When single-family permit demand collapsed in 2022, we still had a healthy backlog of homes that needed to be finished. While that was happening, we also had 5-unit permits expand as well. Well, that isn’t the case anymore, as 5-unit permits are already at COVID-19 recession lows and now we have seen some softness in single-family permits.
The future production of housing units at risk
I am bringing this up because economic recessions tend to see residential construction workers lose their jobs first. After all, higher mortgage rates tend to impact housing faster than other sectors. Manufacturing jobs and business investment also tend to get hit with higher rates, but we have massive manufacturing spending now that hides that issue. As you can see in the chart below, residential construction workers aren’t losing their jobs yet.
When it comes to the monthly supply of new homes, if the single-family permits and 5-unit permits fall together, construction labor is at risk once the backlog of new homes is completed. So, let’s look at the builders’ monthly supply data.
From Census: For Sale Inventory and Months’ Supply: The seasonally adjusted estimate of new houses for sale at the end of April was 480,000. This represents a supply of 9.1 months at the current sales rate.
While the monthly supply data seems massive, it’s a bit misleading regarding total units available for sale. Today, even with 9.1 months of supply, we only have 98,000 completed new homes for sale. This sector traditionally doesn’t release units completed for sale all at once, as it goes against the business model. Even during the housing bubble crash, the monthly supply data never got to 200,000 homes.
To give you some perspective, this amounts to less than two weeks of new listings of existing homes that come on the market.
I like to break down the monthly supply data into subcategories. People sometimes believe that the monthly supply of new homes means active, completed homes ready to buy, but that isn’t the case. In this report:
1.9 months of the supply are homes completed and ready for sale — about 98,000 homes.
5.3 months of the supply are homes that are still under construction — about 281,000 homes
1.9 months of the supply are homes that haven’t been started yet — about 101,000 homes
Now, the 1.9 months of supply of homes at 98,000 is roughly the line in the sand for the builders to start getting cautious about starting on homes that haven’t even dug dirt yet. This is why the rest of the year will be critical: as the builders begin to close on the construction of homes that are under construction, they will be less inclined to issue more permits.
New home sales
From Census: Sales of new single-family houses in April 2024 were at a seasonally adjusted annual rate of 634,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.7 percent (±12.0 percent)* below the revised March rate of 665,000 and is 7.7 percent (±13.2 percent)* below the April 2023 estimate of 687,000.
As we see below, new home sales aren’t booming; they’ve been in a slow grind from the lows of 2022. Higher mortgage rates impacted sales growth toward the end of 2023 so only the big builders could work this out with the rate buy down. The question is, how much longer can they do this? With their profit margin capacity, as long as mortgage rates are below 7.25%, they can make some deals to close some homes. However, as we see in the chart below, new home sales haven’t gone anywhere for a while.
The smaller builders don’t have this buy down advantage, and thus, we have seen a decline in homebuilder confidence data. This is why we need to keep a close eye on the housing starts and new home sales data together. For the first time, permits are falling for both data lines, single-family and 5-units, a staple of every pre-recession cycle data run.
We care about construction workers because the Federal Reserve won’t pivot on rates until they see the labor market break, and the bond market will drive mortgage rates lower once they see that construction workers are really losing their jobs. Twice now, the bond market has tried to get ahead of recession data lines, only to have yields and rates go back up when the recession didn’t happen. This is why tracking housing construction data is critical to each economic cycle when considering mortgage rates and possible better future demand for our current housing market.
The events behemoth Live Nation Entertainment is about to rack up some fees of its own — legal fees, that is.
On Thursday, the Department of Justice announced it was suing Live Nation Entertainment on antitrust grounds. The suit arrives after long-standing allegations of monopolistic practices and multiple federal investigations. The DOJ’s action was largely expected following a report of the impending suit by the Wall Street Journal on April 15.
Live Nation Entertainment encompasses international event promotion and management, as well as ticket sales through its better-known division, Ticketmaster.
The antitrust suit, which was joined by 30 states, was filed in federal court in the Southern District of New York. During a press conference following the announcement, Attorney General Merrick Garland detailed some of the DOJ’s allegations against Live Nation Entertainment including:
Locking out competition through long-term and exclusive contracts with major venues encompassing more than 70% of event ticket sales.
Imposing a “seemingly endless” bevy of fees, such as ticketing fees, service fees, convenience fees, platinum fees, handling fees and more.
Pressuring artists into using its services to promote events at venues it has long-term contracts with.
Working “strategically and illegally to eliminate the threat of potential rivals” in the event ticketing industry, in some cases even when the deal didn’t financially make sense for Live Nation’s business.
“Some monopolies are just so entrenched and some problems so difficult to address that they require decisive and effective solutions,” said Assistant Attorney General Jonathan Kanter at the press conference. “We request a remedy that has been used in antitrust law going back over 100 years, which is structural relief.”
Prior to the lawsuit, in Live Nation Entertainment’s first quarterly earnings call of the year on May 3, President and CFO Joe Berchtold said, “Based on the issues we know about, we don’t believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy.”
The investigation started with Taylor Swift’s Eras Tour
The Justice Department’s suit is the result of an investigation launched in November 2022 following an incident in which Ticketmaster mishandled sales of tickets for Taylor Swift’s Eras Tour. A multitiered presale event for the tour prematurely oversold tickets, which meant hopeful fans couldn’t purchase them in the public sale. Then resellers who did manage to get presale tickets posted those for sale at exorbitant prices.
In the aftermath, fans of the pop star, also known as Swifties, filed a class-action lawsuit accusing the company of fraud, misrepresentation and anti-competitive practices.
The incident also prompted Congress to begin investigating the event ticketing company. In February 2023, legislators recommended that the DOJ’s Antitrust Division probe Live Nation Entertainment, as well.
Then in November 2023, the Senate Permanent Subcommittee on Investigations (PSI) issued a subpoena for documentation that it said Live Nation had yet to produce during the subcommittee’s investigation. The subcommittee also wrote a letter to the Justice Department that said the Eras Tour problems “suggest that the Department’s past enforcement efforts have failed to protect competition.” It went on to say that if Live Nation had indeed abused its power in the event ticketing market, then it may be prudent for the DOJ to break up Live Nation and Ticketmaster.
Live Nation Entertainment controls most of the event ticketing market
In 2010, the Justice Department approved the merger of the event promoter Live Nation and ticketing company Ticketmaster to become Live Nation Entertainment. At the time that the companies consolidated, each was already the dominant player in the events industry: Ticketmaster for ticketing and Live Nation for owning, operating and promoting venues.
Peter Cohan, a professor of practice in the management division at Babson College in Wellesley, Massachusetts, says the merger has been costly for consumers. Face-value tickets have increased sharply, but increasingly pricey fees have been tacked on, as well. They’re commonly called junk fees, and the Biden administration has made a mission of targeting them in the events ticketing space, as well as travel and credit cards.
In a 2009 analysis that Cohan wrote prior to the Live Nation merger entitled “Chokehold on Live Entertainment,” he looked at fees. Cohan says, “I came across a typical kind of concert ticket — Denver, Colorado, a Green Day concert in 2009 — where the fee was 45% of the face value of the ticket. And now fees are as high as 70% or 75%.”
In more than a decade since its merger, Live Nation Entertainment has only strengthened its hold on the market. During last year’s congressional investigation, the PSI submitted a letter to the Justice Department citing statistics that demonstrate Live Nation’s reach: 60% of the event ticketing market is controlled by the company. That includes 80 of the top 100 largest arenas in the U.S.
Live Nation Entertainment’s ownership of and deals with venues make it difficult for artists to use any other ticketing platform for its tours, says Cohan. “If an artist wants to use a different ticketing provider, then Live Nation will basically threaten to say, ‘Well, you can’t use this venue,’” he says.
This hasn’t gone unnoticed by the Justice Department: In 2019, the DOJ determined that Live Nation had violated the consent decree it agreed upon during the merger. The consent decree specified that Live Nation Entertainment cannot retaliate against concert venues for using other ticketing services. According to a Dec. 19, 2019, press release, the DOJ found “Live Nation repeatedly and over the course of several years” violated this agreement.
The consent decree between the companies was supposed to expire after 2019, but the DOJ extended the terms of the merger deal to 2025. In the extension, the Justice Department clarified that Live Nation Entertainment must not pressure venues to use Ticketmaster under the threat of forfeiting Live Nation shows.
Live Nation Entertainment says it’s not to blame for high prices
In response to scrutiny over high ticket prices, Live Nation Entertainment sought to explain more fully the rationale behind the costs. Dan Wall, Live Nation Entertainment’s executive vice president of corporate and regulatory affairs, wrote in a March 4, 2024, open letter entitled “The Truth About Ticket Prices” that high prices “have very little to do with Live Nation or Ticketmaster.” Instead, steep demand for high-profile concerts, like the Eras Tour, naturally leads to more expensive tickets. He went on to add that artists’ increasing dependence on touring income — mainly due to the prevalence of music streaming, which doesn’t pay out for most artists — is also a contributing factor.
Still, Wall wrote that artists tend to underprice tickets “mostly out of regard for their fans,” but the resale market shows artists what their tickets could cost, which, in turn, leads artists to charge more because “when they don’t charge those prices scalpers will find ways to acquire tickets and resell them at full market value.”
He wrote, “The common thread to all these factors is that they have nothing to do with who the promoter is or who sells tickets to the show.” It is the performer’s business team that works with promoters to come up with a strategy that provides revenue while “doing right by their fans.”
