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Apache is functioning normally

May 24, 2023 by Brett Tams

A common misbelief is that one must be rich to invest. It’s easy to invest with little money in a variety of assets and save for your goals. More platforms let you “micro invest” and purchase small amounts of expensive assets.

Even if you only invest a few dollars each month, that money can start building wealth.

Consistently investing small amounts can be more effective than waiting to accumulate a lump sum because you can earn compound interest.

Some people may never invest because they don’t think they have enough money.

In This Article

Best Ways to Start Investing with Little Money

It’s possible to invest as little as $5 at a time and diversify your portfolio. As your financial situation improves, you can increase your monthly investments and try more ideas.

1. Invest in Index Funds

Investing in index funds can be the best option to start investing small amounts of money.

First, index funds let you invest in hundreds of companies with a single investment to quickly diversify your portfolio and minimize risk.

Second, most index funds have low investing fees and expense ratios. For example, a fund with a 0.03% expense ratio costs 30 cents in annual fees.

Most brokers don’t charge trade commissions to buy or sell index funds. Paying fewer fees means you can invest more cash.

Some of the types of index funds you can invest in include:

US stocks
International stocks
Emerging markets
Corporate bonds
Government bonds
Real estate investment trusts (REITs)

The various online stock brokers offer stock and bond index exchange-traded funds (ETFs). These funds trade like individual stocks. The share price fluctuates during the market day and you can buy shares at any time.

Your 401k provider likely offers index mutual funds. The investing strategy is the same except the share price updates once a day after the stock market closes.

Most online brokers offer index funds and don’t charge any trade commissions. However, some can be easier to invest with when you have little money.

Minimum Investment: $5 (varies by broker)

Betterment

Using a robo-advisor like Betterment can be one of the easiest ways to invest in index funds. This fully-automated investing app automatically rebalances your portfolio to maintain your target asset allocation.

You can also enable tax-loss harvesting to minimize your taxable investment income by selling investment losses to offset your investment gains.

You will answer several questions about your age, investment goals and risk tolerance to recommend an investment portfolio of stock and bond index ETFs.

As you grow older, Betterment shifts your portfolio to a more conservative allocation.

Not having to manage your portfolio is one advantage of using a robo-advisor when you don’t have the time or desire to self-manage your investments.

Betterment also offers fractional investing so you can buy partial shares of funds to instantly diversify your portfolio.

Other brokers may require you to buy whole shares which makes buying multiple funds at once difficult if you have limited funds.

You can create a portfolio with $0 and start investing with a $10 initial deposit. The annual account fee for Betterment is 0.25% of your portfolio value.

Acorns

Another unique way to invest in index funds is by using Acorns. This micro-investing app invests your spare change by rounding up your debit and credit card purchases.

You can choose to invest in a premade portfolio of stocks and bonds with different risk levels.

Acorns buys fractional shares of index ETFs when with as little as $5. Taxable and retirement investment accounts are available along with an online checking account.

Monthly plan fees range between $1 and $5 per month.

2. Workplace Retirement Accounts

A workplace retirement account such as a 401k, 403b or a Thrift Savings Plan (TSP), this can be the best place to start investing with little money. See if your employer offers matching contributions. If so, invest enough each month to earn the full match and invest “free money.”

If your workplace doesn’t offer a retirement plan or matching contributions, you can open an individual retirement account (IRA). Most brokers offer IRAs with no account fees or minimum initial deposits. You have multiple investment options.

One perk of investing with a retirement account is the tax benefits. You only pay taxes once. Traditional contributions reduce your current annual income, grow tax-deferred and you pay income taxes when you make a withdrawal. Roth contributions require you to pay income taxes upfront but your withdrawals are tax-free.

Your workplace retirement account investment options can include:

Stock index mutual funds
Bond index mutual funds
Target date funds
Company stock

The investment options are different for each employer yet most plans offer target date funds. Choosing a target date fund that’s nearest to your planned retirement year can be a good option. The fund invests in stocks and bonds and adjusts to a conservative risk tolerance as retirement approaches.

If you only decide to invest in a target date fund, you won’t have to rebalance your asset allocation. However, you should monitor the target date fund performance. You may also decide to self-manage your portfolio by buying index funds to reduce your investment fees.

You can invest as little as $1 at a time into each fund. If you’re uncomfortable managing your own retirement account, Blooom can provide a free portfolio analysis and recommend a portfolio allocation.

Minimum investment: $1

3. Individual Stocks

After establishing an index fund portfolio, you may decide to buy stock in individual companies. There are many online brokers to choose from and most don’t charge account fees or trade commissions to buy or sell shares.

You may decide to buy dividend-paying stocks to earn consistent passive income. Another option is holding companies with strong growth potential that can beat the stock market but may not pay a dividend.

M1 Finance is one of the best free investing apps. You can buy fractional shares of stocks and ETFs with a minimum $25 investment. There are also premade ETF portfolios that can make it easier to diversify. As you invest new money, M1 rebalances your asset allocation.

The minimum initial deposit is $100 for taxable accounts and $500 for retirement accounts to start using M1 Finance.

You can also consider investing with Charles Schwab. You can buy fractional stock slices as small as $5 for many stocks and there are no trade fees or account minimums. But, you will need to self-manage your investment portfolio.

Minimum investment: $5

Tip: Using one of the top investment sites can make it easier to research stocks.

4. Crowdfunded Real Estate

Real estate is a longstanding way to earn passive income without relying on the stock market. However, owning investment properties is expensive and can be time-consuming.

Thanks to real estate crowdfunding, you can invest small amounts of money into commercial and multi-family real estate. These properties have multiple tenants and can provide a more stable income than a single-family rental property. A property manager screens the tenants, collects rent and makes repairs.

You can earn recurring dividends from monthly rent payments. It’s also possible to make money when a property sells for a higher value than the original purchase price.

DiversyFund is one of the best crowdfunding platforms. You can start investing as little as $500. The Growth REIT lets you invest in multifamily apartments across the United States.

