A college job can be a chore. Or it can be the doorway to future success. The choice is yours.
I asked Michael Hampton, director of career development for Western Oregon University, for advice on how college students should approach work. What should they look for in a job? What should they try to get out of it? Are college jobs really that important? We drafted the following seven tips, which we believe can help you to get the most out of your college work experience.
Connect Jobs With the Future Try to connect your jobs — even part-time jobs — with something you enjoy doing. Ideally each job would relate to something you think you might want to do later in life. (This isn’t always possible — it’s an ideal.) This can help you determine if the job is actually a good fit. Test-drive jobs like you would test-drive cars. Students often think they want the prestige and feel of the glamorous BMW/Lexus job, but after a while they realize they’re better suited for a Honda/Nissan job. The opposite happens, too.
(Michael has a personal example. He once sought and obtained a glamorous BMW/Lexus job working for Nike. Though he liked the job, he came to realize that his personality was better suited for a Honda/Nissan job — advising college students.)
Do Your Best Whichever job you choose, do your best. Don’t treat it like a chore. If you approach your work with a good attitude, a willingness to learn, and a spirit of excellence, you will set yourself so far apart from your peers that your employers will be forced to take notice.
Learn How to Work Use any job to evaluate the work style of your supervisor and coworkers. Pay attention to what you like and dislike about how people operate at work. Notice who gains the respect of their supervisors, who seems to be in the dog-house, who gets the better work assignments. Emulate the people who are closest to what you consider the ideal work style. Learn from other’s mistakes and successes and adapt accordingly.
Don’t Spread Yourself Too Thin Remember that you’re in school to learn. It’s nice to have money for beer and pizza, but it is study that will repay you in the long-run. When possible, favor fewer jobs to more jobs. There was once a time I was doing all of the following:
Working in the school’s A/V department from 8-9 three mornings a week. [3 hours/week]
Answering phones in summer events from 4-5 every weekday afternoon. [5 hours/week]
Working at a local coffee and dessert place from 7-11 three nights a week. [12 hours/week]
Waiting tables at a restaurant from 6 a.m. to 2 p.m. on Saturdays and from 8 a.m. to 2 p.m. on Sundays. [14 hours/week]
Serving as a resident assistant for a floor of 54 freshman men.
I enjoyed each of these jobs, and am glad to have had the experiences, but I was spread so thin that I could not excel at anything. And my studies suffered. It would have been better to find one job that could give me the hours and money I needed, and to have devoted myself to it exclusively.
Learn How to Network While you’re working, you’re also networking — with employers, with coworkers, and with customers. It may sound crazy, but the connections you make on a college job can be parlayed into something greater, if you’re ready to do so.
I once worked at a coffee and dessert place that was owned by a man from one of Oregon’s wealthiest and most influential families. He was heir to a department-store fortune. He was chief of staff to a United States Senator. He spent most of his time on the East Coast, hobnobbing with the political elite. I spoke with this man at least once a week, sometimes more. But I was a cypher to him — just a cog in the machine. If I had taken the time and the effort to excel at his store, to become more than just a nameless employee, I could have formed a useful connection.
The summer after I graduated, I worked as an A/V aide on campus. One day, I was drafted to give a tour to an incoming freshman and his family. I was sincerely passionate about the school, and made a good impression. As the father was leaving, he gave me a business card. “You should call me,” he said. “I think I have a job for you.” I never did call him, and it’s probably one of the dumbest things I’ve ever (not) done. (Because this led directly to the worst job I ever had.)
Networking is often just being open to the chance encounters that come your way.
Foster “Planned Happenstance” Michael speaks with students all the time about “planned happenstance” (outlined in the book: Luck Is No Accident by Krumboltz & Levin). The basic principle is that “you should be aware of your surroundings, take a risk, even with rejection as a possible outcome, and be adaptable and open-minded. Unplanned events — chance occurrences — more often determine life and career choices.” No one can control or foresee what happens on a day-to-day basis. Those people who accept and embrace this concept, and who realize these “accidents” are opportunities, experience positive changes. A person lives the planned happenstance life when they prepare for the unexpected, and make the most out of those experiences.
Learn From Others One of the best ways to market yourself in any job is to ask questions. Learn from the wisdom of others. Most people love to talk about themselves and what they do. Tap into that. Ask questions, even if you know some of the answers already (even if you have more knowledge about that particular subject). Leave your ego at the door. It is amazing how much respect you can gain by working hard and asking questions. You should never need to sell yourself through overeager speech and rhetoric. (Don’t be a brown-noser.) Let your actions and questions speak for you.
A college job is not just about earning money for pizza and beer; you can earn money doing almost anything. You’re at the ground floor of life. What you do now establishes the foundation for everything to come. Make smart choices. Work hard. Be open to chance.
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Retirement is a massive financial undertaking. But it’s also more flexible than many people believe. At different stages in life, it’s really possible to retire earlier than you might realize. However, retiring at age 30 with $1 million comes with a lot of leg work and a bit of luck. It’s not impossible, but a lot of things have to go right for you. We’ll discuss what to consider.
A financial advisor can help you put a financial plan together for your retirement needs and goals.
Your Retirement Income With $1 Million
The $1 million is a common benchmark for FIRE advocates, which means “Financial Independence, Retire Early.” The basic philosophy is this: Maximize every penny of earnings early in life. Save hard, spend little and invest wisely. Then, ideally sometime before age 40, have enough cash to retire for good.
