2 Clever Ways to Gift Your Home to Your Kids

Transferring a home to adult children is not quite as easy as giving them the keys and letting them move in. No matter how you do it, the taxman wants his cut, whether through estate and gift taxes or those for property and income, both federal and state.

The most common way to transfer a property is for the kids to inherit it when the parent dies. Some parents will also make an outright gift of the home to their child, who can incur higher property taxes in states that treat the gift as a sale. It’s also possible to finance the child’s purchase of the home or sell the property at a discount, known as a bargain sale.

These last two options might seem like a nice solution, as many adult children struggle to buy a home at today’s soaring prices, but crunch the numbers with an accountant or financial adviser first. These transactions can get complicated fast, says Lawrence Pon, an enrolled agent and a certified public accountant in Redwood City, Calif.

Here’s how they work.

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Bargain Sale

A person does some calculations on a calculator. A person does some calculations on a calculator.

If you sell your home to your child for less than what it’s worth, the IRS considers the difference between the fair market value and the sale price a gift. For example, if you sell a $1 million house to your child for $600,000, that $400,000 discount is deemed a gift. You won’t owe federal gift tax on the $400,000 unless your total lifetime gifts exceed the federal estate and gift tax exemption of $11.7 million in 2021, but you must still file a federal gift tax return on IRS Form 709.

Sounds simple, right? Not exactly. Now, using the same example, consider the federal income tax consequences. Let’s say the parents are married, bought the home years ago and have a $200,000 tax basis in it. When they sell the house at a bargain price to the child, the tax basis gets split proportionately. In this example, 40% of the basis ($80,000) is allocated to the gift and 60% ($120,000) to the sale. To determine the gain or loss from the sale, the sale-allocated tax basis is subtracted from the sale proceeds.

In this example, the parent’s $480,000 gain ($600,000 minus $120,000) is nontaxable because of the home sale exclusion. Homeowners who owned and used their principal residence for at least two of the five years before the sale can exclude up to $250,000 of the gain ($500,000 if married) from their income. Pon suggests maximizing the tax benefit of this exclusion.

The child isn’t taxed on the gift portion, but unlike inherited property, gifted property doesn’t get a stepped-up tax basis. In a bargain sale, the child gets a lower tax basis in the home, in this case $680,000 ($600,000 plus $80,000). If the child were to buy the home at its full $1 million value, the child’s tax basis would be $1 million.

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Parent Financing

A picture of a loan application.A picture of a loan application.

You might also want to consider combining your bargain sale with a loan to your child by issuing an installment note for the sale portion. This helps a child who can’t otherwise get third-party financing. It also lets parents charge lower interest rates than a lender while generating some monthly income.

At today’s low interest rates, parent financing is even more advantageous, says Pon. Make sure the note is written, signed by the parents and child, includes the amounts and dates of monthly payments along with a maturity date, and charges an interest rate that equals or exceeds the IRS’s set interest rate for the month in which the loan is made. That rate was recently 1.85% for long-term loans made in November. It’s worth going through the legal steps of securing the note with the home so that your child can deduct interest payments made to you on Schedule A of Form 1040. Of course, you’ll have to pay tax on the interest income you receive from your child.

To sweeten the deal further, consider making annual gifts by taking advantage of your annual $15,000 per person gift tax exclusion. If you do this, keep the gifts to your child separate from the note payments you receive. As long as you stick to the annual per-person limit, you won’t have to file a gift tax return for these gifts.

Source: kiplinger.com

Early Retirement: How To Protect Your Hidden Retirement Asset

Early retirement has become a hot topic for a lot of workers. Some look at the high balances in their retirement accounts and think, “Maybe I have enough money to retire now.” Others plan to join the FIRE movement (short for “financial independence, retire early”) by leaving their industry before age 50. And yet others are being swept up by the COVID-caused Great Resignation and think it’s time to call it quits.

However, as you’re waltzing out the door of your workplace for the last time, take care not to slam it. Things change, and maybe one day you’ll want to return to the workforce. Maybe you’ll need to return to the workforce. Either way, before retiring it makes sense to take steps to protect your most important, and sometimes hidden, asset: your human capital.

The ability to generate wealth through employment is our human capital. If you are retiring early, you may have significant human capital left; you just have to decide whether you choose to deploy it by going back to work, redirect it by using it for volunteer work, or let it fade away.