One downside of crowdfunded real estate is the multi-year investment commitment. Most platforms require a five-year investment to avoid early redemption fees. As a tradeoff for the long-term commitment, you can earn annual returns that compete with the historical S&P 500 average return of 7% per year.

Minimum investment: $500

5. Small Business Bonds

The bond index funds you invest in hold corporate and government debt. Investing in small business bonds can help you earn a higher yield. Worthy Bonds yield 5% per year and let you invest as little as $10 at a time.

Each bond matures in 36 months but you can sell your position sooner with no early withdrawal penalty.

Read our Worthy Bonds review to learn more.

Minimum investment: $10

6. High-Yield Savings Accounts

It’s wise to keep cash that you need instant access to in a high-yield savings account. Banks are a low-risk way to earn passive income but your returns are not as high.

You might consider keeping your emergency fund in a high-yield savings account that doesn’t charge any account fees. Also, consider opening separate “sinking fund” accounts for various savings goals to avoid borrowing money. A savings account can also be a good place to park cash until you decide where to invest it and earn a higher potential return.

Ally Bank has a competitive interest rate for the high-yield savings account. There are no account fees or minimum balance requirements. The Surprise Savings booster tool can help you calculate a “safe-to-spend” amount and transfer your extra cash into savings.

Minimum investment: $1

7. Certificates of Deposit

Investing in stocks and bonds can provide higher investment returns but carry more risk. A bank certificate of deposit locks in a specific interest rate for the investment term. For example, a 12-month term CD has the same interest rate for the next 12 months.

Instead of keeping your free cash in an interest-bearing savings account, consider opening a bank CD with a similar or higher interest rate.

If the savings account interest rate drops, the CD can earn more interest until the CD matures. Most CDs have early redemption penalties if you withdraw the cash before the term ends. At the end of the term, you can redeem your CD balance penalty-free or renew the CD at the then-current term.

Some banks, including CIT Bank, offer no-penalty CDs. These CDs don’t charge an early withdrawal penalty but may offer lower yields than a term CD.

As bank interest rates are low, the passive income you earn from CDs can be lower than the inflation rate. But earning some interest income can be better than nothing.

Minimum investment: $100

8. Peer-to-Peer Investing

You earn income from savings accounts and bank CDs as the bank lends your money at a higher interest rate. Peer-to-peer lending platforms let you earn a higher rate as you lend directly to the borrower and bypass the bank.

Prosper lets you invest in crowdfunded personal loans with a three-year or five-year repayment term. Borrowers make monthly payments and you make money from the interest payment, minus a 1% service fee. The historical annual returns are between 3.5% and 7.6%.

You can lose money if the borrower defaults on the loan. To avoid losing money, Prosper lets you buy notes in $25 increments and recommends a $2,500 initial investment to properly diversify. You can invest in multiple loans to diversify your portfolio.

Prosper also assigns each borrower a risk rating and you can see basic credit profile details. There’s also an auto-invest feature that spreads your investment across multiple risk ratings. You might be able to easily diversify your portfolio by auto-investing and avoid investing in too many risky loans.

Minimum investment: $25

9. Physical Gold

Precious metals such as physical gold and silver are a popular alternative asset. Unless you invest in gold royalty stocks, you won’t earn dividend income. You make money by selling your precious metal investments above your purchase price.

Buying gold coins and bars can be one of the best ways to invest in gold. Physical gold is expensive and you may not be able to buy an entire ounce or gram at once.

Vaulted lets you buy fractional shares of physical gold bars. Your stash is held at the Royal Canadian Mint. Once your balance is high enough, you can request FedEx delivery to receive your physical gold. There is a 1.8% transaction fee to buy or sell and a 0.4% annual maintenance fee.

It’s also possible to invest in gold trust ETFs that trade on the stock market. Most investing apps let you trade these funds. The share price mimics the price of physical gold.

But most gold ETFs don’t offer physical delivery as the fund family owns the bullion.

Minimum investment: $10

10. Cryptocurrency

When you’re deciding what to invest in first, cryptocurrency probably isn’t going to be at the top of the list. After all, this digital asset is highly volatile and doesn’t earn interest.

Many people who buy crypto do so as an alternative to stocks and gold.

For example, you might buy cryptocurrency as a way to diversify once you hold a sufficient amount of stocks, index funds and gold.

The most popular cryptocurrency is Bitcoin. This cryptocoin has the best name recognition and more merchants accept it as payment instead of paper currency.

There are other “alt-coins” like Ethereum that can also be worth owning if you believe in the long-term potential of cryptocurrency.

It has been fairly difficult to buy cryptocurrency but more platforms are making it easy to buy cryptocurrency. PayPal and Square let you buy Bitcoin and use it to pay for purchases.

However, you won’t be able to move your Bitcoin balance off of their platform.

Another easy way to buy cryptocurrency is through an online broker like eToro. You can trade cryptocurrency futures after a minimum $50 initial deposit.

EToro also lets you copy the investment portfolios of experienced cryptocurrency investors which can improve your income potential.

A third way to buy cryptocurrency is using a digital currency exchange such as Coinbase. Buying directly from an exchange lets you own real Bitcoin and alt-coins. You can transfer them to a cryptocurrency wallet for added security from hackers.

No matter where you decide to buy cryptocurrency, you can buy fractional shares of Bitcoin and other coins. Investment minimums and transaction fees vary by platform.

Minimum investment: $2 (varies by platform)

11. Treasury Bonds

Most investors get exposure to government bonds by holding bond index funds in their brokerage account or 401k workplace retirement plan.

As bonds can be pricey and confusing to buy, bond funds make it easy to earn passive income.

You can have more control over which bonds you own by buying U.S. Treasury bonds. You can choose the maturity date. Each Treasury bond has a $100 minimum investment with a maturity date of up to 30 years.

It’s also possible to buy Treasury Inflation-Protected Securities (TIPs) as a hedge against future inflation.

Another option is purchasing Series I or Series EE Savings Bonds. Both types of savings bonds have a $25 minimum investment.

You can buy Treasury bonds from TreasuryDirect.

