Financial Goals Archives - Page 50 of 271

Apache is functioning normally

July 10, 2023 by Brett Tams

I have a problem. In fact, I think we all have a problem:

We have been way too focused on returns, resulting in the utter destruction of our wealth.

The investment industry has been built using tools that might be appropriate for understanding investments, but are totally worthless for investors. In real life, real people, using real money do not care about returns. We care about our wealth, and the two are not the same. They are not the same!

Risk and investment returns
Nowhere is this paradox more evident than the core tenet that risk goes down over time. When talking about investing, everyone says that risk goes down over time. Every investment book, every investment advisor, and for sure any class you took in college, all shout this idea from the rooftops, an idea illustrated in the chart below.

It’s time to back up and understand what this chart is really telling us.

It measures the best and worst periods in terms of annualized returns from 1926 through March 2009 for the S&P 500, with the average return for the entire period in grey.

For example, while that average return for the entire period is 11.28%, you had a one year period that was positive 162% or negative 67%, a three year period that ranged from up 43% per year to down to 42% per year and so on. As you measure longer and longer periods, the best and the worst start to narrow around this long-term average of 11%.

Just to make sure we are clear before we move on:

This is a chart of the range between best and worst annualized rates of return for different periods of time.
It clearly shows that the range of potential outcomes (in % terms) narrows over time.

Somewhere along the line, someone locked in a back room at a university decided that the range of returns (measured in percentages) was a good proxy for risk. Somehow it is was useful to measure risk in terms of how much something goes up and down in percentage terms.

This is where things get sticky.

Risk and the growth of wealth
It might be true that “risk” goes down over time, if you define risk this way. If you are an investment, this would be a good way to measure risk. But you are not an investment — you are an investor. Real people do not care about their return. We care about our money. We don’t eat percentage pie. You can’t pay your kids’ tuition with percentages; you pay with dollars. Everyone I have ever met thinks of risk as the possibility that they will run out of money.

So the question is not about the accuracy of this chart, but about the conclusion that we draw from it. When you are a real person, measuring risk in terms of returns is like trying to measure temperature with a ruler. Fine tool — wrong application!

Investors measure risk in terms of dollars; investments measure risk in terms of percentages.

When we measure risk in terms of wealth, risk goes way up over time!

The chart looks like this:

This chart shows what happens to a dollar if we invested during those best and worst time periods from chart one. Depending on the sheer luck of timing, $1 could have ended up growing to $62.52 — or just $9.51 thirty years later. That is a huge range of potential outcomes. If you add in withdrawals, things get even more “risky”.

This should make sense. It’s basic math, compounding over time. When you leave on a trip from Los Angeles to Miami, if you are two inches off course, you most likely would not even notice when you are over Nevada, but without any course correction you will end up in Maine! Maine is not a bad place — unless you planned to be in Florida.

The issue is that most of us are on auto-pilot, thinking that if we just “set the course and forget it” that our risk will go down over time.

That is simply not that case.

So what?
I’m still working through all the implications of this, but they at least include the following:

1. The timing of major financial decisions has huge impact on our success. If you happened to retire with a lump sum at the beginning of one of the best 30-year periods, your experience would be dramatically better than if you retired just before one of the worst. The problem is that we really don’t know which one we are in until after the fact.

1. Average is not normal. If you set a course based on some version of a long-term average return, then you are likely to end up somewhere else. Most of the time, the surprise destination appears to be good, but sometimes it’s bad. In fact, it’s bad often enough to make me question some of my long-held beliefs.

1. Making course corrections is at least as important as setting the course!

1. Rates of return are only one factor in meeting your long-term goals. There are other levers to pull when we need to adjust, other levers that we have much more control over, including retirement date, savings goals, withdrawals, etc.

We really can’t rely on the idea that if you buy and hold, your risk goes down. While that may still be the best approach to investing, in terms of meeting your financial goals, there are a lot of other things that you need to think about as you go forward.

The point of this article is really just to raise awareness. I have been thinking about this for a long time. I have been in the financial-planning industry for over 10 years. I really can’t think of one concept that is more important to understand right now. Here’s a video that summarizes my thoughts on this subject:

I want to leave this open-ended. This is the beginning of a discussion, not the end. However, it’s important to understand that the process of planning for your future remains the same:

Determine where you are today.
Define the destination.
Chart a course to get there.

But now that you know your risk of not getting there is actually growing over time, make sure you take the time to do regular course corrections. Are you on course to meet your goals? Have you made corrections in the past — or do you expect to do so in the future? How do you feel about the relationship between wealth and risk?

Source: getrichslowly.org

Apache is functioning normally

July 10, 2023 by Brett Tams

Living off of minimum wage in this country is extremely burdensome: mentally, physically, and financially. As one Redditor puts it:

A nice dinner out with your significant other might seem like nothing to people who make more money than I do, but that is something I have to plan for. I have to pick up shifts at work and skip a meal or two in order to take someone out and feel “normal” for a few hours. But I get up and I do it every day because I have to.

However, with a little strategy applied, there are ways to alleviate your stress in the short term, multiply your earnings, and save for the long term.

Here are seven ways to improve your life and lifestyle while living on minimum wage.

What’s Ahead:

Create a budget

While I researched this piece, my friend Steph described a moment in the life of a minimum wage earner:

I used to love Campbell’s brand soup as a kid. Aldi stocks it right next to the generic brand soup, which is $0.40 cheaper. So I stood there for a good five minutes debating whether I could truly afford the name brand soup that I wanted. But eventually, I left the Campbell’s on the shelf.

Steph’s problem, as she put it, is that she doesn’t have a budget so she never knows how much she can really spend without feeling guilty.

It’s almost ironic that creating a budget can feel both scary and tedious at the same time. But having a budget on any wage is so critical because it provides two primary benefits:

First, budgeting ensures that you don’t overspend and end up with net zero or negative earnings at the end of the month, which can jeopardize your long-term goals of financial independence.
Second, when you create a budget, you’ll learn down to the dollar how much you can spend on nonessentials each month.

As someone who’s briefly lived on minimum wage (and no wage), I can assert that it’s really hard to live life when every non-essential purchase, like Campbell’s soup or a movie rental, is laced with guilt and fear of the unknown.

Part of designing a budget is determining how much you’ll allow yourself to spend on fun and happy things without feeling guilty. Even if it’s only $40 per month on nonessentials, that’s $40 you can spend guilt-free, which is so critical to supporting your mental health.

As for which budget to follow, consider the 50-30-20 budget:

50% of your income goes to essentials (bills, food, rent, utilities, etc.).
30% of your income goes to discretionary spending (entertainment, social life, etc.).
20% of your income goes to savings (investments, 401k, etc.).

Now, you might be thinking that well over 50% of your income is already going to your essentials. To be sure, you can use MU30’s 50-30-20 Budget Calculator to confirm your suspicions. If things are tight, consider shaving 10% off of the latter two categories so your budget plan becomes 70-20-10.

Once you’ve established a budget, it’s time to start storing your money in the right places.

Open some checking, savings, and retirement accounts

There are many American households that are either unbanked or underbanked, meaning they either have no bank accounts or they have an account, but rely upon outside/unscrupulous financial institutions like payday lenders to make ends meet.

Payday lenders are extremely dangerous places to do business and should be avoided, but more on that later.

The research found that the #1 reason why these households avoid banks is that they feel that they don’t have enough money. The #2 reason is that they simply don’t trust banks.

If you hold these beliefs, I get it. Banks do sketchy things, and overdraft fees are a pain. But the benefits of opening accounts with the right bank far outweigh the potential cons.

A checking account is critical for safely storing and accessing your money on a daily basis. It also enables you to make purchases with a credit card, which can help build positive credit. Lastly, having at least a checking account will enable you to set up direct deposit with work, which we’ll talk about below.

A savings account is a rainy day fund that accumulates a little interest (around 1.0% these days, compounded annually). If you have money that you won’t need immediately but may need before retirement, a savings account is a good place to keep it.

For a great starter mobile financial app, consider Chime®. They offer checking and savings accounts, and I don’t hesitate to recommend them to someone making minimum wage because they help you build credit and charge zero fees (their whole mission is to make money off of banks, not customers)². Plus, they make it super easy to get started.

Finally, I strongly recommend setting up a retirement account. Even if you can only contribute a few bucks a month (or a year), that money will still multiply by a factor of 10-15 by the time you retire, so it’s much better than not having any retirement savings at all. Plus, in my experience, just knowing that I was saving something for retirement was a stress-reliever.

To open a retirement account and put a few bucks in, I recommend Betterment. It’s a “robo-advisor,” meaning it’s an AI that never sleeps, optimizing your investments 24/7. You can open an account with a $10 required minimum deposit to start investing, and Betterment charges an annual fee of just 0.25% of your account balance (so no “minimum balance” nonsense here).

² There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account.

Set up direct deposit and automated bill pay

I mentioned direct deposit earlier as a benefit of a checking account. Why is that important?

Direct deposit is where you give your employer your account info so instead of writing a check, they can just directly deposit your pay into your bank account. Direct deposit is awesome because it means no more lost checks and you can get your money two-five days faster, and anyone living paycheck-to-paycheck knows that getting cash faster can make a huge difference at the end of the month.

Next, a checking account will also enable you to set up automatic bill pay. Most banks will have online dashboards where you can input recipients like AT&T and your landlord and set up automatic payments to them each month.

Now, AT&T and your leasing company might offer to automatically withdraw from your account when your bills are due, but I wouldn’t recommend this for two reasons. Let’s say you give your account and routing numbers to AT&T so they can automatically withdraw $50 each month. Regardless of how much money is in your account, AT&T will always try to withdraw $50, which could leave you without food/rent money or worse, overdrafted. Next, AT&T might simply make a clerical mistake and withdraw $500, and it can take a lot of red tape to get it back.

So instead, keep control of your automatic payments yourself so you can always quickly turn off the taps if you need to save money.

