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The mortgage landscape has changed a ton over the past several years.

Mortgage lending guidelines have firmed tremendously since the housing crisis took hold, and mortgage rates have fallen to new all-time lows.

Meanwhile, home prices seem to have bottomed, and decent home price appreciation is in the forecast.

This has created an interesting environment for both prospective and existing homeowners.

Determining Your Homeownership Horizon

  • When to buy real estate and take out a mortgage
  • You need to determine how long you plan to keep the property
  • And in that same sense, the home loan that goes along with it
  • As it will dictate loan choice, paying points, and more

Perhaps one of the biggest changes in thought is that those who take out a mortgage today will keep it for as long as they own their home.

In the past, this wasn’t the case, with mortgage rates very high, and then in a downward trend for many years since.

That allowed existing homeowners to refinance and tap home equity via cash out refinances and HELOCs, while also reducing monthly mortgage payments.

Even recent homeowners were able to refinance just six months or a year after purchasing their homes, thanks to the precipitous drop in interest rates.

[The refinance rule of thumb.]

But that march downward seems to have come to an end, and could in fact reverse course, which will equate to slower prepayment speeds and far fewer refinances.

After all, no one will be keen to lose your super low mortgage rate, even if they do need cash.

It also makes the question of which mortgage to get more difficult. Additionally, one really has to question whether they should buy down their mortgage rate.

Why Homeowners Sell Their Homes

People sell their homes for all types of reasons, and many do so well before their mortgages ever reach maturity.

The most common reason all homeowners move is to obtain a better home, this according to data from the 2017 American Housing Survey (AHS).

It’s also pretty normal to sell a home in order to buy in a better neighborhood, or for a first-time buyer to sell in order to form a household (think more space).

Other reasons include being closer to family, shortening a commute, relocating for a job, reducing housing costs, being forced to move, or simply because of a change in household.

You should consider all these reasons before you decide on a particular type of home loan. It might sway your decision.

Most People Keep Their Homes for Six to 10 Years

  • Prior to the housing crisis the median tenure was around six years
  • Meaning millions of homeowners took out 30-year loans
  • But kept them for a fraction of the time
  • Nowadays tenure is climbing as homeowners hunker down

Take a look at this chart from the National Association of Realtors Profile of Home Buyers and Sellers.

The median tenure for a home seller over the past two decades has been just six years. I guess forever homes are a thing of the past.

As you can see, tenure increased after the mortgage crisis, mainly because underwater mortgagors had no choice but to wait it out.

But many of those who persevered have now listed their homes, just as they are getting their heads above water.

The point I’m trying to make is that very few mortgages are actually held to term, or anywhere close to it.

For one reason or another, mortgages just don’t last that long, despite many being 30-year fixed mortgages.

When looking at this chart, one could reasonably wonder why more homeowners don’t take out short-term adjustable-rate mortgages, such as 5/1 or 7/1 ARMs. The savings would massive.

Both offer lower mortgage rates than their fixed-rate cousins, which would result in a lower monthly payment, less interest paid, and more principal accrued.

Yet most homeowners seem reluctant to go with an ARM, perhaps because it’s difficult to predict the future.

[30-year fixed vs. adjustable-rate mortgage]

Still, the numbers don’t lie – scores of homeowners are on the move in just six short years, whether they hold 30-year fixed mortgages or whatever else.

Will You Keep Your House Longer Now?

  • As you can see from the graph above homeowners are staying put longer
  • Thanks to lower interest rates and high home prices
  • The latest data says homeowners are sticking around for about 10 years on average
  • So that may affect your mortgage decision too

As I noted, the landscape has changed quite a bit. So will the same trend hold true going forward, or will more homeowners choose to stay put for longer?

I’m sure the average homeowner tenure will increase somewhat, but probably not by that many years. There will still be tons of homeowners that sell in a short period of time for a bevy of reasons.

And so homeowners will continue to take out long-term fixed mortgages that don’t do them much good, aside from the peace of mind of knowing their rate won’t change.

More recent data suggests an average holding period of about a decade.

Sure, it’s slightly longer, but since most mortgages come with terms of 30 years, it should still make you question why you’d pay to lock in a rate for triple the time necessary.

Of course, rates on fixed mortgages and ARMs aren’t all that different at the moment, so it’s not a terrible mistake to make, if you can even refer to it a mistake.

Still, you might be able to save some big bucks if you go with a 10/1 ARM as opposed to a 30-year fixed over the course of 120 months, not to mention build equity a bit faster.

Where Homeowners Stay the Longest

  1. El Paso, TX (99 months)
  2. Albuquerque, NM (98 months)
  3. Oxnard, CA (97 months)
  4. Greensboro, NC (97 months)
  5. Philadelphia, PA (96 months)
  6. Cleveland, OH (95 months)
  7. Seattle, WA (94 months)
  8. Baltimore, MD (93 months)
  9. Rochester, NY (93 months)
  10. Jacksonville, FL (92 months)

In the cities listed above, tenure is the longest, per updated data from NAR for 2018. In El Paso, Texas, a full 99 months go by between sales on the average home there.