Cohan says the secondary market has further exacerbated already high prices for tickets — by several thousand percent markups. “If you go to buy a ticket and Ticketmaster says you can’t get it, that’s because 90% of tickets are reserved for secondary market players who immediately bid up the price,” says Cohan. “Then you have to buy it on the secondary market and pay much more for it.”
On the secondary market, Cohan says, Ticketmaster then collects more fees on transactions. However, Ticketmaster has, in the past, publicly denied that it enables a mass-scalping system.
Live Nation reported a record $22.7 billion in revenue in 2023.
This isn’t the DOJ’s first rodeo with Ticketmaster
Anticompetitive accusations have been thrown at Ticketmaster for decades. In the early 1990s, the grunge band Pearl Jam feuded with Ticketmaster over its service charges. A June 30, 1994, article in the Los Angeles Times said the band accused Ticketmaster of refusing to sell tickets to the band’s tour at the price point they wanted to ask of fans: $18 or less, with under $2 in service fees (at the time, Ticketmaster charged $4 to $8 per ticket in service fees). Later, Pearl Jam tried to work outside the Ticketmaster system on its own low-priced tour, but the company allegedly influenced promoters and venues to boycott the tour altogether.
The clashes between Ticketmaster and Pearl Jam prompted a situation similar to the current inquiry following the Eras Tour mess: The Department of Justice launched an investigation into anti-competitive practices while Congress called for hearings. Ultimately, Ticketmaster won out.
What’s next
Cohan is skeptical that a breakup of the merger will happen. He speculates that it’s more likely that Live Nation will stall litigation for as long as possible and likely conduct changes to remediate some of the complaints rather than wade through an entire breakup of the companies.
But if the DOJ does break up the merger, Cohan says, it’s possible prices might improve somewhat since there would be less of a financial incentive for Live Nation to only use Ticketmaster. But he asserts that unwinding the merger is unlikely to make much of an impact.
“The situation was pretty bad before they were merged and probably would be pretty bad afterwards unless there was a fundamental change to the way tickets are sold,” says Cohan, who suggests direct artist-to-consumer sales would likely be the next best option. He reasons that artists need a way to sell tickets, but with existing e-commerce technology, big ticketing systems aren’t really necessary.
“I’m sure many artists — even the smaller ones — could probably pull their money together and build a system that they could sell tickets on directly to consumers without having all these intermediaries taking a piece out of it where they’re not really adding any value,” he says. “It would probably still be expensive to go to a concert, but with the non value-added cost taken out, it would be lower.”
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Are you struggling to build your wealth so that you can live the life you want?
The problem may not be what you think it is.
If you are just working hard to earn more money, that is not enough.
You must also take the time to work on clearing money blocks within your brain.
The problem may not be what you think it is.
It is no secret that money blocks are abundance blocks.
How many times have you thought about how much cash you would need to get rid of your current financial situation?
If not, then it’s time to explore the fastest way out of this dilemma: removing all financial blocks.
Money blocks are on my mind today because–as any woman who wants to have a baby will tell you–the amount of time, money, and energy required to conceive, raise a child or even just get pregnant usually ends up being more than what one would typically invest in creative endeavors.
It’s important that we understand the blocks within us so that we can clear them out before they manifest into physical manifestations in our bodies.
There are infinite possibilities for new experiences–and with these opportunities come new ways to express ourselves creatively, spiritually, emotionally, or materially through whatever medium we choose.
The blocks for abundance are the most insidious because they are completely invisible, making them tough to spot.
You must learn how these blocks manifest in our lives and what can be done about them. Today, you will find some practical steps you could take to remove these blockages from your life if you find yourself struggling with this issue!
Enough of dealing with these painful and frustrating obstacles, let’s take simple steps on how to remove money blocks with ease.
What are Money Blocks?
Money blocks are negative subconscious beliefs about money that limit one from achieving conscious desires.
Money blocks are the result of years of subtle and sometimes not so subtle messages we’ve received about how to be “successful” in life.
They can play a role in limiting our personal abundance as well as others’. For example, if you believe that money is bad or that it will cause you problems, then you may find yourself reacting negatively whenever your income increases.
What are money beliefs?
A person with money blocks may experience feelings of guilt about spending cash, or they may think that money is the source of their problems. When someone has a lot of these beliefs, it can be difficult for them to become independently wealthy because they are so limited by their subconscious thoughts and behaviors.
The concept of money blocks is fairly new. The term was coined in the early 2000’s, and describes a mindset that people have when managing their finances.
Money blocks are usually caused by fear or anxiety stemming from negative thoughts about money and how much we need to invest for our future needs.
Your money blocks hold up your abundance and ability to become financially free.
The good news is the more you work on changing the behaviors, the easier it will be to remove them.
Money is 80% behavior and 20% knowledge.
It’s important for people to understand how they can change their behavior because there is a lot of power in making better choices with regards to what we spend our time and energy on each day – especially when it comes down to money!
How do Know if you have a Money Block?
If you are wondering, what are some limiting beliefs about finances. Then, you probably struggle from a money block.
It may be something like “I won’t let myself do anything unless I have enough money,” or “I won’t allow myself to be vulnerable.” Such blocks can cause you to take on debt or make the wrong decisions, which is not beneficial.
If you have a money block, it is because you are holding onto an idea that does not serve your purpose.
There is an energy around money that often causes blockages within the body. It can be difficult to determine if you have a money block because there are so many different types of blocks. The most common type of money block is the abundance block, which occurs when too much energy and focus is placed on one area of life instead of others.
The best way to know if you have a money block is by taking time to meditate or do yoga for five minutes daily with your eyes closed.
If you feel uncomfortable or notice that the energy around money keeps changing, then it is a good sign that you have an abundance block.
There are many things that can manifest as a money block. Therefore, it is important to know what your personal money blocks might be so you can release them and move forward with financial abundance.
How do you break through money blocks?
One way to break through the money blocks is by identifying problems with your current thought process.
There is a wide variety of ways to break through money blocks. One way is to start your own business and work hard until you make enough money that the blocks are no longer an issue. Another way is to focus on a different area of your life. You could try being part of a community where there are more opportunities for you to make money.
You have to follow through on the process.
What Happens if I Don’t Clear Money Blocks?
You cannot make more income without having abundance blocks.
Until you shift your relationship with money, you will continue to create the same outcomes. This is because you conditioned yourself to believe the limits on the possibility of making or receiving income.
It is important that you recognize these financial blockages! Then, you can understand what they are doing in order to break them down and release the energy tied up in them.
Abundance blocks happen when we believe certain things and our reality reflects those beliefs. If you have a money block, your relationship with abundance is out of balance.
In order to get rid of the blocks in the system, it’s important to identify them and understand why they exist.
Money Block Quiz
Many of us have obstructions around money that prevent them from reaching their goals, but there is one easy way to see if you have a money block.
Quickly reveal whether or not your energy is blocked by this area of your life. Then, you can come back and figure out removing money jams from your life.
Simply takethe Money Blocks quiz.
The best way to identify if there’s a specific thing in your life or mindset that’s causing stress around finances would be to ask yourself these questions:
Section 1 – Your Desires in Life
Create a list of all the things you want.
List 5-10 specific things on this list.
Look at how much time or effort these items require.
Look at how much money you need to achieve these items.
Put a dollar amount next to each item.
Answer Key – If the time or effort required is more than what you make in one year, then there’s your issue. You have a money block.
Section 2 – Spending your Time
What am I not spending enough time doing?
Did something happen recently where my emotions were particularly high?
Do I desire time freedom?
Answer Key – If the answer is yes, then you probably have a subconscious money block.
Section 3 – Triggers around Money
What are your financial failures?
What are your emotional triggers for spending cash without realizing it?
How did your parents relate to money?
How does society teach you about money and status?
Answer Key – Everyone’s answers will be personal to your background, upbringing, thoughts, and experiences. The key is to recognize money obstructions and breakthroughs can slowly happen.
The problem with being broke (or feeling broke) is that it leaves you feeling like there’s never enough of what you need to get ahead, but the good news is – if you want to break through your money barricades, it’s actually pretty easy.
Top 10 List of Money Blocks
Money mindset jams are different for everyone, but there are some common types.
For example, if you find yourself feeling anxious or stressed when thinking about financial-related topics like paying off debt, it could be because you’re subconsciously avoiding something that will help your personal finance situation in the long run.
Let’s learn how to identify 10 common money blocks.
1. Fear:
This is one of the most common stonewalls that you can experience and it can affect how you make decisions about your future.
Fear is a natural emotion, which is caused by the concept that money will cause you to act in certain ways. Thus, not allowing you to take risks and put yourself in danger.
Fear is often an emotion that comes with money, but this does not have to be the case. There is a lot of wisdom in being able to separate one’s emotions from financial decision-making.
For example, if you feel fear when you’re in a position to make an investment, then that could be because of your limiting beliefs.
2. Money Avoidance
Money avoidance happens in one of two ways.
The first way of money avoidance refers to the practice of intentionally decreasing the amount of money one spends. Money avoidance is achieved through various methods, such as not spending any money for a set period of time, using alternative currencies, or just living without money.
The second way of money avoidance is looking the other direction for anything that has to do with money. Money avoiders are people who have less money and a lower net worth than non-avoiders.
Money thoughts are so bad, so they sabotage themselves in an unconscious effort to have as little of it as possible.
You want to enjoy living life with intention.
3. Regret:
A money block of regret is guilt that is inflicted on oneself in the form of an arbitrary amount of money.