Avoid bad debt and build good credit

Never try payday loans

If you’ve ever considered taking out a loan from a payday lender, just don’t. Beg, borrow (but don’t steal) from friends and family before you walk into one of those places, because statistically, most people who take payday loans end up owing magnitudes more than they borrowed.

If you’re short on cash and friends and family couldn’t come through, you can also try Earnin. Earnin is a community-sourced app that lets you withdraw up to $100 per day from your next paycheck amount in advance. Most crucially, they don’t charge fees or interest.

Build good credit simply by getting your credit report

Next, you’ll want to start building some good credit. Your credit score is an indicator not of your wealth, but how likely you are to pay back a loan in time. Building good credit is essential because having good credit lowers your interest rates on future loans. Improving your credit score by just 100 in your 20s can help you save thousands on your car payment, or even a mortgage.

To start, you can check your credit score for free, with no strings attached, at Credit Karma. Also, you’ve probably read in the news about unscrupulous tax filing companies that dupe Americans into paying to file their taxes when it should be free. Well, Credit Karma Tax doesn’t mess around and lets you file your taxes easily, 100% free. Put a note on your calendar to head to Credit Karma Tax next April.

Build your credit by using a credit card responsibly

Aside from paying bills and loans on time, a great way to build good credit is to put your bills and expenses on a credit card. Yes, having a credit card with a big line of credit is a slippery slope for anyone regardless of income, but as long as you stick to your 50-30-20 budget and set up autopay, you’ll be fine.

Having a credit card while you’re living on minimum wage is a good idea because it can generate cash back on your existing daily expenses. I’m a massive fan of my Chase Freedom Unlimited® for this reason; it offers cash back in every category imaginable. You’ll start by earning 5% cash back on travel booked through Chase Ultimate Rewards®, 3% on dining and drugstores, and finally, 1.5% cash back on all other purchases. So there’s a little something for every category I spend in.

Plus, you can earn an additional 1.5% on all purchases (up to $20,000 spent in the first year).

Get some government benefits

If you’re struggling to make ends meet, you may qualify for some government support. The federal and state governments offer programs that provide food, utilities, healthcare, child care, insurance, phones, and more.

To see which benefits you might qualify for, visit benefits.gov.

You may also qualify to receive some help from a local non-profit group. For example, I recently did some work with Helping Mamas in Atlanta, Georgia, who supplies food, diapers, and other critical supplies to low-income mothers in need.

Do a little research and see what non-governmental resources might be available to you locally. You can also use Reddit and Facebook to connect with other minimum wage earners in your area to learn more about where others are seeking support.

Take classes, freelance, and increase your earnings

Did you know that some states offer community college for free, and most will offer scholarships to students with financial needs?

It may seem like an exhausting prospect to take classes on top of a 60-hour workweek, but learning an in-demand skill or trade at community college is the fastest way to transform your earnings into a liveable wage. According to CNN Money, graduates of a vocational program that took less than six months to complete earned an average salary of around $38,000 after graduation. If you get a two-year associate degree in STEM, you can earn twice that.

If you’re looking for a trickle of extra cash in the short term, ask yourself: is there one skill or favor that my friends keep asking me to do? Maybe it’s video editing, photography, public speaking, writing, moving, handiwork, etc. If so, start charging! Use sites like Facebook Marketplace, Nextdoor, and Upwork to list your services and start your fees above the minimums you see so people place value on your work.

Finally, if you’re already spending a lot of time gaming on your smartphone or surfing the web, you might consider earning a little extra cash on Swagbucks. Swagbucks is a safe, secure place where you can watch videos, take surveys, even play games in exchange for gift cards. It all equates to around $2 per hour so it’s less of an income stream than a trickle, but a little time on Swagbucks per day could cover a grocery bill or two.

Set some financial goals

Once you’ve taken the above steps to regain your financial footing and recoup some mental health, let’s set some financial goals.

There are plenty of “ducks in a row” apps out there that will help you organize your finances, stick to a budget, and set a reasonable goal (i.e. save for a down payment on a house) that you can track over time. However, my personal favorite and the one I recommend for minimum wage earners is PocketSmith.

PocketSmith is like a virtual financial assistant. In addition to helping you organize a crystal clear picture of your earnings and financial outlook, its most notable feature is financial forecasting. You can tell PocketSmith that you’re considering a big purchase like a new bike or a down payment on a car and it’ll actually show you how such a decision will impact your finances and savings goals.

Best of all, it offers these services, including forecasting, for free in its Basic Plan.

Summary

Living off of minimum wage is mentally and physically draining, but with some strategy, you can alleviate the stress in the short term and achieve financial independence sooner than you think.

For more on how to cut expenses and increase your earnings while on minimum wage, check out MU30’s article: How To Save And Invest When You Make Minimum Wage.

Apache is functioning normally

July 10, 2023 by Brett Tams

Northwestern Mutual Study Finds Americans Who Carry Personal Debt Owe an Average of $21,800 Exclusive of Mortgages Overall average is $8,000 lower than it was in 2019, but 35% of Americans say they’re carrying close to or at their highest level of debt ever while 43% say their debt is close to or at a … [Read more…]

Apache is functioning normally

July 9, 2023 by Brett Tams

A brokerage account is a type of investment account typically opened with a brokerage firm. Brokerage accounts allow owners to invest their money, and buy, sell, or trade stocks, bonds, and other types of financial securities. There are different types of brokerage accounts, and they’re offered by a range of financial firms.

For prospective investors, knowing what a brokerage account is and how they work is important. For seasoned investors, learning even more about them can help deepen their knowledge, too.

How Does a Brokerage Account Work?

As noted, brokerage accounts allow owners to invest in stocks and other financial securities. They’re offered by different types of financial firms, too. In fact, there are many brokerage firms that investors can choose from. While all offer brokerage accounts, they usually come with different fees and services:

• A full-service brokerage firm usually provides a variety of financial services, including allowing you to trade securities. Full-service firms will sometimes provide financial advice and automated investing to customers.

• A discount brokerage firm doesn’t usually provide any additional financial consulting or planning services. Thanks to their pared down services, a discount brokerage firm often offers lower fees than a full-service firm.

• Online brokerage firms provide brokerage accounts via the internet, although some also have brick and mortar locations. Online brokers often offer the lowest fees and give investors freedom to trade online with ease. They also tend to make information and research available to consumers.

Opening a brokerage account generally starts out as a similar experience to opening any other type of cash account. Consumers can simply start an account either online or in person.

Some brokerage firms require investors to use cash to open their accounts and to have enough funding in their account to cover the cost of stocks or bonds, as well as any commission fees. There are some however, that don’t require any initial deposit.

In order to make their first investment however, consumers usually need to deposit money. They can do this by moving money from another account, such as from their checking or savings accounts. From then on, the brokerage firm can help individuals execute buy or sell orders on stocks, exchange-traded funds (ETFs), bonds, or mutual funds.

Unlike a retirement account, there are generally no restrictions on how much money a consumer can put in. There are also typically no restrictions on when individuals can withdraw their cash from brokerage accounts. Investors do need to claim any profits — or “capital gains” — as taxable income.

Here’s a closer look at how brokerage firms differ from other types of money accounts.

Brokerage Accounts vs Retirement Accounts

The primary difference between a retirement account and a brokerage account is if there’s any tax advantage at play.

For stocks, bonds, exchange traded funds, mutual funds, options etc, brokerage account holders are liable to pay capital gains taxes on most of their profits from trading these securities. That’s why brokerage accounts are also known in the industry as “taxable accounts.”

Retirement accounts are set up with money that has some kind of tax advantage and can be used to buy securities. For example, 401(k)s are set up by an employer and funded with money that comes from an employee’s paycheck before taxes and can be matched by an employer.

These accounts, which also include traditional and Roth IRAs, have specific rules about the amount that can be contributed and when money can be withdrawn. Meanwhile, with brokerage accounts, there are few limits on funding or withdrawals.

Brokerage Accounts vs Checking Accounts

Brokerage accounts and checking accounts have one important thing in common: they can both have cash in them. Sometimes brokerage accounts will “sweep” your cash into a money market fund managed by that same brokerage, allowing you to earn interest. Meanwhile, in a traditional bank checking account, you don’t earn any interest but you do have easy access to your cash.

An important distinction between brokerage and checking accounts is the level of protection you get from them. A checking account offered by a bank will typically have insurance provided by the Federal Deposit Insurance Corporation (FDIC), which protects the first $250,000 deposited at a bank that has a charter from the FDIC. This means that $250,000 deposited can be withdrawn even if the bank itself goes out of business.

Brokerage accounts, on the other hand, typically have insurance provided by the Securities Investors Protection Corporation (SPIC), which unlike the FDIC, is not a government agency. What SIPC insurance does is protect the custody of stocks, bonds, and other securities as well as cash in a brokerage account, not their value.

This means that if a brokerage fails, the SIPC insurance will protect cash deposited in a brokerage account up to $250,000 and securities and cash combined up to $500,000.

This simply means you get your cash deposited in the account and the securities back, not that you have insurance from the value of those securities going down.

Brokerage Accounts vs Checking and Savings Accounts

Cash management accounts are something of a hybrid between checking and brokerage accounts.

They are not offered by banks but can, on a case by case basis, partner with banks and other financial service providers to give clients access to ATMs and even FDIC insurance.

Pros and Cons of Opening a Brokerage Account

Brokerage accounts can be powerful financial tools, but they can have their advantages and drawbacks, too.

Pros of Brokerage Accounts

The most obvious advantage of a brokerage account is that it allows its owner to trade financial securities and invest their money. They tend to have a high degree of liquidity, too, meaning that it’s relatively easy to buy and sell securities. There are also no general requirements for contributions or withdrawals.

Cons of Brokerage Accounts

Cons of brokerage accounts include the fact that they can’t be used for traditional transactions, like, say, a checking account. While your account may have a cash balance, you can’t use it to purchase a soda from the corner store.

Further, getting your money in and out of a brokerage account may take some time. There are often fraud checks and other elements at play when transacting a cash balance in or out of an account, and it may take a couple of days. There are also no tax advantages — something that may be present for certain retirement accounts.