While it sounds like a long time, it’s still just over eight years. A 7/1 ARM would cover most folks there, and even if the rate adjusted higher for one year once it became adjustable, the savings realized during the first seven years would likely eclipse any payment increase.

Where Homeowners Stay the Shortest

  1. Providence, RI (33 months)
  2. Cape Coral, FL (35 months)
  3. Greenville, SC (36 months)
  4. New Orleans, LA (44 months)
  5. Madison, WI (47 months)
  6. Grand Rapids (51 months)
  7. Knoxville, TN (54 months)
  8. Boston (57 months)
  9. Omaha, NE (66 months)
  10. Augusta, GA (66 months)

As you can see, lots of homeowners in the cities above could benefit from the short-term financing afforded with an ARM. In most cases, a 5/1 ARM would mean a fixed rate during their entire stay.

What’s even more worrisome is that some homeowners are paying to refinance, or paying mortgage points at closing to obtain a lower rate.

Unfortunately, many of these homeowners won’t hold their mortgages long enough to benefit from the future savings. So use a refinance calculator if you’re thinking about doing this.

After all, the trend to sell in 10 years or less is one that will be hard to shake, even in light of the unprecedented situation we find ourselves in today.

Still, you should definitely ponder the fact that the mortgage rate you receive today will likely be the lowest you’ll ever have – that may sway your decision to part with it so soon.

Read more: Are mortgage points worth it?

(photo: robstephaustralia)

Source: thetruthaboutmortgage.com

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Good News for Real Estate Agents

The Mortgage Bankers Association (MBA) expects home purchase lending to hit $1.1 trillion next year, per their latest economic forecast released this week.

That would mark an 11% increase from this year’s estimate and be the highest total since before the housing market took a turn for the worse nearly a decade ago.

While things have largely turned around since then, inventory constraints continue to hamper home sales.

Many first-time buyers are locked out of the market thanks to rising home prices and move-up buyers can’t move up because they lack the necessary equity and/or can’t find another home due to those inventory issues. That means fewer entry-level homes and essentially a logjam.

Meanwhile, home builders have yet to fill the void left by fewer distressed sales such as short sales and foreclosures that dominated the housing market in recent years.

Still, the MBA expects 2017 to be a banner year thanks to strong household formation, job growth, higher wages, and ongoing home price appreciation.

Perhaps next year will the year of “not wanting to miss out,” coupled with the fear of not getting a rock bottom mortgage rate before they finally rise. We shall see.

Purchase origination volume is expected to hit $990 billion this year, up from $903 billion in 2015.

It is expected to rise to $1.18 trillion in 2018 and $1.25 trillion in 2019.

Total Mortgage Volume Will Actually Fall

Unfortunately, the uptick in purchase activity will be more than offset by an intense drop in refinance activity over the next several years.

Total mortgage volume is actually forecast to peak this year at $1.89 trillion before falling to $1.63 trillion in 2017 and $1.59 trillion in 2018. It is slated to rise a bit in 2019, but remain below current levels.

You can thank flagging refinance volume for that, which is on pace for $901 billion this year but just $529 billion next year. That’s a 40% drop!

Seems extreme, but the refinance pool is getting smaller and smaller because most folks already have a super low rate.

That figure is only predicted to go lower in coming years, with $410 billion the expectation in 2018 and $395 billion a year later.

Maybe cash-out refinancing can change things if borrowers begin tapping their equity…

Perhaps this explains the timely launch of Motto Mortgage, which aims to pair mortgage brokers with real estate agents nationwide.

It’s a smart play to get their hands on all that anticipated purchase business instead of focusing on declining refinance volume.

In case you were wondering, the MBA expects 30-year fixed mortgage rates to rise from 3.6% this year to 4.2% next year.

A year later, the 30-year might be pricing closer to 4.6%, before jumping to 5.4% in 2019. Ouch!

Of course, the forecasts for rising interest rates have been wrong year after year lately, so it’s not a foregone conclusion. At the same time, they’ve got to increase eventually, right?

If you’re concerned that might drive home prices lower, it’s not necessarily true. There’s no clear correlation between interest rates and home prices.

The economy is what matters, and if all is good there, real estate should fare well too, even if rates are a lot higher.

Source: thetruthaboutmortgage.com

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Typically, most people automatically assume they should roll over their old 401(k) into a traditional IRA. However, a lot of people have been asking about another option lately – and that’s whether you can roll your 401(k) over into a Roth IRA instead.

Fortunately, the definitive answer is “yes.” You can roll your existing 401(k) into a Roth IRA instead of a traditional IRA. Choosing to do so just adds a few additional steps to the process.

Whenever you leave your job, you have a decision to make with your 401k plan. Most people don’t want to let an old 401(k) sit idle with an old employer, and could benefit immensely by moving those funds somewhere that could benefit them more in the long run. Let’s see if I can help you make “cents” of the situation.

But first, let’s look at the rules behind the strategy of rolling over your 401k into a Roth IRA.

Table of Contents

Need to open a Roth IRA?