If you find yourself feeling regretful or sad about something that happened in the past, then that may be a sign that you’re letting the past define your future.
Some examples include:
The regret individuals may feel after spending cash on things they later find were not worth the cost.
A person who has accumulated a debt that they cannot afford to repay.
Regretting the potential opportunities you missed to make more money.
It is often difficult to admit this feeling because it often involves acknowledging that one is not living up to their own standards.
4. Money is Evil:
Money is a symbol of power and control. It gives people the ability to dictate what they need or want, but it also limits individual freedom and diversity by instilling fear in others about being unable to meet their basic needs.
Money is an important tool to be used for good or evil depending on how it is handled.
There are many ways to express your individuality without the use of money.
5. Earning Money is Hard:
Another money chokepoint is the perception of the difficulty one has in earning income. All because of puritanical values about how to earn or spend money.
In order to earn money, we need to move away from the idea of earning and deserving. One way is through creative endeavors such as finding something you enjoy while you make extra income.
Earning money is harder than expected, but it’s not impossible. You can make a lot of cash- both online and offline- with the right skill set and a bit of hard work.
6. Laziness:
Many people despite knowing what is necessary for their financial well-being are stuck because they will not do what is necessary to move to the next level.
When our subconscious mind allows us to create a specific mindset and belief around money, it can have a detrimental effect on our relationships with other people and ourselves.
If you find yourself feeling lazy or unmotivated about doing anything related to money, it might be because you feel like there’s not enough time or you are too afraid to try.
7. Money Status
Money status is the state of a person’s bank account balance, and specifically their net worth. Many people relate their money status to how they feel about their financial situation rather than the reality.
People with money status scripts believe their net worth determines their self-worth.
People may overspend in an attempt to convince others they’re financially successful.
This is often seen with those who are unemployed and trying not to look like it. On the flip side is those who have gained some wealth but want their friends and family members to think it’s even greater than what the reality is.
Is money everything?
8. Debt:
If you find yourself feeling anxious or stressed when thinking about money-related topics like paying off debt, it could be because you’re subconsciously avoiding something that will help you to prosper.
Paying off debt is a huge financial milestone most everyone will experience in their money journey.
You have to determine why you are stopping yourself from the possibility of getting out of out debt.
9. Money Worship
Money worship is a type of idolatry, which can become addictive and destructive for many people.
Any type of money worship can have negative effects on the lives of those who practice it, as well as those around them. Common signs of money worship include hoarding, guilt about spending money, and anxiety over not having enough money.
Money worshippers believe that money will solve all their problems and bring happiness, which often leads them into financial ruin.
In short, money worship is the belief that you need more and more money to live a happy life. They also believe that they cannot have enough because they will never be able to afford all the things in their list of wants.
10. I’m Always Broke
This is always questioned by people who are struggling financially.
Since everyone can be rich, many people mistakenly believe those money impediments are the only type of abundance block that exists. They actually think they are incapable of breaking the I’m broke cycle and will never find contentment.
Meanwhile, scarcity blocks can dictate how much money they make no matter how hard they try. You are stuck in the mindset of being constantly poor.
How to Remove a Money Block
Money blocks are a common obstacle for anyone trying to make progress in their life.
In order to learn how to overcome these blocks, you need to identify what is stopping you from making progress.Then, take immediate action to overcome these blocks.
Money mindset will thwart your progress and are common problems that many people encounter.
They happen when you feel stuck in a situation because of your feelings about money, or your past experiences with money.
This is how do I stop money hindrances…
Step #1 – Uncover the Subconscious Mind
The subconscious is the part of the mind responsible for processing information and memories that are not currently being processed by conscious awareness. Also, it is the memories that remain after the conscious mind has processed the information.
The subconscious mind is the part of your brain that stores patterns and programs. These thoughts are created by society, from parental programming, and societal perceptions of what you can or cannot do.
You are unconsciously creating your own self-fulfilling prophecy.
This means you will continue to create the same outcomes until you shift your relationship with money.
There are different ways for shifting this relationship, such as through meditation or asking yourself what you want instead of what you don’t want.
Action Step: Write a list of the money blocks you struggle the most with and the factors that drive them. Before you make a financial decision, see if your money blocks are driving your thinking.
Step # 2 – Become Aware
Awareness is one of the biggest challenges that we face. You are probably not aware of what’s happening and so they don’t do anything about it.
Awareness is crucial to long term financial success.
The most difficult part of finding your limiting beliefs is simply noticing they are there.
You need to be really honest with yourself.
When you are aware of what is happening, the root of the problem will become clearer and easier to address.
In order to create a reality that is in line with what you expect, awareness is key.
Action Step: Before you make a purchase, think about the real reason you are acting in this way. Keep a notebook of blocks you come across and how you dealt with them.
Step #3 – Reframe Your Beliefs
Money blocks are beliefs that prevent you from having the things that you want. In order to change this, you must reframe your thoughts.
Reframing means rethinking an idea, concept, or belief.
It is a cognitive process that changes the way you view something so that it fits better with your current beliefs. This allows for a more holistic perspective that is not bound by your subconscious mind or whatever you have been taught.
Reframe your beliefs by looking at them objectively and seeing where they come from.
When you have a money block, it can be difficult to see yourself as deserving of certain things because your limiting belief may say otherwise. Reframing your beliefs is key to accepting abundance.
Beliefs are just ideas in your head that aren’t true.
Action Step: You can choose to believe something or not; it’s up to you! Belief is only a thought, so you can use this power of belief to clear away money blocks.
Why Release your Money Blocks
Releasing your money blocks is a process that many people don’t think about.
It is not just releasing the blocks in one specific area, but releasing them throughout your entire being. It’s about releasing the blocks that are holding you back from your full potential and taking all of the money blocks out of your life.
It is very important to learn how to remove your money blocks. Then, you can actually move on with the game.
To remove a money block, close your eyes and focus on your breath for five minutes. Then, visualize all of the excess energy being removed from your body with your breath.
Money blocks are common in our lives, but can be removed with active awareness.
Write down your money blocks on tiny little pieces of paper to act as reminders that there is more abundance than we realize and will encourage us to take action towards achieving financial freedom.
The Abundance View of Money
Money is a means to an end. It should not give you meaning in life. In fact, it is a tool of motivation for achieving your goals and dreams.
Money can a good thing.
Money can buy comfort and security. However, some people have the wrong mindset of worshiping which derives from their desire for material wealth.
Throughout our lives, we are all taught to fear abundance.
Here are the most common ways in which this is taught:
Parents tell their children not to talk about money.
Never mentioning how much they make or spend.
Teachers who avoid talking about success.
Not allowing failures because it is not fair for students today.
People who thrive say they are broke.
These thoughts are often subconsciously triggered by our society and the messages that we have been taught throughout our lives.
This is why talking about money can be so difficult for some people!
You are afraid of the word “abundance.”
By understanding this concept, you will begin to better identify when your mind has an abundance block being triggered in relation to your personal finances or business plans.
In order to remove abundance blocks, it is important to understand what and where they stem from.
Learn the 10 secrets to gaining personal and financial freedom for you and your family, from two top marketing experts and entrepreneurs. Start to redefine what is possible in your life!
This book will help you build confidence, shift your mindset, and learn the tools to take control of your life and start on a path toward your own definition of freedom.
Photo Credit:
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This is the #1 personal finance book I recommend all the time.
It is simple enough for anyone to comprehend. Plus, life changing for anyone’s personal finance situation.
Photo Credit:
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This book is life changing. You can accomplish things in a much shorter time if you put your mind to it. Works for me, so I know it will help you.
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This is an old classic personal finance book. While, yes, some of it is outdated. There are some sections that are timeless. If you are trying to break out of living paycheck to paycheck, getting out of debt, and changing your family’s history with money, then you need to read this book for a change in money mindset.
Photo Credit:
www.amazon.com
Be prepared for what it takes to become set for life. There is more to life than money and you need to learn your dream. But, it all starts with your mindset.
Ready for Releasing Money Blocks?
Money blocks are negative beliefs about money.
Sometimes, these beliefs cause you to feel like you don’t have enough or that what’s happening in your life is not good enough because of the financial situation you’re in.
There are plenty of causes financial blockages.
It doesn’t matter how much money someone has; they can always choose something new and get it if they make a conscious effort to see things differently.
Money is a topic that can be difficult to talk about.
Sometimes, people get embarrassed by the fact that they don’t know how much money they have, or they’re worried about not being respectful by the amount of money they have.
Remember…When you have money blocks, it is time to reframe your beliefs. You can use the power of positive money affirmations and meditation to clear these blocks.
Today, we offered tips on what you can do in order to move forward with your financial goals, including breaking the myths that surround money-related topics.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
When looking for funding for your small business, there are plenty of types of loans to consider, including term loans. A term loan provides a borrower with a lump sum of cash that’s repaid on a fixed repayment schedule.
Term loans could be helpful for businesses looking to expand their business, buy more real estate, update equipment, or purchase more inventory in advance.
Read on to learn more on small business term loans, their pros and cons, and the different types of term loans available.
What Is a Term Loan?
With a term loan, a person or business takes out a lump sum of money from a lender and then pays back the loan amount through regular, fixed-interval payments. These are often monthly payments but could be weekly, bi-weekly, or even quarterly.
Part of the payment would go to principal, lowering the remaining loan balance, and part would go to the lender in the form of interest, which can be a fixed or variable rate.
Term loans aren’t just used for small businesses, though. Mortgage loans, auto loans, and student loans are also all types of term loans.