Pros and Cons of Brokerage Accounts
Pros	Cons
Ability to trade securities	Can’t be used for transactions
High liquidity	Slow transaction times
No limits on contributions and withdrawals	No tax advantages

A couple of other things that may be worth considering, especially if you’re interested in investing for beginners.

Before you consider opening a brokerage account, make sure you have sufficient money set aside for an emergency fund. Common financial advice recommends setting aside three to 12 times your streamlined monthly expenses. It’s also good practice to contribute to your 401(k) or IRA before opening a brokerage account.

If you have an emergency fund stashed away and are making regular contributions to a retirement account, think about what types of assets you plan on investing in. A brokerage account would only be required if you plan to buy stocks, bonds, or other securities. If you only plan on investing in mutual funds, you might not need a brokerage account.

4 Types of Brokerage Accounts

There are also a few distinct types of brokerage accounts, though they all work in a similar fashion — trading securities, after all, is what brokers do. They are cash brokerage accounts, margin accounts, joint brokerage accounts, and discretionary accounts.

1. Cash Brokerage Accounts

A cash brokerage account is the “vanilla” option. If you open a cash brokerage account, you deposit money and start trading securities.

2. Margin Brokerage Accounts

A margin brokerage account may require approval from a brokerage. These types of accounts let owners use “margin” when trading. That means that they can effectively borrow money to trade with from the brokerage. These obviously come with a higher degree of risk, too.

3. Joint Brokerage Accounts

Joint brokerage accounts are more or less cash brokerage accounts that are opened by more than one person. It’s like a joint bank account, in many respects.

4. Discretionary Accounts

Another type of account that some brokerage firms offer is a discretionary account. This type of brokerage account, sometimes referred to as a managed account, allows an authorized broker to make trades on behalf of the client. The client usually must sign a discretionary disclosure with the broker. Many brokerage firms require account minimums for this type of account.

How To Open a Brokerage Account

Most firms allow you to set up a new account online. You’ll need to provide basic personal information, and most firms will ask about your net worth, your employment status, what assets you currently own, and what you have defined as your investment goals.

Requirements for Opening a Brokerage Account

There may be some requirements for opening a brokerage account.

Initial Investments

Depending on the type of brokerage account you are opening, most firms let you open an account with about $1,000 but some require an initial investment of $2,500 or more.

Account Minimums

You will need to have enough money in your account to pay for one or more shares of the stock you want to buy plus the commission fee (if applicable). Each account and brokerage firm is different, so check with your preferred company to determine what the account minimums are.

Agreeing to Terms and Conditions

You’ll need to play by the rules, and a brokerage firm will likely have you agree to certain terms and conditions for using your account. That may include agreeing to certain fee schedules, too.

Funding a Brokerage Account

There are at least five ways to transfer money from your bank account into your brokerage account:

• Electronic funds or wire transfers involve moving money electronically from one’s bank account into another account. Individuals typically have to go to their bank and fill out the required information and direct where the money should be transferred.

• Deposit a check: Customers can withdraw money via a paper check from their checking, savings, or another existing brokerage account. They can then mail the check to the brokerage account they’d like to deposit the funds at.

• Transfer an existing investment from another broker. Customers can typically transfer funds between brokerage accounts through an automated process known as the Automated Customer Account Transfer Service (ACATS). Customers usually fill out a form. Transfers involve assets such as cash, stocks, bonds, or listed options.

• Deposit an existing paper stock certificate: Paper stock certificates are much rarer today in the age of electronic trading, but if a customer does have one, they can mail it to their broker to be deposited. Inheriting a certificate may require additional verification and paperwork, and in general, mailing with insurance is recommended.

Brokerage Account Taxes

Another important thing to remember is that there are taxes associated with brokerage accounts. Specifically, any interest or dividends earned from your brokerage account will be taxable.

If you sell an investment and earn a profit, you will have to pay a capital gains tax. However, if you sell a stock at a loss, that becomes a capital loss and you could get a tax break from that sale which could lower your taxable income.

Investing with SoFi

Brokerage accounts allow owners to buy and sell investments and financial securities. They are offered by a number of financial institutions, and come in a few different types. By and large, though, they’re a very popular choice for investors looking to get their money in the markets.

They do have their pros and cons and associated risks, however. It may be beneficial to speak with a financial professional to learn more about how you can use a brokerage account to your advantage in pursuit of your financial goals.

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

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

FAQ

How do I open a brokerage account?

Most brokerage firms allow prospective customers to open an account online or in person. Opening a brokerage account generally requires some personal information related to identity and financials, and some money to make an initial deposit.

Is there a minimum deposit to open a brokerage account?

Different brokerage firms will have different rules regarding minimum deposits, but there are many that don’t require a minimum deposit. Again, it’ll depend on the specific firm.

Do brokerage accounts have fees?

Yes, most brokerage accounts have some sort of associated fees. There may be commission fees involved, though they’re less common today than they once were, but there can be other types of fees to be aware of, too.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three 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—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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 prequalification 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.

SOIN0623029

Source: sofi.com

Apache is functioning normally

July 9, 2023 by Brett Tams

Money managers can help individuals set financial goals, plot and implement investment strategies, and more. You may not think you need one, either, but an experienced, trustworthy, and savvy guide can be a tremendous help when trying to wrangle your finances. Amid the sea of financial professionals are money managers, who can take a hands-on approach with an investment portfolio.

Before hiring a money manager, however, it’s important to understand what they do, how they get paid, and how they may differ from other financial professionals.

What Is a Money Manager?

Money managers are also known as portfolio, asset, or investment managers. They are people or companies that provide individualized advice about building a portfolio. They buy and sell securities on behalf of their clients, provide updates, and make suggestions for changes as market conditions shift. Clients include individuals and institutional investors like universities and nonprofit organizations.

Money managers have a fiduciary duty to their clients: They are obligated by law to put their clients’ best interests first. This may seem like a no-brainer, but it is not necessarily true of all financial professionals.

Investment advice must advance a client’s goals, not because it is more profitable for the advisor. For example, a money manager could not suggest a particular investment to a client just because the manager would receive higher compensation.

Fiduciary rules mean that advice must be as accurate as possible based on the information that is available. A fiduciary (from the Latin “fidere,” meaning “to trust”) is to take into account cost and efficiency when making investments on behalf of clients, and alert clients to any potential conflicts of interest.

What Makes Money Managers Different?

As you search for someone who can help you invest, you may encounter any number of titles, from asset manager to financial advisor, wealth manager to registered investment advisor. To make matters more confusing, “financial planner” covers a broad range of possible professions. They could be investment advisors, brokers, insurance agents, or accountants.

A potential client can check the registration status and background of a professional or firm on Investor.gov, the SEC’s Investment Adviser Public Disclosure website, FINRA’s BrokerCheck, and/or individual state securities regulators.

Here’s a look at some of the most common financial professionals you may encounter and what may make money managers different.

Registered Investment Advisors

Registered investment advisors, as the name suggests, provide investment advice to clients. They must register with the Securities and Exchange Commission or a state authority, and they have a fiduciary duty to hold a client’s interests above their own. They can manage client portfolios, making trades and offering advice on investment strategies.

Registering as an investment advisor means disclosing investment styles and strategies, total assets under management, and fee structure. RIAs must also disclose past disciplinary action and conflicts of interest.

Broker-dealer

A broker-dealer is an individual or company licensed to buy and sell securities. Brokers act as middlemen, buying and selling stocks and other securities for other people. When they are buying for their own accounts they are functioning as dealers.

Stockbrokers usually work at brokerage firms and earn their money by charging a fee for transactions they make.

Brokers register with the Financial Industry Regulatory Authority, an industry group. FINRA has enforced a “suitability” rule for them, meaning they needed to have reasonable grounds to believe that a recommended transaction or investment strategy involving a security or securities was suitable for the customer.

Now the SEC is enforcing a new rule, Regulation Best Interest, that establishes a “best interest” standard for broker-dealers. It requires them to stop referring to themselves as advisors if they aren’t working under a fiduciary standard.

Certified Financial Planners

Financial professionals who carry the CFP® credential have gone through the rigorous training and experience requirements required by the CFP® board. They must also pass a six-hour exam.

They have a fiduciary duty to their clients but can offer services that don’t require regulation. They can help with general financial planning, such as putting together a retirement plan or a debt reduction plan. They may make recommendations about asset allocation, investment accounts, and tax planning.

Money Managers

Money managers may offer a combination of the services mentioned above. They chiefly manage people’s investment portfolios, but they may also offer other forms of financial planning. They likely give investment advice, which means they must be registered as an RIA.

	Fiduciary?	Offer advice?	Area of focus
Money Managers	Yes	Yes	Portfolio management
Certified Financial Planners	Yes	Yes	Financial planning (retirement, etc.)
Broker-dealers	Sometimes	Sometimes	Facilitating transactions
Registered Investment Advisors	Yes	Yes	Investment advice

Pros and Cons of Hiring a Money Manager

HIring a money manager, like any other financial professional, can have its pros and cons.

Pros of Having a Money Manager

The advantages of having a money manager are rather obvious: You get expertise and experience in helping you make financial decisions. This can save you a ton of resources–such as time–when trying to decide your next moves. It could, potentially, save you money, too, in saving missteps that need to be rectified (rebalancing your portfolio, for instance). In short, though, the pros of hiring a professional are that you have a professional guiding hand helping you out.

At the end of the day, a money manager is theoretically better at managing money than the average person.

Cons of Having a Money Manager

Likely the biggest drawback, in most people’s minds, to hiring a money manager is that you need to pay for their service. Some people may also like to make their own decisions as it relates to their money, and have trouble handing over the reins, so to speak. There’s also the chance that a money manager has a conflict of interest or is not acting in your best interests — something to be aware of when looking to make the right hire.

How Do Money Managers Get Paid?

Money managers typically charge a management fee equal to a percentage of a client’s portfolio each year. On average, advisors charge between 1% and 2% of clients’ assets under management. But there are a lot of variables to consider.