My favorite online broker is Ally Invest but you can check out our recap on the best places to open a Roth IRA and the best online stock broker sign-up bonuses. There are many good options out there, but I have had the best overall experience with Ally Invest. No matter which option you choose the most important thing with any investment is to get started.

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Roth IRA Rollover Rules From 401k

As a reminder, you must generally be separated from your employer to roll your 401k into a Roth IRA. However, some employers do permit an in-service rollover, where you can do the rollover while still employed. It’s permitted by the IRS, but not all employers participate.

Before January 1, 2008, you weren’t able to roll your 401(k) into a Roth IRA directly at all.  If you wanted to do so you had to complete a two-step process.  (Keep in mind that this would also apply to old Simple IRA’s, SEP IRA’s and 403b’s, 457, and qualified pensions, too)

  1. Open a Traditional IRA.

  2. Convert the Traditional IRA to a Roth IRA.

However, the law changed shortly after and this option became available. Still, just because the law has made this option available doesn’t mean you can definitely roll your old 401(k) into a Roth IRA no matter what.  Unfortunately, it all depends on your plan administrator.

For example, recently I had two clients who intended to roll their old retirement plans into a Roth IRA.

One client had an old military retirement plan- Thrift Savings Plan (TSP) – and the other had an old state retirement plan.  After helping each of them complete the required paperwork, I came across an interesting discovery.

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The TSP rollover paperwork had a box you could mark if you wanted to roll over the plan into a Roth IRA (the instructions had been added to make sure you had a Roth IRA already established).  However, the state retirement plan did not give that option.

The only option was to open a traditional IRA to accept the rollover and then immediately convert it to a Roth IRA.  That certainly seemed like a hassle at the time, and it definitely was.

However, this man’s state retirement plan is not the only one I’ve encountered with these extra “rules.”  Many 401(k)’s and 403(b)’s come with the same “No-Roth IRA Rollover” option.  This option was supposed to be mandatory in 2010, but some still do it on a voluntary basis.

At the end of the day, this means you should explore this option thoroughly before automatically assuming it would work in your case. Ask questions, consult your financial advisor, and read through all of your rollover paperwork carefully before you begin moving in this direction.

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Recap on Roth IRA Conversion Rule

These days, nearly anyone can take all of their traditional IRAs and old retirement plans and convert them to a Roth IRA.  The amount you convert will be taxed, but it still can be an attractive move for those that feel that taxes are going nowhere but up.

How Do I Rollover if I Receive the Check?

If you receive a distribution check from your 401(k) rollover to a Roth IRA, then chances are good they will hold around 20% for taxes. If you want a direct 401(k) rollover to a Roth IRA, you may want to send that check back to your employer 401(k) provider and ask to be sent all of your eligible retirement distribution directly to your new Rollover IRA account (not as a check, or they will just give you 80% again).

You have 60 days upon receiving the check to get the money into the Roth IRA- no exceptions!  So don’t procrastinate on this one.

What About the Roth 401k?

If your employer offers a Roth 401k and you were savvy enough to take part, the path to a rollover will be much easier.  When you’re converting one Roth product to another, there is simply no need for conversion.  You would simply roll the Roth 401(k) directly into the Roth IRA with the help of your plan provider.

Roll Your 401(k) by Following These Steps

  1. You have to have a Roth IRA open/established before you can do any of this.
  2. Ask your plan provider about the paperwork required to roll your plan over, then complete the paperwork in a timely manner.
  3. Enjoy the tax-free growth of your Roth IRA!

4 Signs It Makes Sense to Roll Your 401(k) into a Roth IRA

If you’re thinking of rolling your 401(k) into a Roth IRA instead of a traditional IRA, you have plenty of reasons to do so. Not only do Roth IRAs let you invest your dollars in the same investments as traditional IRAs, but they offer additional perks that can help you save money down the line. Here are four signs that a Roth IRA might actually be your best bet.

1. You expect to pay higher taxes in the future.

Since Roth IRAs use after-tax dollars, you’ll have to pay taxes upfront on any funds you roll over. However, you won’t have to pay taxes on your distributions, which could be extremely beneficial if you’re taxed at a higher rate when you reach retirement. You’ll pay taxes either way – now or later. But with a Roth IRA, you can rest assured your withdrawals will be tax-free.

2. You want to take withdrawals when you’re ready, and not a minute before.

While traditional IRAs force you to begin taking withdrawals at age 70 ½, Roth IRAs do not have this stipulation. Because of this, you can squirrel your Roth IRA funds away until you’re ready to use them.

3. You expect to earn more money in the future.

If you plan to earn lots of money in the future – or earn a high income now – you should consider rolling your funds into a Roth IRA instead of a traditional IRA. For single filers in 2023, the maximum income allowable for contributions to a Roth IRA starts at $138,000 and ends at $153,000. Learn more about Roth IRA rules and contribution limits here.

For married filers, on the other hand, the ability to contribute to a Roth IRA begins phasing out at $218,000 and halts completely at $228,000 for 2023. The more you earn in the future, the harder it will become to contribute to a Roth IRA and secure the benefits that come with it.