Minimum investment: $100 for Treasury notes and bonds ($25 for savings bonds)

12. Fine Wine

A long-term investing idea is owning fine wine. You can open a standard portfolio at Vinovest with a $1,000 minimum initial investment.

Vinovest automatically builds your wine portfolio making it easy to start if you’re unfamiliar with wine investing.

Each bottle in your portfolio remains in climate-controlled cellars across the world and is insured against damages. You decide when to sell your wine. It’s possible to request delivery if you want to open a bottle.

Collectible wine can increase in value as it ages and the scarcity of unopened bottles increases. Wine investing is like owning physical gold and doesn’t earn dividend income.

It can take up to 30 years to earn the best value before you sell a bottle.

Minimum investment: $1,000

13. Fine Art

Another unique investment option is investing in fine art. Masterworks lets you buy shares in classic and modern pieces with a $1,000 minimum investment.

The holding period for most pieces is between three and ten years. You earn a profit if the piece sells for a profit.

Due to the relatively high initial minimum investment and waiting years to earn income, you may invest small amounts of money in other ideas first to make money fast.

Minimum investments: $1,000

Summary

There are many ways to start investing little money today and earn recurring income. Many platforms have small minimum investments which make it easy to try several ideas and diversify your portfolio.

As you increase your income, you can boost your monthly investment.

How do you invest your money? Which idea are you going to try first?

Josh is a personal finance writer and Founder of MoneyBuffalo.com. He has been featured in publications like Student Loan Hero, Well Kept Wallet and the US News and World Report.

Source: debtdiscipline.com

Apache is functioning normally

May 24, 2023 by Brett Tams

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If you’ve been paying attention to the news within the past few months, you’ve likely been hearing a lot about the rise of the robo-advisor.

Robo-advisors is the term given to any number of automated investing services that have popped up in recent years that aim to make investing easier, more affordable and in some instances negate the need for a traditional financial or investment advisor.

While their investment recommendations vary to some degree, many of them use algorithms based on Modern Portfolio Theory (MPT) to aid in choosing diversified investments and asset allocation based on your risk tolerance. MPT helps to maximize expected return for your portfolio based on your risk profile.

While I still think that some people could benefit from working with a human financial planner one on one, I do think that for most investors using an automated investing service makes a ton of sense.

Today I thought I would do a review of Wealthfront, one of the top and most well respected automated investing services available today.

UPDATE: Sign up for Wealthfront via this exclusive Bible Money Matters link to get $5,000 managed for free:

Sign up for Wealthfront and get $5,000 managed for free

Wealthfront History

Wealthfront launched their automated investment service in 2011 and the company is currently based in Redwood City, California. In 2012 Wealthfront launched a daily tax-loss harvesting service. From 2013 to 2014 the company went through some tremendous growth, growing by over 450% in one year. By 2019 Wealthfront now has more than $12 billion of assets under management.

Wealthfront never holds your portfolio when you invest with them, they just manage it. The portfolio is actually held with Royal Bank of Canada.

How Does Wealthfront Work?

When you sign up for Wealthfront you start by completing a questionnaire that is aimed at determining your risk tolerance. Once your risk tolerance is determined asset allocations are set that will remain the same regardless of how much you have invested.

The portfolios are based on a mix of 6 – 8 asset classes that includes both U.S. and international stocks and bonds. They invest mainly via the following ETFs, although that is subject to change.

U.S. Stocks (VTI)
Foreign Stocks (VEA)
Emerging Markets (VWO)
Real Estate (VNQ)
Dividend Stocks (VIG)
Emerging Market Bonds (EMB)
Municipal Bonds (MUB)
CorporateBonds (LQD)
US TIPS (SCHP)
Natural Resources (XLE)

When you invest with Wealthfront your diversified asset allocation will depend on the tax status of your account (taxable or tax deferred), and what is the most tax efficient method of investing for you.

In essence, you’ll get a highly diversified, low cost portfolio that is suited to your level of risk, time horizon and other factors.

Signing Up For Wealthfront

Signing up for Wealthfront is a quick process. Here’s what you’ll need to do.

Once you begin the signup process it will first have you go through a risk tolerance assessment.

Once you’ve answered all the questions, it will give you a quick rundown of what assets and allocation that they would suggest for you, in both a taxable account and retirement account.

If everything looks OK, you’re ready to open your account.

Available account options with Wealthfront include:

Standard taxable account
Joint investment account
Trust account
Traditional IRA
Roth IRA
SEP-IRA
Wealthfront 529 College Savings Plan

Once you choose which account type you want and hit continue, it will take you through the process of entering all of your basic information including:

Full name
Address
Birth date
Phone number
Social security number
Income

After filling out the basics it will ask you to fund your account. Your options for funding the account include:

Bank transfer (3-5 business days to get started)
Wire transfer (1 business day to get started)
Account transfer (5-10 business days)

Once you submit your application and confirm your email address you just have to wait for your account to be approved. After approval you can login to your account dashboard to confirm transfers, view your account summary, view your plan, transactions, documents and more.

Wealthfront Features

So what are some of the features that you get when you open a Wealthfront account?

Proven passive investing strategy that gives you a diversified portfolio

So what do you invest in when investing with Wealthfront?

We invest with an equity orientation to maximize long-term returns. Each of our selected asset classes is represented by a low cost, passive ETF. We continuously monitor and periodically rebalance your portfolio to maximize your chance of investment success for the long run. We also attempt to minimize your taxes by analyzing the taxes likely to be generated by any given asset class, and then allocating different asset classes in taxable and non-taxable (retirement) portfolios. We use Modern Portfolio Theory (MPT) to identify the ideal portfolio for each client.

Your portfolio will consist mainly of low cost ETF index funds that will be tailored to your risk tolerance, with intelligent dividend reinvestment and regular portfolio rebalancing. It is fully diversified. For a complete look at the Wealthfront strategy you can check it out here.

