Financial Goals Archives - Page 25 of 271

Apache is functioning normally

February 14, 2024 by Brett Tams

Tracking down an old 401(k) may take some time, and perhaps the quickest way to find old 401(k) money is to contact your former employer to see where the account is now. It’s possible that your lost 401(k) isn’t lost at all; instead, it’s right where you left it.

In some cases, however, employers may cash out an old 401(k) or roll it over to an IRA on behalf of a former employee. In that case, you might have to do a little more digging to find lost 401(k) funds. If you ever wished you could click on an app called “Find my 401(k),” the following strategies may be of use.

4 Ways to Track Down Lost or Forgotten 401(k) Accounts

There’s no real secret to how to find old 401(k) accounts. But the process can be a little time consuming as it may require you to search online or make a phone call or two. But it can be well worth it if you’re able to locate your old 401(k).

There are several ways to find an old 401(k) account. Here are a handful that may prove fruitful.

Contact Former Employers

The first place to start when trying to find old 401(k) accounts is with your previous employer.

If you had more than $5,000 in your 401(k) at the time you left your job, it’s likely that your account may still be right where you left it. In that case, you have a few options for what to do with the money:

• Leave it where it is

• Transfer your 401(k) to your current employer’s qualified plan

• Rollover the account into an Individual Retirement Account (IRA)

• Cash it out

When your plan balance is less than $5,000 your employer might require you to do a 401(k) rollover or cash it out. If you’re comfortable with the investment options offered through the plan and the fees you’ll pay, you might decide to leave it alone until you get a little closer to retirement. On the other hand, if you’d like to consolidate all of your retirement money into a single account, you may want to roll it into your current plan or into an IRA.

Cashing out your 401(k) has some downsides. You would owe taxes on the money, and likely an early withdrawal penalty as well. So you may only want to consider this option if your account holds a smaller amount of money. If you had less than $5,000 in your old 401(k), it’s possible that your employer may have rolled the money over to an IRA for you or cashed it out and mailed a check to you.

Track Down Old Statements

If you have an old account statement, you can contact your 401(k) provider directly to find out what’s happened to your lost 401(k). This might be necessary if your former employer has gone out of business and your old 401(k) plan was terminated.

When a company terminates a 401(k), the IRS requires a rollover notice to be sent to plan participants. If you’ve moved since leaving the company, the plan administrator may have outdated address information for you on file. So you may not be aware that the money was rolled over.

Either way, your plan administrator should be able to tell you which custodian now holds your lost 401(k) funds. Once you have that information, you could reach out to the custodian to determine how much money is in the account. You can then decide if you want to leave it where it is, roll it over to another retirement account, or cash it out.

Check With Government Agencies

Different types of retirement plans, including 401(k) plans, are required to keep certain information on file with the IRS and the Department of Labor (DOL). One key piece of information is DOL Form 5500. This form is used to collect data for employee benefit plans that are subject to federal ERISA (Employee Retirement Income Security Act) guidelines.

How does that help you find your 401(k)? The Department of Labor offers a Form 5500 search tool online that you can use to locate lost 401(k) plans. You can search by plan name or plan sponsor. If you know either one, you can look up the plan’s Form 5500, which should include contact information. From there, you can reach out to the plan sponsor to track down your lost 401(k).

Search National Registries

Another place to try is the National Registry of Unclaimed Retirement Benefits. This is an online database you can use to search for an unclaimed 401(k) that you may have left with a previous employer. You’ll need to enter your Social Security number to search for lost retirement account benefits.

In order for your name to come up in the search results, your former employer must have entered your name and personal information in that database. If they haven’t done so, it’s possible you may not find your account this way.
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What Should I Do With Recovered Funds?

If you do manage to recover an old 401(k) account and its assets, you’ll have some options as to what to do with it. In many cases, it might be a good idea to roll it over into another retirement account to try and stay on track with your retirement savings.

Another important point to consider: If you’ve changed jobs multiple times, it’s possible that you could have more than one “lost” 401(k) — and taken together, that money could make a surprising difference to your nest egg.

Last, if you were lucky to have an employer that offered a matching 401(k) contribution, your missing account (or accounts) may have more money in them than you think. For example, a common employer match is 50%, up to the first 6% of your salary. If you don’t make an effort to find old 401(k) accounts, you’re missing out on that “free money” as well.

But if you’re unsure of what to do, it may be worth speaking with a financial professional for guidance.

Further, if you’re not able to find lost 401(k) accounts you still have plenty of options for retirement savings. Contributing to your current employer’s 401(k) allows you to set aside money on a tax-deferred basis. And you might be able to grow your money faster with an employer matching contribution.

What if you’re self-employed? In that case, you could choose to open a solo or individual 401(k). This type of 401(k) plan is designed for business owners who have no employees or only employ their spouses. These plans follow the same contribution and withdrawal rules as traditional employer-sponsored 401(k) plans, though special contribution rules apply if you’re self-employed.
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The Takeaway

There are several ways to try and find an old 401(k) account, but for most people, the best place to start is by contacting your old employers to see if they can help you. From there, you can also try reaching out to government agencies, tracking down old statements, or even searching through databases to see what you can find.

Saving for retirement is important for most people who are trying to reach their financial goals – as such, if you have money or assets in a retirement account, it may be worthwhile to try and track it down. Again, it may be worth consulting with a financial professional if you need help.

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FAQ

Is it possible to lose your 401(k)?

It’s possible to lose money from your 401(k) if you’re cashing it out and taking a big tax hit or your investments suffer losses. But simply changing jobs doesn’t mean your old 401(k) is gone for good. It does, however, mean that you may need to spend time locating it if it’s been a while since you changed jobs.

Do I need my social security number to find an old 401(k)?

Generally, yes, you’ll need your Social Security number to find a lost 401(k) account. This is because your Social Security number is used to verify your identity and ensure that the plan you’re inquiring about actually belongs to you.

What happens to an unclaimed 401(k)?

Unclaimed 401(k) accounts may be liquidated or converted to cash if enough time passes, and that cash could be transferred to a state government, where it will be held as unclaimed property.

Can a financial advisor find old 401(k) accounts?

A financial advisor may be able to help, but the simplest way to find old 401(k) accounts is contacting your former employer. It’s possible your money may still be in your old plan and if not, your previous employer or plan administrator may be able to tell you where it’s been moved to.

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Apache is functioning normally

February 13, 2024 by Brett Tams

Inside: Embark on a profitable journey with our guide on starting a bookkeeping business. Find the steps on how to become a bookkeeper and find success.

Starting a bookkeeping business from scratch can be an exciting yet nerve-wracking venture.

For many budding entrepreneurs, the formidable task of setting up a business adds a mix of anxiety and anticipation. The initial trepidation often stems from dealing with the unknowns of a new venture and the pressure of ensuring meticulous financial management of someone else’s finances.

However, with thorough planning and an understanding of the essential steps, such as crafting a solid business plan and obtaining the necessary certifications, these nerves can be managed.

By embracing your entrepreneurial spirit and equipping yourself with the right knowledge, you can lay a strong foundation for a successful bookkeeping business.

Plus it is easier to get started than you thought…

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

What is a bookkeeping business?

At its core, a bookkeeping business manages the financial records of other businesses. They ensure accuracy, track receipts and expenses, and prepare financial statements – the financial bedrock upon which enterprises stand.

With an emphasis on accuracy and organization, they are responsible for keeping the financial data up to date and available for strategic decisions.

For many, this is a popular way to make money online.

Earn Extra Income with Bookkeeping

Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.

Find out TODAY if this is THE business you’ve been looking for.

Show Me How

First Steps to Starting a Bookkeeping Business

Craft a Comprehensive Business Plan for Success

Your roadmap to success begins with a business plan. This document is crucial—it outlines your vision, goals, unique value proposition, target market, competitive landscape, marketing strategies, and detailed financial forecasts. Think of it as your strategic compass guiding you from startup to growth.

This takes your side hustle to an actual living thriving business.

Remember, your business plan is a living document. You must regularly review and update your business plan will help you stay on track toward your business objectives and adjust course as necessary to meet new challenges or opportunities.

Acquire Essential Certifications and Training

By obtaining the right certifications and training, you not only perfect your craft but also send a message of reliability and professionalism to prospective clients. While this may require an investment of time and resources, the credibility and expertise you gain are invaluable assets for your bookkeeping business.

Select bookkeeping courses that cover crucial topics such as accounting principles, financial statements, tax preparation, and accounting software. This education will deepen your understanding and sharpen your skills.
Stay updated with continuing professional education (CPE) credits to keep your certifications active and your knowledge fresh.
Familiarize yourself with popular bookkeeping software that you’ll use day-to-day. Being proficient in these tools will increase your efficiency and accuracy—qualities clients highly value.

Once certified, don’t forget to prominently display your credentials on your website and marketing materials. This can significantly bolster potential clients’ trust in your abilities and help establish your reputation as a qualified bookkeeping professional.

Bookkeepers.com Online Courses

Learn what you need to start your very own virtual bookkeeping business.

An overview of the bookkeeping business so you can see if it is right for you.
The tools you need to “wow” clients and get paid for your services and
How to create a steady stream of new clients without the need to “sell” yourself.

Learn More

Legal Considerations and Compliance

Setting the legal foundation for your bookkeeping business is not just a formality—it’s about protecting your operations and establishing credibility.

Register Your Business and Secure the Necessary Permits

Let’s look at the essential steps to ensure your business is registered correctly and fully compliant with regulatory requirements.

Choose a Business Structure: Decide whether an LLC, sole proprietorship, partnership, or corporation best suits your needs.
Register Your Business Name: This is a crucial branding element. Check for name availability and register it with the appropriate state agency, ensuring it’s unique and resonates with your target market.
Obtain an EIN: If you’re in the U.S., you’ll need an Employer Identification Number (EIN) for tax purposes, especially if you plan to hire employees. This number is also often required to open a business bank account and apply for business licenses.
Apply for Licenses and Permits: Depending on your location and the structure of your business, you may need various licenses and permits. Check local and state regulations to ensure you meet all legal requirements.
Register for State Taxes: If applicable, register for your state’s tax structure. This may include sales tax, unemployment insurance tax, and other business-related taxes.
Comply with Local Regulations: Ensure you’re familiar with local zoning laws if operating from home, and obtain a Certificate of Occupancy if required. If you’re part of a homeowners’ association, review any stipulations they might have on home-based businesses.
Understand Ongoing Compliance: Be aware of annual filings, renewals for licenses and permits, and other regulatory commitments to maintain compliance.