A manager’s fees may be assessed quarterly, which could mean the amount you pay at the end of the year may be a bit more or less than if you were to pay annually.

An asset manager’s fees may also decrease depending on the size of an account. For example, fees on very large accounts may be smaller so that single clients don’t end up paying exorbitant amounts.

Asset managers and other financial advisors may also charge an hourly rate, especially if they are doing any consulting or working on a special project. They may also charge fixed fees for certain services. Some advisors and managers may earn a commission when purchases or trades are made. And there may be performance-based fees if a portfolio performs beyond an established benchmark.

Fee-only advisors earn their money only from the fees they charge clients. They do not earn commissions. This fact makes them distinct from fee-based advisors, who may earn money from fees and commissions.

Should You Hire a Money Manager?

Managing your money can take a lot of time and effort, especially if you have multiple investment accounts or you’re juggling a lot of assets.

Money managers typically have many advantages when it comes to choosing investments. Not only are they trained to make investment decisions but they typically have access to a lot of information — including analytical data, research reports, financial statements, and sophisticated modeling software—that the average person doesn’t have. So they may be better equipped to make informed decisions.

For investors who have struggled to understand how to best put their money to work in order to meet financial goals, a money manager may be able to help. A large portfolio isn’t necessary. Even those who are just starting out may be able to benefit from working with one.

Even if you’re just starting to invest, it may be worth it to look into hiring one.

3 Tips on Choosing a Money Manager

You can review some money management tips, but additionally, here are a few things to keep in mind when choosing a money manager.

1. Know What You’re Looking For

Before hiring a money manager, figure out what type of financial help you need. If you’re just starting out, you may want to hire someone who can help you put together a long-term financial plan, for example.

2. Check Credentials

An online check with one or more of the aforementioned official websites will show how long an advisor has been registered, where they have worked, and what licenses they hold.

3. Interview

After narrowing the search, it’s a good idea to speak to a few candidates to get an idea of how they communicate, how they typically work with clients, and how they are compensated. If an advisor is cagey about answering the latter question, that’s a red flag.

The Takeaway

With so many titles and options, from financial planner to broker and money manager, it might be hard to choose a guide to handle your finances. A money manager is a strategist who specializes in managing investment portfolios and has a fiduciary duty to clients.

There are a slew of different types of advisors, planners, and managers in the financial world, so it’s important to know the differences. It’s also important to keep in mind that hiring a money manager can have pros and cons. Bringing in professional help may not be the best route for everyone.

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FAQ

What is the difference between a money manager and a financial advisor?

A money manager is a sort of subset of financial advisors, often with more specialized services offered to clients. The differences likely lie in the specific services and expertise offered.

Is it worth it to use a money manager?

If you value expertise and a guiding hand in the market, hiring a money manager may be worth it to you. Be aware, though, that there are costs to hiring a money manager, and the costs may not always outweigh the benefits for everyone.

Is it better to have a financial advisor or a financial planner?

Depending on your individual circumstances, goals, and needs, whether a financial advisor or planner is better will vary. Each may offer different services, so know what you’re looking for before hiring either.

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Source: sofi.com

Apache is functioning normally

July 9, 2023 by Brett Tams

In general, the movements of stocks and bonds and commodities and real estate are not strongly correlated. Just because the stock market is down doesn’t mean the real estate market will be down. In general, the returns on these investment classes are independent of each other. By putting some money into each class, you’re able to reduce your risk while theoretically maintaining your return on investment.

This might sound complicated, but it’s not. Think of it this way: If I ask you to bet $100 on the flip of a coin, and promise to give you $220 if you make the right call, but I get to keep the $100 if you lose, you would probably refuse. The risk is too high. But if I asked you to agree to stake $100 on each of ten similar coin tosses, would you do it? I suspect you might. Your expected rate of return is still the same (10%), but your risk is significantly reduced.

That is the power of diversification. Each coin flip is like owning an individual stock. Buy owning more stocks, you can maintain a similar rate of return while decreasing your risk. (Note that you also reduce your potential gains, however.)

You can diversify your investments simply by adding a couple funds to your portfolio. You might put 10% of your money into a bond fund, for example, and 10% into a real estate investment trust (which is like a mutual fund for real estate). In the same way that it’s better to own more than one stock, it’s also better to own more than just stocks.

The two best discussions of diversification I’ve found are in:

These are both great books for beginning investors. They’re not technical, and they approach the subject with the average person in mind. Both of them note that there are several ways to approach diversification, including:

Diversification among stocks. “If you want to take some extra money and gamble it on some high-flying biotech stock, go ahead,” Malkiel writes. “But for your serious retirement money, don’t buy individual stocks — buy mutual funds.” In particular, he recommends a portfolio of index funds.
Diversification among asset classes. In Investing 101, Kristof spends 32 pages discussing the importance of diversification, exploring different asset classes in detail. She discusses investing for safety (with cash or cash equivalents), investing for income (with certificates of deposit, Treasury bonds, REITs, etc.), investing for growth (with stocks and mutual funds), and investments that protect you from inflation (such as precious metals). She discusses the pros and cons of each class, and explains why the ideal portfolio has a little of each.
Diversification over time. Many investors practice dollar-cost averaging as a means to mitigate risk. (Though most of us dollar-cost average because we don’t have huge lump sums to invest.) Malkiel writes, “Periodic investments of equal dollar amounts in common stocks can reduce (but not avoid) the risks of equity investment by ensuring that the entire portfolio of stocks will not be purchased at temporarily inflated prices.” (Please note that dollar-cost averaging has critics with valid points.)

Some investors also diversify internationally, or within asset classes (owning both CDs and Treasury bonds, for example).

How much should you diversify? And which investments should you choose? There’s no one right answer. The answer depends on you and your financial goals. The U.S. Government Securities and Exchange Commission has an excellent beginners’ guide to asset allocation, diversification, and rebalancing. If you’d like to learn more about this subject, it’s a great place to start. (I also found an asset allocation calculator, but I wouldn’t take the results as gospel. Use them as a starting point, but make your own decisions.)

If you had to choose just three types of assets that should be in a well-diversified, long-term investment portfolio, what would they be? If we polled the Get Rich Slowly audience, we’d get a range of responses to that question. However, I think plenty of folks would have answered “bonds, U.S. stocks, and international stocks.” Which is perfect, because those are the investments in the demonstration of asset allocation that I’m about to embark upon.

Let’s look at the returns of three mutual funds from 30 June 1989 to 30 June 2009: The Fidelity Intermediate Bond Fund (FTHRX), which holds bonds that mature in five or so years; the Vanguard 500 (VFINX), which very closely mimics the performance of the Standard & Poor’s 500 index of large U.S. stocks; and the T. Rowe Price International Discovery Fund (PRIDX), which invests in small companies from all over the world.

We can make a few observations about these returns:

Compounding is cool. Even by just earning approximately 6% a year, the initial investment more than tripled over two decades. Earn a bit over 9%, and you could almost sextuple your investment (and have fun saying “sextuple” to your friends).
Higher return comes with higher risk. Yes, the T. Rowe Price fund posted the best long-term performance, but its worst years were really worse.
You don’t always get that higher return. While the Vanguard 500 beat the Fidelity bond fund, that was due to the extraordinary returns of stocks in the 1990s. Over the past decade, U.S. large-company stocks actually have lost to bonds. (In fact, as I wrote over at The Motley Fool, the return on such stocks from 1999-2008 was even worse than the 10-year returns during the Depression.)
Earning a little bit more can lead to big bucks. The annualized return of the Vanguard 500 was just 1.52% more than the annualized return on the Fidelity bond fund. Yet the difference in the amount $100,000 grew to after 20 years was huge; the Vanguard 500 earned an extra $108,568, 33% more than what an investor earned in the bond fund. I’ve said it before, and I’ll say it again: That’s the power of earning a little bit more — or paying a little bit less — over the long term. (It is pure coincidence that the difference between the returns of the two funds, or 1.52%, is very close to the average expense ratio charged by actively managed mutual funds. But it’s a telling illustration: If you’re paying that much annually to invest in a mutual fund, but not getting superior results in return, you could be giving up tens of thousands of dollars.)

Let’s say you are given these three investment choices for the next 20 years. How would you allocate your portfolio? If you’re an aggressive investor, you might put all your money in the T. Rowe Price International Fund. But could you stand such large declines? And what if international small companies don’t do as well over the next 20 years?

If you’re a conservative investor, however, you might go the opposite direction and put all your money in the bond fund. Your portfolio would be nice and steady, likely avoiding sleep-disrupting double-digit annual declines. But, if the future is anything like the past, you could potentially be passing up $100,000 to $200,000 in gains. Perhaps that’s playing it too safe.

Let’s try a simple solution: Investing one-third of the portfolio into each of those funds and rebalancing annually. What do you think the annual return would be?

You might pick a number that is the average of the annualized returns on those funds, which would be 7.67%. But here are the actual numbers:

Well, looky there. You got a return that beat the arithmetic average of the three returns. It significantly outperformed the S&P 500, and it did so with a lot less volatility (as indicated by its worst years not being as bad). By owning assets that move in different directions at different degrees and at different times, along with some regular rebalancing, you get a return that beats the average returns of the investments in the portfolio. The whole is greater than the sum of its parts.

Sure, that extra return is less than 1% a year. But we’ve already demonstrated how earning a little for a long time really adds up. And that return beat the return of two of the portfolio’s three components. As I wrote in May, asset allocation means you don’t have to predict which type of investment will do best — which can be dangerous, because you could be wrong.

A well-diversified portfolio provides a respectable return, with lower volatility than a portfolio of just one type of stocks. Not a bad deal at all.