There are a number of ways to protect your future income-earning ability without having to actually return to work. Here are some key strategies:

Make an Effort to Stay Current

If you enjoyed the field you worked in, you’ll benefit by keeping up to date even after you leave.

  • Stay current on the issues in your field. Keep your contacts, and don’t let those subscriptions to trade magazines expire just yet.
  • Maintain your centers of influence network. Don’t ignore your LinkedIn account, and be sure to continue attending association functions.
  • Avoid fading into obscurity. Retirement shouldn’t go from “Who’s Who” to “Who’s He?” Keep your name out there.

If you have simply burned out and can afford to retire, fine. But sometime in the future your batteries may recharge, and your retirement might turn out to be more of a sabbatical than a permanent exit. Hedge your bets by staying up to date.   

Maintain Your Licenses

After a time away from your career you may realize you like to work. Don’t let a piece of paper keep you from getting back in the game. There may be expense in maintaining a license, and continuing education requirements can be a nuisance, but keeping your licensing current — at least for a while — is good insurance.

Avoid Non-Compete Agreements

Many an accountant has aged out of their firm, only to realize they can’t get back into the field unless they move away or wait a few years. Non-compete agreements typically restrict an individual’s ability to work within a geographic area or for a period of time. This can particularly happen to employees leaving positions in the tech sector, professions such as accounting, and any job where employers are protective of their trade secrets. However, non-compete agreements are under attack — indeed they are illegal in some states — so you may be able to negotiate better terms for your agreement before you leave.

Your firm’s exit agreement isn’t just paperwork. It may determine your future.

Be Tech Savvy

Many newly minted retirees are dismayed when the reality sets in that there’s no longer a tech-support department to call when having a computer issue. Since you will have spare time as a retiree, it behooves you to stay current on tech issues. Whether you use the Geek Squad or become a DIY techie, you’ll want to avoid being an IT dinosaur. 

You’ll find that you’ll need to stay computer literate so that you can take on the occasional self-employment gig. In fact, working for yourself often requires computer skills you may not have needed when you were an employee. You might even consider looking for a tech-support person to have on-call for the occasional computer hiccup.

Stay Healthy

It’s more than just a platitude to emphasize the importance of good health in retirement. For some retirees, they see that taking care of themselves — being healthy — is their new job. They replace their work routine with activities such as going to the gym, being disciplined about their diet, and building social interaction into their schedules.

Besides making for a happier retirement, staying healthy is the best insurance policy for maintaining your human capital.

Protect Your Options

Sometimes early retirements don’t stick. Either finances or boredom demand that you return to the working world. So don’t just protect your 401(k) and Social Security — protect your human capital. Retirement can last a long time, and so can your earning ability.  

Co-Director, Retirement Income Center, The American College of Financial Services

Steve Parrish, JD, RICP®, CLU®, ChFC®, RHU®, AEP®, is an Adjunct Professor of Advanced Planning and Co-Director of the Retirement Income Center at The American College of Financial Services. His career includes years spent as a financial adviser, attorney and financial service company executive. He focuses on law, estate planning, taxes and financial strategies that can help enable a successful retirement. 

Source: kiplinger.com

What Is the Alternative Minimum Tax (AMT) and Who Has to Pay It?

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Additional Resources

Most people never pay the alternative minimum tax, also known as AMT. In fact, according to the Tax Policy Center, in 2019, only 0.1% of households paid the AMT, and the majority of those had income greater than $1 million.

But when the AMT does come into play, it can be an unwelcome surprise that forces you to pay tax on income you thought was tax-exempt or lose out on tax deductions you thought you could claim.

What Is the Alternative Minimum Tax (AMT)?

As the name suggests, the AMT is another way to calculate your federal income tax bill. If you meet certain criteria, you have to calculate your tax liability twice—once using regular income tax rules and again using AMT rules—and pay whichever amount is higher.

The AMT was introduced in 1969 after Treasury Secretary Joseph Barr reported to Congress that 155 wealthy taxpayers with adjusted gross incomes of more than $200,000 (over $1.4 million in today’s dollars) paid no federal income tax at all.

Rather than eliminating tax deductions, credits, and other loopholes in the tax system that made this situation possible, Congress made tax law even more complex by enacting the AMT.