By being diligent with these legal prerequisites, you’re not just following the rules—you’re also sending a clear message about your professionalism and attention to detail.

Protect Your Endeavors with the Right Insurance

Insurance is the safety net that can save your bookkeeping business from unexpected financial challenges. It’s not about expecting the worst; it’s about being prepared for any situation that could undermine the stability and reputation of your business.

General Liability Insurance: This covers a broad range of issues, including bodily injury or property damage claims made by others.
Cyber Liability Insurance: As a bookkeeper dealing with sensitive data, you’ll want protection against cyber threats and data breaches.
Property Insurance: If you have a physical office or own valuable equipment, property insurance can cover losses from events like fire or theft.

By integrating the right insurance policies into your business strategy, you set up a protective fortress around the hard work and dedication you put into your bookkeeping business. Insurance should not be perceived as an unnecessary expense but rather as a prudent investment in your business’s longevity and reputation.

Setting Up Shop

Establishing a Home Office vs. Renting Space

Choosing the right environment for your bookkeeping business is a balancing act between professionalism, cost-effectiveness, and personal working style. Whether you decide on a home office or opt for a rented space, the decision will significantly impact your operations.

Home Office Advantages	Renting Space Advantages
Cost Savings: Eliminate commuting costs and monthly rent, channeling those savings back into your business.	Professionalism: A commercial office can provide a more professional setting for client meetings and create a clear boundary between work and home life.
Convenience: Enjoy the flexibility of setting your own hours and working in a stress-free environment.	Networking Opportunities: Proximity to other businesses in shared office spaces can foster relationships and potential client referrals.
Tax Deductions: You may be eligible for home office tax deductions, saving you money during tax season.	Amenities: Rented spaces often come with value-added services like receptionists or conference rooms.

Home Office Disadvantages	Renting Space Disadvantages
Distractions: Domestic life can disrupt your work, impacting productivity.	Overhead Costs: Monthly rent and utility bills will add to your business expenses.
Professional Image: Having a dedicated business address and separate workspace can often project a more professional image to clients.	Long-term Commitments: Leases typically require a long-term commitment that may be risky if your business circumstances change.

Ultimately, the decision depends on the nature of your clientele, your personal work preferences, and your budget. Also, this is great for a stay at home mom to make money.

Many bookkeepers find success starting with a home office and transitioning to rented space as the business expands. Others may find that a small rented office fits their needs right from the onset, or that a virtual office setup provides the perfect middle ground.

Selecting State-of-the-Art Bookkeeping Software

With the right bookkeeping software, you can streamline your operations, foster transparency with clients, and confidently tackle complex financial scenarios.

Adopting top-notch software will serve as both a foundation and a catalyst for your bookkeeping business, ensuring you remain competitive and responsive in a rapidly evolving industry.

Look into popular bookkeeping software such as QuickBooks Online, Xero, FreshBooks, and MYOB. Compare them based on features, ease of use, scalability, and customer support.

By taking the time to carefully weigh these factors, you will be better positioned to select bookkeeping software that not only meets your current needs but also supports your business as it expands.

Financial Foundations for Your Firm

Unravel Funding Options and Small Business Loans

Before seeking funding, calculate your startup costs including equipment, software subscriptions, legal fees, marketing, and initial operating expenses. This will help you understand how much capital you need to secure.

Typically, you should be able to start your bookkeeping business with little investment and add additional expenses as you grow.

If needed, there are a variety of funding sources available for new businesses. Research options like traditional bank loans, credit unions, Small Business Administration (SBA) loans, online lenders, and crowdfunding. When applying for loans or pitching to investors, a comprehensive business plan is essential. It should outline your business concept, financial projections, and growth strategy to demonstrate the viability and potential profitability of your bookkeeping business.

Smart Money Management from the Start

Establishing smart money management practices from the very inception is the same as being financially sound with your personal finances.

Open a Dedicated Business Bank Account: Keep your personal and business finances separate. This is fundamental for accurate bookkeeping and simplifies your tax situation come year-end.
Start With a Budget: Even before your first client, create a realistic budget for your business. Know the costs of all aspects, including marketing, equipment, insurance, and any other operational expenses. This will help prevent overspending and ensure your resources are allocated effectively.
Use the Profit First Formula: This simple formula will help you to pay yourself as well as have enough money for operational expenses and to pay your self-employment taxes.

By establishing and maintaining these smart money management practices from the outset, you’re not just safeguarding your bookkeeping business against common financial pitfalls—you’re also building a foundation for a prosperous financial future.

Marketing Your Bookkeeper Business

Digital Presence: Creating a Website That Converts

In today’s digital-first world, your website often makes the first impression for your bookkeeping business. It’s not just an online brochure; it’s a crucial tool engineered to turn visitors into leads and leads into loyal clients.

User-Friendly Design: Your website should be easy to navigate with a clean layout that directs visitors naturally from one section to the next. Prioritize quick load times and mobile responsiveness with Kadence to cater to all potential clients.
Clear Value Proposition: Immediately communicate what you offer and why a potential client should choose your bookkeeping services. Highlight your unique selling points front and center on the homepage.
Strong Call-to-Actions (CTAs): Use compelling CTAs to guide visitors towards taking action, whether that’s contacting you, scheduling a consultation, or signing up for your newsletter. Make it easy for them to engage with you.
Client Testimonials and Case Studies: Social proof can be incredibly persuasive. Showcase positive reviews, client testimonials, and case studies to build trust and credibility with prospective clients.

With a well-crafted website, your bookkeeping business demonstrates its expertise and readiness to cater to client needs, no matter where they are in their financial journey.

Networking and Navigating Social Media Strategies

Building a robust network and mastering social media can turbocharge your bookkeeping business’s growth. It positions you not just as a service provider, but as a thought leader in your field.

Identify the Right Platforms: Choose one or two social media platforms where your target audience is most active. LinkedIn, for instance, is a goldmine for professional networking, while Instagram can showcase your brand’s personality.
Create Valuable Content: Share content that resonates with your audience — tips to manage business finances, tax updates, or insights into bookkeeping trends. This positions you as an expert and invites engagement.
Engage Actively: Don’t just post and disappear; interact with your followers. Answer questions, join discussions, and show appreciation for their engagement. Building relationships is key to networking success.
Leverage Professional Groups and Forums: Beyond your own social channels, be active in online groups or forums related to bookkeeping and your clients’ industries to expand your visibility and establish credibility.

Your network and social media are not just channels for promoting your services; they’re platforms for sharing your expertise, engaging with peers and potential clients, and building a community around your bookkeeping brand.

Bookkeeping Startup Pricing, Clients, and Growth

Determining Competitive Rates for Your Services

Setting competitive, yet fair pricing for your bookkeeping services is a balancing act that ensures value for your clients and viability for your business.

Let’s explore how to establish a rate structure that meets the market demands and supports your financial goals.

Market Research: Begin by understanding what other bookkeepers in your area or within your niche are charging. This insight will help you benchmark your rates competitively. Keep in mind factors like experience, specialization, and location.
Value Your Expertise: Assess your qualifications, experience, and the quality of services you offer. Clients are willing to pay for the value you bring to their business, so price your services accordingly.
Consider Your Costs: Ensure your rates cover your expenses, including software subscriptions, continuing education, insurance, and taxes, while also leaving room for profit.
Pricing Models: Decide whether you’ll charge hourly, offer flat-fee packages, or adopt a value-based pricing model. Each model has its advantages and can be chosen based on the type of service or client preferences.
Communicate Your Pricing Clearly: Be transparent with clients about your rates. Clear communication prevents misunderstandings and builds trust from the outset. [Placeholder for sample pricing page]

Within your pricing strategy, consider the lifetime value of client relationships and the potential for added services down the line.

How will you find clients for your bookkeeping business?

Finding clients is the engine that powers your bookkeeping business and your income. With a strategic combination of diligent networking, tactical marketing, and leveraging existing relationships, you can start building your client base.

Utilize Online Platforms: Websites like Upwork, Fiverr, and LinkedIn can connect you with businesses looking for bookkeeping services.
Local Business Outreach: Approach local businesses directly. Offer to discuss how your bookkeeping services can alleviate their financial stress and add value to their operations.
Referral Program: Encourage word-of-mouth by setting up a referral program. Incentivize your current clients or network to refer others to you.
Social Media and Content Marketing: Create and share engaging content on your social media profiles to build brand awareness.
Community Involvement: Join local business associations, attend chamber of commerce events, or contribute to community projects. These can lead to connections and opportunities.
Offer Free Workshops or Webinars: By providing value upfront through informative sessions on bookkeeping and financial management, you can attract potential clients who are interested in improving their business finances. Also, you can partner with other professionals.
Professional Partnerships: Build relationships with accountants, lawyers, and business consultants who might not offer bookkeeping services but can refer their clients to you.

With a consistent and strategic approach, you can attract and retain the clients that are the best fit for your business, ultimately building a robust client portfolio. Remember, it’s not just about finding any clients—it’s about finding the right clients who treasure you.

Discovering and Retaining Your Ideal Clientele

Attracting clients is one feat, but discovering and retaining those who are the perfect fit for your bookkeeping business is where the real growth happens.

Offer Customized Solutions: Set yourself apart by tailoring your services to meet the specific needs of your clients. Show that you understand their industry and are invested in their success.
Provide Exceptional Service: Consistently deliver high-quality work, be responsive, and proactively address your clients’ needs. Clients will stay with a bookkeeper who goes above and beyond.
Host Client Appreciation Events: Small gestures of appreciation or exclusive events can strengthen business relationships and foster client loyalty.
Stay on Top of Industry Trends: Being knowledgeable about your clients’ industries can make you indispensable. Offer insights that can help them stay ahead of the curve.

Stay Ahead in the Bookkeeping Scene

Continuous Learning and Leveraging Industry Trends

The bookkeeping industry doesn’t stand still, and neither should you. Continuous learning keeps you at the forefront of evolving practices, ensuring your services remain relevant and your advice sound.