The trouble is that $1 million does not actually generate that much secure income in retirement, at least not before you can supplement it with Social Security. The rule of thumb used by most financial professionals is that you should expect a 4% drawdown each year.
This means that for a sustainable retirement, you should budget to live on about 4% of your total retirement portfolio. For a retiree with a $1 million portfolio, this comes to $40,000 per year.
We can also adjust up from 4%, given that it is admittedly very conservative. So you can hit that number holding nothing but bonds and getting no returns beyond simple coupon payments. So take a number like 6%. This gives you an annual income of $60,000.
Now, that’s not nothing. According to the Census Bureau, it’s less than the median income of $70,700. But not by that much. The problem is that you need to live on that money for a long time.
Costs of Retirement In Your 30s
When the New York Times wrote on this subject, they profiled a man who retired at 43 on his $1.2 million savings. The man’s wife still worked, supplementing the household’s budget significantly. Even still, the article wrote, the couple lived a life, “Rich on time but short on luxuries: Groceries are bought at Costco, car and home repairs are done by him.”
This is the problem with retirement in your 30s. The odds are that it leads to a lot of sitting around asking, “Now what?”
3 Tasks to Solve
First, you will have to account for all the basic expenses of life: Housing, food, utilities and more all add up.
If you have collected $1 million at age 30, the odds are good that you live in or around a city, where the higher-paying jobs are located. For example, if you live in Washington D.C., rent alone can consume almost an entire $40,000 income. And if you move, that will mean leaving your friends and connections, as well as an entire lifestyle that you have presumably come to enjoy.
Second, there are the employment-related expenses of life. Mostly this means finding your own health insurance. At age 30, you might be able to get away with a cheaper high-deductible plan, but as you age into your 40s and 50s that will be increasingly less of an option.
Third, there are situational costs. If you have children, they will need their own care and feeding. According to SmartAsset’s 2023 study, raising a child can cost up to $30,000 annually in the U.S. And as your parents’ age, they might need care both personal and financial.
And unexpected expenses crop up on a regular basis. Home and auto repairs aren’t always do-it-yourself (DIY) projects, for example. If your car throws a rod or (to cite this writer’s experience) a four-story elm dies in your backyard, that’s thousands of dollars directly from your own pocket.
What to Look Out for at Age 30
At age 30, you have a lot of time and responsibilities ahead of you. Every retiree needs to plan for the unexpected. But when you’re a young adult, far more people will count on you and you will have far fewer resources.
Medicare and Social Security won’t kick in for several years. And Medicaid won’t help someone who is voluntarily unemployed. Family members will look to you for support, property will need tending and many of life’s biggest expenses may still be on their way.
To put it another way, you’re not a kid anymore and there is no backup plan. For the next 30 or 40 years, you are the backup plan. By retiring this early with this budget, you are planning to face that with virtually no room for error.
The FIRE Lifestyle
There is a very good reason that early retirement has caught fire (or FIRE) in recent years. Work for millennials and, as they age in, Generation Z, is worse than it was for past generations. Employers expect ever-longer hours and make ever-broader demands.
For Baby Boomers and Generation X, it can seem bizarre to plan on leaving the workforce by age 40. In large part, though, that’s because theirs was a generation that still got to clock out at 5 and only worked on the weekdays.
“The rule books our parents have given us is advice that’s perfect for 1970,” wrote the New York Times in one representative quote. “We have to throw out that rule book and write a new one.”
Current generations were brought up in an era where every job has been migrated to salaries to avoid overtime pay. And most days end well after 5:00 p.m. This is a working world of smartphones, seven-hour half-days and “just real quick” Saturday assignments. It’s easy to understand why so many young workers want to opt-out.
Considering the Alternatives
Consider the other side of that lifestyle carefully, because you may not be buying yourself the freedom that you think. You will have freedom from burning out on work culture and the stress that comes from expecting work e-mails at all hours of the day. But you may not have the freedom to for very long.
In other words, you may not have the freedom to live the kind of lifestyle that you want to enjoy. If you have a home, you may not be able to afford anything else. On a $40,000 – $60,000 per year budget, there probably won’t be much left for travel, dining and other luxuries.
Your plan might be Netflix and dinner for a long period of time, for example. If, as many young retirees do, you choose to travel, then those temporary travels may become more permanent than you’d think.
Bottom Line
Is it possible to retire at 30 with $1 million? Yes. But the odds are it’s likely that it will do more harm than good. If you have $1 million at age 30, you’re doing beyond great. If you keep this money in a series of solid, comfortable investments, then you almost certainly can retire early. The truth is, you probably can target retiring at age 40 or 45. Give this account another 10 years or so to ride. And let compound growth increase over time.
Retirement Planning Tips
A financial advisor can help you prepare for an early retirement. Finding a qualified 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.
Want to see how much your 401(k) will be worth when you retire? Use SmartAsset’s free calculator.
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.
Is your real estate business running you ragged? Consider starting a real estate team! On today’s podcast with Amy Florida, we discuss what it takes to start a new team and why it’s beneficial for overworked but successful solo agents. Tune in and discover what it takes to attract competent agents and how to generate leads to keep them productive without blowing your budget. Amy also shares insight on geographic farms, client-focused events, and more.