What Can a Term Loan Be Used For?
Common uses of term loans for businesses include:
• Buying real estate or rehabbing property you already own (in that case, the real estate would likely serve as the collateral for the loan)
• Buying new equipment or repairing what you have (the equipment could serve as collateral)
• Restocking inventory, perhaps in anticipation of the holidays or another busy season
• Buying vehicles for work
• Meeting payroll and other expenses
• Covering employee wages
What Are Different Types of Term Loans?
Small business owners may take out a term loan for a variety of purposes, which is one way to consider types of term loans. Another way is through the loan term’s length: short, intermediate, and long.
Payments may be higher with short-term loans compared to when the payback period is longer (depending upon how much the business needs to borrow). When considering what your business can qualify for and pay back with its available cash flow, this needs to be factored in.
Short-Term Loans
Short-term loans typically have a length of less than one year. They may extend to 18 months. Businesses that don’t qualify for a line of credit might find this type of term loan helpful. Though these loans are typically easier to qualify for, they tend to have higher interest rates.
A short-term loan may come with a balloon payment, meaning the last payment is much larger than the rest.
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Intermediate-Term Loans
Intermediate loans typically have terms between one and three years. Because of their slightly longer payoff time, they may be an option if you’re hiring a new salesperson, for instance, and know there might be some lag time before they start bringing in revenue.
Like short-term loans, intermediate business term loans may also come with a balloon repayment structure.
Long-Term Loans
Long-term loans typically have terms of five to 10 years, but they may go up to 25 years. They typically require collateral, such as real estate or equipment, and may come with lower interest rates compared to short- and intermediate-term loans.
Also keep in mind that long-term loans typically tend to be more difficult to qualify for, requiring proof of revenue and a solid credit history.
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How Do Term Loans Work?
After you’re clear about how much you need to borrow and for what purpose, then you can approach financial institutions to see what programs they offer, their interest rates, and their loan terms.
You’ll also want to find out what documentation you’ll need in order to apply, what collateral might be needed, and whether they can supply the funds on your timeline. Also, check to see what small business loan fees may apply.
Once you’ve evaluated all of the above factors, comparison shop multiple lenders and choose the lender that suits your needs. Applying for the loan is typically done online, but may be able to be done in person if you’re applying with a bank.
Rates and terms offered can vary based on the lender, your personal and business credit history, your time in business, and your financial health and history.
If you’re approved for the loan, you would sign paperwork and then be free to use the funds once disbursed. You’d then make regular payments based on the loan agreement.
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What Are the Pros and Cons to Term Loans?
Just as with any kind of loan, term loans have advantages and disadvantages.
Pros of Term Loans
Pros of term loans include:
• You may be able to borrow a large amount of money.
• Multiple types of term loan programs may be available when you look at different lenders.
• Interest rates are typically lower than credit cards, payday loans, and other short-term funding options.
• As you pay the term loan back on time, you can boost your business credit score.
Note: Check with your accountant or tax professional to see what tax benefits you may realize. Term loan interest may be tax-deductible.
Recommended: What Are the Tax Benefits of a Limited Liability Company (LLC)?
Cons of Term Loans
As with any financial product, there are downsides to consider, as well. Cons of term loans include:
• You may be entering into a long-term debt.
• The loan application process may take longer than you’d like.
• Some loans come with prepayment penalties, which means that you can’t prepay to reduce the amount of interest paid over the loan’s life.
• If your credit isn’t the best, the interest rates you’re offered may not be, either.
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Applying for a Term Loan
Be sure to assess your business goals and lenders’ eligibility requirements as you choose the best option for your company.
Compare Small Business Term Loans
Comparing the lenders’ terms helps you improve your chances of qualifying for a loan and saves you time by helping you avoid applying for options for which you’re not eligible. On top of that, you want to make sure you’re not overpaying when it comes to rates and fees, or endangering your business cash flow with a repayment schedule that’s too aggressive.
Look at Each Lender’s Eligibility Requirements
It’s helpful to examine these requirements side by side:
• Personal and business credit
• Time in business
• Annual revenue
• Collateral
• Down payment
• Personal guarantee
Scrutinize the Lender’s Fees
Also look at the fees side by side:
• Interest rate and APR
• Origination fees
• Late payment fees
• Early payoff penalty
Be Sure You Understand Repayment Schedule
Questions to ask:
• Are payments made daily, weekly, monthly, or quarterly?
• Are payments automatically deducted from a business bank account?
Many lenders have strict repayment terms, meaning you need to make sure you can meet those standards so you don’t overdraft your accounts, accrue late fees, and damage your credit score.
Recommended: Long-Term Small Business Loans
Documents Needed to Apply for a Term Loan
When applying for a loan, documents often requested by lenders include:
• Bank statements (personal and business)
• Tax returns (personal and business)
• Business legal documents, including licenses and permits
• Personal identification
• Business plan
• Revenue statements
• Accounts receivable reports
• Accounts payable reports
Because exact documentation required varies by lender and loan type (and whether collateral is involved), you’ll need to clarify what the lender you choose will need.
Also, before you go straight to loans, it can be worthwhile to explore business grants since those do not need to be paid back.
Recommended: What Are Small Business Grants?
The Takeaway
When businesses seek funding, term loans are an option to consider. With a business term loan, the company borrows a certain amount of money in a lump sum and then pays it back in regular installments at either a fixed or variable interest rate. Terms can range from short (even under a year) to long (perhaps as long as 25 years), with the funds used for a variety of purposes.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.
FAQ
What does “term loan” mean for a business loan?
A term loan provides borrowers with a certain amount of cash upfront in exchange for specific borrowing terms. Borrowers agree to pay their lenders a fixed amount over a certain repayment schedule. The interest rate can be either fixed or variable.
What is an example of a term loan?
A small business loan of $50,000 from a bank that has to be paid over three years in monthly payments, with fixed interest.
What are the three main types of term loans?
They are short term, intermediate term, and long term.
SoFi’s marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
When you ask people how they’re doing, you often get a knee-jerk “fine” or “good” without much introspection. But lately, when you ask people about the economy, they have clear feelings.
Over the past several years, the economy has been remarkable, in a literal sense; there has been a lot to talk about. Inflation rose to levels we hadn’t seen in about 40 years, and home prices climbed roughly 50%. The Federal Reserve stepped in to fight inflation. Interest rates reached territory they hadn’t touched in 20 years or more, but they did so without triggering a recession. Economic growth has remained high and the labor market strong. All of these factors have resulted in a cacophony of narratives about the economy, which is very likely playing a role in people’s perceptions.
A new survey from NerdWallet, conducted online by The Harris Poll among more than 2,000 U.S. adults, reveals a disconnect that illustrates these perceptions well. When asked how they feel about a variety of economic and financial topics now compared with 12 months ago, Americans were nearly twice as likely to feel worse than better about the state of the U.S. economy in general. Yet they were slightly more likely to feel better than worse about the state of their own personal finances.
Over the past 12 months, the survey period we asked about, the economy has actually remained strong, and the post-pandemic recovery has carried on better than expected. Consumers continue spending, which is typically taken as a sign of confidence. It may be tempting to disregard negative sentiment if we can’t confirm it’s rooted in current economic reality. But that sentiment may provide clues to yet-unseen problems and potentially drive behavior changes that could have significant economic impact.
Half of Americans are feeling worse about the economy
People’s perceptions are colored by their background, personality traits and exposure to information, among many other things. And these perceptions don’t always reflect demonstrable reality, particularly when you ask about how people feel. Asking about perceptions and focusing on an emotional component can give people explicit permission to detach their experience from what the actual evidence might show. And often, it’s likely our feelings that govern our behaviors, whether we’re talking about managing relationships or spending money.
About half (49%) of Americans say they feel worse about the state of the U.S. economy in general now compared to 12 months ago, according to the NerdWallet survey conducted in April. Just 26% feel better. Among the questions asked, this one garnered the strongest opinions — it had the lowest rate of people who neither felt better nor worse.
Twelve months before this survey, the economic indicators most people would encounter in daily living were pretty close to where they are now. Unemployment was a low 3.4%; now, it’s still low by historical standards, at 3.9%. Gas prices were relatively the same: $3.71 per gallon on average then and $3.73 now. One major improvement over that one-year period can be found in price growth, however. Inflation in April 2023 was near 5%. Now, it’s closer to 3.5%. In fact, wages are now growing faster than prices.
When asked to look more locally — how they feel about the state of their personal finances now versus 12 months ago — one-third (33%) of Americans feel better and 29% feel worse. Parents of minor children are more likely (39%) than non-parents (31%) to feel better.
What’s driving the disconnect?
The disconnect between how people feel about the economy at large and how they feel about their household finances seems counterintuitive. By most official measures, the economy is strong. If feelings or perspectives run contrary to that, one source of the negative sentiment could be personal experience. In other words, if I feel bad about the economy when the economy is doing well, maybe it’s because my personal financial situation is not so great. But a modest segment of Americans hold these two seemingly disparate feelings simultaneously: 18% of those who feel worse about the economy now than they did 12 months ago say they feel better about their personal finances over the same period.
There are many other possible explanations for the perception of a worsening economy, including:
1. We could be measuring the economy wrong (maybe it’s not doing as well as we think). The COVID-19 pandemic didn’t just shake the economy, it shook economic data too. This explanation might not be the most likely, however, as the people responsible for economic data are experts in their field. If someone’s going to get it right, it’s likely them. Data collection, benchmarking and seasonal adjustments have all been impacted and continue to be accounted for.
