1% to 2% annual fees that human investment advisors charge. You set your allocation with the robo advisor – which they take care of for you – then your money is automatically managed and invested by the platform. You’re only responsibility is to fund your account.

There are now dozens of robo advisors available, but one of the most popular – and well-regarded – is full review of Betterment for more details.

The Mechanics of Buying Stocks With a Broker

Okay, if you still want to buy stocks and you’re not completely comfortable going online to do it, I don’t blame you. That can be intimidating for a lot of people. You have to open up an account online and send some money to some faceless operation.

The other option you have is you could go to a local investment house, local stockbroker and buy stock through them. Just so you know, by going that direction you’re probably going to pay more, considerably more, but at least you have a face of someone you can talk to. They can share their expertise of what you think is going to make you a lot of money, if it really is. Also, you have somebody that hopefully is going to educate you in having that foundation set.

All these different brokerage firms differ on their prices, but I have to think at minimum you’re going to be spending about $40 per transaction. So if you buy a certain number of shares it’s 40 bucks. If you sell again it’s another $40. That’s for a smaller amount transaction. The higher transaction you go, the more shares you buy, or the higher the share price is will then determine how much the commission is going to be.

Some of these firms as well, if you don’t trade frequently, are going to hit you with either a small account fee or an inactivity fee. Be conscious of that. It’s definitely not the cheapest direction to go. Typically, when I’m working with clients and if they want to do some stock trades or they have a younger relative or their kid that wants to buy shares of stock and that’s all they want to do, I usually will guide them to one of these online platforms if they are comfortable just to help save them a few bucks.

Those are some of the different options you have. If you want to buy stock, you can go online to one of the online discount brokers or go to computershare.com. If you’re not comfortable head to your local brokerage. Then, when you shop around I would maybe interview one or two different brokers just to see what would be the potential cost to do so. I would just say,

“Hey, how much would it cost to buy 100 shares of…..”

and just give them some stock, maybe the stock you’re interested in, just to see what it is and how much the fee is going to be. You want to make sure you know what you’re getting yourself into. Make sure you read the fine print before you proceed and make that initial investment.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Source: goodfinancialcents.com