PassivePlus® tax efficient passive investment products

Wealthfront offers a broad suite of tax efficient passive investment products. These strategies are known as PassivePlus, and in the past have mainly been available only to high dollar investors. Wealthfront didn’t invent these strategies, but it’s team of PhDs led by reneowned economist Burton Malkiel, along with their investment technology has made these products available to anyone. Among the strategies included in PassivePlus:

Tax loss harvesting: Tax-loss harvesting essentially takes investments that have declined in value and selling them at a loss, generating a tax deduction. The tax deduction helps to reduce your taxes. Wealthfront’s service allows daily tax harvesting to be possible, which can help to maximize gains versus a traditional year end tax loss harvesting. This service is available at no extra cost to investors.
Stock-level Tax-Loss Harvesting: Available for no extra cost to taxable accounts over $100,000, Stock-level Tax-Loss Harvesting is an enhanced form of Tax-Loss Harvesting that looks for movements in individual stocks within the US stock index to harvest more tax losses and lower your tax bill even more.
Risk Parity: Available for an additional 0.03% to taxable accounts over $100,000, Risk Parity is an alternative methodology to allocate capital across multiple asset classes, much like Modern Portfolio Theory (MPT), also known as mean-variance optimization. Historically, Risk Parity has generated better returns for a given level of portfolio risk than the more common MPT.
Smart Beta: Available for no extra cost to taxable accounts over $500,000, Smart Beta is an investment feature designed to increase your expected returns by weighting the securities in the US stock index of your portfolio more intelligently.

Wealthfront also invests in index funds which tend to have little turnover, and as such will likely realize lower capital gains taxes. They also use dividends to rebalance your portfolio throughout the year, lowering capital gains. They optimize asset classes and allocations depending on whether an account is taxable or tax advantaged.

No commission fees

With Wealthfront you’re never going to pay fees for purchase of the ETFs in your account.

Other Wealthfront Feature Updates

Wealthfront is constantly innovating, and has had a myriad of other updates in the past year or so, all designed to make investing easier, more efficient, and to bring you better returns. Here are a few of the features and functionality that set them apart.

Free Financial Planning: The new free financial planning experience, unique to Wealthfront, using the Path planning engine.
Tailored Transfers: Instead of selling everything at once, use our tailored transfer process to migrate your investments tax-efficiently over time.
Portfolio Line of Credit: This line of credit is available for any Wealthfront client with an Individual or Joint Wealthfront account valued at $100,000 or more. There’s no set up – if you’re an eligible Wealthfront client then you already have access. Your line of credit is secured by your diversified investment portfolio, so current rates are as low as 3.25-4.5% depending on account size – lower than most HELOC loans. Borrow the amount you need up to 30% of account value, when you need, for whatever you want. Repay on your own schedule.

Free Automated Financial Planning

In December of 2018 Wealthfront became the first robo-advisor to offer software based financial planning for free to anyone through their app or on their website. Some other services will offer planning to clients, but usually at a premium, and only through a call with a CFP on the phone.

With Wealthfront’s financial planning tools you can connect to your existing financial accounts in a few minutes, and then by tracking your actual spending and saving patterns to help you figure out how your financial future may look.

It helps you to figure out how much you need to save now to reach your future goals, and helps you to determine if you’ll be able to live the same lifestyle you live now, in retirement.

The free financial planning help takes the guesswork out of figuring out if your hoped for future is even attainable based on your current spending and saving patterns. It helps you take a look at “what-if” scenarios, and help you figure out what the impact of a raise at work, or saving more every month might be.

The free automated financial planning service is like having a personal financial planner, but without the need for a bi-annual meeting at an expensive office with a planner that hardly pays attention to your needs. Here’s a look at it from Wealthfront:

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Home Planning In Financial Planning Software

The financial planning software brings clients out of the window-shopping phase of home buying and into planning and saving with the help custom advice and recommendations. The Path advice engine uses third party data on home prices and mortgage rates combined with your financial information to provide an accurate estimate of what you can expect to afford when ready to purchase a home — whether it’s six months or five years from now.

The home affordability estimate given by the tool even accounts for expenses beyond the mortgage, such as closing costs, property taxes, maintenance, and insurance.

College Planning In Financial Planning Software

In addition they also now have a College planning tool that looks at every important aspect of college planning and deliver a complete, personalized assessment.

It will allow you to choose a college that your child may attend, enter some personal data about yourself, after which it will calculate the financial aid you can expect to receive at that school. Then you can setup how much to save, and see the effect of adding more to your savings. At the end you can link it to your Wealthfront 529 College Savings Plan!

The Wealthfront 529 College Savings Plan

This is another investment account unique to Wealthfront. They offer one of the lowest cost 529 plans from an advisor, that offers more diversification for higher returns. (Many plans offer a very limited range of investment options).

A recent Sallie Mae study shows that more and more parents are saving for college, but are nowhere near prepared to meet their goals because they are saving solely through savings accounts earning less than 1% interest. The Wealthfront 529 College Savings Plan was created to help change this, to help parents grow their child’s college savings, while minimizing the amount of risk based on your level of risk tolerance.

Wealthfront’s 529 uses 20 different glide paths, tailored to match both the beneficiary’s age, as well as the account owner’s financial situation and risk tolerance. Our glide paths transition asset allocations much more continuously, which again means you may be less likely to be hurt by market movements.

This is definitely something to check out if you’re interested in saving for your child’s education.

Wealthfront Cash Account

Wealthfront recently implemented a great new tool for savers. If you’ve got cash you want to keep out of the market and low risk, but you still want to earn a good amount of interest on it, the Wealthfront Cash Account might be just what you’re looking for.

The cash account is an FDIC insured account (up to $1 million dollars, 4 times the traditional bank insurance), that charges no fees and has only a $1 minimum.

At the time we updated this article it’s currently earning 2.57% APY. This makes their APY the highest on the market according to Bankrate, so if you’ve got extra cash laying around it makes their account a no brainer to sign up for.FDIC insured AND the best rate.

The Bankrate industry average savings rate is only 0.10%, so you can now earn over 25x more than the national average on cash balances!

It’s fast and easy to setup your cash account, it takes just minutes. Definitely worth checking out – whether you already have a Wealthfront account or not.