Source: getrichslowly.org

Apache is functioning normally

July 9, 2023 by Brett Tams

7 Amazing Sam’s Club Buys Under $10

By: Brittney Myers |
Updated
June 4, 2023– First published on June 4, 2023

We all love the shock and awe of huge discounts, such as when you can save hundreds on living room furniture or get a half-priced gazebo. But it’s not those outsized deals that make warehouse stores like Sam’s Club such a great personal finance choice for so many families.No, that comes down to the solid savings on all our everyday necessities. Because, in the long run, shaving a few bucks off dinner each night will add up to way more money in your bank account than the occasional big score on furniture.With that in mind, let’s take a look at some of the best deals you can find under $10 at your local Sam’s Club.1. Member’s Mark spices: $3.68 to $9.98There are a lot of low-cost ways to improve your home cooking, not the least of which is making sure it’s spiced and seasoned properly. Sam’s Club offers a great range of popular spices, all of which have great reviews online. Prices depend on the particular spice, but they start at just $3.68. While the containers are fairly large, most spices have a shelf life of one to two years so you should have plenty of time to use them up.2. Member’s Mark over-the-counter medicines: $4.48 to $9.87Keeping the medicine cabinet stocked can get pricey, especially if you have family members who regularly go through items like allergy or heartburn medications. You can find Member’s Mark versions of many popular over-the-counter drugs, all for much less than you’d typically spend at the grocery store or drugstore. Prices vary, but start at just $4.48.3. Member’s Mark agave nectar: $7.98 Made from the agave plant, this sweet syrup has become a popular alternative to sugar and honey, especially in the vegan community as it is entirely plant-based. But while its growing popularity has helped it become more affordable, few places offer as good a price as Sam’s Club. Member’s Mark Organic Agave Nectar costs just $7.78 for a two-pack of 29-ounce bottles. While this may seem like a lot, agave nectar can last for years when stored properly.4. Member’s Mark walnuts: $7.98Not only are walnuts considered to have a wide range of health benefits, but they’re darn tasty, too. Of course, getting them out of their tough shells can be a serious workout. You can skip the hassle while also saving money by picking up Member’s Mark Natural Shelled Walnuts. A giant 3-pound bag will run you less than $8 at Sam’s Club.5. Member’s Mark broth: $8.48Alright, so the absolute best broth is always going to be one you make yourself. But who really has time to simmer chicken bones for hours? Sam’s Club offers two different Member’s Mark broths — chicken broth and beef broth — that are well-reviewed for taste and value. Get a 6-pack of 32-ounce cartons of either flavor for just $8.48.6. Member’s Mark loungewear: $8.98 to $9.98Thanks in large part to the work-from-home movement, a lot of folks have switched from business casual to business comfy (and I, for one, am happy for the change). If your new work uniform could use a few new pieces, scope out the deals at Sam’s Club. You can find a ton of different options — from knit pants to slouchy tees — for less than $10, making it easy to refresh your work-from-home wardrobe.7. Member’s Mark canned tomatoes: $9.48Canned tomato products are some of the most versatile items you can have in your pantry. You can use them for everything from a homemade pasta sauce to a hearty chili. And Sam’s Club makes it easy to keep them in stock. For just $9.48, you can get a 12-pack of 14.5-ounce cans of Member’s Mark Diced Tomatoes in Tomato Juice or a 12-pack of 15-ounce cans of Member’s Mark Tomato Sauce.Stack the savings with the right cardOn top of all of the other ways Sam’s Club can help you save, don’t forget to use a good rewards credit card when you shop. Purchase rewards from credit cards stack on top of any other type of deal or discount.

5 Things to Never Buy at Sam’s Club

By: Dana George |
Updated
June 13, 2023– First published on June 13, 2023

It’s easy to go wild while shopping at Sam’s Club. After all, there are new things to see and buy every time you walk into the warehouse store. And while many purchases are spot-on, some only make sense if you go in with a plan. Here are five things it rarely makes sense to buy at Sam’s Club. 1. Huge containers of anythingIf you’re excited by the idea of purchasing a one-gallon container of mayonnaise, you’re my kind of person. However, it may not be the best idea, particularly if you’re unsure how long it will take to consume a container of mayonnaise as large as a newborn baby.While there are dueling expert opinions on the matter, Dr. Karen Latimer is quoted in EatDelights as saying that a jar of mayonnaise can last for months if left unopened and stored away from sunlight. However, once that jar is opened and refrigerated, you have between two and three months to ensure it’s consumed. And if you accidentally leave it out for eight hours? Prepare to toss it. In short, unless you’re running a school cafeteria, a massive quantity of mayo may not be a good buy. It’s easier to save money on groceries if you’re willing to give up mega-sized products. 2. Fresh produceEvery time I walk into a warehouse store, I rack my brain to figure out who would benefit from purchasing the fresh produce. It’s colorful and looks supremely healthy, but you can’t just pick up two or three tomatoes or apples. So, unless you’re throwing a huge party and need enough avocados to put a bowl of guacamole on every table, or you’re a summer camp director and know the kids will tear through 10 pounds of onions with their burgers, you’ll probably save money by picking up the actual quantity of produce you need at your local farmer’s market or grocery store. Given that an estimated 20% of the food we buy goes to waste, making an extra stop could be worth the money. 3. SunscreenSummer is upon us, and we all know better than to allow our skin to burn in the midday sun. Sunscreen is essential, but unfortunately, it does expire. According to Mayo Clinic, we have 36 months to use sunscreen from the time it’s manufactured. The active ingredients will break down faster if exposed to excessive heat or direct sun. Picking up a three-pack of sunscreen as you browse your local Sam’s Club may seem like you’re saving money.. However, if you still find yourself squeezing sunscreen from one of those bottles three years later, you’re essentially putting lotion on your body and expecting it to protect you from the elements. 4. Vitamins and over-the-counter medicines One of the things that make vitamins and over-the-counter medicines so attractive at Sam’s Club is how much less you have to pay per unit. After all, the less you spend, the more money you’ll have to put away in a savings account, right? It’s not quite that simple.Let’s say you need to pick up Bayer Low Dose Aspirin. At Target, you’ll pay between $0.05 and $0.06 per tablet. But at Sam’s Club, you’ll pay only $0.03 per tablet. In this situation, there’s no doubt that Sam’s offers the best bargain. According to Bayer, aspirin remains 100% effective for up to four years, and you’ll probably use an entire bottle of aspirin in that time. However, it can be tough to determine when other products in the pharmacy department are due to expire. The Food & Drug Administration does not require vitamin manufacturers to put expiration dates on their products. While some manufacturers do so willingly, it’s not something you can count on. For example, if you were to pick up a 400 count bottle of Vitamin C + Zinc 500 mg at Sam’s Club today, you’d pay $0.04 per capsule. Here’s the problem: A Brazilian Journal of Pharmaceutical Sciences study found that 92% of vitamin C supplements lose efficacy after 12 months of storage. But unless you know that in advance, you don’t know if you’re getting an actual bargain. 5. Diapers and toilet paperGoing out of your way to purchase either diapers or toilet paper at Sam’s Club may cost you more than it’s worth. We all use toilet paper. Retailers know that, so they frequently discount toilet paper to lure shoppers into their stores. Chances are, you’ll score a deeper discount by purchasing TP when it’s on sale at your local market. You can compound the savings by using a coupon. The same is true of diapers. Today, the cost of Member’s Mark Newborn Diapers comes out to $0.16 per diaper. At the same time, Target’s Up & Up Newborn Diapers sell for a little less than $0.14 per diaper. It’s not a huge difference, but the savings add up when you consider how many of those things you go through while a child is young. By determining what constitutes a good buy and which products you want to avoid before walking into a Sam’s Club, you can spend less and keep more in your bank account.

5 Traps to Avoid When Shopping at Sam’s Club

By: Dana George |
Updated
June 18, 2023– First published on June 18, 2023

If you’re a Sam’s Club member, you probably employ a few tricks to make your shopping more productive. Maybe you hit one specific part of the warehouse club before heading to others. Maybe you shop alone. Or, you may just be figuring out what works best for you. As you adopt new shopping strategies, here are five things you’ll want to avoid.1. Shopping while hungryA study in the Proceedings of the National Academy of Sciences found that hungry shoppers spend more than 60% more than those who shop on a full stomach. Based on five research studies conducted by professors from the University of Southern California, Chinese University of Hong Kong, and the University of Minnesota, the researchers found something rather strange.According to Norbert Schwarz of the University of Southern California, the trio found that the desire to get food generally plants the idea of “getting stuff” in a hungry person’s mind, increasing the likelihood that they’ll be attracted to products that don’t satisfy physical hunger. The internal message “I want food,” simply becomes “I want.”2. Feeling obligated to buyThere’s a good reason Sam’s Club employs people to hand out samples. According to Inspira Marketing, 65% of consumers who try a sample purchase it during the same shopping trip. What’s more, 24% of those people say they replaced an item they planned to buy with the sampled product.Don’t get caught up in the belief that you must purchase an item just because someone was kind enough to offer you a sample. Naturally, if it’s something you really like and believe your household will consume it, go for it. But if you’re doing it to be polite, there’s no need. It truly is a marketing strategy.3. Being seduced by low pricesIt’s fair to say that most of us would rather tuck a little extra money into savings each month than overpay for the items we regularly purchase. Sam’s Club can make it easier to accomplish this goal — but only for savvy shoppers. Here are two reasons why:A product is only a “bargain” if you plan to use it in its entirety. At Sam’s, you can buy a 25-pound bag of enriched long grain rice for $13.28. At Target, you can buy the same amount of rice for $21.95. It seems like an easy choice. However, it’s not truly a bargain if you don’t end up using the entire 25-pound bag by the time it expires.There’s something about finding an item at a discounted price that makes us think twice about leaving it on the shelf. We walk away wondering if we just squandered the opportunity to snag a great deal. If you didn’t walk into Sam’s Club needing that 48-pack of AA batteries, you won’t miss them when you get home.4. Leaving the house without a listShopping from a list is one of the best ways to resist temptation. You know specifically what you need and don’t have to wander around the club trying to remind yourself. If you can get in the habit of sticking to your list, you’re sure to leave more in your checking account.A survey by retail solutions company Field Agent found that 44% of shoppers believe they spend less when they head out prepared with a shopping list, evidence that shopping lists can work.Fun fact: One of the few remaining papers from the Renaissance Man, Michelangelo, is a shopping list. Written either in the late 15th or early 16th century, it included staples like fish, soup, bread, and wine.5. Shopping on SaturdaysUnless you’re one of those rare souls who adore crowds, you may want to avoid shopping at Sam’s Club on Saturdays. The more physically uncomfortable you are, the more likely you’ll be to make hurried decisions, like buying an item you’re not sure you need. It’s tough to think clearly when you’re surrounded by noise.Instead, look for a day (or time) that tends to be less crowded. According to Sam’s Club members on Quora, you should encounter less hustle and bustle midweek. If you can’t make it midweek, the crowds are manageable early on Sundays before the church crowd floods in.As we wait for inflation to cool, perhaps the best we can do is save where we can. That may mean using money-saving apps, conducting a price comparison before we leave the house, and sticking to a shopping list.