How the Alternative Minimum Tax Works

Calculating the AMT is complicated. For that reason, if you believe you may have to pay AMT, it’s a good idea to use tax software or work with a qualified tax preparer. But here’s an overview of how it works:

  1. Calculate your taxable income under normal tax rules.
  2. Complete Form 6251, which walks you through the process of adding back certain deductions and tax-exempt income to determine your alternative minimum taxable income (AMTI).
  3. Subtract your AMT exemption amount (found on Form 6251) from your AMTI and apply the AMT tax rate to the result to determine your alternative minimum tax.
  4. If your alternative minimum tax is higher than your regular tax liability, then you have to pay the AMT.

Who Pays AMT

Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), more upper-middle-income households were hit with the AMT. But the TCJA provided higher AMT exemptions and made other changes to the AMT that dramatically reduced its impact. 

As a result, according to estimates from the Tax Policy Center, the number of people who pay AMT fell from more than 5 million in 2017 to just 200,000 in 2018, the first year the changes took effect.

If your income is higher than the AMT exemption amount, you must calculate your tax bill under both the regular and AMT rules and pay the higher amount. 

However, being a high-income taxpayer isn’t the only thing that can trigger AMT. You might have to calculate your AMT tax bill if you have any of the following:

AMT Exemption Amounts

To prevent low- and middle-income taxpayers from getting hit with the AMT, the rules allow taxpayers to exempt some of their income from their alternative minimum taxable income. These exemptions act like a standard deduction for the AMT.

For 2021 and 2022, the AMT exemption amounts are:

Filing Status 2021 AMT Exemption Amount 2022 AMT Exemption Amount
Single and unmarried taxpayers $73,600 $75,900
Married filing jointly and surviving spouses $114,600 $118,100
Married filing separately $57,300 $59,050

However, this exemption phases out if you earn too much income. For the 2021 tax year, that phase-out starts at $523,600 of AMTI for single filers and $1,047,200 for married couples filing a joint return. For every dollar of AMTI over that phase-out threshold, you lose 25 cents of your AMT exemption.

For example, say you’re a single filer with AMTI of $600,000. That puts you $76,400 over the phase-out threshold ($600,000 minus $523,600). You have to reduce your AMT exemption amount by $19,100 ($76,400 times 0.25). So only $54,500 of your income would be exempt from AMTI.

How to Determine Alternative Minimum Tax

Use IRS Form 6251 to determine whether you need to pay AMT and how much you’ll owe. Using the 2021 version of Form 6251:

  1. Line 1. Start with your taxable income using normal IRS rules. You can find this on line 15 of your 2021 Form 6251. If line 15 is zero, subtract the amount on line 14 from line 11 and start with the result.
  2. Line 2a through 3. Add back certain adjustments that reduced your taxable income under normal tax rules. The list of adjustments is long and includes many income and deduction categories that don’t apply to most taxpayers. You can find more information on each of those items in the IRS Instructions for Form 6251.
  3. Line 4. Calculate your alternative minimum taxable income by adding up lines 1 through 3. If your filing status is married filing separately and the total is more than $752,800, you need to add an additional amount to the total on line 4. Check the Instructions for Form 6251 to find that additional amount.
  4. Line 5. Apply the AMT exemption amount based on your filing status and income.
  5. Line 6. Subtract line 5 from line 4. If the result is more than zero, continue to line 5. If the result is zero or less, enter a zero on lines 6, 7, 9, and ll. You don’t owe AMT.
  6. Line 7. Apply the AMT tax rate. For most taxpayers, that rate is either 26% or 28%, but a special rate may apply if you claim the foreign earned income exclusion, capital gain distributions, or qualified dividends. Follow the instructions to see whether you need to compute your AMT tax in Part III of Form 6251.
  7. Line 8. Enter your AMT foreign tax credit, if applicable.
  8. Line 9. Calculate your tentative minimum tax by subtracting line 8 from line 7.
  9. Line 10. This line is only for farmers and fishermen who use Schedule J to calculate their tax. If this applies to you, follow the instructions to recalculate the tax here.
  10. Line 11. Subtract line 10 from line 9. If it’s zero or less, you do not owe AMT. If the result is greater than zero, enter it on line 1 of Schedule 2.

How Does the AMT Affect Tax Credits?

Tax credits reduce the income tax you pay on a dollar-for-dollar basis. For example, if your tax bill is $10,000 and you can claim a $2,000 tax credit, you would only have to pay $8,000 in taxes.