Listen to today’s show and learn:
The St. Louis real estate market [2:01]
Why St. Louis is a great place to own and sell real estate [4:19]
What the best real estate agents are worst at [6:13]
Amy Florida’s start in real estate [9:08]
A repeatable system for six-figure income in real estate [11:58]
Amy’s first year in real estate and career progression [19:24]
Leveraging buyer’s agents to reduce your workload [20:13]
Advice for busy real estate agents on starting a team [23:24]
Starting new agents with shadowing [26:17]
Where Amy gets her real estate leads [28:00]
How to start a geographic farm in your market [30:45]
The effort required to host an Easter-egg hunt [33:51]
The number of losses it takes to get to a win [44:45]
How to find and follow Amy Florida [47:28]
Amy Florida
Known to the team as ‘Hustler in Charge’ aka ‘Head Homeslinger’, Amy is honored to lead the daily grind in this dynamic and outrageously fun group! She has been in the real estate industry for over 10 years and has worked diligently to be a Multi-Million Dollar Producer each and every year. She led the team last year in an overall production of $23.4 Million Dollars and over 80 families assisted. Aside from being a tired momma of Charli, Lily, and Parker, Amy is an avid rock and roll concert goer, musician, yogi, and traveler. The business of helping people sell and buy their most valuable asset is something that she feels grateful to be able to wake up and do each and every day. With extensive knowledge of the greater St. Louis and St. Charles area markets, local builders large and small, investment real estate, and all things houses, she and her team is THE group you want on your side!
Related Links and Resources:
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
Options sweeps are large options trades executed by well-capitalized, typically institutional investors, quickly and across the best available order prices. When an option sweep is placed, the executing broker will hit all available counterparties, by order of best outstanding prices, until the investor-specified order size is filled.
The typical retail investor typically will not execute options sweep trades, given the massive amount of funding and leverage they entail. Instead, options sweep trades can serve as an indicator of underlying interest around a certain security. As they typically reflect institutional investor actions, option sweep trades are indicators of what the “smart money” is doing.
What an options sweep implies is up to interpretation and depends on the order size, type of option, and average price at which the options sweep was executed. We cover how options sweeps work and how retail investors should interpret them.
How Do Options Sweeps Work?
When options sweeps are executed, the trade will be visible to market participants. The details around the trade, namely its size, the type of option traded, and the approximate price of the trade, are viewable by traders with the capability to scan for them. However, the specific entity entering the trade and the order type (whether it’s a buy or sell) will not be disclosed.
Option sweeps aren’t really considered one of the strategies for trading options. But given the massive amount of capital needed to properly transact an options sweep, and the fact that these are typically entered as block trades, entities that use option sweeps are likely to be well-capitalized institutional investors.
Consequently, options sweeps are viewed as indicators of aggressive bets made by “smart money,” and can stir up investor interest due to the perceived informational advantage that professional money managers have over retail investors learning to trade options.
Under the right circumstances, they can provide useful insight into implied short-term price swings that large institutional investors might be hedging against. This makes it a popular tool for short-term traders.
How to Interpret Options Sweeps
Options sweeps serve as indicators of unusual options activity surrounding the underlying investment.
Options trades may imply aggressive actions by institutional investors, and traders who detect options sweeps may use them to inform their actions.
How an options sweep should be interpreted depends on the type of option being traded, its expiration date (American- and European-style options are different), and the price near where the options sweep was executed.
Regardless of what an options sweep may suggest, investors should bear in mind that institutional investors are fallible like retail investors. In other words, sometimes the “smart money” isn’t so smart. Despite the informational asymmetry, option sweeps should be interpreted with a grain of salt. Make sure to conduct your own due diligence before trading, looking at bearish or bullish stock indicators and so on.
Option Type
When a trader buys to open a call option, this generally implies a bullish bet on the price of a security, as call options offer upside potential beyond the stated strike price.
Conversely, when a trader buys to open a put option, this implies a bearish bet on the direction of the underlying security, as put options offer downside protection beyond the stated strike price.
Price
While it’s evident that a trade was made when an options sweep occurs, the trade won’t explicitly disclose whether the options were bought or sold by the institutional investor.
To gauge whether or not an options sweep was a buy or sell order, and to better understand options pricing, traders can contextualize based on whether the average execution price was traded “near the bid,” or “near the ask.”
Trades made near the bid are typically sell orders, while near the ask trades are typically buy orders. This follows the traditional trading logic of “sell at the bid” and “buy at the ask.”
Combination Trades
Not all option trades are simply buy calls or buy puts. Combination trade strategies using multiple options are very common. It might be very difficult to interpret the strategy of the option sweep investor, and even more difficult to determine if your own investing strategy aligns.
Finally, user-friendly options trading is here.*
Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.
How to Detect Options Sweeps
Options sweeps are difficult to detect without the aid of dedicated trade scanners that monitor options flow activity.
Many third-parties and brokerage accounts that offer advanced trading capabilities may include this as part of a subscription fee, or as a part of their trading suite.
If you don’t have access to these paid programs, there are still ways to detect unusual options activity on stocks you follow.
First, options are useful hedging tools for institutional investors and are therefore typically used during times of heightened market volatility.
You can watch for open options interest on calls and puts, expiring close to earnings reports or dividend announcements. Beyond company-specific announcements, traders can often gauge options interest close to market-moving events, economic reports, or even Federal Reserve statements.
While this won’t necessarily inform the direction of an upcoming trade, it will certainly shed some light on where volatility is likely to occur as the expiration date on the options approach.
Who Uses Options Sweeps
Options sweeps are used almost exclusively by large well-capitalized institutional traders.