Keep Abreast of Regulatory Changes: Tax laws, financial regulations, and compliance standards can affect your clients; stay updated through webinars, online courses, and industry news.
Embrace Technological Innovations: New software and tools can streamline bookkeeping tasks. Be open to adopting tech that can improve your efficiency and the services you provide.
Participate in Professional Development: Attend workshops, seminars, and conferences geared toward bookkeeping professionals. Networking with peers can also uncover new trends and techniques.

By maintaining a commitment to continuous learning, you not only improve your own skillset but also enhance the overall value of your bookkeeping services.

Join Professional Associations for Peer Support

Being part of a professional association offers more than just credentials; it’s a direct line to a community of peers who can share insights, resources, and support as you build and grow your bookkeeping business.

By joining professional associations such as the American Institute of Professional Bookkeepers (AIPB) or the National Association of Certified Public Bookkeepers (NACPB), you demonstrate a commitment to professionalism and continuous improvement. These affiliations provide a wealth of resources to support you in delivering high-quality services and growing a thriving bookkeeping business.

Plus you can take advantage of seminars, webinars, and certification courses offered by associations to further your education and maintain any required continuing education credits.

Bookkeepers.com Online Courses

Learn what you need to start your very own virtual bookkeeping business.

An overview of the bookkeeping business so you can see if it is right for you.
The tools you need to “wow” clients and get paid for your services and
How to create a steady stream of new clients without the need to “sell” yourself.

Frequently Asked Questions (FAQs)

Yes, a bookkeeping business can certainly be profitable. It offers a low overhead cost model, recurring revenue opportunities through ongoing client relationships, and the potential to scale services.

With diligent financial management and strategic growth, profitability can be substantial.

While a degree is beneficial for deep knowledge, it’s not mandatory. Certification and practical experience can often suffice in starting a successful bookkeeping business.

In fact, this is one of the best low stress jobs without a degree.

Begin by gaining an understanding of bookkeeping principles, getting certified, investing in software, and slowly building up your clientele with strategic marketing and networking.

Ready to Open Bookkeeping Business?

Starting your own bookkeeping business can be a fruitful endeavor with the right preparation and education.

This guide outlines the key steps and provides direction on how to start a bookkeeping business, ensuring you cover all essential elements for a successful launch. With focus and attention to these structured steps, you’ll be well on your way to establishing a thriving bookkeeping business.

Still on the fence? Check out this free bookkeeping webinar to learn more.

With the right preparation, tools, and mindset, you can launch a thriving venture that supports businesses in their financial journey while growing your own entrepreneurial dreams.

Embrace the adventure—your future in finance awaits!

Just remember if you are looking for ways to make money fast, this one comes with patience and perseverance to make things happen.

Earn Extra Income with Bookkeeping

Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.

Find out TODAY if this is THE business you’ve been looking for.

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.

Source: moneybliss.org

Apache is functioning normally

February 13, 2024 by Brett Tams

Nursing can be a well-paying profession. According to the Bureau of Labor Statistics (BLS), the median salary for a registered nurse (RN) is $81,220 per year or $39.05 per hour.

In fact, nursing can be a rewarding career path in more ways than one. Not only can these healthcare professionals provide for themselves financially, they also care for people during times of need.

To better understand what it’s like working as a nurse and what the earning potential is, keep reading.

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What Are Nurses?

An RN provides patients with care and support, and they offer education on health issues and conditions. Responsibilities can vary by workplace and specialty. For example, a geriatric nurse works with elderly patients and provides a different type of care than an oncology nurse, who supports patients with cancer.

Generally speaking, an RN’s tasks often include the following:

• Evaluate the condition of patients.

• Set up care plans for patients.

• Consult and collaborate with doctors and other healthcare providers.

• Operate and monitor medical equipment.

• Document patients’ medical backgrounds and symptoms.

• Administer medications and treatments.

• Assist in conducting diagnostic tests and analyzing the results.

• Educate patients and their families on managing illnesses or injuries.

• Provide instructions for post-treatment care at home.

Nurses often work on a team made up of other nurses, physicians, and healthcare specialists. Some nurses may even supervise other RNs, nursing assistants, or home health aids. Because of how much collaboration and patient interaction is involved in nursing, this role may not be a great fit for introverts.
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How Much Do Starting Nurses Make?

On average, entry-level nurses earn around $80,321 a year or $39 per hour, according to ZipRecruiter. But keep in mind that amount represents a middle ground; incomes for nurses fresh out of school can run the gamut from $36,000 to $136,000.

Recommended: What Is Competitive Pay?

What Is the Average Salary for a Nurse?

Unlike some other healthcare professionals, nurses may be paid hourly or earn an annual salary. They can also make extra by working overtime, overnight, or on holidays. As mentioned, nurses who are paid by the hour earn a median rate of $39.05 or $81,220 per year.

It’s worth noting that where a nurse chooses to work can significantly affect how much they earn. When it comes to settings that pay the most money, the government comes out on top. Let’s take a look at the median annual wage for nurses across a variety of settings, per the BLS:

• Government: $92,310

• Hospitals: $82,250

• Ambulatory healthcare services: $78,670

• Nursing and residential care facilities: $75,410

• Educational services: $65,450

Nurses also have the option to take travel assignments, which can be an attractive option for professionals seeking flexibility, short-term assignments, and competitive pay. Travel nurses can expect to earn anywhere from $81,000 to $128,00 a year.

To help manage that high level of income, consider digital tools like a money tracker app. In addition to being convenient, it can help take the guesswork out of budgeting and setting financial goals.

What Is the Average Salary by State for a Nurse?

The state a nurse chooses to work in can greatly influence how much they earn, as illustrated by the following table:

State	Average Annual Salary
Alabama	$68,782
Alaska	$78,193
Arizona	$70,717
Arkansas	$71,792
California	$78,490
Colorado	$90,700
Connecticut	$69,698
Delaware	$84,924
Florida	$56,707
Georgia	$64,076
Hawaii	$75,614
Idaho	$75,172
Illinois	$84,135
Indiana	$72,210
Iowa	$69,236
Kansas	$65,099
Kentucky	$76,147
Louisiana	$63,306
Maine	$76,539
Maryland	$82,211
Massachusetts	$78,960
Michigan	$75,056
Minnesota	$72,508
Mississippi	$69,141
Missouri	$80,121
Montana	$69,652
Nebraska	$80,357
Nevada	$73,935
New Hampshire	$74,558
New Jersey	$76,040
New Mexico	$72,231
New York	$83,627
North Carolina	$77,842
North Dakota	$77,045
Ohio	$70,515
Oklahoma	$77,820
Oregon	$77,062
Pennsylvania	$76,604
Rhode Island	$71,379
South Carolina	$79,483
South Dakota	$72,815
Tennessee	$67,322
Texas	$74,746
Utah	$67,313
Vermont	$81,802
Virginia	$83,556
Washington	$91,445
West Virginia	$59,162
Wisconsin	$75,198
Wyoming	$73,262

Source: ZipRecruiter

Recommended: Is $100,000 a Good Salary?

Nurse Job Considerations for Pay and Benefits

Whether they’re paid by the hour or per year, a nurse can make a good living. And there are ways to supplement that income or create a flexible working schedule that supports a work-life balance. For instance, nurses can choose to work part-time, as many hospitals are short-staffed and need the extra help and expertise. There’s also travel nursing, which allows these healthcare professionals to pick up short-term assignments.

But if a full-time role with benefits is what you’re after, you may have little trouble finding one that fits. The BLS projects that between now and 2032, the number of RN jobs available in the field will grow 6%. And those on-staff positions can come with benefits like health insurance, retirement contribution matches, and tuition reimbursement.

Pros and Cons of Nurse Salary

Like any career path, working as an RN comes with a unique set of pros and cons that are worth keeping top of mind:

Pros	Cons
• High demand for nurses • Full-time work and benefits available • Flexible schedule may be an option depending on your employer	• Physically and emotionally demanding job • Potential exposure to illnesses • May work nights, weekends, or holidays • Limited work-from-home options (aside from telehealth roles)

Pros

Cons

• High demand for nurses

• Full-time work and benefits available

• Flexible schedule may be an option depending on your employer

• Physically and emotionally demanding job

• Potential exposure to illnesses

• May work nights, weekends, or holidays

• Limited work-from-home options (aside from telehealth roles)

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

While the hours can be long and the work physically demanding, nurses have the potential to earn a lot of money. As they gain years of experience or enter more lucrative industries, these professionals can potentially earn a six-figure salary. Bottom line: If you’re passionate about health care and helping others, you may find that a career in nursing is professionally and financially rewarding.

FAQ

What is the highest-paid RN job?

The type of nursing role an RN takes can affect how much they earn. Those looking to earn high incomes may want to pursue government nursing, which earns a median salary of $92,310. This is much higher than the $81,220 median salary for all RNs.

How much money does a RN make in California?

In the state of California, an RN can expect to earn an average of $78,490 per year, or an hourly rate of $37.74, per ZipRecruiter.

What state pays nurses the lowest?

Of all the 50 states, Florida pays its nurses the least, according to ZipRecruiter. Nurses there earn an average of $56,707 a year, and their average hourly wage is $27.26.

Photo credit: iStock/FG Trade

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Apache is functioning normally

February 13, 2024 by Brett Tams

When are interest rates going to come down? Where should mortgage rates be before I buy or refinance my home? How much home can I afford today? These are just a few of the questions independent mortgage brokers get asked on a daily basis.

The reality is, borrowers are rate sensitive because it’s what they’re exposed to. Mainstream media often emphasize fluctuations in rates, which causes uncertainty and apprehension among borrowers. Furthermore, the average consumer is likely unaware of the variety of loan options available to them through the wholesale channel. This is why it’s more important than ever for independent mortgage brokers across the country to establish themselves as an expert and trusted advisor in the mortgage industry.

However, to do this, consumers need to know and trust that you’re the expert before they’re even going to consider you. So how do you build that trust and credibility? And how can you confidently talk to clients and potential clients about their mortgage needs?

Building trust

First, you need to establish trust and credibility. A mortgage is one of the biggest financial decisions someone makes in their lifetime. It can also be quite emotional and stressful. If they view you as someone who doesn’t know what they’re talking about, or someone who just wants to get a commission check, you’re not likely to get their business, or if you do, it’s unlikely to result in any future or referral business.

Trust starts with your online presence. The way you present yourself across digital platforms can make or break that first initial layer of credibility. When’s the last time you made a purchase or did business with someone without Googling them or checking reviews first? You need to make sure everything that comes up when someone Googles your name or business makes a good first impression, whether that be your social media or Google Business Profile.