Fees, Charges & Minimums For Wealthfront

What are the fees that you’ll have to pay for the Wealthfront investment service? The good news is they offer some extremely competitive rates.

Wealthfront charges a monthly advisory fee based on an annual fee rate of 0.25%. The only other fee you incur is the very low fee embedded in the cost of the ETFs you will own that averages 0.15%.

Fees

You pay the following fees to Wealthfront:

So if you have $10,000 in your account and you signed up via our link, you’ll have no charge for the first $5,000, and a 0.25% fee on the second $5,000.

When you sign up you’ll also have the chance to refer other users to the service to earn $5,000 more per user in free asset management, beyond the first $5,000. If you know enough people who want to sign up, you could definitely increase the amount managed for free very quickly!

Account Minimums

An account with Wealthfront does come with a minimum balance.

Our account minimum is $500, which entitles you to a periodically rebalanced, diversified portfolio of low cost index funds enhanced with our daily tax-loss harvesting service (for taxable accounts).The account minimum required to qualify for our Stock Level Tax-Loss Harvesting is $100,000.

So to open an account, you’ll need a minimum of $500. Why not start with $500, and then fully fund your Roth IRA for the year ($5500 for 2018)?

There is also a minimum withdrawal of $250, and you can’t withdraw below the account minimum of $500.

If you withdraw all of your funds it will transfer your money and close your account for you, with no exit fees.

Wealthfront – Great Low Cost Investment Advisory Service

When I first heard about Wealthfront a few months ago, I wasn’t sure if it would be a service that I could recommend. After doing my due diligence, however, I believe they’re a great service that would be perfect for a lot of people.

Wealthfront is the only robo advisor who offers investment management, financial planning and banking-related services through their software. Anyone can open a Wealthfront investment account and receive a personalized, globally-diversified investment portfolio and access a variety of tax-efficient services.

I’d highly recommend giving them a chance if you’re looking for an easy place to start investing – that will work for you over the long haul.

Sign up for Wealthfront and get $5,000 managed for FREE

Wealthfront

Ease of use

10.0/10

Design

9.0/10

Cost Efficiency

9.8/10

Investment Strategy

10.0/10

Pros

Free or low cost
$5,000 invested for free via our link
Automatic re-allocation
Proven, tax efficient investing
Low $500 account minimum

Cons

Fees higher than DIY

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Source: biblemoneymatters.com

Apache is functioning normally

May 24, 2023 by Brett Tams

Long-term financial goals are an essential part of financial planning. They help you define your aspirations and create a roadmap for achieving them.

Long-term goals aren’t easy to achieve. But why?

Could it be that motivation wanes over time? Perhaps external circumstances change. Maybe it has to do with the feasibility of the goals.

Many people have trouble sticking to something over the course of a single year let alone several years or decades.

Perhaps that’s why long-term goals – like most financial goals – are so difficult to achieve.

How do we fight against whatever it is that holds us back from achieving these financial goals? Is it possible to win?

Yes. It is.

Today I’d like to share with you some ways you can achieve your long-term financial goals. I won’t claim it will be easy, but it will be worthwhile.

So whether you need to pay off debt, build an emergency fund, save for your kids’ college education, or invest for retirement, here are some ways you can make it hap’n, cap’n.

Why Long-Term Financial Goals Are Important

Long-term financial goals provide direction and motivation for your financial decisions. By defining your long-term goals, you will have a clear picture of what you want to achieve and what steps you need to take to get there. Setting long-term financial goals can help you:

Stay focused on your priorities: Setting long-term financial goals will help you prioritize your financial decisions and avoid getting distracted by short-term financial needs or impulses.
Achieve financial stability: Long-term financial goals can help you create a safety net, build wealth, and prepare for unexpected events such as medical emergencies or job loss.
Enjoy the benefits of compound interest: Investing in long-term goals, such as retirement or education, can help you take advantage of the power of compound interest and grow your wealth over time.

1. Capture your long-term goals in your to-do list.

Long-term goals of the financial sort are usually more like projects than individual tasks.

For example, if you want to pay off your debt, chances are that you don’t just have one credit card to pay off – you might have three credit cards, a vehicle loan, and a student loan to overcome (if not more).

“Pay off debt” would be the project. “Pay off Visa #1” would be the task.

The truth is that without writing down your projects and tasks within a task management system of some type, you’re much less likely to accomplish your long-term goals.

There’s just something about seeing your long-term goals on paper (or on a screen) that makes them real. The very act of writing them down is a type of commitment.

Give it a whirl. Write down your long-term financial goals and review them on a regular basis.

2. Don’t bury your long-term goals.

It’s not enough to write down your long-term financial goals. Additionally, you need to make them readily available to your eye.

One idea that I’ve found works well is to write down your goals on a whiteboard where you can’t help but see them. But that’s not for everybody.

The point is that you need to find a way to see your long-term goals in the context of all your other goals (namely, your short-term goals). If only your short-term, urgent goals are displayed for you to see, you’ll tend to focus on those instead of kicking butt on your long-term goals.

Don’t bury your long-term goals. They’re important too!

3. Dedicate certain days of the week to long-term goals.

One helpful tip I derived from Strategic Coach was to dedicate certain days of the week to certain goals. This has proved to be very helpful in my own life, and I believe it will in yours, too.

For example, you could dedicate a certain day of the week to managing your finances and brainstorming ways to improve your financial future. Perhaps you have a day off of work that would work best for you.

Now, I can hear you saying, “Oh Jeff, if I only had a day for such tasks – I’m way too busy with other stuff!” That’s fair.

But here’s the thing, you don’t just have to make this day about finances – you can make it about your other long-term goals too. Add in health, family, and other areas of responsibility. Consider this day (or these days) of the week to be all about bettering yourself and your life. Can’t you make time for that?

4. Prioritize your long-term goals properly.

When it comes to long-term financial goals, you need to properly prioritize them. There are some preliminary goals that should only take you less than a month, like setting up a budget and cutting expenses, but we’ll leave that for another article.