Due to the large amount of capital needed to execute an options sweep, and the massive risk profile that this entails, it’s unlikely that anyone without a substantially large bankroll would be able to conduct an options sweep trade.
Virtually all retail investors would be excluded from the list of candidates capable of executing options sweeps.
The Takeaway
While options sweeps are not usually executable by everyday investors, their existence still serves as a useful indicator of institutional activity.
Unusual options activity has historically been a popular short-term metric for gauging the direction of stocks. While there’s no guarantee as to the accuracy of the implied price moves, they’re nonetheless another useful tool in the arsenal for short-term options traders.
If you’re ready to try your hand at options trading, You can set up an Active Invest account and trade options online from the SoFi mobile app or through the web platform.
And if you have any questions, SoFi offers educational resources about options to learn more. SoFi doesn’t charge commissions, and members have access to complimentary financial advice from a professional.
With SoFi, user-friendly options trading is finally here.
FAQ
Are call sweeps considered bullish?
Call option sweeps are large purchases or sales of call options that can be considered either bullish or bearish, depending on the price where the trade completes.
All options trades have both a bid and an ask price; the bid price indicates the price you’d receive for selling to open the option while the ask price indicates the price you’d pay to buy to open the option.
If a call sweep is shown executing near the bid price, that means that an institutional trader likely sold a large number of call options at the bid price, which may imply a bearish signal.
Conversely, if a call sweep is shown executing near the ask price, that indicates that an institutional trader likely purchased a large number of call options at the ask price, which could imply a bullish signal.
How can you find options sweeps?
Finding options sweeps isn’t as simple as searching for trade ideas. Detecting option sweeps requires scanning software that can sleuth through public trade data for unusual options activity.
There are a number of options activity scanners available on the web and through third-party information services; in most cases, these require paid subscriptions.
Many popular online brokerage accounts also sometimes offer their own activity scanners as part of their suite of advanced trading platforms.
What does it mean for a sweep to be near the ask?
If a sweep is near the ask, this means a large sweep order was made to trade securities near the ask price.
This may be interpreted as a “bullish” signal that the stock price may rise in the short term.
Photo credit: iStock/Drazen Zigic
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes. SOIN0322023
If you’ve been paying attention to the news within the past few months, you’ve likely been hearing a lot about the rise of the robo-advisor.
Robo-advisors is the term given to any number of automated investing services that have popped up in recent years that aim to make investing easier, more affordable and in some instances negate the need for a traditional financial or investment advisor.
While their investment recommendations vary to some degree, many of them use algorithms based on Modern Portfolio Theory (MPT) to aid in choosing diversified investments and asset allocation based on your risk tolerance. MPT helps to maximize expected return for your portfolio based on your risk profile.
While I still think that some people could benefit from working with a human financial planner one on one, I do think that for most investors using an automated investing service makes a ton of sense.
Today I thought I would do a review of Wealthfront, one of the top and most well respected automated investing services available today.
UPDATE: Sign up for Wealthfront via this exclusive Bible Money Matters link to get $5,000 managed for free:
Sign up for Wealthfront and get $5,000 managed for free
Wealthfront History
Wealthfront launched their automated investment service in 2011 and the company is currently based in Redwood City, California. In 2012 Wealthfront launched a daily tax-loss harvesting service. From 2013 to 2014 the company went through some tremendous growth, growing by over 450% in one year. By 2019 Wealthfront now has more than $12 billion of assets under management.
Wealthfront never holds your portfolio when you invest with them, they just manage it. The portfolio is actually held with Royal Bank of Canada.
How Does Wealthfront Work?
When you sign up for Wealthfront you start by completing a questionnaire that is aimed at determining your risk tolerance. Once your risk tolerance is determined asset allocations are set that will remain the same regardless of how much you have invested.
The portfolios are based on a mix of 6 – 8 asset classes that includes both U.S. and international stocks and bonds. They invest mainly via the following ETFs, although that is subject to change.
U.S. Stocks (VTI)
Foreign Stocks (VEA)
Emerging Markets (VWO)
Real Estate (VNQ)
Dividend Stocks (VIG)
Emerging Market Bonds (EMB)
Municipal Bonds (MUB)
CorporateBonds (LQD)
US TIPS (SCHP)
Natural Resources (XLE)
When you invest with Wealthfront your diversified asset allocation will depend on the tax status of your account (taxable or tax deferred), and what is the most tax efficient method of investing for you.
In essence, you’ll get a highly diversified, low cost portfolio that is suited to your level of risk, time horizon and other factors.
Signing Up For Wealthfront
Signing up for Wealthfront is a quick process. Here’s what you’ll need to do.
Once you begin the signup process it will first have you go through a risk tolerance assessment.
Once you’ve answered all the questions, it will give you a quick rundown of what assets and allocation that they would suggest for you, in both a taxable account and retirement account.
If everything looks OK, you’re ready to open your account.
Available account options with Wealthfront include:
Standard taxable account
Joint investment account
Trust account
Traditional IRA
Roth IRA
SEP-IRA
Wealthfront 529 College Savings Plan
Once you choose which account type you want and hit continue, it will take you through the process of entering all of your basic information including:
Full name
Address
Birth date
Phone number
Social security number
Income
After filling out the basics it will ask you to fund your account. Your options for funding the account include:
Bank transfer (3-5 business days to get started)
Wire transfer (1 business day to get started)
Account transfer (5-10 business days)
Once you submit your application and confirm your email address you just have to wait for your account to be approved. After approval you can login to your account dashboard to confirm transfers, view your account summary, view your plan, transactions, documents and more.