Once you get a borrower in the door, continue building trust by building a relationship with them. Your conversations with clients should extend beyond mortgages. Get to know them on a more personal level. Do they have kids? Are they passionate about their job? What about sports? Find something to connect with them on and extend the relationship past the transaction.

Breaking down the misconceptions about interest rates

The big question we’re all getting is, “When will interest rates come down?” As much as I would love to have a definite answer, I don’t, and no one else does either. Realistically, it could happen tomorrow, two weeks from now or six months from now. Rates are something we can’t control, so instead of trying to time the market, focus them on what you can control — finding the best option for your borrower that meets their expectations today.

When borrowers ask you about mortgage rates, you first need to understand why they’re asking. The consistent media chatter and click-bait headlines around mortgage rates have caused hesitation among consumers when it comes to buying, selling and refinancing. It’s up to you to shift their mindset from just the rate to the overall financial goal for their mortgage.

Are they looking to save money on a monthly basis? Do they need to tap into their equity to pay off other debts? Do they want to pay off their mortgage faster? Are they interested in buying, but worried about down payment and closing costs? Once you have a better grasp on their goals and financial situation, you can make a recommendation and work through the best option together.

For example, say you have a borrower who is living paycheck to paycheck. After reviewing your product offerings, you find a refinancing option that could save this borrower $80 a month. To you, that may not seem significant, but for this borrower, that $80 could make a huge difference. If they refinance, they also won’t have to make the payment until a month after the loan closes, which could provide some additional relief. The reality is most Americans have $1,000 or less in savings, and they are unaware of the savings options that may be available to them through a refi.

Let’s take a look at a fast-track borrower. This borrower wants to pay off their mortgage faster. After looking at their budget, you can determine what loan is best for them, and give them some options. If resetting their term is an issue, maybe use a flex term loan. If they’re able to make a higher payment, perhaps a 15-year or 20-year loan would work. Once a borrower is open and honest with you about their goals and financial expectations, you’ll be able to give them options that make sense, and together, move forward with a plan of action.

When you change the focus from rates to financial goals, you’ll be surprised how much more productive a conversation can be with your borrower. It’s also important to keep in mind that what works for one borrower may not work for another, but the key is to dispel their misconceptions and concerns and present them with options they may not even knew existed.

Becoming the expert

You have to know the ins and outs of the products you can offer your clients. Touch base regularly with the account executives at your lenders and make sure you understand the variety of offerings that are available to your clients. Read up on industry news every day. Connect with others in the industry and share best practices.

Become the expert so you can confidently help your clients with their questions about mortgages, interest rates and the market. That, paired with strong relationships, will take your business to the next level.

Alex Elezaj serves as chief strategy officer at United Wholesale Mortgage. Before joining UWM, he was CEO of Class Appraisal.

Apache is functioning normally

February 13, 2024 by Brett Tams

When it comes to buying a home, the significance of securing a mortgage with a competitive rate cannot be overstated. Imagine finding your dream home, only to realize the financial burden of a less-than-ideal mortgage rate.

This is where the expertise of a mortgage broker becomes invaluable. With their in-depth understanding of the mortgage landscape and access to a broad network of lenders, mortgage brokers play a crucial role in ensuring you don’t just find a loan, but the best possible loan for your situation.

Consider the impact: A difference of even 0.5% in your mortgage rate could mean saving or spending thousands over the life of your mortgage loan. In today’s market, where every little saving counts, the right mortgage rate can significantly affect your monthly budget and long-term financial planning.

Mortgage brokers offer a streamlined path through the complex process of loan comparison and application, saving you time, stress, and most importantly, money. Whether you’re in the process of home buying for the first time or looking to add to your portfolio, understanding the value a mortgage broker brings to the table is the first step towards securing your financial future.

What a Mortgage Broker Does

A mortgage broker serves as your ally in the journey toward homeownership, offering more than just a bridge to potential lenders. They dive into the vast sea of mortgage options, evaluating lenders and loan programs with an expert eye to pinpoint the ones that align with your unique financial landscape. But how exactly do they accomplish this? Let’s break it down.

Tailoring the Search to Your Financial Profile

Every homebuyer’s financial situation is distinct, with varying income levels, credit histories, and long-term goals. Mortgage brokers start by understanding these intricacies.

They assess your financial health, scrutinize your income, credit score, and debt-to-income ratio, and then use this information to filter through loan options. This personalized approach ensures that the recommendations they provide are not just any loans, but loans tailored to your specific needs.

Evaluating Lenders and Loan Programs

Mortgage brokers don’t just randomly select lenders. They perform a comprehensive analysis, comparing interest rates, loan terms, and qualification criteria across a wide spectrum of lenders.

This includes major banks, credit unions, and niche financing companies, some of which you might not have access to on your own. Their goal is to find you a loan that not only has competitive rates but also favorable terms that match your financial situation.

Overcoming Financial Challenges

Consider a scenario where a borrower has a solid income but a less-than-stellar credit score. A mortgage broker can identify lenders who are more lenient or specialized in handling similar profiles. Or, for self-employed individuals, brokers are aware of which lenders are more receptive to non-traditional income documentation, making what might seem like a daunting process simpler in finding suitable options.

Check Out Our Top Picks for 2024:

Best Mortgage Lenders

How a Mortgage Broker Can Help You

Engaging with a mortgage broker can significantly elevate your home buying journey, offering bespoke assistance that aligns with your unique financial and personal circumstances. Here’s a deeper dive into the ways a mortgage broker can be indispensable to prospective homeowners.

Streamlining the Loan Comparison Process

Mortgage brokers excel in their ability to filter through the vast array of loan options, identifying those that best fit your financial situation and home buying goals. This service is invaluable, saving you considerable time and effort that would otherwise be spent navigating through complex loan terms and conditions on your own.

Expert Negotiations on Your Behalf

With their extensive knowledge of the mortgage industry and relationships with multiple lenders, brokers are adept at negotiating terms that may not be directly accessible to you. This can include lower interest rates, reduced fees, or more favorable loan terms, directly impacting your financial well-being over the life of your mortgage.

Handling Paperwork and Coordination

The home loan process involves a significant amount of paperwork, from application forms to financial disclosures. A mortgage broker helps you compile the necessary documentation and ensures that all paperwork is completed accurately and submitted promptly, minimizing delays or issues.

Providing Tailored Financial Solutions

Brokers are particularly valuable for buyers with unique financial backgrounds — such as self-employed individuals, those with variable incomes, or buyers with a complex credit history. They have the expertise to find lenders who are more flexible with their lending criteria, providing solutions that might not be available through traditional channels.

Ongoing Support and Guidance

From the initial consultation to closing, a mortgage broker offers continuous support and guidance. They can clarify complex terms, answer questions, and provide updates throughout the process, ensuring you’re well-informed and confident in your decisions.

The Pros and Cons of Using A Mortgage Broker

Utilizing a mortgage broker comes with a host of advantages, but it’s important to consider the full picture. Let’s explore the nuanced benefits and potential drawbacks, enriched with real-life examples, for a more comprehensive understanding.

Pros

Access to Expertise and Options

One significant advantage is the broker’s role as an expert guide through the complex mortgage landscape. Their access to a broad array of lenders means they can offer various loan options tailored to your specific needs.

Case Study: Overcoming High Debt Ratios

For instance, a family with a high debt-to-income ratio was able to secure a favorable mortgage through a broker who knew which lenders offered more lenient qualification criteria, turning a challenging situation into a home-buying success story.

Cons

While brokers can offer invaluable assistance, there are considerations to keep in mind. Awareness of these aspects can help you make informed decisions.

Variability in Rates and Terms

It’s crucial to remember that not all deals brokered are set in stone. Interest rates and terms can fluctuate, which means the initial estimates might change. Engaging in open discussions about these possibilities can prepare you for any adjustments.

Direct Deals Might Be More Beneficial

In some cases, directly engaging with loan officers at your financial institution might offer more competitive mortgage options. It’s worth speaking to a loan officer at your bank or credit union to see what they have to offer before making a decision. This direct approach can sometimes yield benefits, especially if you have a strong relationship or history with the financial institution.

Mitigating the Drawbacks

Understanding how to leverage the benefits while minimizing the downsides involves clear communication with your broker about all potential options and staying informed about your own financial institution’s offerings.

The Cost of Hiring a Mortgage Broker

When considering the services of a mortgage broker, it’s important to understand how they are compensated for their expertise. Most often, mortgage broker fees are paid by the lenders, though there are situations where the borrower might cover these costs. This flexibility in the payment structure means that, in many instances, engaging a broker may not result in direct out-of-pocket expenses for you.

Brokers typically earn their income through commissions, which are usually between 1% and 2% of the loan’s total amount at closing. These costs can often be incorporated into your mortgage, becoming part of the loan’s overall financial setup. Despite the potential fees, the financial benefits that brokers can provide often far outweigh these costs.

In addition to their commission, brokers might also receive compensation through loan origination fees, administrative charges, upfront fees, or a yield-spread premium. Having a transparent conversation about the broker’s fee structure early on is crucial to avoid any surprises later in the process.

Although the idea of paying additional fees for a broker might seem significant, it is a strategic investment. The savings on your mortgage interest over time can substantially surpass the cost of the broker’s fee, making their services a valuable asset in your home buying or refinancing journey.

Finding the Right Mortgage Broker for You

With the abundance of mortgage brokers available, selecting the right one can seem daunting. Here are strategic steps to ensure you partner with a broker who best suits your needs:

Seek referrals from people you trust, like family, friends, or your real estate agent.
Confirm their professional credentials through the National Mortgage Licensing System.
Look for membership in recognized industry associations, such as the National Association of Mortgage Brokers, as a sign of professionalism and integrity.
Research online reviews to gauge their reputation and client satisfaction.
Discuss their fee structure upfront to understand how they are compensated.
Consult the Better Business Bureau to check for any complaints or issues.

Bottom Line: The Value of a Mortgage Broker

While searching for the ideal home loan can seem overwhelming, the right mortgage broker can significantly reduce your stress and workload. Their expertise and services not only simplify the loan comparison and application process but can also lead to significant savings on interest, making their cost a worthwhile investment in your financial future.

By carefully selecting a broker who aligns with your needs and financial goals, you position yourself to secure a mortgage that benefits you in the long term, both financially and personally.