What are some common long-term financial goals and in which order should you complete them? Generally, I recommend you complete the following long-term financial goals in the order they are displayed below:

Build Your Emergency Fund

Think of your emergency fund as the foundation of your financial future. Without some liquid money, you’re going to be out of luck when financial disaster strikes. Believe me, they happen.

Your car engine might explode. Your kneecap might explode (ouch). Your water heater might explode. There are so many things that can explode . . . and it’s not easy to just walk away from those explosions while keeping your cool. It’s stressful!

But you know what would make those situations a little less stressful? You guessed it: an emergency fund baby!

Wipe Out Your Debt

Once you have your foundation in place, it’s time to knock out that debt. This can take several years or a few months – it depends on how much debt you have and how quickly you can shovel money at it.

Write down all of your debts and attack them one by one. It’s easier that way.

Start Investing for Retirement

Now it’s time to start investing for your latter years. Why? It’s possible that your earning potential can go down when you’re physically unable to work. Who knows, you might have a self-sustaining business upon reaching retirement age, but don’t count on it. Invest for the future!

Helping people retire well is what I do.

Start Saving for Other Long-Term Goals

This might include saving for your kids’ college education, purchasing a new vehicle, saving for a home renovation, or another goal that will take some time.

By prioritizing your long-term goals in the proper way, you can ensure that should you experience a slump in income, you aren’t wiped out due to a lack of financial planning.

5. Discover and focus on your motivations.

I’m convinced that one of the main reasons people don’t accomplish their long-term goals is because they really haven’t discovered their motivations.

For example, everyone knows it’s a good idea to pay off debt. It’s a financial goal that’s been embedded in our minds by countless financial advisors. But unless you discover your motivation for paying off debt, chances are you’ll give up before you achieve your goal.

In fact, if you’re paying off debt for the sake of paying off debt, you might as well give up now. You’re not going to be motivated enough to get the job done.

Instead, focus on some common motivations that can become your motivations. Here are some great reasons why people want to pay off debt:

To not have to pay interest on their purchases
To free up money for vacations
To free up money for investing for retirement
To not have to worry about those bills
To reduce the amount of stress in their lives
To free up the time it takes managing debt to focus on family

These are just a few of the motivations of others. What’s your motivation?

Assign a motivation for every long-term goal you have. Otherwise, you’re just trying to accomplish your long-term goals for the sake of accomplishing them – that’s not a real motivating factor if you ask me!

Long-Term Goal Examples

Long-term financial goals can take many forms, depending on your values, aspirations, and time horizon. Here are some examples of long-term financial goals in the SMART framework:

Example 1: Save for Retirement

Specific: Save $1 million by age 65 for retirement.

Measurable: Save $500 per month in a retirement account.

Achievable: Based on current income and expenses, it is feasible to save $500 per month for retirement.

Relevant: Retirement is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal by age 65.

Example 2: Pay off Debt

Specific: Pay off $30,000 in credit card debt.

Measurable: Pay $500 per month towards credit card debt.

Achievable: Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.

Relevant: Paying off debt is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal within 5 years.

Example 3: Invest in Education

Specific: Save $50,000 for a child’s college education.

Measurable: Save $200 per month in a 529 college savings plan.

Achievable: Based on current income and expenses, it is feasible to save $200 per month for college education.

Relevant: Investing in education is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal in 18 years.

Example 4: Buy a House

Specific: Save $100,000 for a down payment on a house.

Measurable: Save $1,000 per month in a high-yield savings account.

Achievable: Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.

Relevant: Buying a house is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal in 5 years.

Example 5: Start a Business

Specific: Launch a profitable business in the next 5 years.

Measurable: Develop a business plan and secure funding within the next 12 months.

Achievable: Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.

Relevant: Starting a business is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Launch the business within the next 5 years.

Long-Term Goal	Specific	Measurable	Achievable	Relevant	Time-bound
Save for Retirement	Save $1 million by age 65 for retirement.	Save $500 per month in a retirement account.	Based on current income and expenses, it is feasible to save $500 per month for retirement.	Retirement is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal by age 65.
Pay off Debt	Pay off $30,000 in credit card debt.	Pay $500 per month towards credit card debt.	Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.	Paying off debt is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal within 5 years.
Invest in Education	Save $50,000 for a child’s college education.	Save $200 per month in a 529 college savings plan.	Based on current income and expenses, it is feasible to save $200 per month for college education.	Investing in education is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal in 18 years.
Buy a House	Save $100,000 for a down payment on a house.	Save $1,000 per month in a high-yield savings account.	Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.	Buying a house is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal in 5 years.
Start a Business	Launch a profitable business in the next 5 years.	Develop a business plan and secure funding within the next 12 months.	Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.	Starting a business is a long-term financial goal that aligns with personal values and aspirations.	Launch the business within the next 5 years.

Need More Long-Term Goal Examples?

Knowing I’m not the only goal-setting freak that exists in this world, I asked fans from the Good Financial Cents Facebook page what their long-term goals (big shout to the Fincon community for contributing, too!).

Fincon Community Long-Term Goals

Here’s a great list of examples of long-term goals:

Bob Lotich at SeedTime.com says:

[I want] to provide a comfortable life for my family, to have enough cash to maintain a flexible lifestyle, and to use everything else to financially support charities and organizations that are making a huge impact on the world.

Ryan Guina at TheMilitaryWallet.com says:

[I want] to become financially independent. What this means to me: to have no consumer or mortgage debt and have enough resources in savings and investments to cover my everyday living expenses without relying upon income from my job. This will provide more freedom in pursuing activities based on fulfillment vs. the need to generate revenue.

Larry Ludwig at InvestorJunkie.com says:

[I want] to be financially free. I define it specifically as to accumulate $10,000,000 in investment assets that can generate at minimum 4% per year of income.

Teresa Mears at LivingOnTheCheap.com says:

[I want] to support myself, both now and in retirement, and enjoy life. What else is there?

Steve Chou at MyWifeQuitHerJob.com says:

[I want] to generate enough income so that I can spend more time with my family and be there for the kids. Growing up, my parents worked their butts off so I could go to a good school but I didn’t see them very often during the week. With my kids, I’m going to send them to a good college and always be present.