2. Exposure to negative stories in the news or social media could be coloring people’s outlook on the economy’s health. The last high inflation period was a relative lifetime ago, in the 1980s. Then, our primary sources of economic information came at regularly scheduled and limited intervals: in the morning newspaper or in front of the evening newscast, for example. Now, economic data is everywhere you look, translated by both experts and social media influencers alike. This consistent attention to the economy’s measurements could be having an outsized impact on our perception of its well-being.
3. The housing market could be playing an outsized role in overall economic perspectives. If there’s one section of the economy that is undoubtedly difficult, it’s the housing market. Under current conditions — high home prices, a paltry number of homes available for sale and high borrowing costs — even if someone has taken steps to position themselves to buy, they’ll be met with difficulties. Healthy household finances can only get you so far if you’re trying to buy a home in this unfriendly market, and confronting these roadblocks on the path to a long-term financial goal can be very discouraging.
4. We’re aware that even though we might be doing better personally, others aren’t so fortunate. Aggregate measures of the economy conceal a lot of nuance. Unemployment is low on a national scale, but people are still unemployed. Wage growth is outpacing inflation, but not everyone is receiving raises. Even if you personally aren’t experiencing any downside to this economy, knowing that others are may color your views. This isn’t necessarily a bad thing — empathy across the economy can drive meaningful community involvement and policies that improve the well-being of others.
What we shouldn’t do is assume that people just don’t understand the economy and write off the disconnect as immaterial. At some point, how we feel about the economy can impact how we act. It can affect decisions such as whether now’s a good time to buy a new car, invest in the stock market or start a new business. For business owners, it can impact hiring and investment decisions. And all of these spending and saving decisions can ultimately impact the health of the economy, feeding into official data. Consumer expenditures account for about two-thirds of total GDP, for example. So how we feel about things, no matter the driving force, can impact economic reality. And that makes this sentiment worth listening to.
Loans can help us achieve big goals, like buying a car or going to college. But did you know that the interest rate on your loan can affect how much money you pay back? A lower interest rate means you pay less money over time. So, how can you get a lower loan rate? Here are some simple tips to help you save money.
1. Check Your Credit Score and Credit Reports
We know this is obvious but it needs to be said. Make sure that you are more familiar with your credit than any potential lender could be. This means checking your credit score and your credit reports (all three) because your lender will be looking at more than just your score. You may feel like you have a decent credit score, and then be surprised by what rate your lender quotes you because there are too many negative items in your credit report.
If you’ve never downloaded copies of your credit reports before, you can do so for free at the only official website, AnnualCreditReport.com
If you want a more broken out view of your credit and explanations for what everything means, you can also get a free Credit Report Card from us.
2. Really Spend Time Shopping Around
Don’t settle for the first loan offer you get. Don’t settle for the second. The difference of half a percent can mean thousands of dollars, so really take your time and do your research. Check the rates offered by your own bank, credit unions, digital lenders, mortgage brokers – anyone – to see who has the lowest rates.
Just remember to compare not only the interest rates but also any fees or charges that might be included.
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3. Consider a Co-Signer
If you’re having trouble getting approved for a loan or getting a low interest rate on your own, consider asking someone with good credit to co-sign the loan with you. Having a co-signer with a strong credit history can help you qualify for a lower interest rate.
4. Save Up For a Big Down Payment
Putting more money down upfront can help you secure a lower interest rate on your loan. It shows lenders that you’re serious about paying back the money you borrow. Plus, a larger down payment means you’ll have a smaller loan amount, which can also lead to lower monthly payments and less interest paid over time.
5. Choose a Shorter Loan Term
The length of your loan term can affect your interest rate. Generally, shorter loan terms come with lower interest rates because the lender takes on less risk. While a shorter loan term means higher monthly payments, it also means you’ll pay less in interest over the life of the loan. So if you can afford it, choosing a shorter loan term can help you save money in the long run.
6. Improve Your Debt-to-Income Ratio
Lenders also consider your debt-to-income ratio when deciding your loan rate. This is the amount of money you owe each month compared to the amount of money you make. If you have a high debt-to-income ratio, lenders might see you as a higher risk borrower and charge you a higher interest rate. Paying down debt or increasing your income can help improve your debt-to-income ratio and qualify you for a lower rate.
7. Ask About Discounts
Some lenders offer discounts on loan rates for things like setting up automatic payments or having a checking account with them. It doesn’t hurt to ask if there are any discounts or special offers available when you apply for a loan. Even a small discount can add up to big savings over time.
8. Use Mortgage Points
Mortgage points are a way to lower your interest rate by paying extra money upfront to your lender when you close on your mortgage. Each point typically costs 1% of the total amount of your loan.
So, let’s say you’re getting a $200,000 mortgage, and the lender offers you the option to buy one mortgage point for $2,000. If you buy one point, you’d pay an extra $2,000 upfront, but your lender might lower your interest rate by, let’s say, 0.25%.
If you plan to stay in your house for a long time, buying mortgage points might be a good idea because you could end up saving more money on your monthly mortgage payments. But remember, it’s not always the right choice for everyone. Think about how long you plan to stay in the house and whether you’ll actually save enough money in the long run to make up for the extra cost upfront.
By following these tips, you can increase your chances of getting a lower loan rate and save money on interest. Remember, every little bit counts when it comes to your finances, so take the time to explore your options and find the best loan rate for you. With a little effort, you can be on your way to achieving your goals while keeping more money in your pocket!
Investing can feel like riding a rollercoaster, especially when you’re trying to keep up with market fluctuations. One popular technique that long-term investors use to smooth out this ride is dollar-cost averaging (DCA).
This investment strategy offers a methodical approach to investing that can eliminate the guesswork and stress of trying to time the market. Let’s dive into the world of DCA and see how it might serve your personal finance goals.
Basics of Dollar-Cost Averaging
Dollar-cost averaging is a simple but effective investment strategy. The basic idea is to invest a fixed dollar amount at regular intervals into a particular investment, such as a stock or mutual fund, regardless of its share price. Over time, this approach can result in a lower average price per share compared to making a lump sum investment at a higher price.
Here’s how to dollar-cost average: Suppose you decide to invest $500 into an index fund every month. The share price of the fund fluctuates from month to month, sometimes high, sometimes low. By investing regularly, you buy more shares when the price is low and fewer shares when the price is high. Over time, this can lead to a lower average purchase price.
A Deeper Dive Into How Dollar-Cost Averaging Works
One way to get a better grasp of how dollar-cost averaging works is to look at a hypothetical scenario. Suppose you decide to invest $200 in a mutual fund every month. In January, the share price is $20, so you buy 10 shares.
In February, the share price drops to $10, so your $200 buys you 20 shares. In March, the price goes up to $25, so you can only afford 8 shares. Despite the market’s fluctuations, your regular investment allowed you to purchase more shares when the price was low and fewer shares when the price was high, resulting in a lower average purchase price.
Benefits of Dollar-Cost Averaging
The key advantage of the dollar-cost averaging approach is that it mitigates market volatility. Instead of trying to time the market and potentially making ill-timed investment decisions, DCA allows you to follow a fixed schedule and make regular investments.
This strategy can be especially beneficial in declining markets. When stock prices fall, your fixed dollar amount can purchase more shares. If the stock market recovers, you would have bought those shares at lower prices, potentially leading to gains. This way, DCA can turn market declines into opportunities.
Another benefit of dollar-cost averaging is that it can promote disciplined investing. By investing a fixed amount at regular intervals, you are more likely to stick with your investing strategy, even when the market is turbulent.
The Psychology Behind Dollar-Cost Averaging
Dollar-cost averaging isn’t just about mathematical probabilities and financial strategy—it’s also deeply intertwined with investor psychology. Investing can be an emotional roller coaster, especially during periods of significant market volatility. When stock prices swing wildly, investors often let their emotions guide their decisions, which can lead to costly mistakes.
For instance, a sudden market downturn might provoke feelings of fear and uncertainty. In response to these emotions, some investors may resort to panic selling, hastily offloading their investments to stave off further losses. This can be detrimental to their long-term financial goals because they might miss out on potential gains when the market eventually rebounds.
On the flip side, during a bullish market when prices are high, feelings of greed and fear of missing out (FOMO) might take over. These emotions can lead to impulsive buying, where investors pour money into the market hoping to ride the wave. But if the market corrects or crashes, these investors stand to lose a significant portion of their investment.
This is where the dollar-cost averaging approach comes into play. The discipline of investing a fixed amount at regular intervals removes the need to time the market and reduces the influence of emotions on investment decisions. It provides a systematic investment plan that is followed regardless of whether the market is up or down. This disciplined approach can prevent impulsive decisions, providing a level of emotional comfort and stability.
Limitations and Risks of Dollar-Cost Averaging
While dollar-cost averaging offers many benefits, it’s not without its potential drawbacks. One potential downside is that if the market consistently rises, a dollar-cost averaging strategy could yield lower returns compared to lump sum investing. In bullish markets, a lump sum invested early would have more time to grow.
Another risk is that despite the potential to achieve a lower average price per share, DCA doesn’t guarantee profits or protect against losses. If the market continually declines, you may lose money, especially if you need to withdraw your investment before the market has a chance to recover.
Finally, for dollar-cost averaging to work effectively, it requires regular and continuous investments. This may pose a challenge if you have a tight budget or unpredictable cash flow.
Dollar-Cost Averaging vs. Lump Sum Investing
Lump sum investing is another common strategy where an investor puts a large sum of money into the market at once. This approach can yield higher returns during a bull market because your entire investment is exposed to the market’s growth from the beginning.