Wealthfront Features
So what are some of the features that you get when you open a Wealthfront account?
Proven passive investing strategy that gives you a diversified portfolio
So what do you invest in when investing with Wealthfront?
We invest with an equity orientation to maximize long-term returns. Each of our selected asset classes is represented by a low cost, passive ETF. We continuously monitor and periodically rebalance your portfolio to maximize your chance of investment success for the long run. We also attempt to minimize your taxes by analyzing the taxes likely to be generated by any given asset class, and then allocating different asset classes in taxable and non-taxable (retirement) portfolios. We use Modern Portfolio Theory (MPT) to identify the ideal portfolio for each client.
Your portfolio will consist mainly of low cost ETF index funds that will be tailored to your risk tolerance, with intelligent dividend reinvestment and regular portfolio rebalancing. It is fully diversified. For a complete look at the Wealthfront strategy you can check it out here.
Wealthfront offers a broad suite of tax efficient passive investment products. These strategies are known as PassivePlus, and in the past have mainly been available only to high dollar investors. Wealthfront didn’t invent these strategies, but it’s team of PhDs led by reneowned economist Burton Malkiel, along with their investment technology has made these products available to anyone. Among the strategies included in PassivePlus:
Tax loss harvesting: Tax-loss harvesting essentially takes investments that have declined in value and selling them at a loss, generating a tax deduction. The tax deduction helps to reduce your taxes. Wealthfront’s service allows daily tax harvesting to be possible, which can help to maximize gains versus a traditional year end tax loss harvesting. This service is available at no extra cost to investors.
Stock-level Tax-Loss Harvesting: Available for no extra cost to taxable accounts over $100,000, Stock-level Tax-Loss Harvesting is an enhanced form of Tax-Loss Harvesting that looks for movements in individual stocks within the US stock index to harvest more tax losses and lower your tax bill even more.
Risk Parity: Available for an additional 0.03% to taxable accounts over $100,000, Risk Parity is an alternative methodology to allocate capital across multiple asset classes, much like Modern Portfolio Theory (MPT), also known as mean-variance optimization. Historically, Risk Parity has generated better returns for a given level of portfolio risk than the more common MPT.
Smart Beta: Available for no extra cost to taxable accounts over $500,000, Smart Beta is an investment feature designed to increase your expected returns by weighting the securities in the US stock index of your portfolio more intelligently.
Wealthfront also invests in index funds which tend to have little turnover, and as such will likely realize lower capital gains taxes. They also use dividends to rebalance your portfolio throughout the year, lowering capital gains. They optimize asset classes and allocations depending on whether an account is taxable or tax advantaged.
No commission fees
With Wealthfront you’re never going to pay fees for purchase of the ETFs in your account.
Other Wealthfront Feature Updates
Wealthfront is constantly innovating, and has had a myriad of other updates in the past year or so, all designed to make investing easier, more efficient, and to bring you better returns. Here are a few of the features and functionality that set them apart.
Free Financial Planning: The new free financial planning experience, unique to Wealthfront, using the Path planning engine.
Tailored Transfers: Instead of selling everything at once, use our tailored transfer process to migrate your investments tax-efficiently over time.
Portfolio Line of Credit: This line of credit is available for any Wealthfront client with an Individual or Joint Wealthfront account valued at $100,000 or more. There’s no set up – if you’re an eligible Wealthfront client then you already have access. Your line of credit is secured by your diversified investment portfolio, so current rates are as low as 3.25-4.5% depending on account size – lower than most HELOC loans. Borrow the amount you need up to 30% of account value, when you need, for whatever you want. Repay on your own schedule.
Free Automated Financial Planning
In December of 2018 Wealthfront became the first robo-advisor to offer software based financial planning for free to anyone through their app or on their website. Some other services will offer planning to clients, but usually at a premium, and only through a call with a CFP on the phone.
With Wealthfront’s financial planning tools you can connect to your existing financial accounts in a few minutes, and then by tracking your actual spending and saving patterns to help you figure out how your financial future may look.
It helps you to figure out how much you need to save now to reach your future goals, and helps you to determine if you’ll be able to live the same lifestyle you live now, in retirement.
The free financial planning help takes the guesswork out of figuring out if your hoped for future is even attainable based on your current spending and saving patterns. It helps you take a look at “what-if” scenarios, and help you figure out what the impact of a raise at work, or saving more every month might be.
The free automated financial planning service is like having a personal financial planner, but without the need for a bi-annual meeting at an expensive office with a planner that hardly pays attention to your needs. Here’s a look at it from Wealthfront:
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Home Planning In Financial Planning Software
The financial planning software brings clients out of the window-shopping phase of home buying and into planning and saving with the help custom advice and recommendations. The Path advice engine uses third party data on home prices and mortgage rates combined with your financial information to provide an accurate estimate of what you can expect to afford when ready to purchase a home — whether it’s six months or five years from now.
The home affordability estimate given by the tool even accounts for expenses beyond the mortgage, such as closing costs, property taxes, maintenance, and insurance.
College Planning In Financial Planning Software
In addition they also now have a College planning tool that looks at every important aspect of college planning and deliver a complete, personalized assessment.
It will allow you to choose a college that your child may attend, enter some personal data about yourself, after which it will calculate the financial aid you can expect to receive at that school. Then you can setup how much to save, and see the effect of adding more to your savings. At the end you can link it to your Wealthfront 529 College Savings Plan!