How to Claim Your Google Class Action Settlement Cash by July 31

By: Natasha Etzel |
Updated
June 24, 2023– First published on June 24, 2023

Many of us use search engines like Google multiple times daily, and the same was true for many people 10 or more years ago. You may be owed money if you used Google between 2006 and 2013. The technology company has agreed to a $23 million settlement to resolve a user privacy class-action lawsuit. Eligible individuals can submit a claim to collect payment through July 31, 2023. Here’s what you need to know about this news.Google agrees to a $23 million settlementA class action lawsuit alleges that Google violated users’ privacy by sharing search queries with third-party websites between Oct. 26, 2006, and Sept. 30, 2013. You can file a claim if you performed a Google search and clicked on a search result during this time. Google denies any liability or wrongdoing, but has agreed to make payments to claimants who file.You may wonder how much money you can expect to receive. Since millions of users are expected to be eligible for compensation, payments will likely be small. Current estimates suggest that each claimant could be owed approximately $7.70. However, the payment amount could change as more users submit claims.While this amount of cash won’t significantly impact your checking account balance, filing a claim is worthwhile. No matter how minimal, extra cash can be a win for your personal finances. Whether you’re working to pay down credit card debt or build an emergency fund, a few extra dollars could help you reach your financial goals sooner.How to file a claim to receive a paymentThe deadline to submit a claim or exclude yourself from this class action settlement is July 31, 2023. You can file a claim if you used Google during the dates mentioned above. Below are the steps you need to take to collect the cash you’re owed:Visit the claim website and review the details of the settlement.Register to receive a class member ID.Use the class member ID sent to you to start a claim.Provide the required contact information and choose your preferred payment method (bank account, Venmo, PayPal, Venmo, Zelle, or a prepaid Mastercard)Complete and submit the claim form by July 31, 2023.Currently, there’s no set date for when to expect payment. The final approval hearing is scheduled for Oct. 12, 2023. You can visit the claim website for updates. If you wish to receive compensation, submit a claim before the deadline passes. If you do nothing, you give up your right to compensation and won’t receive a payment.This isn’t the first class action settlement of its kindGoogle isn’t the first technology company to be accused of violating users’ privacy. Facebook allegedly allowed third parties to access private user data from 2007 to 2022. The company admits no wrongdoing, but has agreed to a $725 million settlement. Claims are still being accepted for the Facebook privacy settlement through Aug. 25, 2023.If you were a Facebook user in the United States between May 24, 2007, and Dec. 22, 2022, you’re eligible to receive payment. Staying alert to class action settlements like this is worthwhile, as it could help you boost your savings account balance.

5 Reasons People Have Their Sam’s Club Membership Revoked

By: Lyle Daly |
Updated
June 29, 2023– First published on June 29, 2023

If you like shopping at Sam’s Club, the last thing you want is to lose your membership. Since it has a large selection and reasonable prices, it’s a great place to shop without too much of a hit to your finances. Fortunately, Sam’s Club doesn’t go around canceling people’s memberships for no reason. That wouldn’t be a great way to run a membership club.However, it does reserve the right to revoke membership, and it lists actionable offenses that could lead to this on its website. Here are the most common reasons for people to have their Sam’s Club membership revoked.1. Writing bad checksBounced checks could get you bounced from Sam’s Club. You might be able to fix this if it’s a one-time issue, but not if it happens on a regular basis. A better option is to pay with a rewards credit card instead of a check, so you can earn cash back or points on your purchase. If you’re one of the store’s frequent shoppers, there are Sam’s Club credit cards that are worth checking out.2. ShopliftingLike most of the actionable offenses on Sam’s Club’s list, this one’s pretty self-explanatory. Most stores ban people who get caught trying to shoplift. With those that require a membership, including Sam’s Club and Costco, they’ll usually take away your membership.3. Violent behaviorYour local Sam’s Club is not the place to throw down, even on Black Friday. You’ll most likely lose your membership, plus there’s the whole “could get arrested and spend the night in jail” part.4. Abusive, disrespectful, or threatening behavior toward an associate; profanity used toward an associateIt should go without saying, but sadly, not all customers treat retail employees well. Sam’s Club considers practically any type of rude behavior toward its associates as an actionable offense. That gives it plenty of leeway to revoke memberships of problem customers.5. Questionable returnsReturn abuse is a common issue for retailers, especially those with generous return policies. It’s the No. 1 reason people have their Costco membership revoked, and it’s also an actionable offense at Sam’s Club.You don’t need to worry if you have a legitimate return to make every now and then. Even if it has been months, or years since you made the purchase, Sam’s Club lets you return most items at any time. This stipulation about questionable returns is designed for the small percentage of customers who try to game the system. Here are a few examples of what can qualify:Returning a large number of your purchases.Frequently returning items you’ve had for a long time.Committing any sort of return fraud, such as trying to pass off an old laptop or phone as a new one.Most members won’t have any problemsThe reasons listed above are the actionable offenses that Sam’s Club specifically mentions. It can technically revoke your membership for any reason, without cause.The typical shopper doesn’t have anything to worry about. All the things Sam’s Club will ban you for aren’t exactly normal customer behavior. If someone tries to steal, start fights, or return 90% of what they buy at Sam’s Club, their membership could be revoked. The people who just shop there, enjoy the deals, and don’t yell at the employees can have a membership for as long as they want.

Source: fool.com

Apache is functioning normally

July 8, 2023 by Brett Tams

I am a 40-year-old single woman in need of a home loan to buy a 1-BHK house. Currently, I work as a freelance content writer. Should I approach private banks, PSU (public sector unit) banks, or NBFCs (non-bank financial companies) for the loan? What are the merits and disadvantages with each option?

—Name withheld on request

It is very much possible to secure a home loan with proper planning and consideration. Here’s how you can approach it:

Loan amount: Before applying for a home loan, assess your affordability for monthly EMI (equated monthly instalments) outgo based on your income. As a freelancer, lenders may require additional documents, such as income tax returns, bank statements, and client contracts, to evaluate your income stability. Make sure you have a set of these documents ready.

Down payment: Aim to save a substantial down payment to reduce the loan amount and enhance your chances of loan approval. Having a higher down payment can also help you negotiate better interest rates.

Lenders: You have several options to explore when it comes to lenders. These include private banks, PSU banks, and NBFCs. There are pure-play affordable players in the market, who have customized programmes especially for structuring loans and assessing incomes for informal self-employed profiles. There are many lenders (housing finance companies), who support first-time women borrowers without credit history or with informal incomes.

Interest rates and terms: Regardless of the lender type, compare interest rates, loan terms, processing fees, and other charges. Choose a loan option that offers favorable terms and aligns with your financial goals.

Seek expert advice: It may be beneficial to consult a financial advisor or loan expert who can guide you through the loan process and help you make informed decisions.

Anuj Sharma is chief operations officer, India Mortgage Guarantee Corporation.

Apache is functioning normally

July 8, 2023 by Brett Tams

At any given time, there are numerous places and ways to invest your money, ranging from the stock market to real estate. But how and where you invest your money also brings up numerous potential risks and potential outcomes — for that reason, it can be difficult to decide what to do.

And while investors are right to wonder what investments make sense given the current economic and political climates, they may be surprised to hear that other, longer-term factors are just as important. As such, you may find it useful to learn the behavior of the available investment types, and then compare those patterns to whatever it is that you’re trying to accomplish, and along what timeline.

Learning About Investment Options

If you’re wondering “where should I invest my money right now?”There are several different potential answers and investment opportunities out there. But before you do anything, you’ll need to make some key decisions.

The first is to make a decision by investment type, which involves deciding to invest in certain asset classes or asset types. Your portfolio mix will be your asset allocation, which is covered below.

Stocks, bonds, cash, and money market funds, and real estate are just a few of the asset classes available to investors. Generally, the first order of business is to determine which is most appropriate for the financial goals an investor has. In order to determine this, it’s important to understand how each investment type earns a return.

Where to Invest Money

As noted, there are many different assets that investors can utilize or add to their portfolio. Here’s a rundown.

Stocks

A stock represents a share of ownership in a company. When an investor buys a share in a company, they own a small proportion of that company. Shareholders may even receive voting rights. This is why stocks are sometimes referred to as equities; investors now own equity in that company.

A stock can earn money in two ways. The first way is through the value of shares appreciating over time; this is called capital appreciation. The second is through periodic cash payments made to shareholders, called dividends.

Stock prices can be influenced by both internal and external factors, such as a new product launch or broader national or global events like a political event or natural disaster. Because the nature of business is highly unpredictable, stock prices can be volatile.

Bonds

A bond, on the other hand, is an investment in the debt of a company or government. The bondholder earns a rate of return by collecting a rate of interest on that debt for a predetermined amount of time, such as 10 or 20 years. Because the terms are stated upon purchase, bond values generally tend to be less volatile than stocks, but have more modest returns. That said, bonds are not completely without risk, and it is possible for bonds to lose value.

When interest rates are low, overall, bonds will likely pay out a lower rate of interest. Interest rates can change, and quickly, sometimes, which is something investors may want to take into account.