Frequently Asked Questions

Do I need to use a mortgage broker to get a mortgage?

No, you are not required to use a mortgage broker to get a mortgage. You can also apply for a mortgage with a direct lender, such as a bank or credit union.

How do mortgage brokers make money?

Mortgage brokers typically earn a commission from the lender for successfully arranging a mortgage. This commission is typically a percentage of the loan amount. They may also charge you a fee as part of your closing costs.

How do I choose a mortgage broker?

If you decide to work with a local broker, make sure they are experienced, reputable, and have a proven track record. You can ask for recommendations from friends and family, or research mortgage brokers online to find one that meets your needs.

Can a mortgage broker help me if I have bad credit?

A mortgage broker may be able to help you secure a mortgage even if you have less than perfect credit. However, you may have to pay a higher interest rate or provide a bigger down payment to compensate for the increased risk to the lender.

Can a mortgage broker help me with refinancing my mortgage?

Yes, a broker can help you with refinancing your mortgage. They can work with you to find a lender that offers the best terms for your specific needs and help you navigate the refinancing process.

Source: crediful.com

Apache is functioning normally

February 12, 2024 by Brett Tams

Whether it’s a 5% increase or a 20% bump, a pay raise at work is an opportunity to take charge of your financial priorities. A small raise might not seem like much when it’s broken down into a biweekly paycheck, but over time, that difference in income could provide a boost to your lifestyle or be put toward other financial goals.

Whether you decide to pay off debt, pad your safety net, invest, give back, improve your quality of life or treat yourself, a raise is a good time to think about the direction of your financial life.

Keep an eye on lifestyle creep

Many personal finance experts warn against “lifestyle creep,” which is when you begin to spend more as you earn more. Lifestyle creep can take the form of buying more conveniences — like ordering food in more often — or buying more expensive or higher-quality items, like sturdier hiking boots or a better brand of skin care products.

“If you get a raise and use it to buy a new car or a new home or go out every weekend, your rate of spending might surpass your new income,” says Mabel Nuñez, founder of the investing education site Girls on the Money.

Nuñez says that it’s good to reward yourself, but she advises clients to avoid buying more expensive things.

“Think about an expense that’s going to be a one-time purchase or something that’s going to make you better, like traveling somewhere new or taking a cooking class,” Nuñez says. “Don’t spend just for the sake of spending.”

Once you’ve looked at your financial situation, you might find that it’s not in your best interest to increase your spending on nonessentials. But if you’re feeling good about the status of your consumer debt and savings, then you might choose to spend more money on things that will make life more enjoyable.

For example, maybe you’ve been washing dishes by hand because you don’t have a dishwasher or yours is broken. You could put part of your raise toward a new appliance that’s going to save you a lot of time and energy. Or maybe you’ve been driving the same car for the past 20 years or living in a too-small house with your growing family. If you’ve planned for the increased costs, an upgrade that brings you increased functionality and comfort is a raise well-spent.

Focus on high-priority financial goals

Liz Carroll, a financial life and wellness coach at Mindful Money Coaches, says that paying off consumer debt with an 8% annual percentage rate or higher should be a top priority, especially if you have more income that you can put toward it.

Beyond debt payoff, Carroll suggests people have a financial safety net of at least a month’s worth of expenses, with the goal of working toward three to six months’ worth. This could be done through regular recurring transfers from your paycheck to your savings account.

“Give your future self a share,” Carroll says. “I tell my clients to be mindful and pause before the quick reaction of, ‘I got a raise, now I can spend money.’ Instead, you should think, ‘What’s in alignment with my values?’”

Investing for retirement is another priority to consider, such as contributing to your 401(k) to earn any matching funds offered by your employer or putting your money in a Roth IRA. You could also consider an index fund, which allows you to invest in a wide range of stocks all at once.

“You want money in savings for an emergency, but anything above that that you don’t need in the next few years could be invested in a conservative way, like an index fund,” Nuñez says. “Learn how to invest it in a smart way, and it’ll get you to the next level of financial life.”

Treat yourself and give back

Beyond debt, savings and other future financial planning, Carroll says you should feel comfortable celebrating your accomplishments. Just keep in mind that you may want to put up some guardrails around the way you reward yourself so that you can maximize the financial benefits of a raise. Carroll says something that equals 5% of the total raise is a good amount to aim for if you want to treat yourself but are also paying off debt. If you don’t have debt, she says, 10% of the total raise is a good benchmark.

Another thing you may choose to do with your raise is to give back to your community. Whether you donate money to your favorite charity or surprise a loved one with a random act of kindness, it can make you feel good to share your good fortune.

More income means having more resources to achieve your goals. By creating a plan for important financial milestones — as well as for fun splurges — you’ll get the most out of your money.

This article was written by NerdWallet and was originally published by The Associated Press.

Source: nerdwallet.com

Apache is functioning normally

February 7, 2024 by Brett Tams

The Adirondack Mountains are a gorgeous outdoor wonderland, attracting tourists from all over the world. The park covers 20% of New York state (3x larger than Yellowstone!). Perhaps the “ADK’s” most extraordinary natural resources are the 46 “High Peaks” in the park’s northeast corner.

Friend-of-the-blog/pod Tyler led me on one of my first High Peak adventures (hey Tyler, thanks for reading!). We conquered the Dix Range, summiting four peaks in one day, trudging ~15 miles through the mountainous woods over 11 hours

Hiking is Hard Work

It was a draining day. I drank more water than expected and chafed in…uncomfortable…ways. I ate dinner for two that night and slept like a baby and learned many applicable lessons for my next hike.

For example, during our rest breaks at the summits, I observed the other hikers around us. What were they doing that I wasn’t? Some were fit and lean, others a bit overweight. Some had expensive gear, others had gym shorts and sneakers. The pros drank from Nalgene bottles and ate rehydrated meals. The amateurs had Poland Spring bottles and Nutrigrain bars.

All shapes and sizes. There was a broad spectrum between the expertly prepared and the woefully inexperienced. Yet all of these hikers had reached the top. And hopefully they all got back to the bottom, too.

Are You Prepared?

More preparedness requires more research, more time, and more money. But it provides a higher probability of summiting the mountain(s), a more straightforward path, and the mental confidence of knowing you’re prepared.

Less preparedness is easier upfront. But is it easy in the long run? Likely not. “A stitch, in time, saves nine,” as Ben Franklin said. This idea rhymes with the concept of, “Hard choices, easy life. Easy choices, hard life.”

Where do you want to fall on the spectrum of preparedness? That’s totally your call. There is no correct answer in general, but only a correct answer for you.

You’ll hopefully reach “the summit” either way. But your preparedness provides flexibility in how easy or hard that journey will be.

Retirement Works the Same Way

In my experience running The Best Interest and working professionally in financial planning, retirement preparedness works the same way. I received a perfect example last week via email from a blog reader, Jon…

Hi Jesse, my wife and I are 56 and 58 years old, respectively, and on the verge of retirement, I hope. We have about $2M in Traditional accounts, $510K in Roth accounts, and $430K in taxable accounts. 95% of that money is invested in diversified stocks. We’ll both receive significant Social Security benefits (north of $3K/month each at age 67). We live within our means…last year our total outflow of money was just shy of $90,000. Do you think we’re ready to retire? Can we chat with you about retirement readiness?

Jon (and Eva)

Some quick math: Jon and Eva have $2.9M in assets to support an $90,000 annual lifestyle. They’re at less than a 3% annual withdrawal rate, and we haven’t even accounted for their Social Security income. They are more than set!

Do Jon and Eva need professional help? I don’t see how.

Could Jon and Eva benefit from professional help? I’m positive.

It’s like my adventure in the Dix Range. I conquered the mountains! I didn’t need to be more prepared. But I could have (and should have) done many things differently to make my day more manageable and eliminate the probability of failure.

Many of us don’t need intervention. But it would undoubtedly help.

Questions for Jon and Eva

I find it hard to imagine a scenario where Jon and Eva live a failed financial retirement, regardless of professional advice. They’re on course to “summit the mountain.” Still, many critical financial questions come to my mind:

They’re retiring before 59.5 (the age of normal IRA distributions). What’s their plan for funding those intervening years?
Fof 99%+ of people on the verge of retirement, a portfolio of 95% stocks is inappropriate. Red flag!
In general, how do they plan on balancing withdrawals from their Roth accounts (no tax), their Traditional accounts (fully taxable as Income), and the taxable accounts (with capital gains)? Done poorly, they’ll “leak” money to taxes.
Are they sure waiting until 67 is the optimal Social Security move for both of them? It usually isn’t.
What’s their healthcare plan before Medicare?
Do they have any significant financial goals beyond “live our normal lifestyle?” Are they prepared to fund those goals?
And many more. There are lots of puzzle pieces to retirement and many ways to arrange them.

I’m sure Jon and Eva have answers. However, my experience with similar families is that their answers are rarely optimized. While it’s terrific that they’re better off than most, there’s still room for optimization – and therefore, room for dollars saved and dollars earned.

If they were hikers, they’d be in peak physical shape (peak?!) with plenty of water. I can’t see them failing to get up the mountain. But did they bring a map and compass, just in case? Are they aware those cotton underpants are going to get very uncomfortable? Or that the trailhead parking lot is “by reservation only?”

They’ll reach the summit regardless. But their day will be more annoying than it needed to be. Who wants that?!

Is Preparedness Worth It?

Just as I wrote earlier, I’m asking Jon and Eva,

“Where do you want to fall on the spectrum of preparedness? That’s totally your call. There is no right answer in general, but only a right answer for you.”

Based only on Jon’s short email, I have plenty of questions for them. They could use a sanity check (or more) for retirement preparedness.

But preparedness costs money, time, energy, etc. Do they want to incur those costs to get more prepared? Will they see enough benefit from those costs, or are they beyond the point of diminishing returns?

Perhaps they’re ready to hit the trail as is. They’ll reach their retirement goals regardless. But they might have more annoying financial moments than needed. Who wants that?!

Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

-Jesse

Want to learn more about The Best Interest’s back story? Read here.

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Source: bestinterest.blog

Apache is functioning normally

February 6, 2024 by Brett Tams

Investing in a private company means acquiring equity in a company that doesn’t sell shares on public stock markets. Broadly speaking, there are two types of companies: public and private. And while you are likely more familiar with public-company investments — stocks traded on stock exchanges — there are also investment opportunities to be had with private companies.