However, timing the lump sum investment correctly can be challenging, even for professional investors. Misjudging the market can lead to buying high, which could result in lower returns or even losses. It’s also worth noting that investing a large sum all at once can be a significant risk if the market takes a downturn shortly after.
Choosing between dollar-cost averaging and lump sum investing largely depends on factors like your risk tolerance, investment horizon, and the amount of money you have to invest.
Implementing Dollar-Cost Averaging in Your Investment Strategy
If you’re interested in implementing a dollar-cost averaging strategy, you’ll need to consider several factors:
Choosing an investment: First, choose a suitable investment option. This could be individual stocks, mutual funds, or exchange-traded funds (ETFs). It’s wise to diversify across different asset classes to reduce risk.
Budget: Decide how much money you can invest regularly. This could be a fixed dollar amount you set aside from your paycheck every month. The key is to ensure it’s an amount you can commit to over time.
Frequency: Determine how often you want to invest. This could be monthly, quarterly, or any interval that fits your financial situation. The main point is to stick to a regular schedule.
Duration: Consider how long you plan to keep investing. This would typically be linked to your financial goals. Are you saving for retirement, a down payment on a home, or your child’s college education? Your end goal can help you determine how long you dollar-cost average.
Dollar-Cost Averaging in Different Market Conditions
Dollar-cost averaging can prove beneficial in various market conditions:
Bullish markets: In a steadily rising market, a DCA strategy may underperform a lump sum investing approach. However, the benefit is that you’re not risking a large sum of money at once and aren’t trying to time the market.
Bearish markets: In declining markets, DCA comes into its own by allowing you to buy more shares at lower prices. This can reduce the average cost of your investment over time.
Volatile markets: Market volatility can make it difficult to time your investments. With DCA, you’re investing at regular intervals, which means you’re less likely to be swayed by short-term market swings.
Dollar-Cost Averaging With Robo-Advisors and Investment Apps
Nowadays, you don’t need to manually make investments at regular intervals. Many financial institutions offer automatic trading plans, and several robo-advisors and investment apps also provide automated DCA services.
These tools can automatically deduct a set amount from your bank or brokerage account and invest it according to your preferences, making DCA even more straightforward.
Conclusion
Dollar-cost averaging helps you manage fluctuations in the market, mitigate the risks of market timing, and potentially lower your average purchase price. It offers a systematic and disciplined approach to investing. However, like any investment strategy, it’s not without risks. Always consider your financial goals, risk tolerance, and investment horizon before deciding to implement DCA.
Remember, past performance is not indicative of future results, and it’s important to evaluate your investment options carefully. While this article provides a thorough understanding of how dollar-cost averaging works, it does not provide investment advice. You should consider seeking advice from professional advisory or brokerage services that can provide personalized advice based on your circumstances.
Frequently Asked Questions
Can I use dollar-cost averaging in my retirement account?
Yes, DCA fits perfectly in retirement accounts like 401(k)s or IRAs. You’re typically contributing a set amount regularly, which is DCA in practice. Over time, this can help smooth out the impact of market volatility on your retirement savings.
Do I need a large sum of money to start dollar-cost averaging?
No, the advantage of DCA is that it allows you to start investing with any amount you’re comfortable with. You simply invest a fixed amount at regular intervals, which could be as little as a few dollars every month.
How does dollar-cost averaging help me build wealth over time?
DCA can contribute to wealth building by potentially lowering the average cost of your investments over time. By buying more shares when prices are low and fewer when they’re high, you might lower your average cost per share, setting the stage for potential gains in the long run.
Can dollar-cost averaging protect me from all investment losses?
While DCA can help mitigate the effects of volatile markets, it does not guarantee protection from all investment losses. The value of your investments can still go down, particularly if the entire market is in a prolonged downturn. It’s important to have a diversified portfolio and a strategy that aligns with your risk tolerance.
Is dollar-cost averaging only suitable for stocks?
Not at all. While often associated with buying stocks, you can apply dollar-cost averaging to other types of investments as well, like mutual funds, index funds, exchange-traded funds (ETFs), or even Bitcoin. The key is that the asset’s price changes over time.
How often should I make investments if I’m using a dollar-cost averaging strategy?
The frequency of investments in a DCA strategy can vary based on your personal finance situation and goals. Common intervals include monthly and bi-weekly, often aligned with pay periods. The key is to be consistent and stick to your predetermined schedule.
Loan application volumes increased last week, as government-backed refinances maintained their upward trend, according to the Mortgage Bankers Association.
The MBA’s seasonally adjusted Market Composite Index, a measure of weekly application activity based on surveys of trade group members, rose 1.9% for the seven-day period ending May 17. Volumes increased for the third straight survey, after inching up 0.5% one week earlier. Year-over-year, applications came in 1.5% lower.
“Rates coming down from recent highs spurred some borrowers to act, with increases across both conventional and government refinance applications,” said Joel Kan, MBA vice president and deputy chief economist, in a press release.
The fixed contract rate for 30-year conforming mortgages, with origination balances eligible for sale to the government-sponsored enterprises, dropped to its lowest point in seven weeks at 7.01% among trade group members, falling 7 basis points from 7.08%. Points used to help buy down the rate declined to 0.6 from 0.63 for 80% loan-to-value ratio applications.
The latest numbers come in as the association sees continued challenges this year for lenders, with MBA economists revising some of its annual projections slightly downward this week from April’s forecast. Recent economic data, though, is leading some in the business community to hold out hope for a cut in rates this year from the Federal Reserve that could spur activity.
Refinances propelled weekly gains in volume, particularly among government-sponsored loans. The MBA’s Refinance Index jumped up 7.4% week over week, and activity also came in 21.2% higher from the same week a year ago.
Of note, refinances coming from the Department of Veterans Affairs continued its recent surge, up 31.8% from the previous week, “although the current level of refinancing is still well below its historical average,” Kan said. The Government Refinance Index came in 16.1% higher, while conventional lending rose 3.3%.
The seasonally adjusted Purchase Index, on the other hand, lost some steam, down 1.2% from seven days earlier, its second straight weekly drop. Compared to year-ago levels, activity was also 11.6% lower.
“Purchase activity continues to lag despite this recent decline in rates,” Kan said, noting pressure coming from low inventory, which keeps prices elevated.
As a result, refinances increased to 34% of all new loan applications last week, compared to 66% for purchases. A week earlier the ratio stood at 32% to 68%.
The share of adjustable-rate mortgages, meanwhile, narrowed further to 6.6% from 7% and 7.7% the prior two weeks. Interest in ARMs traditionally moves in the same direction as movements in fixed rates.
Largely thanks to the current heightened pace of refinances, federally sponsored lending activity saw the size of its share grow relative to overall activity. Federal Housing Administration-backed mortgages accounted for 12.8% of all new applications, rising from 12.4% week over week, while VA-guaranteed mortgages saw its share grow to 13.7% from 12.7%. But U.S. Department of Agriculture activity garnered a smaller slice of 0.3%, falling from 0.4% the prior week.
Mortgage rates fell across the board in tandem with the conforming average. The mean fixed-contract rate for 30-year jumbo loans with balances above conforming limits slid down 4 basis points to 7.18% from 7.22% in the previous survey. Borrower points also decreased to 0.44 from 0.58 for 80% LTV-ratio loans.
The 30-year fixed rate for FHA-backed mortgages took a 9 basis point fall to average 6.77% compared to 6.86% seven days prior. Points dropped to 0.88 from 0.94.
The contract average for the 15-year fixed mortgage equaled 6.42%, tumbling 19 basis points from 6.61% a week earlier. Points used to buy down the loan came in at 0.54, down from 0.65.
The average 5/1 contract ARM rate also dipped, finishing last week at 6.48% compared to 6.56% in the previous survey period. Borrowers typically used 0.55 worth of points, down from 0.66, to buy down the rate, which starts with a fixed 60-month term.
Inside: Making money is one thing, but saving it is another. Learn how to save 10000 in a year using the following steps. Plus download your free printable!
The number of people who do not save money is growing at a rapid pace. The economy has changed and many families are struggling to make ends meet, even with two incomes.
That is why saving $10,000 in one year can seem like an impossible goal for some people.
You can save $10,000 in a year.
This has been proven over and over here at Money Bliss.
This has happened because my readers dedicated themselves to one of our money savings challenges.
A lot of people are interested in saving more money right now, but not everyone can afford to save a lot of money. You do not need a ton of income to be successful, you just need to dedicate yourself to new habits of saving.
The thing is – money doesn’t grow on trees, and I wouldn’t recommend waiting for one either if you want your savings plan to be successful.
Are you ready to be the next Money Bliss success story to save 10000 dollars in a year?
If so, then you are in the right place. Let’s create your 10000 saving plan.
How to Save $10000 in One Year
It’s not as difficult to save $10,000 in one year as you may think. All it takes is a few small changes, creating a plan, and some careful budgeting.
The first step is to start saving money.
This can be done by paying yourself first. Decide on the amount you want to save each pay period. Then, you prioritize your savings before all of your expenses and money runs out
Next, you have to decide where to save your money.
Will you put the money into an online savings account where the temptation goes away?
Or invest in your future with a Roth IRA and/or 401k?
Where can you grow your savings over time?
Do not underestimate the power of your employer match contribution. If they offer this option for retirement savings or another type of investment account like Roth IRA or 401K, take advantage by contributing the maximum your plan allows each pay period.