Typically, stocks are considered to have a higher potential for returns over time, but that comes with the price of volatility — the possibility of an investment losing value, especially in the short-term. Bonds are often considered a safer, more stable investment that may be more appropriate for investors who aren’t as comfortable with the volatility of the stock market.

A big part of deciding where to invest has to do with determining your relative comfort level with each of the different asset classes.

Mutual Funds

Investing directly in stocks isn’t the only option available to investors. Mutual funds present another way to invest in the stock market. Think of funds as baskets that hold an assortment of some other investment type, such as those mentioned above — stocks, bonds, and real estate holdings. Funds provide investors an easy way to access diversified exposure to many investments at once, but they are not an asset class in and of themselves.

Investment funds can be an affordable and quick way to get (and stay) invested, which makes them popular with both new and seasoned investors. But even if you decide to use funds as the device for which you invest in different markets, the first order of business is to understand the fund’s underlying asset class.

For example, someone who purchases a mutual fund that holds 500 stocks, is invested in those 500 stocks — and very much invested in the stock market. If you buy a mutual fund comprising 1,000 bond holdings, then you are invested in those bonds. If you buy a fund with real estate holdings, well, you get the idea.

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Options

Options are a form of derivative, and are “higher-level” investments than, say, stocks or bonds. Options can be difficult to understand, but fairly easy to trade — you’d likely want to discuss options trading or investing with a financial professional before you get into it.

That said, investors can invest their money in various forms of options, but they’ll need to keep an eye on their portfolios. Options trading is an active form of investing, as there are strike prices and dates that they’ll need to be aware of.

Exchange-Traded Funds (ETFs)

Exchange-traded funds, or ETFs, are very similar to mutual funds in that they’re effectively a basket of different investments, all compiled into one security. There are tons of different types of ETFs, encompassing all sorts of different market indexes, sectors, and asset classes. Odds are, if you’re looking for a specific type of ETF, there’s likely one out there that fits the bill — or that comes close to it.

Retirement Plans

A retirement plan or account is another place that investors can put their money to work. There are various types of retirement plans — the list includes individual retirement accounts (IRAs), 401(k) plans, and the Roth variations of each. Not all investors may have access to each type, so, see what’s available to you, and which type of plan best fits your investing strategy.

Index Funds

As discussed, index funds offer yet another investment vehicle. These are investment funds that track an index, which is usually a specific part of the broader market. For example, there are index funds that track the S&P 500, or there are index funds that track the tech sector.

Investing in an index fund allows investors to gain exposure to their preferred market segment, and there are numerous options out there, too.

Real Estate

Real estate investing can include physical property — houses, commercial buildings, etc. — or, it comprises purchasing certain real estate-oriented investment vehicles. While many investors may not have the capital laying around to buy a house for investing purposes, they can buy real estate stocks, or even look at REITs, or real estate investment trusts, to get real estate exposure into their portfolios.

Certificates of Deposit (CDs)

Certificates of deposit, often called CDs, should also be on investors’ radar. CDs are somewhat like savings accounts, in which investors “lock up” their funds for a predetermined period of time in exchange for interest rate payments. Functionally, they’re similar to bonds, but there can be fees if you need to pull your money out of a CD before it matures.

Options for Cash

In some instances, it may make the most sense to keep the money for a particular goal in cash. It is helpful to understand what options are available for cash savings.

Savings accounts at a traditional bank or credit union: This is likely the most familiar option. Traditional and commercial banks remain popular for their large geographical footprint. Note that many traditional banks tend to pay a relatively low rate of interest on any cash holdings.

Online-only checking and savings accounts: A newer option for bankers, online-only banks and banking platforms may offer a slightly higher yield than a savings account at a commercial bank. Additionally, many do not require minimums or charge monthly maintenance or account fees.

Money market funds: Often found in brokerage accounts, a money market fund is a fund that holds cash and or other “very liquid investments,” like short-term government securities.

Certificate of deposit (CD): As discussed previously, certificate of deposit is a savings account that holds money for a fixed amount of time, like one year or three years. A fixed rate of return is paid out during that period. Generally, there is a penalty to cash out a CD prior to expiration.

When considering cash as an asset class, consider the risk and reward tradeoff, just as one would for any other investment type. Although cash might not be risky when considered in terms of volatility, it does not come without risk. Cash carries the risk of losing value over the long-term due to the effects of inflation, or prices rising over time.

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Beginner-Friendly Places to Invest

If you’re a beginner investor looking for places to put your money, it may be beneficial to revisit some basic investing rules or guidelines. For instance, you’ll likely want to build an emergency savings fund before focusing on your stock portfolio.

But assuming you’re ready to put your money in the market or otherwise start building your investment portfolio, many beginners begin with some basic investment funds. ETFs are a popular choice, as are mutual funds — but note that there are some differences to be aware of.

If you’re not sure where to turn or what to do, consider speaking with a financial professional for advice.

Which Investments Provide the Highest Returns?

You’ve probably heard a certain phrase before: The higher the risk, the higher the reward. That largely holds true in the financial space, although not in every instance. It’s all to say that riskier investments tend to provide higher returns.

Assets like stocks are probably, by and large, going to provide higher or better returns than, say, bonds. Trading options can likewise be more profitable than buying and holding stocks, too. But there are significant risks involved in any strategy, and those risks can be magnified by the specific investments involved.

Again, if you’re looking for the highest possible return, it may be best to consult with a financial professional for guidance, or to give some thought to how each type of investment fits with your overall strategy.

Creating a Goals-Based Strategy

Contrary to how many new investors are encouraged to think about investing, it may not make sense to try and pick “hot” stocks right out of the gates.

Instead, take a step back and consider the bigger picture view, and ask whether stocks are even appropriate given your goals and investing timeline. This decision on which combination of asset classes to be invested in, and in what proportions, is called asset allocation.

To determine your asset allocation, start by thinking of each “bucket” or “pot” of money independently. For example, maybe someone has $1,000 set aside for retirement and another $1,000 that they’d like to use as a down payment for a home. Think about this intuitively; these are very different goals with different timelines and therefore, may require different investing strategies.

Next, consider the financial goals, risk tolerance, and investment time horizon for each bucket. This can sound pretty boring especially if you’ve been conditioned to believe that you should invest in whatever is currently the talk of the town.

Risk vs Reward

The asset allocation decision really boils down to an examination of an investment’s risk and reward characteristics in order to determine whether it’ll work on a personal level. Here’s what’s so important to understand: with investing, risk and reward are two sides of the same coin. Investors cannot have one without the other. For more reward potential, an investor will have to take more risk. There is no such thing as an investment that produces returns with no risk.

Let’s consider, again, the two hypothetical investment goals from above: $1,000 for a down payment and $1,000 for retirement. How do goals lead one down the path of where to invest?

First, the $1,000 for a down payment: If the money is designated for use in the next few years, the risk of losing any money in a volatile investment may outweigh the potential to earn investment returns. Therefore, it might be best to keep this money in a lower-risk investment or cash equivalent.

Next, the $1,000 for retirement. Many retirement investors have the goal of reasonable growth over the long-term. Because of this long time horizon, there should be enough time to grow beyond spates of short-term volatility. Therefore, it may be suitable to create a portfolio that is primarily invested in the stock market or a combination of stocks and bonds.

Retirement investors close to retiring may opt to consider some exposure to bonds for both diversification purposes and to lower the overall volatility of the portfolio. Ultimately, a person’s comfort level with the stock market will determine their specific stock and bond allocations. And it’s worth noting that an investing strategy isn’t stagnant. As a person ages, their goals and investing strategy will likely need to evolve, too.

Opening the Right Account

Here’s another way to answer the question, “where should I invest my money?” By doing so, in an appropriate account type, at a brokerage bank or on an investing platform.

Just as it makes sense to keep cash in a bank account, the same must be done with investments. But with investments, opening the right account can be a bit trickier.

It is not uncommon to hear someone refer to a 401(k) or a Roth IRA as if one of those is, in itself, an investment. But retirement accounts are not investments — they are accounts. Granted, they can hold investments, but they are still accounts.

Money is contributed to any investment account in cash, and then those proceeds are used to purchase investments, like stocks, mutual funds, and ETFs. (In a plan sponsored by a workplace plan, like a 401(k), the investing might happen automatically, hence the confusion about it being an investment itself.)

It is also possible to invest in an account that is not designated for retirement. At a brokerage firm, these are often simply referred to as brokerage accounts. If you use a trading platform, it may be referred to as an individual or a wealth account.

Retirement accounts offer some sort of tax benefit, like tax-free growth on your investments, which make them suitable vehicles for long-term goals. But because they offer a tax benefit, there are more rigid rules for use. For example, some retirement accounts, like 401(k) and Traditional IRAs, levy a 10% penalty on money withdrawn before retirement age (there are some exceptions to this withdrawal fee). Also, there are limits to how much money can be contributed annually to retirement accounts.

Weighing Your Options

It all comes down to the individual. You’ll need to look at your risk tolerance, time horizon, and personal preferences to determine the most suitable investing path or accounts.

For short-term goals that require more flexibility, a non-retirement account may be a better choice. Because there are no special taxation benefits, there are generally no rules about when money can be withdrawn or how much can be contributed. Because of this, non-retirement accounts can also be a good place to invest for folks who have met their maximum contribution amount for the year in their retirement accounts.

Investing With SoFi

At any given time, there are a plethora of places or vehicles in which you can invest your money. You can invest in stocks, bonds, funds, real estate — the list is long. But each has its own considerations and risks that must be taken into account. Overall, an individual’s investing strategy is the most important thing to keep in mind.

As for where to open an account, new investors may want to focus on an institution or platform where they are able to keep costs low. There’s not a whole lot that investors can control, like investment performance, but how much they pay in fees is one of them. There are lots of options for investors.

SoFi Invest offers educational content as well as access to financial planners. The Active Investing platform lets investors choose from an array of stocks, ETFs or fractional shares, but restrictions apply.

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

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

FAQ

Which investment gives the highest returns?