The Wealthfront 529 College Savings Plan
This is another investment account unique to Wealthfront. They offer one of the lowest cost 529 plans from an advisor, that offers more diversification for higher returns. (Many plans offer a very limited range of investment options).
A recent Sallie Mae study shows that more and more parents are saving for college, but are nowhere near prepared to meet their goals because they are saving solely through savings accounts earning less than 1% interest. The Wealthfront 529 College Savings Plan was created to help change this, to help parents grow their child’s college savings, while minimizing the amount of risk based on your level of risk tolerance.
Wealthfront’s 529 uses 20 different glide paths, tailored to match both the beneficiary’s age, as well as the account owner’s financial situation and risk tolerance. Our glide paths transition asset allocations much more continuously, which again means you may be less likely to be hurt by market movements.
This is definitely something to check out if you’re interested in saving for your child’s education.
Wealthfront Cash Account
Wealthfront recently implemented a great new tool for savers. If you’ve got cash you want to keep out of the market and low risk, but you still want to earn a good amount of interest on it, the Wealthfront Cash Account might be just what you’re looking for.
The cash account is an FDIC insured account (up to $1 million dollars, 4 times the traditional bank insurance), that charges no fees and has only a $1 minimum.
At the time we updated this article it’s currently earning 2.57% APY. This makes their APY the highest on the market according to Bankrate, so if you’ve got extra cash laying around it makes their account a no brainer to sign up for.FDIC insured AND the best rate.
The Bankrate industry average savings rate is only 0.10%, so you can now earn over 25x more than the national average on cash balances!
It’s fast and easy to setup your cash account, it takes just minutes. Definitely worth checking out – whether you already have a Wealthfront account or not.
Fees, Charges & Minimums For Wealthfront
What are the fees that you’ll have to pay for the Wealthfront investment service? The good news is they offer some extremely competitive rates.
Wealthfront charges a monthly advisory fee based on an annual fee rate of 0.25%. The only other fee you incur is the very low fee embedded in the cost of the ETFs you will own that averages 0.15%.
Fees
You pay the following fees to Wealthfront:
So if you have $10,000 in your account and you signed up via our link, you’ll have no charge for the first $5,000, and a 0.25% fee on the second $5,000.
When you sign up you’ll also have the chance to refer other users to the service to earn $5,000 more per user in free asset management, beyond the first $5,000. If you know enough people who want to sign up, you could definitely increase the amount managed for free very quickly!
Account Minimums
An account with Wealthfront does come with a minimum balance.
Our account minimum is $500, which entitles you to a periodically rebalanced, diversified portfolio of low cost index funds enhanced with our daily tax-loss harvesting service (for taxable accounts).The account minimum required to qualify for our Stock Level Tax-Loss Harvesting is $100,000.
So to open an account, you’ll need a minimum of $500. Why not start with $500, and then fully fund your Roth IRA for the year ($5500 for 2018)?
There is also a minimum withdrawal of $250, and you can’t withdraw below the account minimum of $500.
If you withdraw all of your funds it will transfer your money and close your account for you, with no exit fees.
Wealthfront – Great Low Cost Investment Advisory Service
When I first heard about Wealthfront a few months ago, I wasn’t sure if it would be a service that I could recommend. After doing my due diligence, however, I believe they’re a great service that would be perfect for a lot of people.
Wealthfront is the only robo advisor who offers investment management, financial planning and banking-related services through their software. Anyone can open a Wealthfront investment account and receive a personalized, globally-diversified investment portfolio and access a variety of tax-efficient services.
I’d highly recommend giving them a chance if you’re looking for an easy place to start investing – that will work for you over the long haul.
Sign up for Wealthfront and get $5,000 managed for FREE
Long-term financial goals are an essential part of financial planning. They help you define your aspirations and create a roadmap for achieving them.
Long-term goals aren’t easy to achieve. But why?
Could it be that motivation wanes over time? Perhaps external circumstances change. Maybe it has to do with the feasibility of the goals.
Many people have trouble sticking to something over the course of a single year let alone several years or decades.
Perhaps that’s why long-term goals – like most financial goals – are so difficult to achieve.
How do we fight against whatever it is that holds us back from achieving these financial goals? Is it possible to win?
Yes. It is.
Today I’d like to share with you some ways you can achieve your long-term financial goals. I won’t claim it will be easy, but it will be worthwhile.
So whether you need to pay off debt, build an emergency fund, save for your kids’ college education, or invest for retirement, here are some ways you can make it hap’n, cap’n.
Why Long-Term Financial Goals Are Important
Long-term financial goals provide direction and motivation for your financial decisions. By defining your long-term goals, you will have a clear picture of what you want to achieve and what steps you need to take to get there. Setting long-term financial goals can help you:
Stay focused on your priorities: Setting long-term financial goals will help you prioritize your financial decisions and avoid getting distracted by short-term financial needs or impulses.
Achieve financial stability: Long-term financial goals can help you create a safety net, build wealth, and prepare for unexpected events such as medical emergencies or job loss.
Enjoy the benefits of compound interest: Investing in long-term goals, such as retirement or education, can help you take advantage of the power of compound interest and grow your wealth over time.
1. Capture your long-term goals in your to-do list.
Long-term goals of the financial sort are usually more like projects than individual tasks.
For example, if you want to pay off your debt, chances are that you don’t just have one credit card to pay off – you might have three credit cards, a vehicle loan, and a student loan to overcome (if not more).