4. You want to increase your tax diversification.

Contributions to traditional IRAs are tax-advantaged, meaning you won’t pay taxes on your invested funds until you begin taking withdrawals at retirement. Roth IRAs, on the other hand, are taxed up front but offer tax-free withdrawals after age 59 ½.

If you’re unsure how your tax and income situation might pan out in the future, having both types of accounts – a traditional IRA and a Roth IRA – is a smart move in terms of diversifying your future tax exposure.

401k to Roth IRA Rollover Rules Details
Eligibility You can roll over a 401k to a Roth IRA if you have left the employer sponsoring the 401k and are no longer contributing to the plan. Some plans also allow in-service rollovers, but it’s best to check with your plan administrator for details.
Taxes When you roll over a 401k to a Roth IRA, you will owe income taxes on the amount you convert. This is because contributions to a 401k are made with pre-tax dollars, while contributions to a Roth IRA are made with after-tax dollars.
Conversion Limitations There is no limit on the amount you can convert from a 401k to a Roth IRA. However, the amount you convert will be added to your taxable income for the year in which you make the conversion, which could have tax implications.
Timing You can convert a 401k to a Roth IRA at any time, but it’s important to consider the timing of the conversion carefully. If you convert when your income is higher, you will owe more in taxes.
Penalty-Free If you are 59 ½ or older, you can convert a 401k to a Roth IRA penalty-free. If you are younger than 59 ½, you may be subject to a 10% early withdrawal penalty on the amount you convert.

The Bottom Line – Rolling Over 401k into a Roth IRA

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Rolling your 401(k) into a Roth IRA is a smart decision for many investors, but it may not be right for everyone.

Some financial advisors may suggest rolling over your 401k into a Roth IRA to take advantage of the tax-free growth the account offers. While this can be a great option for some, it’s important to consider if you’ll be able to afford to pay the taxes on your contributions and earnings when you eventually withdraw them.

Before you pull the trigger, make sure to investigate all of your options and consider speaking with a tax professional. When it comes to complex investment vehicles and taxes, what you don’t know can hurt you

FAQs on Rollover 401k to Roth IRA

Can you roll over 401k to Roth IRA without penalty?

Yes, you can roll over funds from a 401(k) to a Roth IRA without incurring any penalties, but there are some important rules and restrictions to be aware of.

First, you’ll need to meet the eligibility requirements for a Roth IRA, which include having earned income and not exceeding certain income limits. If you’re eligible, you can roll over funds from your 401(k) to a Roth IRA by asking your 401(k) plan administrator to transfer the funds directly to your Roth IRA account. This is known as a “direct rollover” and it allows you to avoid paying any taxes or penalties on the funds.

However, there are limits on how much you can contribute to a Roth IRA each year, and there may be tax consequences if you exceed those limits. It’s important to consult with a financial advisor or tax professional before making any decisions about rolling over funds from a 401(k) to a Roth IRA. They can help you understand the rules and restrictions and determine if a rollover is the right move for your financial situation.

What are the disadvantages of rolling over a 401k to a Roth IRA?

There are a few potential disadvantages to rolling over funds from a 401(k) to a Roth IRA. These include:

1. Tax implications: When you roll over funds from a 401(k) to a Roth IRA, you’ll have to pay taxes on the amount you roll over. This can be a disadvantage if you’re in a high tax bracket and don’t have other funds available to pay the taxes.

2. Loss of employer matching: If your employer offers matching contributions to your 401(k), you’ll lose out on those contributions if you roll over your funds to a Roth IRA.

3. Loss of certain benefits: 401(k) plans may offer certain benefits, such as loan provisions and hardship withdrawals, that are not available with a Roth IRA. If you roll over your funds to a Roth IRA, you’ll lose access to these benefits.

Overall, rolling over funds from a 401(k) to a Roth IRA can be a good move for some people, but it’s important to carefully consider the potential disadvantages and consult with a financial advisor before making any decisions.

What is the tax penalty for rolling 401k to Roth IRA?

If you roll over funds from a 401(k) to a Roth IRA, you’ll have to pay taxes on the amount you roll over. This is because funds in a 401(k) are pre-tax, meaning you don’t have to pay taxes on them until you withdraw the funds. When you roll over the funds to a Roth IRA, you’re essentially withdrawing the funds and then depositing them into the Roth IRA, so you’ll have to claim that amount of reportable income.

Since you’re “rolling over” and not taking a distribution you won’t have to pay the 10% early withdrawal penalty if you’re under the age 59 1/2. If you do choose to this be prepared to pay the taxes on the rollover out of pocket. Otherwise if you use your 401k money to pay the taxes you will be penalized on that amount.

What is the Roth five year rule?

The Roth 5 year rule is a requirement for certain tax-free withdrawals from a Roth IRA. In order for a withdrawal from a Roth IRA to be tax-free, the account must have been open for at least 5 years and the withdrawal must be made after the age of 59 1/2. If these conditions are not met, the withdrawal may be subject to taxes and penalties.