Finally, you have to make sure you are living below your means with your increased saving rate.
These are all the fine details to make sure you learn how to save $10,000 in one year with cutting expenses.
Don’t forget to set up automatic transfers for all of your savings so they’ll be taken care of even when you don’t do it!
Shortly, you will find savings tips to help you save $10,000. The exact steps you need to do to save your first $10K or whether you want to do it again.
Breakdown How to Save 10000 Dollars in a Year:
But, first how much do you have to save to hit that 10K milestone in a year?
To save $10,000 in one year, you must set aside an average of $833.33 per month for 12 months.
Don’t quit reading now and walk away! You are reading this post for a reason. So, you will reach your saving challenge goal.
Let’s break that monthly number down into bit-size chunks.
Daily:
$27.40
Weekly:
$192.31
Bi-Weekly:
$384.62
Monthly:
$833.33
Bi-Monthly:
$416.67
Quarterly:
$2,500.00
Places to Save $10K in a Year
Your goal for the year is to save $10,000.
First, decide where you want to put this dollar bump in savings.
Everyone is at a stage in their financial journey, so what you choose will be completely different than someone else.
Here are some ideas:
Also, you may likely divide up your $10K savings into more than one bucket!
What are the ways you plan on saving $10,000?
Tips to help you Save $10000
According to the Federal Reserve, only half of Americans have retirement accounts.1
This means that most people will retire broke. Yikes!
The only way to achieve a comfortable lifestyle is by saving, investing, and planning for your future.
You can save $10,000 in one year if you make a goal and try your best. It will take some effort as it is not easy to do so, but the rewards are worth it.
If there’s anything that we know for certain about living life well, then this is: “you must be willing to work hard.”
So, what are some practical steps that you can take to save money? Let’s start with the first one.
1. Mindset
The purpose of this personal challenge is to help you save $10,000 in one year.
To save $10,000, you probably cannot continue doing what you are already doing when it comes to saving money.
You need to change your money mindset and your money habits.
There are a few key steps you need to take in order to save money. The first step is to have a proper mindset towards your savings – figure out where all of your money is going, then figure out whether or to what degree you’re living as you can afford it.
The next step is you believe that you are capable of saving money. That is the bigger part of the battle for most. It is believing that are incapable of saving that much money.
If you haven’t heard of a vision board, then you must create one ASAP. And don’t forget those money affirmations.
2. Automate Savings
Automating savings is a great way to save money.
It can be done by setting up automatic transfers from your checking account or even transferring funds from your paycheck into an emergency fund that you will never touch.
This allows for more freedom in spending without having to think about if you saved your goal for that pay period.
With direct deposit, you will save money automatically and the temptation to spend drastically goes down.
If direct deposit is unavailable, you could set up an automatic transfer with your bank.
3. Focus on Saving Goal
All of your money decisions revolve around your goal of saving 10000 dollars.
That is the smart financial goal you have created for yourself. Now, that is your #1 focus.
Here is how to believe you will save $10k before you start:
Tell yourself over and over that you will save $10K by (insert your date).
Post reminders about your goal.
Put a sticky note on your debit or credit cards and/or cash envelopes.
Find an accountability partner.
Review your habits that make saving more different.
All in all, you have to stay dedicated and commit to your saving goal.
4. Budgeting
Budgeting allows you to save money and reduce stress.
It is important to take the time and create a budget that works for your needs to minimize spending and maximize savings.
When you sit down and take a hard look at your budget, it is easier to make cuts and prioritize what needs the most attention.
In this case, your goal for the next year is to save 10000 dollars!
Don’t skip this step! You must pay yourself first to reach your 10k goal.
5. Biggest Expenses
We are talking about your biggest fixed expenses – housing, transportation, and food.
Big moves are difficult, but they produce big results. Downsizing or moving to a cheaper place is drastic, but it can save you thousands of dollars in the long run.
Other options include renting out space in your home on Airbnb, negotiating with your landlord, and taking other measures to reduce housing expenses.
Although it is now more uncommon for families to have only one car, that is a great way to save money on a depreciating asset and ongoing maintenance costs.
Refinancing a car payment or trading in your set of wheels for an affordable ride will help you keep up with the latest trends without breaking the bank. You could also save on gas by doing your own maintenance.
In order to save some money, you should start meal planning and save money on food. You can also eat out less and use coupons or cash back apps for your grocery shopping.
Buying in bulk is a great way to get cheaper prices on certain items, but it might be too much of a hassle if you’re unsure about what kind of foods work best with each other–and there’s always the possibility that they’ll go bad before their expiration date!!
6. Increase Your Income
When you increase your income, the sky is virtually your limit. There are various ways to accomplish this goal but each way comes with its own set of risks and rewards.
The best way to increase your income is by taking on a second job. Even better, negotiate or find a new job that pays more and increases your income.
The next possible way to make money is from a side hustle or an online business, such as Amazon FBA, Etsy, eBay flipper, Rover, or affiliate marketing. This will allow you to be your own boss and work from home.
Check out the best ways to make money online for beginners.
People who want to save $10,000 in a year should increase their income. To do that, you must find ways to earn more money.
Don’t forget that you always want your money to make money! This is called passive income.
It is possible to make more money on your business than you make more money in your current job or career.
7. Track Progress
It’s important to track progress with goals. This will help you see the journey and milestones of your savings.
To track progress, download our free $10000 printable and check off boxes as you hit milestones.
Before you can reach $10,000 in savings, you must first reach smaller amounts such as $500, $1,000, or $5,000.
8. Celebrate Milestones
You can decide what to reward yourself with, but it’s important to celebrate each win by rewarding yourself somehow.
Plan your milestones and rewards in advance.
That way you have the motivation to keep going and know that you can afford your milestone.
Some examples:
$500 = Ice cream treat out
$1000 = Take out from your favorite place
$2500 = Something you want, but haven’t wanted to splurge.
$5000 = Halfway point! Celebrate with dinner out.
$7500 = Plan an experience gift like ziplining or rock climbing.
$10000 = A hotel night and dinner to celebrate with your significant other or friends.
Now, come out with your own milestones and rewards that match your lifestyle and desires.
Bonus Tip – Get Out of Debt
Saving money becomes way easier once you have paid off all debts (excluding mortgage).
This can be accomplished by prioritizing your loans, paying down the highest-interest loan, and then moving on to the next one.
Once you’re free from debts, it’s time for some simple adjustments in your spending habits that will help save thousands over a year.
Debt will always hold you back on your financial journey until you enjoy a debt free life!
How to save $10000 fast
So, you want to save $10,000 in a year?
Many of the methods listed above will help you save $10,000. But, let’s add ways to get your results faster!
You can do it!
At first glance, this might seem like an impossible task but with these tips and tricks, it’s not too hard to set your budget up so that you’ll be able to afford everything from a vacation abroad in your future.
The key is finding ways around spending money on things such as coffee, clothes, and other small luxuries so you can save the most money.
Here is a list of ways to save $10,000 in one year:
Cut your spending on coffee by 90%
Eliminate cable TV from your life for a month
Stop using taxis or public transportation when possible
Avoiding credit card debt.
Living with roommates instead of buying a house.
Get rid of all unnecessary subscriptions
Stop buying coffee at Starbucks or other coffee shops
Don’t buy anything with coupons unless it’s something you really need
Stop eating out
Cook your own food at home
Figure out what you spend the most on in a month and cut back by 20%
Sell any unused items you have in your home
Spend $5 per meal. Frugal meals are good!
Creates grocery list to limit eating out
Live like a thrifty person
Try a no spend challenge
Compare what is happening with your savings goals
Eliminate fees
Be careful with your money. Stop buying things that you don’t need and start living more simply. Do you really need that new iPhone?
Think about purchases over $25, specifically whether or not it’s worth it
Save for a set purchase instead of buying things as you go
Limit all impulse buys
For more ideas, check out our 200+ Frugal Living Tips.
There are some faster methods above that will get the job done quicker than just saving for 12 months.
Saving money isn’t as hard as you think it is. All it takes is some creativity and a little bit of willpower.
How to Save $10000 in a Year with Envelopes
Envelopes are a great way to save money. They allow you to collect interest on the cash you have saved in your account. Envelopes make it easy for people without much financial knowledge to save.
Since you are saving such a large amount of money, it is best to use an online budgeting app that works well with the envelope method.
To save money, you need to know how much you have saved with the 10k in 100 days challenge.
Tracking your progress is a good way of doing this and can be done by using envelopes with the amount inside that corresponds to what total savings count towards each goal.
Download Your 10000 Dollars Printable
Saving up $10,000 can be difficult and it’s not easy to know what to do. The tricky part is learning how to sustain those savings for the long run.
To help you show you how to save on a consistent basis, you can download one of our free $10000 printables.
When you sign up, you will have access to these free money saving challenge printables!
How to Save 10000 in 6 Months
Okay, you are determined to speed up your $10k savings!
That is awesome!
All you have to do is double how much you are saving each pay period.
To save $10,000 in 6 months, you must set aside an average of $1,666.67 per month for 6 months.
Daily:
$54.65
Weekly:
$384.62
Bi-Weekly:
$769.23
Monthly:
$1,666.67
Bi-Monthly:
$833.33
Quarterly:
$5,000.00
How to Save $10000 in 3 Months
Saving $10,000 in 3 months is a difficult task but not impossible. Here are some suggestions:
-Start saving money as soon as you can and work your way up to $10,000.