Tax credits such as the child tax credit, the dependent care credit, and the foreign tax credit are a useful way to reduce your AMT liability. You may also qualify for a tax credit if you paid the AMT in prior years.

However, you may lose some of your credits. AMT rules limit business credits, including the Low-Income Housing Credit, the Work Opportunity Tax Credit, and most general business credits. These credits cannot reduce the tax you pay below the tentative minimum tax calculated on Form 6251. If you lose any general business credits due to the AMT, you’re allowed to carry them forward to offset your future tax liability for up to 20 years.

Final Word

If you have to perform an AMT calculation and compare it to the amount of tax you owe under ordinary income tax rules, it will be complicated to prepare your tax return. For that reason, it’s a good idea to use tax software or work with a qualified tax professional who can help you complete Form 6251. 

This will save you a lot of time and aggravation versus trying to calculate your potential AMT liability by hand and help you avoid an IRS notice saying you owe more money.

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Source: moneycrashers.com

14 Ways Landlords Can Verify Proof of Income for Renters

Landlords have multiple tools to confirm proof of income for apartment tenants.

The most crucial part of screening tenants is ensuring that they make enough money to pay rent each month and the ability to pay it on time. There are several ways to verify proof of income for apartment renters.

On average, a tenant should spend about 30 percent of their income on rent. It’s vital to make sure the applicants for your apartment community earn at least that much. Be sure to check your local landlord-tenant laws to ensure you’re allowed to ask for the information you’re requesting. For example, some states prohibit housing discrimination based on how someone earns their income.

During the screening process, asking for documentation, contacting employers or running a credit check can help verify proof of income for apartments. Here are 14 ways to verify income.

1. Pay stubs

Tenants should have easy access to their pay stubs, either electronically or in paper form. Request that they send stubs for the past three months or so to ensure they’ve been employed for a while. The stub will list how much the individual earns before and after taxes, how often they get paid and their year-to-date earnings.

Tax Forms

Tax Forms

2. W-2s and tax returns

Requesting personal tax returns (Form 1040) for the previous few years provides a financial history for the rental applicant. Tax returns show all sources of income, including employment, contract work and interest income.

Check the wages and adjusted gross income, which indicates whether the tenant can afford the rent. The tax return might include the W-2 tax forms, which employees receive at the end of the year, showing how much they earned for the year.

3. Bank statements

Bank statements show an account holder’s balance, deposits and withdrawals. Getting copies of bank statements for the past two months gives you an idea of the person’s spending habits, income and bill-paying history. Bank statements also provide proof of income for self-employed or retired tenants or those who work as contractors.

Keep in mind, though, that some tenants might be wary of sharing this personal information, so try to use tax returns, W-2s or pay stubs as your primary proof.

Employment letter

Employment letter

4. Letter from an employer

Tenants can ask their employer to write a letter verifying their employment and income. Make sure the letters are on company letterhead with the employer’s contact information and specify how much the tenant earns, how often they get paid and how long they’ve been at the company. It’s a good idea to request an employer letter in addition to pay stubs and tax forms.

The letter can also serve as a reference for the renter. Instead of requesting a letter, you can ask for contact information for the employer and contact them directly.

5. 1099 tax form

About a third of U.S. workers are self-employed, according to an Intuit QuickBooks survey. So, chances are one of your rental applicants will fall into this category. The 1099 tax form lists earnings from sources besides regular employment, such as from contract work.

Keep in mind, though, that someone must earn at least $600 from the same organization to receive a 1099 form, and if they have a business, they’re not required to receive one. But they should include all income earned, whether they receive a 1099 or not, on their tax return.

Profit and loss

Profit and loss

6. Profit and loss statement

Self-employed individuals usually have a profit and loss statement, also known as a P&L or can get one from their accountant or bookkeeper. The P&L shows how much the business earns, its expenses and profits. You can use it in support of a tax return to get a complete sense of how much rent a self-employed individual can afford.

7. Contracts or invoices

For rental applicants who are freelancers or independent contractors, requesting copies of invoices or contracts can prove income and ongoing work. While most tenants should have easy access to invoices, not all independent contractor or freelancing gigs require contracts.