“Pay off debt” would be the project. “Pay off Visa #1” would be the task.
The truth is that without writing down your projects and tasks within a task management system of some type, you’re much less likely to accomplish your long-term goals.
There’s just something about seeing your long-term goals on paper (or on a screen) that makes them real. The very act of writing them down is a type of commitment.
Give it a whirl. Write down your long-term financial goals and review them on a regular basis.
2. Don’t bury your long-term goals.
It’s not enough to write down your long-term financial goals. Additionally, you need to make them readily available to your eye.
One idea that I’ve found works well is to write down your goals on a whiteboard where you can’t help but see them. But that’s not for everybody.
The point is that you need to find a way to see your long-term goals in the context of all your other goals (namely, your short-term goals). If only your short-term, urgent goals are displayed for you to see, you’ll tend to focus on those instead of kicking butt on your long-term goals.
Don’t bury your long-term goals. They’re important too!
3. Dedicate certain days of the week to long-term goals.
One helpful tip I derived from Strategic Coach was to dedicate certain days of the week to certain goals. This has proved to be very helpful in my own life, and I believe it will in yours, too.
For example, you could dedicate a certain day of the week to managing your finances and brainstorming ways to improve your financial future. Perhaps you have a day off of work that would work best for you.
Now, I can hear you saying, “Oh Jeff, if I only had a day for such tasks – I’m way too busy with other stuff!” That’s fair.
But here’s the thing, you don’t just have to make this day about finances – you can make it about your other long-term goals too. Add in health, family, and other areas of responsibility. Consider this day (or these days) of the week to be all about bettering yourself and your life. Can’t you make time for that?
4. Prioritize your long-term goals properly.
When it comes to long-term financial goals, you need to properly prioritize them. There are some preliminary goals that should only take you less than a month, like setting up a budget and cutting expenses, but we’ll leave that for another article.
What are some common long-term financial goals and in which order should you complete them? Generally, I recommend you complete the following long-term financial goals in the order they are displayed below:
Build Your Emergency Fund
Think of your emergency fund as the foundation of your financial future. Without some liquid money, you’re going to be out of luck when financial disaster strikes. Believe me, they happen.
Your car engine might explode. Your kneecap might explode (ouch). Your water heater might explode. There are so many things that can explode . . . and it’s not easy to just walk away from those explosions while keeping your cool. It’s stressful!
But you know what would make those situations a little less stressful? You guessed it: an emergency fund baby!
Wipe Out Your Debt
Once you have your foundation in place, it’s time to knock out that debt. This can take several years or a few months – it depends on how much debt you have and how quickly you can shovel money at it.
Write down all of your debts and attack them one by one. It’s easier that way.
Start Investing for Retirement
Now it’s time to start investing for your latter years. Why? It’s possible that your earning potential can go down when you’re physically unable to work. Who knows, you might have a self-sustaining business upon reaching retirement age, but don’t count on it. Invest for the future!
Helping people retire well is what I do.
Start Saving for Other Long-Term Goals
This might include saving for your kids’ college education, purchasing a new vehicle, saving for a home renovation, or another goal that will take some time.
By prioritizing your long-term goals in the proper way, you can ensure that should you experience a slump in income, you aren’t wiped out due to a lack of financial planning.
5. Discover and focus on your motivations.
I’m convinced that one of the main reasons people don’t accomplish their long-term goals is because they really haven’t discovered their motivations.
For example, everyone knows it’s a good idea to pay off debt. It’s a financial goal that’s been embedded in our minds by countless financial advisors. But unless you discover your motivation for paying off debt, chances are you’ll give up before you achieve your goal.
In fact, if you’re paying off debt for the sake of paying off debt, you might as well give up now. You’re not going to be motivated enough to get the job done.
Instead, focus on some common motivations that can become your motivations. Here are some great reasons why people want to pay off debt:
To not have to pay interest on their purchases
To free up money for vacations
To free up money for investing for retirement
To not have to worry about those bills
To reduce the amount of stress in their lives
To free up the time it takes managing debt to focus on family
These are just a few of the motivations of others. What’s your motivation?
Assign a motivation for every long-term goal you have. Otherwise, you’re just trying to accomplish your long-term goals for the sake of accomplishing them – that’s not a real motivating factor if you ask me!
Long-Term Goal Examples
Long-term financial goals can take many forms, depending on your values, aspirations, and time horizon. Here are some examples of long-term financial goals in the SMART framework:
Example 1: Save for Retirement
Specific: Save $1 million by age 65 for retirement.
Measurable: Save $500 per month in a retirement account.
Achievable: Based on current income and expenses, it is feasible to save $500 per month for retirement.
Relevant: Retirement is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal by age 65.
Example 2: Pay off Debt
Specific: Pay off $30,000 in credit card debt.
Measurable: Pay $500 per month towards credit card debt.
Achievable: Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.
Relevant: Paying off debt is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal within 5 years.
Example 3: Invest in Education
Specific: Save $50,000 for a child’s college education.
Measurable: Save $200 per month in a 529 college savings plan.
Achievable: Based on current income and expenses, it is feasible to save $200 per month for college education.
Relevant: Investing in education is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal in 18 years.
Example 4: Buy a House
Specific: Save $100,000 for a down payment on a house.
Measurable: Save $1,000 per month in a high-yield savings account.
Achievable: Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.
Relevant: Buying a house is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal in 5 years.
Example 5: Start a Business
Specific: Launch a profitable business in the next 5 years.