Grayson Bell at DebtRoundup.com says:

[I want to] build a business and a financial stockpile to allow my family and I to travel when and where we want to. I don’t want to be stuck due to a job or financial situation. This will require scaling my business and looking for more opportunities to expand my passive income streams.

Robert Farrington at TheCollegeInvestor.com says:

[I want] to generate enough passive income to replace my current income. This will require a long-term strategy of earning more money (through my salary and side hustles) and investing the excess. The goal, of course, is to retire early while still being able to provide the quality of life I want.

My Lifetime Goals

Long-term goals can be difficult to articulate but deserve to be written down. I previously shared my lifetime goals on this post. Looking them over I recognize I would make a few tweaks, but; for the most part, they are still align with what I want to achieve in life. Here’s a look:

1. Spiritual leader of my household. I want my kids to see me first as a God-loving father who puts his faith first before success. I want to continually love and support my wife, and do so in an Godly manner.

2. Live a long and filling life with my wife and family. Raise my kids with the philosophies of: working hard, but not sacrificing “work” for what you love; love first; and treat people with respect (Golden Rule)

3. Have several multiple-system driven businesses that produce >$100,000 a month of passive income.

4. Live in multiple countries (5+) for an extended period of time (minimum 3 weeks) with entire family

5. Inspire over 1,000,000 people to invest in themselves. This can be through traditional investing (Roth IRA, 401k), obtaining a higher degree or certification, or investing in a small business.

6. Be a successful entrepreneur and best-selling author of numerous works. I want to be recognized as as a hard worker who put his family and faith first.

The Bottom Line – Long-Term Financial Goals

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Setting long-term financial goals is an important step towards achieving financial stability and building wealth. By defining your values, aspirations, and time horizon, you can create a roadmap that aligns with your priorities and guides your financial decisions.

Remember to monitor your progress, stay motivated, and seek professional advice when needed. With discipline and perseverance, you can achieve your long-term financial goals and secure your financial future.

Here’s your homework

I want you to implement at least one of these strategies for reaching your long-term goals over the next year. When the year is over, write me. Tell me how well the strategy worked out for you. I want you to put your heart and soul into one or more of these strategies.

Why? I want you to see success.

Make it hap’n, cap’n!

FAQs – Long-Term Financial Goals

How do I balance saving for long-term goals with short-term needs?

It’s important to strike a balance between saving for your long-term financial goals and meeting your short-term needs. You can achieve this by creating a budget that allocates some of your income towards both short-term and long-term goals.

This way, you can address your immediate financial needs while also making progress towards your long-term goals.

How can I stay motivated to achieve my long-term financial goals?

Staying motivated to achieve your long-term financial goals can be challenging, especially if your goals are several years away.

One way to stay motivated is to break your long-term goals into smaller, manageable milestones. Celebrate each milestone as you reach it, and use the progress you’ve made as motivation to keep going.

How do I know if I’m on track to achieve my long-term financial goals?

Regularly monitoring your progress towards your long-term financial goals is essential to staying on track.

You can use financial planning tools and software to track your progress and adjust your plan as needed. You can also work with a financial advisor or planner to evaluate your progress and make any necessary adjustments to your plan.

Can I adjust my long-term financial goals as my situation changes?

Yes, it’s important to be flexible and adjust your long-term financial goals as your situation changes. Life is unpredictable, and unexpected events can impact your financial situation. Review your financial plan regularly and adjust it as needed to ensure that it aligns with your current situation and goals.

Need some more long-term goals? Check out The Top 10 Good Financial Goals That Everyone Should Have. If you’re a baby boomer, check out 5 Financial Goals for Baby Boomers.

Source: goodfinancialcents.com

Apache is functioning normally

May 24, 2023 by Brett Tams

Long-term financial goals are an essential part of financial planning. They help you define your aspirations and create a roadmap for achieving them.

Long-term goals aren’t easy to achieve. But why?

Could it be that motivation wanes over time? Perhaps external circumstances change. Maybe it has to do with the feasibility of the goals.

Many people have trouble sticking to something over the course of a single year let alone several years or decades.

Perhaps that’s why long-term goals – like most financial goals – are so difficult to achieve.

How do we fight against whatever it is that holds us back from achieving these financial goals? Is it possible to win?

Yes. It is.

Today I’d like to share with you some ways you can achieve your long-term financial goals. I won’t claim it will be easy, but it will be worthwhile.

So whether you need to pay off debt, build an emergency fund, save for your kids’ college education, or invest for retirement, here are some ways you can make it hap’n, cap’n.

Why Long-Term Financial Goals Are Important

Long-term financial goals provide direction and motivation for your financial decisions. By defining your long-term goals, you will have a clear picture of what you want to achieve and what steps you need to take to get there. Setting long-term financial goals can help you:

Stay focused on your priorities: Setting long-term financial goals will help you prioritize your financial decisions and avoid getting distracted by short-term financial needs or impulses.
Achieve financial stability: Long-term financial goals can help you create a safety net, build wealth, and prepare for unexpected events such as medical emergencies or job loss.
Enjoy the benefits of compound interest: Investing in long-term goals, such as retirement or education, can help you take advantage of the power of compound interest and grow your wealth over time.

1. Capture your long-term goals in your to-do list.

Long-term goals of the financial sort are usually more like projects than individual tasks.

For example, if you want to pay off your debt, chances are that you don’t just have one credit card to pay off – you might have three credit cards, a vehicle loan, and a student loan to overcome (if not more).

“Pay off debt” would be the project. “Pay off Visa #1” would be the task.

The truth is that without writing down your projects and tasks within a task management system of some type, you’re much less likely to accomplish your long-term goals.

There’s just something about seeing your long-term goals on paper (or on a screen) that makes them real. The very act of writing them down is a type of commitment.

Give it a whirl. Write down your long-term financial goals and review them on a regular basis.

2. Don’t bury your long-term goals.

It’s not enough to write down your long-term financial goals. Additionally, you need to make them readily available to your eye.

One idea that I’ve found works well is to write down your goals on a whiteboard where you can’t help but see them. But that’s not for everybody.