Retirement plan

Retirement plan

8. Retirement savings statement

For people living off a 401(k) or other retirement savings, asking for a statement verifying how much they receive each month could help you prove if they can afford your rent. Another option is to ask for a form 1099-R, showing the distributions paid out from these accounts in the past year.

9. Social Security statement

If someone receives Social Security benefits because of retirement or disability, a benefits verification letter can provide proof of income. These benefits are low, so you should also request other forms of income verification, such as bank statements or tax returns, to get the full picture of their income.

10. Unemployment benefits statement

Some states, including California, have laws forbidding property owners and managers from discriminating against renters receiving unemployment benefits. Check on what’s allowed in your area. A federal or state unemployment statement can show proof of income. However, the report will usually list an end date, so requesting secondary proof of income will help you know if someone can afford to rent the apartment.

Workers Comp

Workers Comp

11. Worker’s compensation details

Worker’s compensation is a kind of insurance that covers wages and medical expenses for employees who get injured on the job. An insurance company or court typically awards these benefits. If your renter is living off worker’s compensation, they can use a copy of the award letter as proof of income. Worker’s compensation often has an end date showing benefits will stop.

12. Statement of severance package

When someone gets laid off from their job, they’re often given a severance package that includes a lump sum of money or a payout of funds over a period of time. The renter can use a statement showing proof of their termination and how much of a severance they received can show how much rent they can afford.

13. Annuities, interest and dividends

Tenants may have earnings coming from interest, dividends or annuities. Interest income comes from the interest on savings accounts. Dividends refer to income earned from stocks and mutual funds, and annuity income is from an inheritance or insurance. In these cases, asking for statements showing how much someone receives in a month or year, or the tax forms 1099-INT or 1099-DIV, will verify proof of income.

Credit check

Credit check

14. Credit check to verify income

Even when you ask for proof of income documentation, it’s still a good idea to run a credit check as part of the screening process. A credit check lets you know about a renter’s financial health, including their credit score, amount of debt, if they’ve filed for bankruptcy, any delinquent accounts and payment history, including late or missed bill payments.

Be sure to request consent from the tenant before you run a credit check. If they won’t give it, that’s a red flag. As a courtesy, before conducting the credit report, ask the potential tenant if there’s anything they want to tell you first. This gives renters a chance to explain any dings on their credit report. They can also tell you how they’re working to improve their finances.

How to verify proof of income for apartments

Depending on a renter’s situation, several documents can serve as proof of income for apartment tenants. It’s usually a good idea to ask for multiple pieces of information. This will give you a better sense of someone’s financial situation. If a tenant tries to submit a fraudulent document, you can check that information matches up. Listing your property on Rent.com lets you accept applications and conduct screenings online.

Source: rent.com

10 Best Stock Picking Services of December 2021

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Additional Resources

Over the long term, the stock market returns around 10% on average. Investors looking to sit back and relax can put their stock investments on autopilot, investing in index funds, possibly managed by a robo-advisor or investment advisor. It’s easy, and it works.

But what if you’re not satisfied with average returns?

Investors seeking an edge over the market at large often look for individual stocks that will beat the market. And while some research these stocks themselves, using methods like the CAN SLIM strategy, others don’t mind leaning on equities experts to analyze stocks for them.

Enter: stock picking services.

What Is a Stock Picking Service?

Stock picking services do exactly what they sound like — they pick specific stocks they believe will outperform the broader stock market. They recommend those stocks to you, for you to act on or ignore as you see fit.

They sound straightforward, and they are, but many new investors confuse them with similar-sounding services.

For example, stock screeners are tools that help you filter down the thousands of available stocks to a manageable few, based on your precise criteria.

Stock scanners, while related, are another type of online investing tool that stream stock-related data and alerts in real time.

And, of course, stockbrokers offer the actual mechanism for buying and selling stocks online.

Keep in mind these services often overlap. Most stockbrokers offer stock screener tools. Some stock screeners offer real-time stock scanning.

What to Look for in a Stock Picking Service

As with everything else in life, some stock picking services are better than others.

But stock pickers don’t simply vary based on quality. They also vary in focus.

Many specialize in serving day traders or swing traders, helping them identify stocks poised to jump or drop sharply that day or during the following week. Others serve long-term buy-and-hold investors, recommending stocks they believe will grow quickly in the years to come.

First and foremost, look for stock pickers with a strong track record of beating the market. No stock picker will get every call right, but the astute ones prove to be right far more often than wrong.