The Roth 5 year rule applies to both contributions and earnings in a Roth IRA. For example, if you make a contribution to a Roth IRA and then withdraw it within 5 years, the withdrawal will be subject to taxes and penalties unless it meets one of the exceptions to the rule. The same is true for earnings on your contributions – if you withdraw earnings from a Roth IRA within 5 years, they will be subject to taxes and penalties unless an exception applies.

There are a few exceptions to the Roth 5 year rule, including:

-Withdrawals made to pay for qualified higher education expenses
-Withdrawals made to pay for qualified first-time homebuyer expenses
-Withdrawals made due to the account holder’s disability
-Withdrawals made by a beneficiary of the account after the account holder’s death

It’s important to understand the Roth 5 year rule and the exceptions to it before making any withdrawals from a Roth IRA. If you’re not sure whether a withdrawal will be subject to taxes and penalties, it’s a good idea to consult with a tax professional.

Source: goodfinancialcents.com

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

In the last decade, the idea of sharing — and monetizing — the things you’re not using has gained traction at lightning speed, and that’s thanks in large part to technology. It seems like everyone has some sort of side-hustle these days. Have an empty guest room? Airbnb can help you rent it out. Got a car and a few extra hours on the weekend? Uber and Lyft are happy to match you up with a rider.  

When you combine this rise in new money-making opportunities with the fact that the average car spends 95 percent of its life sitting in a parking spot, it’s not surprising that app-based marketplaces like Getaround and Turo have cropped up to offer car owners a new way to make a few dollars on the side. These services are referred to as peer-to-peer (P2P) car-sharing, and they’re posing some serious competition to the traditional car rental model.  

If you’re looking to take full advantage of the sharing economy by listing your car on a rental marketplace, there are a few things you should think about first. 

How Do I Choose a Marketplace? 

Some P2P apps advertise that listing your car could earn you up to $10,000 a year. Others say you can make $1,000 per month. So how do you decide which marketplace you should list your car in, and how do you sign up? 

First, you’ll need to figure out which services operate in your area — currently, the biggest P2P marketplaces are concentrated in major urban centers. Then, simply go online and enter your vehicle details and personal info to get an estimated hourly rental rate for your vehicle.  

Rates vary depending on the age, make and model of your car, so check around to see who will pay you the most for renting out your ride. Keep in mind that some services also adjust rates on a daily basis (similar to a rental car agency), so the amount you make may depend on when your vehicle is available. 

Finally, you should consider how much insurance each provider offers to protect your vehicle in case a renter has an accident — which brings us to our next point.  

How Does Insurance Work? 

Most of the well-known P2P car rental marketplaces include varying levels of insurance to protect your car and your liability when your car is rented out. Before you list your car on one of these services, do your research to find out which one provides the best coverage.   

Keep in mind that your personal car insurance policy will not provide any coverage while your car is being rented out. That means they won’t pay for any injuries or damage the renters cause, whether to your car or anyone else. What’s more, if your car is parked and waiting for a renter to pick it up, your personal coverage may not cover you if someone hits it, or if it’s stolen.  

Even more importantly, before you go all in on P2P marketplace rentals, you should check with your current insurer to see whether doing so will affect your existing policy. They may have concerns that the extra wear and tear on your car could increase your accident risk, or that your P2P insurance may not provide sufficient coverage and you may seek coverage from them. There are many factors that could affect your level of risk, so checking with your insurer before listing your car is a must.  

Who Pays for Gas? 

This one’s actually a little less complicated. If you aren’t driving, you shouldn’t be paying for gas. Typically, the renter is responsible for returning the car to you at the same fuel level they drove away with. But pro tip: If you fill it up to the top before they rent, it’s a little easier to tell if they did their part.  

Before someone rents your car, be sure to take a photo of your fuel gauge. That way, if they return your car without replacing your gas, you’ll be able to file a dispute with the sharing service, who will typically charge the renter a fee for the gas (and the inconvenience). 

Can I Control Who I Rent to? 

As the owner, who you rent your car to is your choice. The most popular apps will allow the renter to put in a request for a date, time and duration that they’d like to rent your car. Then it’s up to you whether you’d like to rent to them or not. You don’t have to rent to anyone you don’t want to.  

The moral of the story is, if you have a car that spends most of its time sitting in your garage or parked in front of your office, putting it to work for you could help you make a little extra income on the side … and who doesn’t like that? Just make sure to do some research beforehand so you’re not met with any surprises.  

Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the industry. He writes on all things car insurance, including what to know before signing up for a car-sharing service. Learn more about auo insurance from Esurance at Esurance.com. 

 

This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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Home security is an issue that everyone needs to take seriously. Unfortunately, many people may be inadvertently overlooking some aspects that may not seem like much, but that can end up putting the security of their homes and families at risk.

Here are ten common home security mistakes that can be easily corrected.

Hiding spare keys outside

It is convenient to have a spare key hidden outside just in case you get locked out of your home. It’s also easy for intruders to find them.

If you must hide a spare key outside of your home, you should never put it in an obvious place. Don’t hide it under the mat or above a light fixture, or any other element that might stand out.

Having large foliage right next to your home

By having large foliage right next to your home, you could be creating a place for intruders to disguise themselves.