The point is that you need to find a way to see your long-term goals in the context of all your other goals (namely, your short-term goals). If only your short-term, urgent goals are displayed for you to see, you’ll tend to focus on those instead of kicking butt on your long-term goals.

Don’t bury your long-term goals. They’re important too!

3. Dedicate certain days of the week to long-term goals.

One helpful tip I derived from Strategic Coach was to dedicate certain days of the week to certain goals. This has proved to be very helpful in my own life, and I believe it will in yours, too.

For example, you could dedicate a certain day of the week to managing your finances and brainstorming ways to improve your financial future. Perhaps you have a day off of work that would work best for you.

Now, I can hear you saying, “Oh Jeff, if I only had a day for such tasks – I’m way too busy with other stuff!” That’s fair.

But here’s the thing, you don’t just have to make this day about finances – you can make it about your other long-term goals too. Add in health, family, and other areas of responsibility. Consider this day (or these days) of the week to be all about bettering yourself and your life. Can’t you make time for that?

4. Prioritize your long-term goals properly.

When it comes to long-term financial goals, you need to properly prioritize them. There are some preliminary goals that should only take you less than a month, like setting up a budget and cutting expenses, but we’ll leave that for another article.

What are some common long-term financial goals and in which order should you complete them? Generally, I recommend you complete the following long-term financial goals in the order they are displayed below:

Build Your Emergency Fund

Think of your emergency fund as the foundation of your financial future. Without some liquid money, you’re going to be out of luck when financial disaster strikes. Believe me, they happen.

Your car engine might explode. Your kneecap might explode (ouch). Your water heater might explode. There are so many things that can explode . . . and it’s not easy to just walk away from those explosions while keeping your cool. It’s stressful!

But you know what would make those situations a little less stressful? You guessed it: an emergency fund baby!

Wipe Out Your Debt

Once you have your foundation in place, it’s time to knock out that debt. This can take several years or a few months – it depends on how much debt you have and how quickly you can shovel money at it.

Write down all of your debts and attack them one by one. It’s easier that way.

Start Investing for Retirement

Now it’s time to start investing for your latter years. Why? It’s possible that your earning potential can go down when you’re physically unable to work. Who knows, you might have a self-sustaining business upon reaching retirement age, but don’t count on it. Invest for the future!

Helping people retire well is what I do.

Start Saving for Other Long-Term Goals

This might include saving for your kids’ college education, purchasing a new vehicle, saving for a home renovation, or another goal that will take some time.

By prioritizing your long-term goals in the proper way, you can ensure that should you experience a slump in income, you aren’t wiped out due to a lack of financial planning.

5. Discover and focus on your motivations.

I’m convinced that one of the main reasons people don’t accomplish their long-term goals is because they really haven’t discovered their motivations.

For example, everyone knows it’s a good idea to pay off debt. It’s a financial goal that’s been embedded in our minds by countless financial advisors. But unless you discover your motivation for paying off debt, chances are you’ll give up before you achieve your goal.

In fact, if you’re paying off debt for the sake of paying off debt, you might as well give up now. You’re not going to be motivated enough to get the job done.

Instead, focus on some common motivations that can become your motivations. Here are some great reasons why people want to pay off debt:

To not have to pay interest on their purchases
To free up money for vacations
To free up money for investing for retirement
To not have to worry about those bills
To reduce the amount of stress in their lives
To free up the time it takes managing debt to focus on family

These are just a few of the motivations of others. What’s your motivation?

Assign a motivation for every long-term goal you have. Otherwise, you’re just trying to accomplish your long-term goals for the sake of accomplishing them – that’s not a real motivating factor if you ask me!

Long-Term Goal Examples

Long-term financial goals can take many forms, depending on your values, aspirations, and time horizon. Here are some examples of long-term financial goals in the SMART framework:

Example 1: Save for Retirement

Specific: Save $1 million by age 65 for retirement.

Measurable: Save $500 per month in a retirement account.

Achievable: Based on current income and expenses, it is feasible to save $500 per month for retirement.

Relevant: Retirement is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal by age 65.

Example 2: Pay off Debt

Specific: Pay off $30,000 in credit card debt.

Measurable: Pay $500 per month towards credit card debt.

Achievable: Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.

Relevant: Paying off debt is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal within 5 years.

Example 3: Invest in Education

Specific: Save $50,000 for a child’s college education.

Measurable: Save $200 per month in a 529 college savings plan.

Achievable: Based on current income and expenses, it is feasible to save $200 per month for college education.

Relevant: Investing in education is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal in 18 years.

Example 4: Buy a House

Specific: Save $100,000 for a down payment on a house.

Measurable: Save $1,000 per month in a high-yield savings account.

Achievable: Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.

Relevant: Buying a house is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal in 5 years.

Example 5: Start a Business

Specific: Launch a profitable business in the next 5 years.

Measurable: Develop a business plan and secure funding within the next 12 months.

Achievable: Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.

Relevant: Starting a business is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Launch the business within the next 5 years.

Long-Term Goal	Specific	Measurable	Achievable	Relevant	Time-bound
Save for Retirement	Save $1 million by age 65 for retirement.	Save $500 per month in a retirement account.	Based on current income and expenses, it is feasible to save $500 per month for retirement.	Retirement is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal by age 65.
Pay off Debt	Pay off $30,000 in credit card debt.	Pay $500 per month towards credit card debt.	Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.	Paying off debt is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal within 5 years.
Invest in Education	Save $50,000 for a child’s college education.	Save $200 per month in a 529 college savings plan.	Based on current income and expenses, it is feasible to save $200 per month for college education.	Investing in education is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal in 18 years.
Buy a House	Save $100,000 for a down payment on a house.	Save $1,000 per month in a high-yield savings account.	Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.	Buying a house is a long-term financial goal that aligns with personal values and aspirations.	Achieve this goal in 5 years.
Start a Business	Launch a profitable business in the next 5 years.	Develop a business plan and secure funding within the next 12 months.	Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.	Starting a business is a long-term financial goal that aligns with personal values and aspirations.	Launch the business within the next 5 years.