Before taking investment advice from any stock picker, verify their bona fides in the form of a track record. Compare their picks’ returns to the market at large whenever possible. It doesn’t matter if their picks saw 30% growth last year if the market grew by 35%.

The longer that track record, the better. Look for experience in your stock pickers, as a year or two of good picks could come down to luck. Twenty years of strong picks indicate skill.

Take a close look at stock pickers’ integrity as well. Ethical and transparent stock pickers never mislead their audience by recording trade wins but leaving losing trades open, for example, and only reporting the closed wins.

Likewise, they never record profits before having them executed and in hand. They don’t claim wins for hypothetical historical profits they didn’t actually earn, saying “Our system would have earned a 1,000% profit over the last 10 years!”

Look for credibility and transparency indicators like free trial periods and money-back guarantees. It always helps to try a service before committing your money permanently.

Finally, make sure you understand their stock picking strategy. Reputable stock pickers explain their approach and the data analysis they use, so do your homework to understand the stock picker’s methodology and ensure it aligns with your personal investing goals.

Best Stock Picking Services

Regardless of your investment strategy, there’s a stock picking service designed for you.

Here are the best currently available to help you beat the market.

1. The Motley Fool Stock Advisor

Designed For: Buy-and-hold investors

The Motley Fool has been around for roughly three decades and has earned its place at the head of the table among long-term stock pickers.

The Motley Fool showcases that their Stock Advisor picks have delivered nearly five times the returns of the S&P 500 since their inception, as of October 2021. That’s a cumulative return of 683% compared to the S&P’s 143%, which makes for a pretty impressive visual:

Tmf ReturnsFurther reinforcing the integrity of their approach, they urge you to commit to three investing principles when you enroll:

  1. Own at least 15 stocks.
  2. Hold your stocks for at least five years.
  3. Expect market downturns every five years.

The Motley Fool was founded in 1993 by two brothers, David and Tom Gardner. In the decades since, the two brothers have written four bestselling books, partnered with NPR for investing radio segments, and launched a series of wildly popular podcasts.

With more than 700,000 subscribers, their Stock Advisor service has performed spectacularly by any standard.

The service includes four newsletters every month, starting on the first Thursday of the month and then arriving weekly.

The first and third newsletters contain a new stock recommendation, and the second and fourth Thursday’s newsletters contain five New Best Buys Now stock picks. The latter comprise previous picks that they still recommend as strong buys.

When market conditions change, subscribers receive “sell” recommendation emails in real time. Subscribers also get access to Fool’s “Top 10 Best Stock to Buy RIGHT Now” report and their “Top 5 Starter Stocks” that they recommend for all new investors.

The Stock Advisor subscription costs $199 per year, with a discounted $79 offer for the first year (new members only). With its 30-day money-back guarantee, you can try a full monthly cycle before deciding whether to continue.

For more information, see our full review of The Motley Fool and its services.

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2. The Motley Fool Rule Breakers

Designed For: Buy-and-hold investors

The Motley Fool offers more than its flagship Stock Advisor subscription. The Rule Breakers newsletter features “hidden gem” growth stock picks, and particularly companies that are poised to disrupt their industries.

Since its inception in 2004, the Rule Breakers stock picks have returned 371%, according to The Motley Fool. That’s in contrast to the S&P 500’s 123% over the same period.

If that sounds weaker than Stock Advisor’s pick returns, bear in mind that Stock Advisor launched several years earlier.

The Rule Breakers stock picks tend to be up-and-comers, rather than established mega-corporations. That adds an element of risk, so consider Rule Breakers only if you’re looking for scrappy growth stocks that the wider market hasn’t discovered yet.

Like Stock Advisor, subscribers receive stock recommendations on the first and third Thursdays of the month, and five New Best Buys Now on the second and fourth Thursdays. You also get sell notifications in real time and access to The Motley Fool’s Starter Stocks.

At $299 per year, Rule Breakers costs a bit more than Stock Advisor, and you get the same 30-day guarantee.

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3. Seeking Alpha Premium

Sign up and you’ll receive a 14 day free trial.

Designed For: Buy-and-hold investors, day traders

Seeking Alpha Premium is a powerful package of market intelligence tools designed to help you become the best investor or trader — or both — you can possibly be.