They can easily hide inside of a bush or behind a tree. If you must have foliage right next to your home, you should choose items that are small in size and aren’t very dense.

Not having proper lights

It’s all too easy for intruders to hide in the dark. You can easily solve this by having an adequate amount of lighting outside of your home.

Don’t forget to put your lighting system on a timer as well. This will allow your lights to automatically come on even when you are not at home.

Installing privacy fences

Many of us like our privacy. However, a privacy fence can put you in danger. These types of fences can make it all too easy for thieves to hide, and it can be difficult for a neighbor to spot an unauthorized person on your property. If you have a privacy fence, intruders can break into your home without anyone even seeing it.

Keeping valuables in plain sight

You could be inadvertently encouraging a thief to break into your home by having your valuables in plain sight.

Be mindful about leaving your blinds and curtains open. If you do plan on having them open to let in some natural light, you need to make sure things like jewelry and money aren’t in plain sight.

Not using your alarm system

A good home alarm or wireless security system is great for keeping intruders out of your home. However, you may not be using it like you should be.

Many homeowners forget to set their alarm. It really can’t do its job if it isn’t armed. Even if you have a sign in your yard that lets others know that you have an alarm, it won’t do much good if you never use the actual alarm system itself.

Posting too much personal information on social media

We all want to let our friends know when we go on vacation or have a fun evening out.

However, you could also be letting others know that your house will be empty for an extended period of time.

So it’s always better to post those vacation photos once your trip is over, whenever possible.

Letting your mail pile up

Many people don’t realize that their mail is one of the most common ways for intruders to find out when a home is empty. They will look in your mailbox to see if your mail has piled up for several days, and know to time their actions accordingly.

If you will be going out of town, have your mail service temporarily suspended. You can also ask a trusted neighbor to collect it for you while you are gone. 

Putting the packaging of expensive items by the trash can

If you put packaging from an expensive item like a laptop or tablet by your trash cans, you will be letting thieves know that you just purchased these items.

Instead of doing this, you should cut up the packaging so that it fits into your trash can or recycling bin. This will allow you to still throw away the packaging in a way where you won’t be announcing to everyone that you just bought an expensive item.

Not locking your doors in the daytime

Burglaries don’t just happen at night. It’s actually very common for them to occur during the day as well.

In fact, many burglars target homes only during the day. This is because they assume that occupants are at school or work.

Don’t leave your doors unlocked when you aren’t at home. Even just a quick trip to the store can put your home at risk. You need to lock your doors no matter what time of day it is.

Don’t forget to check your windows as well. You’d be surprised at how easily an intruder can find their way into a home, even if it’s through a second-story window that you failed to lock.

In conclusion, many homes aren’t as secure as they can be. Many individuals are putting themselves at risk by making the security mistakes mentioned above. Fortunately, all of these mistakes can be avoided. By being mindful about security at all times, you can easily keep your home secure and keep intruders out. 

More tips for homeowners

How To Set Up a Killer Smoking Room at Home
The Kid-Friendly Home: Creating A Safe Haven For Your Little Explorers

Source: fancypantshomes.com

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Robinhood vs. Fidelity vs. Vanguard – SmartAsset

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With Fidelity and Vanguard, investors can access traditional, full-service investment platforms that allow you to individually manage your own account. Robinhood, by comparison, offers a very different experience geared towards mobile users. Here’s how they stack up. If you prefer hands-on investing advice, a financial advisor could help you create a financial plan for your investment goals.

Overview: Robinhood vs. Fidelity vs. Vanguard

Fidelity and Vanguard both offer standard, full-service platforms that support most mainstream financial products. They are individual trading platforms, meaning that you trade your own assets and manage your own portfolio. Fidelity tends to distinguish itself through its advisor services. With a brand that has long centered around its retail financial advisories, this platform offers particularly strong educational and advisor resources.

Vanguard, on the other hand, has long been associated with the firm’s mutual funds. It continues to build its identity around these long-term assets, offering more no-fee funds than most competitors and charging low fees for funds not on that list.

Robinhood offers an distinctly different product that is designed primarily for mobile and online trading users. Investors using the platform should be self-sufficient and tech savvy, since users will get limited information about financial products.

Fees: Robinhood vs. Fidelity vs. Vanguard

All three of these brokerages offer no-fee trading and require no minimum balances. This means that you don’t pay anything to sign up, don’t have to carry any amount of money in your account and can trade most of the platform’s assets for free.

Robinhood

Robinhood, on the other hand, charges nothing for most of its services. There are no fees or commissions on each trade. Nor does Robinhood charge inactivity fees or other transaction fees for the most common activities such as depositing or withdrawing money. The main fee that Robinhood charges is $5 per month to subscribe to Robinhood Gold, which allows margin trading at 7.5% interest rate and – as of April 2023 – 4.4% APY on idle cash.

Fidelity

Fidelity lets customers trade stocks, ETFs and bonds free of charge. There are several thousand no-fee mutual funds. Fidelity charges $49.95 to trade funds that aren’t on its no-fee list. Options trading costs $0.65 per contract. There is a zero expense ratio for four Fidelity funds. The Depository Foreign Trust Company foreign settlement fee is $50 per trade.