There can be benefits that come with investing in privately held companies. Depending on your current circumstances, risk tolerance, and financial goals, you will likely approach the types of companies you consider investing in differently. And it’s important to understand that there are significant risks involved, and develop your expectations accordingly.

Understanding Private Companies

A private company is one that has not or does not sell shares of itself on public exchanges. Conversely, a public company has undergone an initial public offering (IPO), which means that it has publicly issued stock in hopes of raising more capital and making more shares available for purchase by the public.

As a general rule of thumb, until a company has an IPO, it’s considered private.

Classification of Private Companies

Again, private companies are those that are not publicly traded.

Unlike the world of public investing, private investing happens off of Wall Street and takes place anywhere new, buzzy ventures are cropping up.

Public companies, especially ones that are bigger, are more easily bought and sold on the stock market, and individuals are able to invest in them. These companies are also regulated by organizations like the Securities and Exchange Commission (SEC).

The SEC is a government body that makes sure these businesses stay accountable to their investors and shareholders, and it requires publicly traded companies to share how they are doing, based on their revenue and other financial metrics.

In contrast, a privately held company is owned by either a small number of shareholders or employees and does not trade its shares on the stock market. Instead, company shares are owned, traded, or exchanged in private.

The landscape of investing in private companies can sometimes be mystifying, in part because private stock transactions happen behind closed doors. But even though private companies may be less visible than their public counterparts, they still play an important role in the economy and can be a worthwhile investment.

Investing in a private company can also be incredibly risky, and it’s important to understand some of the pros and cons of investing in this landscape.

The Growth Journey: Startups to Unicorns

Generally speaking, the goal of a startup (a small business with aims to grow quickly and possibly go public) is to become a “unicorn.” A “unicorn” company is a private company that’s valued at more than $1 billion. Very few companies become unicorns, and for investors, a primary goal is to find and invest in companies that will become unicorns.

Strategic Pathways to Private Investments

There are several ways to invest in private companies, though not all of them will be available to every investor.

Early Stage Investments and Angel Investing

Early-stage investing, often called “angel investing,” involves making an investment in a very small-stage company in exchange for ownership of that company. This tends to be the riskiest stage to invest, as companies at this stage are small, young, and often unproven.

Joining Private Equity Firms

Investors can also get involved in private company investing through private equity. Private equity firms invest in private companies, like angel investors, in hopes that the equity they acquire will one day be much more valuable. Again, this is likely not an option for the average investor, as private equity is usually an area reserved for high-net-worth individuals.
💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Investing in Pre-IPO Companies

Some investors attempt to invest in companies before they go public to take advantage of any post-IPO spikes in share value. There are a few ways to invest in pre-IPO companies.

Leveraging Pre-IPO Investing Platforms

There are certain platforms that allow investors to make investments in pre-IPO companies. An internet search will yield some of them. Those platforms tend to work in one of a few ways, usually by offering investors access to specialized brokers who work with private equity firms, or by directly connecting investors with companies, allowing them to make direct purchases of stock.

You’ll need to dig in and do your own research into these platforms if this is a route you plan to pursue, but also know that there are significant risks with these types of investments.

The Accredited Investor’s Guide

For some private company investments, investors will need to be “accredited.” An accredited investor is an individual or entity that meets certain criteria, and can thus invest in hedge funds, private equity, and more.

Qualifications and Opportunities

For individuals to qualify as accredited investors, the SEC says that they need to have a net worth of more than $1 million (excluding primary residence), and income of more than $200,000 individually, or $300,000 with a spouse or partner for the prior two years.

There are also professional criteria which may be met, which includes being an investment professional in good standing and holding certain licenses. There are a few other potential qualifications, but those are the most broad.

Exclusive Markets for the Accredited Investor

Becoming an accredited investor basically means that you can invest in markets shut off from other investors. This includes private companies, and private equity. Effectively, being “accredited” comes along with the assumption that the investor has enough capital to be able to make riskier investments, and that they’re likely sophisticated enough to be able to know their way around private markets.

The Pros and Cons of Private Company Investments

There are pros and cons to investing in private companies that investors should be aware of.

Advantages of Private Market Engagement

Because private companies are often smaller businesses, they may offer investors an opportunity to get more involved behind the scenes. This might mean that an investor could play a role in operational decisions and have a more integrated relationship with the business than they could if they were investing in a large, public company.

In an ideal scenario, if you invest in a private company, you’ll get in earlier than you would when a company goes public. (Note: This is the ideal scenario.) And getting in early can potentially produce impressive results — if you’ve made a sound investment decision.

Another possible benefit of investing in a private company is that there is generally less competition for equity than with a public company. This means you could end up with a bigger slice of the pie.

Investing in a private company might also mean that you are able to set up an exit provision for your investment — meaning you could set conditions under which your investment will be repaid at an agreed upon rate of return by a certain date.

Generally speaking, investing in a private company can have some strong benefits, including increased potential for financial gain and the opportunity to become more involved in the future of a business.

Risks and Considerations

One of the biggest risks involved in investing in a private company is that you may have less access to information as an investor. Not only is it more challenging to get hold of data in order to understand how the company performance compares to the rest of the industry, private companies are also not held to the same standards as publicly-traded ones.

For example, because of SEC oversight, public companies are held to rigorous transparency and accounting standards. In contrast, private companies generally are not. From an investor’s standpoint, this means that you may sometimes be in the dark about how the business is doing.

In addition to this, many private companies may lack access to the capital they need to grow. And even though there may be an opportunity to set up an exit provision as an investor in a private company, unless you make such a provision, it could be a huge challenge to get out of your investment.
💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.

Critical Steps for Investing in Private Companies

Just like investing in the public stock exchanges, there are some steps that investors may want to follow as a sort of best-practices approach to investing in private companies.

Conducting Thorough Research

Always do your homework — or, as much research as you can before investing in a private company. As noted, this may be difficult, as there’s going to be less available information about private companies versus public ones. You also won’t be able to research charts and look at stock performance to get a sense of what a company’s future holds.

Identifying and Assessing Potential Deals

Through the research you are able to do (perhaps as a part of a private equity or hedge fund), you’ll want to do your best to zero-in on some potential investment opportunities. Like investing in stocks, you’ll be looking for companies that appear healthy, are competitive, and that you think have a good chance of surviving the years ahead.

There’s no magic formula, of course, but investors should do as much due diligence as possible.

The Transaction: Making Your First Private Investment

Depending on how you choose to invest, making your first private company investment may be as simple as hitting a button — such as on a private crowdfunding website or something similar. Or, if you’re directly investing with the company, it may be more involved. Just know that it’ll probably be a bit different than buying stocks or shares on an exchange.

Post-Investment Vigilance

As with any investment — public, or private — investors will want to keep an eye on their holdings.

Monitoring Your Investment

Monitoring your investment in a private company is not going to be the same as monitoring the stocks in your portfolio. You won’t be able to go on a financial news website and look at the day’s share prices. Instead, you’ll likely need to be in touch with the company directly (or through intermediaries), reading status reports and financial statements, and doing your best to learn how business is operating.

It’ll be a bit opaque, and the process will vary from company to company. So, keep that in mind.

Exit Strategies and Liquidity Events

When an investor “exits” an investment in a private company, it means that they sell their shares or equity and effectively “cash out.” If an investor bought in at an early stage and the company gained a lot of value over the years, the investor can “exit” with a big return. But returns vary, of course.

Liquidity events present themselves as times to exit investments, and for many private investors, the time to exit is when a company ultimately goes public and IPOs. But there may be other times that are more favorable to investors, if they present themselves.

Investment Myths Debunked

As with any type of investment, there may be myths or misunderstandings related to private company investments.

Setting Realistic Expectations

A good rule of thumb for investors is to keep their expectations in check. In all likelihood, you’re not going to stumble upon the next Mark Zuckerberg or Jeff Bezos, desperately looking for cash to fund their scrappy startup. Instead, you may be more likely to find a company that has good growth potential but no guarantee of survival. For that reason, it’s important to always keep the risks in mind, as well as what you actually expect from an investment.

Common Misconceptions

Some further misconceptions about private investing include that it’s only for the ultra-rich (not necessarily true, but may often be the case), that every investment may offer high returns (along with high risks), and that profits will come quickly. An investment may take years to ultimately pay off — if it does at all.

Ready to Invest? Questions to Ask Yourself

If you feel comfortable with the idea of investing in private companies and are ready to take the next step, be sure to know your own preferences before making any moves.

Assessing Your Risk Tolerance

Are you okay with taking on a lot of risk? Because you’ll probably need a high risk tolerance to be able to stomach private company investing. So, be sure to take stock of how much risk you can realistically handle, as the importance of knowing your risk tolerance will become abundantly clear as you progress in your investing journey.

Aligning Investments with Personal Goals

Also think about how your investments in private markets relate or mesh with your overall investing goals. That’s to say that you don’t necessarily want to invest in private companies just for the sake of investing in private companies — instead, think about how these investments fit into your larger portfolio.

The Takeaway

Investing in private companies entails buying or acquiring equity in companies that are not publicly traded, meaning you can’t buy shares on the public stock exchanges. This often involves investing in small companies with high growth potential — but not always, and not necessarily. Because this is a risky type of investing, there tends to be high potential rewards, too.

Investing in private companies is not for everyone, and there may be stipulations involved that prevent some investors from doing it. If you’re interested, it may be best to speak with a financial professional before making any moves.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

How much capital is needed to start?

There isn’t a limit to how much capital needed to invest in private companies, but to be an accredited investor, there are income and net worth limits that may apply.

What are the time commitments and expectations?

There are no hard and fast time commitments or expectations of private investors, in a general sense. But that may differ on a case by case basis, especially if an investor takes a broader role with managing a company they’re investing in.

SoFi Invest®
SoFi Invest refers to the two investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.

2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA(www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of SoFi Digital Assets, LLC, please visit SoFi.com/legal.

Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Bank, N.A.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Source: sofi.com

Apache is functioning normally

February 6, 2024 by Brett Tams

The Adirondack Mountains are a gorgeous outdoor wonderland, attracting tourists from all over the world. The park covers 20% of New York state (3x larger than Yellowstone!). Perhaps the “ADK’s” most extraordinary natural resources are the 46 “High Peaks” in the park’s northeast corner.