For $19.99 per month — an annual savings of $120 — Seeking Alpha Premium delivers:

  • Unlimited access to premium content created and curated by Seeking Alpha’s deep stable of expert contributors
  • Seeking Alpha Author Ratings and Author Performance metrics
  • Proprietary quant ratings available nowhere else
  • Unlimited earnings call audio and transcripts
  • Powerful stock screeners
  • Article sidebars with key data, charts, and ratings
  • Tracking for each investment idea’s performance
  • And much more

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4. Trade Ideas

Designed For: Day traders

The software platform Trade Ideas uses an artificial intelligence named “Holly” to generate real-time trade recommendations for subscribers. Made up of more than 70 proprietary algorithms, Holly runs more than 1 million simulated trades each night before the trading day starts.

She then proposes stock trade picks in real time, along with recommended entry and exit points. That delivers a complete day trading plan for each pick.

Trade Ideas also features its own internal broker, so you can authorize Holly to execute trades on your behalf rather than buying or selling manually through your own separate brokerage account.

One particularly nice feature that Trade Ideas includes is their simulated trading option. It lets you trade with fake money and build your comfort level before you start slinging your hard-earned cash around the market.

Trade Ideas’ many features come with a hefty price tag. Plans start at $1,068 per year, and if you want the full Holly AI experience, you need to upgrade to their Premium plan at $2,268.

But for that price, you get access to arguably the best day trading software in the business.

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5. Mindful Trader

Designed For: Swing traders

The beauty of Mindful Trader is that you don’t need to constantly stay on standby waiting for trade alerts.

The recommended swing trades take up to 10 days between buying and selling, so you can buy at any time during the trading day. That’s a crucial perk given that most of us can’t glue our eyeballs to the screen all day waiting for alerts to pop up.

Eric Ferguson, the founder of Mindful Trader, put decades of stock market data through statistical analysis to create an algorithm that alerts him — and you — to high-probability market movements. He includes stock trades, futures trades, and options trades. In 2021 he also added a stock equivalent to his futures trades, so you can mimic them even if you don’t want to hassle with trading futures.

Eric updates his website for logged-in subscribers when he executes a trade, so you can do the same in your own brokerage account. He makes the overwhelming majority of his trades within the first half hour of the markets opening every day, so you can simply check the site once per day. As swing trades, these aren’t nearly as time-sensitive as faster day trades.

I also like the backtest review of Mindful Trader’s hypothetical returns. Over the last 20 years, Eric’s trading system would have yielded an average annual return of 143%. You can view the year-by-year return breakdown here.

I’ve personally been following Eric’s trades for around nine months now. During that time, I’ve earned an annualized return of 31.2%.

That doesn’t mean you don’t get hit with losses some months. All traders know the stomach-dropping feeling of a string of losing trades. In Eric’s backtests, the median account drawdown was 28%.

That’s nothing to take lightly. I can personally attest to how jarring it is to go from thousands of dollars up for the month to thousands of dollars down, all within a window of just a few days.

Mindful Trader charges a monthly subscription fee of $47. Although not cheap per se, it’s less expensive than many competitors. And the monthly billing interval means you can try it for a month or two and then cancel without losing a fortune if you don’t like the trading style.

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6. Pilot Trading

Designed For: Traders of cryptocurrencies, futures, forex, and ordinary stocks

Pilot Trading features psychology-based AI algorithms that anticipate when asset prices will shift directions, beyond simply showcasing their current trends. To make trading even faster and easier, they connect directly to many brokerage accounts for in-app trading.

One feature that sets Pilot Trading apart is the breadth of assets it covers. Beyond stocks, they also include futures, forex, and cryptocurrency trends and anticipated swing points. And if you’re new to trading any of those assets, Pilot Trading offers a simulated paper trading account to practice.

Best of all, Pilot Trading foregoes the massive membership fees charged by many competitors. They charge a flat $19.95 per month, with access to all features. No upselling, no separate pricing for bells and whistles, just one affordable price for all users.

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7. Warrior Trading

Designed For: Day traders

Warrior Trading excels at education, and that starts at the top with its founder Ross Cameron.

Cameron leads highly personal chat room discussions, audio feeds, and video feeds in real time. Subscribers can even see Cameron’s own trades in real time, along with the company’s other professional traders and educators.

To help new traders get started, Warrior Trading provides a series of free educational videos in addition to their premium education tools.