-House hacking is a must. Buy a house and rent out the rooms for extra income. Live with parents. Another great option is house sit and be paid for your housing!
-Rent out your car (or sell it) in order to save on gas costs.
If your goal is to aggressively save $10000 in three months, then you must drastically reduce all expenses.
To save $10,000 in three months, you must set aside an average of $3,33.33 per month for three months or in a period of 90 days.
Daily:
$111.11
Weekly:
$833.33
Bi-Weekly:
$1,666.67
Monthly:
$3,333.33
Bi-Monthly:
$1,666.67
Quarterly:
$10,000.00
How to Save $10000 in 2 Years
Saving 10000 dollars in a year is a little more aggressive than you believe possible. That is completely okay.
It does not matter how long it takes you to save $10000 as long as you complete the saving money challenge!
To save $10,000 in two years, you should start by saving at least 10% of your income every month. Then you can invest that money into index funds or other investment options to maximize your wealth.
To save $10,000 in 2 years you must set aside an average of $416.67 per month for two years or $5000 per year.
Daily:
$13.70
Weekly:
$96.15
Bi-Weekly:
$192.31
Monthly:
$416.67
Bi-Monthly:
$208.33
Quarterly:
$1,250.00
Are you Ready to Save 10000 Dollars?
A money saving challenge is a competition with the goal of finding ways to save money.
The best way to save money is through baby steps.
To start, you can take a look at your current financial situation and identify the areas of opportunity for savings. For example, if you’re struggling with debt or have an expensive monthly budget, then it’s time to find ways to reduce spending in these areas.
Once you’ve identified some opportunities for savings and created a plan accordingly, make sure that your progress doesn’t slow down by using tools like automatic saving plans and paperless billing.
Money saved in the long run will be worth it and you should participate in any of our money saving challenges.
The key point about saving money is not having too many goals as it will make it difficult to prioritize which ones are more important than others when trying to save more.
This is a simple guide for saving money, and it’s designed to help you save $10,000 in a year. Next up, is learning how to save 20000 in a year.
We have included tips on how to save money, but more importantly, change your finances for the long term.
Related Money Saving Challenges:
Source
Federal Reserve. “Changes in U.S. Family Finances from 2019 to 2022.” https://www.federalreserve.gov/publications/october-2023-changes-in-us-family-finances-from-2019-to-2022.htm. Accessed January 22, 2024.
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Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
“MOASS,” or, the “Mother of All Short Squeezes,” was largely unknown to investors prior to 2021. But a saga involving so-called “meme stocks,” most notably GameStop stock, changed that, and MOASS entered the investing lexicon. In short, that specific scenario, bringing the Mother of All Short Squeezes, as a strategy, to investors’ attention, involved a rag-tag band of day traders taking on the hedge fund giants, with a short-sale “squeeze” that greatly impacted some of those giants.
Meme stocks, including GameStop and AMC Theatres, saw further short squeeze action in mid-May 2024, too. But the episode in 2021 shined a light on investors, short-sales, trading squeeze strategies, and digital trading on a massive scale, all of which fell under the MOASS umbrella.
Key Points
• MOASS stands for “Mother of All Short Squeezes,” a phenomenon where stock prices skyrocket due to mass buying.
• It gained prominence with the GameStop stock saga, where day traders challenged large hedge funds.
• The strategy involves a high volume of purchases to drive up stock prices, countering short sellers.
• Effective execution of MOASS can lead to significant profits for traders who initiate the squeeze.
• The approach carries high risks, especially for those who join late or cannot sell off at peak prices.
Table of Contents
Short Squeeze Basics
A short squeeze is an orchestrated effort to drive up shares of a stock that’s being heavily shorted. MOASS, meaning the Mother of All Short Squeezes, as noted, is a trading strategy in which a high volume of buyers drive up shares of stocks that were being “shorted” by other investors.
A short squeeze trading strategy needs two components to work — a short seller or, more preferably, several short sellers on one side and a group of disciplined contrarian investors who unroll a short squeeze and buy shares of the stock being shorted.
💡 Quick Tip: Investment fees are assessed in different ways, including trading costs, account management fees, and possibly broker commissions. When you set up an investment account, be sure to get the exact breakdown of your “all-in costs” so you know what you’re paying.
How the MOASS Works
In order to understand how a short squeeze — or a massive short squeeze — works, you first need to understand short selling.
Short sellers aim to profit from the fall in a stock’s price. They do so by borrowing and selling shares of a stock that they believe will decline in value. Then, when the stock price falls, a short seller buys the stock at the reduced price, returns the shares, and pockets the profit.
If the short seller makes the right call, meaning the price does fall, they earn the difference between the price when they entered the short position and the lower stock price at which they bought to cover.
If the short seller makes the wrong call, and the price goes up, the investor must buy the stock at a price higher than when they entered the short position, thereby losing money — and negating any potential for a profit.
As short sellers wind up leaving their short positions when they execute a buy order on the stock, those “short-squeeze” buy positions get noticed by other day traders, who also jump in to purchase the stock. That, in turn, drives the stock’s price even higher, since there are fewer shares of the stocks available to purchase.
Short-sellers, highly alarmed by the rising share price, also issue buy orders on the stock to exit the short sale strategy and reduce their investment risk, which completes the cycle and puts the short squeeze in full effect. This can result in the short sales losing money and the MOASS day traders making a profit on the rising stock price.
Recommended: Understanding Low Float Stocks
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GameStop: The Prime Example of MOASS
Perhaps the best example of MOASS in action is the GameStop saga in early 2021. At the time, several hedge fund firms had “shorted” GameStop stock, which essentially meant betting the share price of the stock would decline. That didn’t happen with GameStop shares. Some context is important to understand, too, as many retail stocks, like GameStop, had been heavily affected by the pandemic at the time.
But GameStop shares bucked the trend.
A group of day traders hanging out on a Reddit investing forum called “Wallstreetbets” banded together and started buying up shares of GameStop stock. The gambit worked, with GameStop shares skyrocketing from $19 per share to around $350 per share. The retail investors had successfully “squeezed” the short sellers, causing several hedge funds to lose hundreds of millions of dollars on their short positions on GameStop.
If the short squeeze works, the share price will continue to rise and the short investors, many of whom have fixed deadlines built into their short sales positions, will have to sell their shares and cut their losses, thereby driving the stock price even higher. That rewards the short squeeze investor, who profits from the rising share price, especially as other buyers enter the fray and drive the share price up even higher.
Once victory was declared with the GameStop short squeeze, the Reddit traders turned their attention to other so-called meme stocks where short selling activity was particularly high. That group included AMC Entertainment Holdings, Koss Corporation, and Blackberry, which all saw share volumes rise after the MOASS traders entered the fray.
Thus, a series of short squeezes that target more and more short sellers is really what MOASS is all about: squeezing enough short-sellers to achieve critical mass in the trading markets, and making huge profits in the process.
Also, as mentioned, a similar situation played out in May 2024, when certain stocks (including GameStop and AMC Theatres) were at the center of another short squeeze, though smaller in scale than the 2021 events.
Recommended: Pros and Cons of Momentum Trading
MOASS Trading Tips
Investors who want to participate in the next short squeeze effort should be careful. So-called “meme” stock trading can be fraught with risk, especially if you’re left holding the bag after other short-squeezers sell out of their positions before you do.
Take these risk considerations with you before participating in a mass short squeeze play.
Consider Minimal Purchases to Limit Losses
While the adrenaline level can be high when participating in a short squeeze trading event, tamp down emotions by limiting the amount of money you invest in a GameStop-type situation. As the old gambling adage says, never risk money you can’t afford to lose. That goes double when chasing the thrill of a MOASS scenario.
Should You Expect to Lose Money?
There’s a significant chance that you’ll lose money at some point with a short squeeze play.
Nothing is guaranteed in the stock market and that’s especially the case as short-sellers have learned their lesson after meme-stock related events in recent years, and grow more cautious about their investing habits. MOASS trading patterns can be something of a roller coaster ride for investors, and the odds that your ride will dip along the way are high. That can translate into days or even weeks of your short-squeeze buying strategy where your investment returns are written in red ink.
💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).
MOASS Tip: Have a Plan to Sell Quickly
Short squeeze investing isn’t exactly an orderly process and you need to put your interest first ahead of other MOASS investors. Why? Because volatility can be high and prices can swing at a moment’s notice when trading MOASS-themed stocks. Additionally, nobody really has any idea how high a price can go with a short squeeze in play, and nobody really knows if a stock will rise higher at all.
That’s why it’s a good idea to have a fixed “sell price” in mind when engaging in a short squeeze situation — a stop loss order to automatically sell the stock at a specific price can be a good idea in this scenario.
If you buy a targeted MOASS stock at $50 and it goes to $70, there’s no way of knowing if the stock will go any higher — it might and it might not. Worse, the price could slide back to $30 when buyers lose interest in the stock.
Having a good investment exit strategy in a short squeeze scenario, can help minimize investment losses and capitalize on a stock increase when and if it happens.
The Takeaway
“MOASS” means the “Mother of All Short Squeezes,” and perhaps the best example of it in action involved so-called “meme stocks” in 2021. Short squeeze trading strategies can bring a great deal of portfolio-shaking volatility to the investment table, and there are plenty of heavily shorted stocks that could be the next MOASS, but it’s impossible to know which one could trigger a squeeze.
That means MOASS may not be the best strategy for long-term investors or those with an aversion to risk. A short squeeze takes a significant amount of discipline, patience, and attention on the part of the investors, with continual risk in play until the squeeze is played out.
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