Vanguard

When trading Vanguard mutual funds and ETFs, you won’t face any commission fees on those trades. You also avoid commission charges on 1,800 non-Vanguard ETFs and mutual funds when you buy online. Trading individual stocks on Vanguard, which charges a $20 annual account service, will cost you $7 per trade. Minimum balances for mutual funds range from $1,000 to $100,000. The firm recently lowered the minimum investment on many low-cost Admiral Shares index mutual funds, from $10,000 to $3,000.

Services & Features: Robinhood vs. Fidelity vs. Vanguard

Fidelity and Vanguard both offer broadly similar products when it comes to services and features. These are, as noted above, full-service trading platforms. This means that you manage your own account and can personally buy and sell most mainstream financial products.

Both of these platforms support stocks, ETFs, bonds, mutual funds and options contracts, and neither allows you to trade futures contracts or forex. Both also provide a full suite of technical indicators, ranging from basic information like pricing and volatility indicators to more complex data sets. This makes either platform generally a good choice for long-term investors and short-term traders. However, neither offer some of the more specialized features, like high-speed transactions, that active day traders prefer.

Vanguard distinguishes itself somewhat for wealthier and passive investors. It offers better prices on both mutual funds and options contracts to investors who have at least $1 million invested in their Vanguard account, and it has a better selection of mutual funds for investors to choose from. Most investors won’t find much advantage in a large selection of mutual funds, since the average investor will only pursue a small number of funds that meet their personal risk criteria anyway. However, sophisticated investors may prefer this kind of selection.

Fidelity distinguishes itself with its education and advising services. The brokerage offers an impressive array of educational materials for new investors, and that’s particularly useful when it comes to understanding complex products and the range of technical data you can access. Relatively new investors will find this useful.

Robinhood, on the other hand, is focused around its app experience and the company’s design philosophy is to allow people to trade stocks at great convenience. They have achieved this, building an app that lets you buy and sell stocks and options contracts with a swipe.

You should note, however, that Robinhood offers very few tools for understanding your investments. Their technical data is minimal, with little more than basic information about pricing and trading history. This makes Robinhood far more accessible than any other trading platform, but investors should be self-sufficient in researching investments and the risks that come with trading equities and options.

Online & Mobile: Robinhood vs. Fidelity vs. Vanguard

Fidelity and Vanguard are both clearly designed for their website experience.

This is common among full-service trading platforms. Making investments requires a lot of data, and sophisticated investors will want even more. This can simply require a lot of screen space.

In that regard, both services are solid choices for an investor. Both have well designed interfaces that allow you to access your portfolio at a glance, and which let you find both financial assets and technical information relatively easily. As with their services and features, Vanguard’s site is a little more complex than Fidelity’s and will generally serve more sophisticated investors better, while new investors will generally prefer Fidelity’s web experience.

Both have apps that are generally well regarded as companions to the platform’s full-service web experience. The Fidelity app has high ratings on the Apple App Store (4.8 rating) and Google Play (4.2 rating). The Vanguard app also has a high rating on the Apple App Store (4.7 rating) but only a 2.0 rating on Google Play.

However, with both platforms, the apps do not offer the complete range of data and technical indicators that you can get through the web platform, and they are best considered useful add-ons for checking your portfolio.

Robinhood has the opposite design philosophy, with a 4.2 rating on the Apple App Store and a 3.9 rating on Google Play. This trading platform has a sleek, minimalist approach that works extremely well for users to access their portfolios quickly, and find and trade assets with ease. The platform also has a website-based interface, but it sacrifices much of the app’s clean design.

Which Should You Use? Robinhood vs. Fidelity vs. Vanguard

Both Fidelity and Vanguard are good choices for individual investors who want to manage their own portfolios. If you have a relationship with either company, you would be well served by using their platform.

Otherwise, new investors may find a small advantage with Fidelity because of the company’s generally excellent educational materials and access to the network of Fidelity financial advisors. Sophisticated investors may prefer Vanguard, as they will be better able to take advantage of the small, but important, differences among the platform’s many mutual funds.

Investors who are tech savvy and self-sufficient to research opportunities and risks for their investments could benefit from the convenience of Robinhood.

Bottom Line

Vanguard and Fidelity are full-service platforms that allow you to trade most mainstream financial assets. While they are largely comparable in terms of price and features, Vanguard has a slight edge for more sophisticated investors and Fidelity may be more useful for newcomers who are still learning about the market. Robinhood, on the other hand, offers a sleek, minimalist experience that requires investors to be more knowledgable about investments.

Tips for Investing

  • A financial advisor can help you develop an investment strategy that works for you. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • It’s important to know where your investments will stand over time. SmartAsset’s free investment calculator can help you get an estimate to keep your goals on track.