In a fun exercise, Cameron opened a publicly visible new account with only $500, and he lets subscribers watch as he grows it to a target of $1 million. In the first month alone, he grew it from $500 to more than $53,000.

Warrior Trading delivers a newsletter every day with a handful of stocks to watch that day. You can use their real-time scanner to track them and other stocks throughout the trading day and create SMS message alerts in addition to email alerts for timely trades. To build confidence, you can trade with fake money using their simulator.

All that personal attention costs a pretty penny. Warrior Trading’s Pro service charges a dizzying $5,997 per year, so it doesn’t exactly appeal to the mildly curious. Alternatively, you can try their Warrior Starter Course, but it’s not cheap either at $997 for the first month then an auto-renewed $197 per month thereafter. I also dislike that they don’t list the price on the sales page. But they have a strong reputation for results.

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8. Investors Underground

Designed For: Day traders

Another education-centric platform, Investors Underground provides more than 700 video lessons and guides. It hosts frequent webinars with plenty of question-and-answer sessions.

Investors Underground sends a daily newsletter with stock watchlists and game plans, so you come to the market prepared. When the bell rings to kick off the trading day, you can join other traders in the chatroom to compare notes, ask questions, and monitor real-time stock scanning and alerts.

Those stock alerts don’t include an SMS option however, a feature many day traders prefer to more passive email alerts.

Although far from cheap, Investors Underground memberships still clock in at under one-third of Warrior Trading’s fee. The service costs $1,897 per year, and you can optionally add access to its premium courses if you want to up your trading game. If you want to try it for a month, you can pay monthly at $297 per month.

According to Investors Underground, their customers remain happy to keep paying. They claim 91% of their subscribers report the membership to be a good value, and that 83% say their trading improved after they joined.

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9. Tim Alerts

Designed For: Penny stock day traders

Timothy Sykes started trading in his preteen years with around $12,000 in bar mitzvah gift money. By the time he was a senior in college, he’d become a self-made millionaire through trading penny stocks.

Since then, Sykes has launched a series of finance-related platforms and services, largely designed to help mom-and-pop day traders earn more money.

His Tim Alerts provide daily newsletters around 8am EST to lay out stock watchlists for the day, and traders receive alerts by email, SMS, or push notifications in real time throughout the day about Sykes’s trades. Subscribers get live chat room access along with a proprietary mobile app.

The Tim Alerts subscription costs $697 per year, making it more affordable than some of his competitors. At a higher subscription level — Pennystocking Silver for $1,297 per year — members get access to more than 6,000 educational videos and weekly video updates.

Beyond Tim Alerts, Sykes has launched a range of successful financial platforms. His Profit.ly platform serves as a community for more than 160,000 day traders where they can openly share their trades and performance.

Sykes also created Investimonials.com, a community-based platform for reviews of financial products and services, and StocksToTrade.com, a stock screener and trading platform.

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10. Superman Trades

Designed For: Scalp traders, swing traders, and technical traders

Paul Scolardi has nearly two decades of experience as a trader and Certified Public Accountant, and became a self-made millionaire trading stocks.

Scolardi runs his Superman subscription service through Timothy Sykes’s Profit.ly platform. Subscribers get daily stock watchlist newsletters, real-time alerts via email and SMS, and real-time commentary with Scolardi and other traders in his chatroom. The Superman Alerts package costs $147 per month.

For an extra $100, Superman Pro subscribers get weekly videos, access to a rich educational video library, premium stock research reports, and an earnings tracker.

Although Scolardi does teach day trading — often in quick, in-and-out “scalp” trades — what sets him apart from other trading gurus is his experience as a swing trader. Swing traders hold stocks longer than one day, but still a short term (often a few days or weeks).

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Final Word

Your likelihood of success as a day or swing trader depends on the quality of your information. Timely, accurate information makes profit possible for traders; without it, beating the market is next to impossible.

But beyond up-to-the-second financial alerts, traders and long-term investors alike also need help narrowing the field from thousands of stocks to a handful. That’s where stock picking services come in handy.

And, of course, they help in providing education. Trading or investing in individual stocks isn’t passive and easy like index fund investing. It requires deep knowledge and skill, and good stock picking services provide not just alerts and watchlists but a replicable system that any trader or investor can follow.

The promise is that if you follow the system, you can beat the market.

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Source: moneycrashers.com