Higher-risk investments tend to give the highest returns, but can also give the highest losses. These can include certain stocks or investment funds, particularly those focused on market segments that are risky or volatile.

Where can you invest your money as a beginner?

Beginners can use any number of investment vehicles to invest their money. Some choices include investment funds like ETFs or mutual funds, or even retirement accounts or plans.

Where can you invest money to get good returns?

There are numerous investment vehicles that can provide good returns, but those returns can be thwarted by down markets. Stocks and more volatile investments tend to provide higher returns, but also tend to have higher risks than other investment types.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three 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—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.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 prequalification 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

July 7, 2023 by Brett Tams

Canceling a life insurance policy is an important decision that can have financial and emotional implications.

Deciding whether to continue with your life insurance policy or cancel it is not just a significant financial choice, it can also have profound emotional implications.

After all, life insurance isn’t just a monetary consideration – it’s about ensuring that your loved ones are protected in case of your untimely demise.

However, sometimes circumstances may lead you to contemplate canceling your life insurance policy. The question then arises: should you and if so, how do you go about it? Let’s delve deeper.

Understanding Life Insurance Policies: More Than Meets the Eye

First off, to make an informed decision, it’s crucial to understand the two main types of life insurance policies that are on the market.

Term Life Insurance: The Straightforward Option

As its name suggests, term life insurance provides coverage for a specified term, which typically ranges from 10 to 30 years. If you pass away during this term, your designated beneficiaries receive the policy’s death benefit. This type of insurance is often viewed as the simpler and more affordable option, as it strictly provides coverage without any investment component.

Permanent Life Insurance: Coverage Plus Investment

On the other hand, permanent life insurance policies, such as whole life or universal life insurance, provide coverage for your entire lifetime and include an investment element known as cash value. This cash value portion grows over time and can be borrowed against or even surrendered for cash, making this type of policy more complex and usually more expensive.

Reasons for Canceling Life Insurance: Making the Tough Call

Several scenarios might lead you to contemplate canceling your life insurance policy.

Financial Reasons: When the Premiums are too High

It could be that the premiums have become unaffordable due to changes in your financial circumstances. As the cost of living increases, especially in the light of rising inflation as highlighted in a recent FT Adviser report, it’s not uncommon for individuals, especially those over 50, to consider cutting back on their life insurance.

Policy No Longer Needed: When Life Takes a Better Turn

Your reasons for canceling could also be positive. Maybe your children have grown up and become financially independent, or your financial status has improved significantly since you first took out the policy.

Considerations Before Canceling Your Life Insurance: Weigh Your Options

But before you make the decision to cancel your life insurance policy, there are several factors to consider.

Evaluate Your Current Situation: Checking the Safety Net

Firstly, evaluate your current financial situation. You should be sure that you and your dependents won’t need the safety net that life insurance provides in the future.

Understand Potential Consequences: The Trade-Offs

It’s important to understand the potential consequences of canceling your life insurance. If you cancel your term life insurance, you won’t receive any money back and will be left without coverage.

On the other hand, canceling a permanent life insurance policy might allow you to recover some of the cash value, but could also result in surrender charges, especially if the policy is still in its early years, as pointed out by a Forbes Advisor article.

Alternatives to Canceling: Is There a Middle Ground?

Before canceling your policy outright, it’s worth exploring other options. For instance, you could reduce the death benefit to lower the premiums or even switch to a more affordable term life insurance policy if you currently have a permanent life insurance policy.

How to Cancel Your Life Insurance: Following the Right Steps

If, after considering all the implications and alternatives, you still decide that canceling your life insurance is the best course of action, then here are the steps you need to take.

Steps to Cancel Term Life Insurance: It’s All About Communication

The process for canceling term life insurance is generally straightforward. First, you need to contact your insurance provider and inform them of your intention to cancel the policy. This could be over the phone, via email, or sometimes through an online portal.

Ensure you follow all the steps they provide and always ask for a confirmation of your policy’s cancellation. It’s also important you understand your rights to canceling your insurance policy.

Steps to Cancel Permanent Life Insurance: A Bit More Complex

The process of canceling a permanent life insurance policy, on the other hand, could be a bit more complex, particularly because of the cash value component. You may need to complete a policy surrender form or send a written request to your insurance provider.

Remember:

Always confirm the details with your insurer and remember that you might be entitled to receive some of the policy’s cash value upon surrendering the policy.

Life After Canceling Your Life Insurance: Managing Your Risks

The aftermath of canceling your life insurance policy requires careful financial planning. Now that you no longer have the protection that the policy provided, you need to manage the financial risk that the policy once covered.

Managing Financial Risk: New Strategies

This risk management could involve several strategies, from building an emergency fund to investing for your long-term financial goals.

Setting Up an Emergency Fund: An Essential Buffer

An emergency fund is an essential financial tool that provides a buffer against sudden expenses or financial emergencies. It ensures that even if unexpected costs arise, you have a financial cushion to rely on.

Investing for Long-term Goals: Playing the Long Game

By investing, you can grow your wealth over time and work towards achieving your financial goals. Whether it’s retirement planning, saving for a home, or investing in your child’s education, having a robust investment strategy can provide financial security in the long run.

Conclusion: Making the Best Choice for You

Canceling your life insurance policy is a significant decision that should be made with careful consideration. It’s crucial to weigh the potential risks and benefits, evaluate your current and future financial situation, and explore all available alternatives.

Remember, the right choice will depend on your unique circumstances and the needs of your dependents.

FAQs – Cancelling Life Insurance Policy

Can I cancel my life insurance policy?

Yes, you can cancel your life insurance policy at any time. It’s your right as the policyholder to do so.

How do I cancel my life insurance policy?

The cancellation process may vary depending on your insurance provider. Generally, you can contact your insurance company directly and inform them of your decision to cancel. They will guide you through the necessary steps and paperwork.

Will I get a refund if I cancel my policy?

It depends on the type of life insurance policy you have. Term life insurance policies typically do not have a cash value, so cancelling them usually doesn’t result in a refund.

However, if you have a permanent life insurance policy, such as whole life or universal life, there may be a cash surrender value that you could receive upon cancellation.

Are there any fees or penalties for cancelling my life insurance policy?

Some life insurance policies may have surrender charges or penalties for early cancellation. These charges are more common with permanent life insurance policies, and they can vary depending on the specific terms of your policy.

Review your policy documents or contact your insurance company to understand any potential fees or penalties.

Source: goodfinancialcents.com

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Apache is functioning normally

Apache is functioning normally

Apache is functioning normally

Apache is functioning normally

Apache is functioning normally

Apache is functioning normally

Understanding Life Insurance Policies: More Than Meets the Eye

Term Life Insurance: The Straightforward Option

Permanent Life Insurance: Coverage Plus Investment

Reasons for Canceling Life Insurance: Making the Tough Call

Financial Reasons: When the Premiums are too High

Policy No Longer Needed: When Life Takes a Better Turn

Considerations Before Canceling Your Life Insurance: Weigh Your Options

Evaluate Your Current Situation: Checking the Safety Net

Understand Potential Consequences: The Trade-Offs

Alternatives to Canceling: Is There a Middle Ground?

How to Cancel Your Life Insurance: Following the Right Steps

Steps to Cancel Term Life Insurance: It’s All About Communication

Steps to Cancel Permanent Life Insurance: A Bit More Complex

Remember:

Life After Canceling Your Life Insurance: Managing Your Risks

Managing Financial Risk: New Strategies

Setting Up an Emergency Fund: An Essential Buffer

Investing for Long-term Goals: Playing the Long Game

Conclusion: Making the Best Choice for You

FAQs – Cancelling Life Insurance Policy

Create a budget

Open some checking, savings, and retirement accounts

Set up direct deposit and automated bill pay

Avoid bad debt and build good credit

Never try payday loans

Build good credit simply by getting your credit report

Build your credit by using a credit card responsibly

Get some government benefits

Take classes, freelance, and increase your earnings

Set some financial goals

Summary

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How Does a Brokerage Account Work?

Brokerage Accounts vs Retirement Accounts

Brokerage Accounts vs Checking Accounts

Brokerage Accounts vs Checking and Savings Accounts

Pros and Cons of Opening a Brokerage Account

Pros of Brokerage Accounts

Cons of Brokerage Accounts

4 Types of Brokerage Accounts

1. Cash Brokerage Accounts

2. Margin Brokerage Accounts

3. Joint Brokerage Accounts

4. Discretionary Accounts

How To Open a Brokerage Account

Requirements for Opening a Brokerage Account

Initial Investments

Account Minimums

Agreeing to Terms and Conditions

Funding a Brokerage Account

Brokerage Account Taxes

Investing with SoFi

FAQ

How do I open a brokerage account?

Is there a minimum deposit to open a brokerage account?

Do brokerage accounts have fees?

What Is a Money Manager?

What Makes Money Managers Different?

Registered Investment Advisors

Broker-dealer

Certified Financial Planners

Money Managers

Pros and Cons of Hiring a Money Manager

Pros of Having a Money Manager

Cons of Having a Money Manager

How Do Money Managers Get Paid?

Should You Hire a Money Manager?

3 Tips on Choosing a Money Manager

1. Know What You’re Looking For

2. Check Credentials

3. Interview

The Takeaway

FAQ

What is the difference between a money manager and a financial advisor?

Is it worth it to use a money manager?

Is it better to have a financial advisor or a financial planner?

Learning About Investment Options

Where to Invest Money

Stocks

Bonds

Mutual Funds

Put your money to work and startinvesting with as little as $1

Options

Exchange-Traded Funds (ETFs)

Retirement Plans

Index Funds

Real Estate

Certificates of Deposit (CDs)

Options for Cash

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to 4.30% APY on your cash!

Beginner-Friendly Places to Invest

Which Investments Provide the Highest Returns?

Creating a Goals-Based Strategy

Risk vs Reward

Opening the Right Account

Weighing Your Options

Investing With SoFi

FAQ

Which investment gives the highest returns?

Put your money to work and start
investing with as little as $1