Friend-of-the-blog/pod Tyler led me on one of my first High Peak adventures (hey Tyler, thanks for reading!). We conquered the Dix Range, summiting four peaks in one day, trudging ~15 miles through the mountainous woods over 11 hours

Hiking is Hard Work

It was a draining day. I drank more water than expected and chafed in…uncomfortable…ways. I ate dinner for two that night and slept like a baby and learned many applicable lessons for my next hike.

For example, during our rest breaks at the summits, I observed the other hikers around us. What were they doing that I wasn’t? Some were fit and lean, others a bit overweight. Some had expensive gear, others had gym shorts and sneakers. The pros drank from Nalgene bottles and ate rehydrated meals. The amateurs had Poland Spring bottles and Nutrigrain bars.

All shapes and sizes. There was a broad spectrum between the expertly prepared and the woefully inexperienced. Yet all of these hikers had reached the top. And hopefully they all got back to the bottom, too.

Are You Prepared?

More preparedness requires more research, more time, and more money. But it provides a higher probability of summiting the mountain(s), a more straightforward path, and the mental confidence of knowing you’re prepared.

Less preparedness is easier upfront. But is it easy in the long run? Likely not. “A stitch, in time, saves nine,” as Ben Franklin said. This idea rhymes with the concept of, “Hard choices, easy life. Easy choices, hard life.”

Where do you want to fall on the spectrum of preparedness? That’s totally your call. There is no correct answer in general, but only a correct answer for you.

You’ll hopefully reach “the summit” either way. But your preparedness provides flexibility in how easy or hard that journey will be.

Retirement Works the Same Way

In my experience running The Best Interest and working professionally in financial planning, retirement preparedness works the same way. I received a perfect example last week via email from a blog reader, Jon…

Hi Jesse, my wife and I are 56 and 58 years old, respectively, and on the verge of retirement, I hope. We have about $2M in Traditional accounts, $510K in Roth accounts, and $430K in taxable accounts. 95% of that money is invested in diversified stocks. We’ll both receive significant Social Security benefits (north of $3K/month each at age 67). We live within our means…last year our total outflow of money was just shy of $90,000. Do you think we’re ready to retire? Can we chat with you about retirement readiness?

Jon (and Eva)

Some quick math: Jon and Eva have $2.9M in assets to support an $90,000 annual lifestyle. They’re at less than a 3% annual withdrawal rate, and we haven’t even accounted for their Social Security income. They are more than set!

Do Jon and Eva need professional help? I don’t see how.

Could Jon and Eva benefit from professional help? I’m positive.

It’s like my adventure in the Dix Range. I conquered the mountains! I didn’t need to be more prepared. But I could have (and should have) done many things differently to make my day more manageable and eliminate the probability of failure.

Many of us don’t need intervention. But it would undoubtedly help.

Questions for Jon and Eva

I find it hard to imagine a scenario where Jon and Eva live a failed financial retirement, regardless of professional advice. They’re on course to “summit the mountain.” Still, many critical financial questions come to my mind:

They’re retiring before 59.5 (the age of normal IRA distributions). What’s their plan for funding those intervening years?
Fof 99%+ of people on the verge of retirement, a portfolio of 95% stocks is inappropriate. Red flag!
In general, how do they plan on balancing withdrawals from their Roth accounts (no tax), their Traditional accounts (fully taxable as Income), and the taxable accounts (with capital gains)? Done poorly, they’ll “leak” money to taxes.
Are they sure waiting until 67 is the optimal Social Security move for both of them? It usually isn’t.
What’s their healthcare plan before Medicare?
Do they have any significant financial goals beyond “live our normal lifestyle?” Are they prepared to fund those goals?
And many more. There are lots of puzzle pieces to retirement and many ways to arrange them.

I’m sure Jon and Eva have answers. However, my experience with similar families is that their answers are rarely optimized. While it’s terrific that they’re better off than most, there’s still room for optimization – and therefore, room for dollars saved and dollars earned.

If they were hikers, they’d be in peak physical shape (peak?!) with plenty of water. I can’t see them failing to get up the mountain. But did they bring a map and compass, just in case? Are they aware those cotton underpants are going to get very uncomfortable? Or that the trailhead parking lot is “by reservation only?”

They’ll reach the summit regardless. But their day will be more annoying than it needed to be. Who wants that?!

Is Preparedness Worth It?

Just as I wrote earlier, I’m asking Jon and Eva,

“Where do you want to fall on the spectrum of preparedness? That’s totally your call. There is no right answer in general, but only a right answer for you.”

Based only on Jon’s short email, I have plenty of questions for them. They could use a sanity check (or more) for retirement preparedness.

But preparedness costs money, time, energy, etc. Do they want to incur those costs to get more prepared? Will they see enough benefit from those costs, or are they beyond the point of diminishing returns?

Perhaps they’re ready to hit the trail as is. They’ll reach their retirement goals regardless. But they might have more annoying financial moments than needed. Who wants that?!

Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

-Jesse

Want to learn more about The Best Interest’s back story? Read here.

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Source: bestinterest.blog

Apache is functioning normally

February 6, 2024 by Brett Tams

Investing in mutual funds has become a cornerstone strategy for those looking to grow their wealth over time. With a mutual fund, you’re essentially pooling your money with other investors to buy a large portfolio of stocks, bonds, or other securities. This collective investment approach allows individuals to participate in a diversified range of assets, which might be difficult to achieve on their own.

What exactly is a mutual fund?

At its core, a mutual fund gathers money from many investors to invest in various securities. These can include stocks, bonds, and other financial instruments. The beauty of mutual funds lies in their ability to offer immediate diversification, spreading out the risk across different investments.

When you buy a share of a mutual fund, you’re buying a piece of a large, varied portfolio. For example, a single mutual fund share could include small portions of companies like Apple, Microsoft, and Berkshire Hathaway.

How Mutual Funds Work

Mutual funds are a popular choice for investors looking to diversify their portfolios without the hassle of managing each investment individually. Let’s break down how these investment vehicles operate, focusing on the collective investment strategy, the pivotal role of mutual fund managers, the principle of diversification, and the critical concept of Net Asset Value (NAV).

Pooling Money for Diverse Investments

At its most basic, a mutual fund works by pooling money from multiple investors. This pool of funds is then used to buy a wide array of securities, including stocks, bonds, and other financial instruments. This collective buying power allows individual investors to access a broader range of investments than they might be able to afford or manage on their own.

The Crucial Role of Fund Managers

A mutual fund manager is a professional that is tasked with making the day-to-day decisions about where to invest the fund’s money. Their goal is to select securities that will help the fund achieve its investment objectives, whether that’s growth, income, or stability. Through their expertise, they strive to maximize returns for investors while adhering to the fund’s stated investment strategy.

Emphasizing Diversification and Risk Management

One of the key benefits of investing in mutual funds is diversification. By holding a wide variety of investments within a single fund, mutual fund investors can reduce the impact of poor performance from any single security. This strategy helps manage risk and can lead to more stable returns over time. Mutual funds make diversification easier and more accessible, particularly for investors with smaller amounts of capital.

Understanding Net Asset Value (NAV)

The net asset value (NAV) is a fundamental concept in the world of mutual funds, serving as a critical measure of a fund’s per-share market value.

The Definition and Importance of NAV

NAV represents the total value of all the securities held by the fund, minus any liabilities, divided by the number of shares outstanding. This figure is crucial because it determines the price at which shares of the mutual fund can be bought or sold at the end of the trading day. Investors pay close attention to NAV to assess the performance and value of their mutual fund investments.

Calculating NAV: A Closer Look

To calculate the NAV of a mutual fund, you subtract the fund’s liabilities from its assets and then divide this figure by the number of shares outstanding. This calculation is typically done at the end of each trading day to reflect the current market value of the fund’s holdings. By understanding NAV, mutual fund investors can make informed decisions about when to buy or sell shares of a mutual fund, ensuring they are aligned with their investment strategies and goals.

Types of Mutual Funds

Investors have a wide array of mutual fund types to choose from, each catering to different investment goals, risk tolerances, and time horizons. Understanding the nuances of these various funds can significantly aid in constructing a diversified and effective investment portfolio. Here’s a comprehensive look at some of the key types of mutual funds available:

Equity Funds (Stock Funds)

Equity funds, or stock funds, are mutual funds that invest primarily in stocks of publicly traded companies. They are categorized based on the market capitalization of the companies they invest in (small-cap, mid-cap, large-cap) or their investment strategy (growth, value, dividend income).

Equity funds aim to provide capital appreciation over the long term and can be either actively managed, where a fund manager picks stocks to try to outperform the market, or passively managed, mimicking the performance of a specific index.

Fixed-Income Funds (Bond Funds)

Fixed-income funds, often referred to as bond funds, invest in bonds and other debt securities that pay a fixed rate of return. These funds are designed to provide investors with steady income and are generally considered less risky than equity funds. They can invest in various types of bonds, including government bonds, municipal bonds, and corporate bonds, each offering different levels of risk and return.

Asset Allocation Funds

Asset allocation funds are designed to invest across different asset classes, including stocks, bonds, and sometimes alternative investments like real estate or commodities. These funds adjust their asset allocation based on the fund’s investment objectives and the current market conditions, aiming to balance risk and return. They can be a good choice for investors looking for a diversified investment in a single fund.

Index Funds

Index funds aim to replicate the performance of a specific market index, such as the S&P 500 or the Dow Jones Industrial Average, by investing in the securities that make up that index. These funds are known for their low expense ratios and passive management strategy, making them an attractive option for cost-conscious investors seeking market-matching returns.

Target Date Funds

Target date funds are a type of asset allocation fund that automatically adjusts its investment mix as the fund’s target date (usually retirement) approaches, shifting from more aggressive investments to more conservative ones. These funds are designed for investors who prefer a hands-off approach to managing their retirement savings.

Money Market Funds

Money market funds invest in short-term, high-quality debt securities, such as Treasury bills and commercial paper. They aim to provide investors with a safe place to invest easily accessible, liquid assets, offering a higher return than regular savings accounts, though with slightly higher risk.

Commodity Funds

Commodity funds invest in physical commodities, such as gold, oil, or agricultural products, or in commodity-linked derivative instruments. These funds can offer investors a hedge against inflation and a way to diversify their portfolios away from traditional stocks and bonds, though they can be more volatile.