Photo credit: ©iStock.com/PRASANNAPiX, ©iStock.com/AleksandarGeorgiev, ©iStock.com/SDI Productions

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

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Let’s say you want to build your own stock market index fund based on the S&P 500. Easy: download a list of all the companies in the index (from 3M to Zions Bancorp) and their market cap, and start investing. Every stock in the index will be easy to buy in whatever quantity you want.

Now, after the success of your first index fund, you decide to create an emerging market fund, concentrating on the world’s up-and-coming economies. Again, no problem. We have the internet, after all, and we can just print off a list of all the stocks in China, India, Chile, Hungary, and so on, pull out a pile of Benjamins, and go to town.

That won’t work, says Raman Subramanian, Executive Director of Index Research at MSCI. Subramanian oversees the index underlying the the two largest emerging markets: ETFs, from Vanguard (VWO) and iShares (EEM). “You can go to any of the emerging markets and download the listed stocks there,” says Subramian. “But there can be some potential issues.”

So how do you build an emerging markets index, anyway? And, can it shed any light on how you should invest your money?

Who’s emerging?

The first order of business for Subramanian, or any emerging markets indexer, is to decide which countries count as emerging markets. This is not as easy as it sounds: no two indexes agree on which countries are emerging.

MSCI uses three criteria to classify a country as developed, emerging, or frontier (“frontier” is an euphemism for “not really emerging yet”).

Wealth. A country has to have a GDP per capita above a certain threshold to be considered developed; below that, it’s emerging or frontier.

Market structure. In order to be included in the index, a country has to have an active stock market with many companies listed and few or no limits on foreign ownership.

Accessibility. How easy is it to participate in country’s market? “If you’re a US investor and want to invest in India, how do you go about setting up that account?” says Subramanian. “What are the regulations?” To determine market accessibility, MSCI surveys market participants about their experience.

A wealthy country with market structure or accessibility issues might be classified as “emerging.” MSCI puts Taiwan and South Korea in this category. (They redo the list annually.)

Pick of the list

Now that we have a list of economies to put on our index, we just go out and buy all the stocks, and…. Wait, that won’t work, either, because some stocks are hard to buy. They might be stocks of very small companies or companies closely held by a small number of shareholders, with few shares trading freely. If you include those stocks in your index, it makes it harder to invest in the entire index and drives up the cost of trying.

So MSCI excludes companies that it considers insufficiently “investable.” To be investable, your stock has to trade on at least 4 out of 5 days, and at least 15% of the stock has to trade freely, not be held by controlling interests or otherwise out of circulation.

How much are investors in VWO or EEM missing out on by not owning these companies? Not much. The MSCI index captures almost 98% of the total market cap of the listed countries. “What is excluded is basically very small companies, illiquid companies,” says Subramanian.

In short, emerging markets indexes aren’t easy to build, but they’re constructed on a simple principle: own the most liquid securities in the most accessible markets.

How to beat the index

I became interested in this question of how to build an emerging market index because (a) I am a huge nerd, and (b) recently I interviewed an investment guru who argued that there is great opportunity for active managers to outperform in emerging markets because the markets are inefficient.

That argument doesn’t hold up, because, as I explained, the record of active managers in emerging markets is the same as it is everywhere else: ludicrously bad. Most managers underperform the index; the ones who outperform are an annually rotating cast whose good fortune is mostly indistinguishable from luck.

But learning how the MSCI index is constructed gave me a new idea: couldn’t I start an active fund specializing in those unloved securities that MSCI and the other indexes won’t touch? Small companies, illiquid stocks, frontier markets. Sure, they’re risky. That’s the point: you have to take risks to get higher returns.

Bad idea, says Larry Swedroe, director of research at Buckingham Asset Management and author of the Wise Investing series. “The more inefficient the market is, the higher the trading costs are,” says Swedroe, who has written frequently about active management in emerging markets. “The round-trip in emerging markets is extremely expensive.”

In other words, to pull off my trick, I have to outperform by a margin big enough to cover my costs—the curse of every active manager. Vanguard’s ETF, VWO, charges an expense ratio of 0.2%. I don’t even want to think about what my expenses would be.

Subramanian agrees. “Sometimes active managers will try to capture that illiquidity premium by going into those stocks,” he says. “But then the question becomes, can they sell it?” The big problem is market impact: if my illiquid stocks do well and I try to sell them, I’ll depress the market price, causing a hefty chunk of my gains to vanish.

As for those frontier markets, Swedroe steers clear. “The reason they’re called frontier markets is because generally they don’t have the rule of law and international investors are not well protected,” he says. “If those things are not present, you shouldn’t invest no matter what the risk premium is.”

The bottom line

Costs matter in investing: they compound just as surely as gains, and for this reason, low cost is an excellent predictor of above-average mutual fund performance. If you want to invest in emerging markets, there is no way to do so at low cost other than by using an index fund (or, to be scrupulous, a passive index-like fund such as those from Dimensional Fund Advisors).

Vanguard’s ETF, remember, charges 0.2% annually. Its actively managed competitors tend to charge between 1.5% and 2%. This, more than any arcane argument about market efficiency, is why indexing works in emerging markets: it doesn’t involve throwing away 1.5% of your money every year in pursuit of elusive market-beating strategies.

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.

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