Environmental, Social, and Governance (ESG) Funds

ESG funds select investments based on ethical, social, and environmental criteria, in addition to financial considerations. Investors who wish to align their investment choices with their personal values may find these funds appealing. ESG funds can invest across a range of industries and asset classes, excluding companies that do not meet specific ethical standards.

Setting Up a Mutual Fund Account

Embarking on your mutual fund investment journey begins with setting up an account. This process is straightforward, but there are a few key considerations to keep in mind to ensure you’re making informed decisions right from the start.

Here’s a step-by-step guide to getting your mutual fund account up and running, along with insights into selecting a broker and understanding the fees involved.

Step-by-Step Guide to Opening an Account

Determine your investment amount: Start by deciding how much money you’re ready to invest. Mutual funds often have minimum investment requirements, but these can vary widely from one fund to another.
Choose a broker or investment platform: Research brokers or investment platforms that offer access to the mutual funds you’re interested in. Look for platforms that align with your investment goals and budget.
Understand the fees: Before making your choice, thoroughly investigate the fees associated with buying, holding, and selling mutual funds on the platform. These can include management fees, transaction fees, and any other charges that could affect your investment’s growth.
Open your account: Once you’ve chosen a broker or platform, go ahead and open your account. This process typically involves providing some personal information and setting up a way to fund your account.
Start investing: With your account open, you’re ready to start buying shares of mutual funds. Consider starting with a diversified fund that aligns with your risk tolerance and investment goals.

Selecting a Broker and Understanding Fees

When choosing a broker or investment platform, consider not only the fees but also the services and support offered. Some investors prefer platforms with robust educational resources and customer service, while others might prioritize low fees or the availability of a wide range of funds. Understanding the fee structure is crucial because fees can significantly impact your investment returns over time.

Making Money and Managing Risks with Mutual Funds

Investing in mutual funds can be a profitable endeavor, but it’s important to understand how returns are generated and the risks involved. Here’s what you need to know about making money with mutual funds and managing the inherent risks of investing in the market.

How Investors Earn Returns

Mutual fund returns can come from several sources, including dividend payments from stocks within the fund, interest payments from bonds, and capital gains from selling securities at a higher price than they were purchased.

The fund’s performance, and consequently, your return as an investor, is influenced by the market performance of its underlying investments. As the value of the fund’s holdings increases, so does the value of your shares in the fund.

Understanding the Risks and Market Volatility

While mutual funds can offer a more diversified and thus potentially less risky investment than individual stocks, they are not immune to market volatility. The value of your investment can fluctuate based on overall market conditions, the performance of the securities within the fund, and economic factors. Diversification can help manage risk, but it cannot eliminate it entirely.

It’s vital to have a long-term perspective and recognize that market fluctuations are a normal part of investing. By staying informed about your investments and maintaining a diversified portfolio aligned with your risk tolerance and financial goals, you can navigate market volatility more effectively and work towards achieving your investment objectives.

Comparing Mutual Funds with ETFs

When expanding your investment portfolio, understanding the differences between mutual funds and exchange-traded funds (ETFs) is crucial. Both investment types offer unique advantages and come with distinct fee structures and management styles.

Differences Between Mutual Funds and ETFs

Mutual funds are investment vehicles that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are typically managed by a professional fund manager and are bought or sold at the end of the trading day based on the fund’s net asset value (NAV).

ETFs, on the other hand, are similar in that they also pool investor money to buy securities, but they trade like stocks on an exchange. This means they can be bought and sold throughout the trading day at market prices that can fluctuate.

Fee Structures and Management Styles

Mutual funds often have higher expense ratios due to active management, where fund managers make decisions on which securities to buy or sell. ETFs tend to have lower fees, partly because many are passively managed, aiming to track the performance of a specific index rather than outperforming the market.

See also: What’s the Difference Between ETFs and Mutual Funds?

Benefits of Investing in Mutual Funds

Mutual funds offer several advantages that make them an attractive option for individual investors, including diversification, liquidity, and professional management.

Diversification

By investing in a mutual fund, you gain access to a broad array of securities in one transaction. This diversification can help reduce your investment risk by spreading it across various assets.

Liquidity

Mutual funds offer high liquidity, meaning you can buy or sell your shares of the fund at the end of each trading day at the NAV, making it easier to manage your investments.

Professional Management

Actively managed mutual funds benefit from the expertise of a fund manager who makes investment decisions aimed at achieving the fund’s objectives. This is particularly valuable for investors who do not have the time or experience to manage their investments.

Fund managers actively select and manage the investments within the fund to try to outperform the market, providing a potential advantage over passively managed funds.

Withdrawing Money from Mutual Funds

Withdrawing money from your mutual fund investments can have financial implications, especially when it comes to retirement accounts.

Penalties and Taxes on Withdrawals

If you withdraw from a mutual fund within a retirement account like an IRA or 401(k) before the age of 59 and a half, you may face early withdrawal penalties and income taxes on the amount withdrawn. For non-retirement accounts, selling shares of a mutual fund can trigger capital gains taxes if the investment has increased in value.

Starting Your Mutual Fund Investment

Beginning your journey with mutual funds involves a few key steps, including understanding the initial investment requirements and the importance of research.

Initial Investment Requirements

Mutual funds often have minimum investment requirements, which can vary significantly from one fund to another. It’s important to choose a fund that matches your financial situation and investment goals.

Importance of Research and Understanding Fund Performance

Before investing, thoroughly research potential mutual funds to understand their investment strategy, past performance, and fee structure. Reviewing historical returns can provide insight into how the fund performs in different market conditions, helping you make an informed decision.

Final Thoughts

Diving into mutual fund investments offers a promising path to wealth growth and achieving your financial aspirations. It’s crucial to engage in thorough research and choose mutual funds that best match your investment goals and risk appetite. Mutual funds are integral to a diverse investment strategy, providing the benefits of diversification, expert management, and liquidity.

Being well-informed is key to investment success. Take the initiative to explore the various mutual fund options, their past performances, fee structures, and their role in your overall investment portfolio. With careful selection and strategic planning, mutual funds can significantly contribute to a robust and prosperous financial future.

Frequently Asked Questions

What are the differences between actively and passively managed mutual funds?

Actively managed funds are managed by professionals who actively select investments to outperform the market, leading to higher fees. Passively managed funds, or index funds, aim to mirror the performance of a specific index, resulting in lower fees due to less frequent trading and lower operational costs.

How do mutual fund dividends work?

Mutual fund dividends come from the income generated by the fund’s investments. Shareholders can either receive these dividends as cash or reinvest them to buy more shares of the fund. The approach depends on the fund’s distribution policy and the investor’s preference.

Can I lose money in a mutual fund?

Yes, investing in mutual funds carries the risk of loss. The value of a mutual fund can decrease if the investments it holds lose value. Market volatility and economic changes can affect the fund’s performance, potentially leading to losses.

How do I choose the right mutual fund for me?

Choosing the right mutual fund involves considering your investment goals, risk tolerance, the fund’s performance history, fee structure, and the fund manager’s track record. It’s important to select a fund that aligns with your financial objectives and comfort with risk.

How often should I review my mutual fund investments?

Review your mutual fund investments at least annually or when your financial situation or goals change. This helps ensure your investments remain aligned with your objectives and allows you to make adjustments based on the fund’s performance and changes in the market.

What is the impact of taxes on mutual fund investments?

Taxes on mutual fund investments can affect your returns, especially for funds in non-retirement accounts. Dividends and capital gains distributions are taxable events. Selling shares at a profit also triggers capital gains taxes. Investing in tax-efficient funds or using tax-advantaged accounts can help minimize the tax impact.

Source: crediful.com

4 Ways to Track Down Lost or Forgotten 401(k) Accounts

Contact Former Employers

Track Down Old Statements

Check With Government Agencies

Search National Registries

What Should I Do With Recovered Funds?

The Takeaway

FAQ

Is it possible to lose your 401(k)?

Do I need my social security number to find an old 401(k)?

What happens to an unclaimed 401(k)?

Can a financial advisor find old 401(k) accounts?

What is a bookkeeping business?

First Steps to Starting a Bookkeeping Business

Craft a Comprehensive Business Plan for Success

Acquire Essential Certifications and Training

Legal Considerations and Compliance

Register Your Business and Secure the Necessary Permits

Protect Your Endeavors with the Right Insurance

Setting Up Shop

Establishing a Home Office vs. Renting Space

Selecting State-of-the-Art Bookkeeping Software

Financial Foundations for Your Firm

Unravel Funding Options and Small Business Loans

Smart Money Management from the Start

Marketing Your Bookkeeper Business

Digital Presence: Creating a Website That Converts

Networking and Navigating Social Media Strategies

Bookkeeping Startup Pricing, Clients, and Growth

Determining Competitive Rates for Your Services

How will you find clients for your bookkeeping business?

Discovering and Retaining Your Ideal Clientele

Stay Ahead in the Bookkeeping Scene

Continuous Learning and Leveraging Industry Trends

Join Professional Associations for Peer Support

Frequently Asked Questions (FAQs)

Ready to Open Bookkeeping Business?

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What Are Nurses?

How Much Do Starting Nurses Make?

What Is the Average Salary for a Nurse?

What Is the Average Salary by State for a Nurse?

Nurse Job Considerations for Pay and Benefits

Pros and Cons of Nurse Salary

The Takeaway

FAQ

What is the highest-paid RN job?

How much money does a RN make in California?

What state pays nurses the lowest?

Building trust

Breaking down the misconceptions about interest rates

Becoming the expert

Related

What a Mortgage Broker Does

Tailoring the Search to Your Financial Profile

Evaluating Lenders and Loan Programs

Overcoming Financial Challenges

How a Mortgage Broker Can Help You

Streamlining the Loan Comparison Process

Expert Negotiations on Your Behalf

Handling Paperwork and Coordination

Providing Tailored Financial Solutions

Ongoing Support and Guidance

The Pros and Cons of Using A Mortgage Broker

Pros

Access to Expertise and Options

Case Study: Overcoming High Debt Ratios

Cons

Variability in Rates and Terms

Direct Deals Might Be More Beneficial

Mitigating the Drawbacks

The Cost of Hiring a Mortgage Broker

Finding the Right Mortgage Broker for You

Bottom Line: The Value of a Mortgage Broker

Frequently Asked Questions

Do I need to use a mortgage broker to get a mortgage?

How do mortgage brokers make money?

How do I choose a mortgage broker?