Measurable: Develop a business plan and secure funding within the next 12 months.
Achievable: Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.
Relevant: Starting a business is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Launch the business within the next 5 years.
Long-Term Goal
Specific
Measurable
Achievable
Relevant
Time-bound
Save for Retirement
Save $1 million by age 65 for retirement.
Save $500 per month in a retirement account.
Based on current income and expenses, it is feasible to save $500 per month for retirement.
Retirement is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal by age 65.
Pay off Debt
Pay off $30,000 in credit card debt.
Pay $500 per month towards credit card debt.
Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.
Paying off debt is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal within 5 years.
Invest in Education
Save $50,000 for a child’s college education.
Save $200 per month in a 529 college savings plan.
Based on current income and expenses, it is feasible to save $200 per month for college education.
Investing in education is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal in 18 years.
Buy a House
Save $100,000 for a down payment on a house.
Save $1,000 per month in a high-yield savings account.
Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.
Buying a house is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal in 5 years.
Start a Business
Launch a profitable business in the next 5 years.
Develop a business plan and secure funding within the next 12 months.
Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.
Starting a business is a long-term financial goal that aligns with personal values and aspirations.
Launch the business within the next 5 years.
Need More Long-Term Goal Examples?
Knowing I’m not the only goal-setting freak that exists in this world, I asked fans from the Good Financial Cents Facebook page what their long-term goals (big shout to the Fincon community for contributing, too!).
Fincon Community Long-Term Goals
Here’s a great list of examples of long-term goals:
Bob Lotich at SeedTime.com says:
[I want] to provide a comfortable life for my family, to have enough cash to maintain a flexible lifestyle, and to use everything else to financially support charities and organizations that are making a huge impact on the world.
Ryan Guina at TheMilitaryWallet.com says:
[I want] to become financially independent. What this means to me: to have no consumer or mortgage debt and have enough resources in savings and investments to cover my everyday living expenses without relying upon income from my job. This will provide more freedom in pursuing activities based on fulfillment vs. the need to generate revenue.
Larry Ludwig at InvestorJunkie.com says:
[I want] to be financially free. I define it specifically as to accumulate $10,000,000 in investment assets that can generate at minimum 4% per year of income.
Teresa Mears at LivingOnTheCheap.com says:
[I want] to support myself, both now and in retirement, and enjoy life. What else is there?
Steve Chou at MyWifeQuitHerJob.com says:
[I want] to generate enough income so that I can spend more time with my family and be there for the kids. Growing up, my parents worked their butts off so I could go to a good school but I didn’t see them very often during the week. With my kids, I’m going to send them to a good college and always be present.
Grayson Bell at DebtRoundup.com says:
[I want to] build a business and a financial stockpile to allow my family and I to travel when and where we want to. I don’t want to be stuck due to a job or financial situation. This will require scaling my business and looking for more opportunities to expand my passive income streams.
Robert Farrington at TheCollegeInvestor.com says:
[I want] to generate enough passive income to replace my current income. This will require a long-term strategy of earning more money (through my salary and side hustles) and investing the excess. The goal, of course, is to retire early while still being able to provide the quality of life I want.
My Lifetime Goals
Long-term goals can be difficult to articulate but deserve to be written down. I previously shared my lifetime goals on this post. Looking them over I recognize I would make a few tweaks, but; for the most part, they are still align with what I want to achieve in life. Here’s a look:
1. Spiritual leader of my household. I want my kids to see me first as a God-loving father who puts his faith first before success. I want to continually love and support my wife, and do so in an Godly manner.
2. Live a long and filling life with my wife and family. Raise my kids with the philosophies of: working hard, but not sacrificing “work” for what you love; love first; and treat people with respect (Golden Rule)
3. Have several multiple-system driven businesses that produce >$100,000 a month of passive income.
4. Live in multiple countries (5+) for an extended period of time (minimum 3 weeks) with entire family
5. Inspire over 1,000,000 people to invest in themselves. This can be through traditional investing (Roth IRA, 401k), obtaining a higher degree or certification, or investing in a small business.
6. Be a successful entrepreneur and best-selling author of numerous works. I want to be recognized as as a hard worker who put his family and faith first.
The Bottom Line – Long-Term Financial Goals
Setting long-term financial goals is an important step towards achieving financial stability and building wealth. By defining your values, aspirations, and time horizon, you can create a roadmap that aligns with your priorities and guides your financial decisions.
Remember to monitor your progress, stay motivated, and seek professional advice when needed. With discipline and perseverance, you can achieve your long-term financial goals and secure your financial future.
Here’s your homework
I want you to implement at least one of these strategies for reaching your long-term goals over the next year. When the year is over, write me. Tell me how well the strategy worked out for you. I want you to put your heart and soul into one or more of these strategies.
Why? I want you to see success.
Make it hap’n, cap’n!
FAQs – Long-Term Financial Goals
How do I balance saving for long-term goals with short-term needs?
It’s important to strike a balance between saving for your long-term financial goals and meeting your short-term needs. You can achieve this by creating a budget that allocates some of your income towards both short-term and long-term goals.
This way, you can address your immediate financial needs while also making progress towards your long-term goals.
How can I stay motivated to achieve my long-term financial goals?
Staying motivated to achieve your long-term financial goals can be challenging, especially if your goals are several years away.
One way to stay motivated is to break your long-term goals into smaller, manageable milestones. Celebrate each milestone as you reach it, and use the progress you’ve made as motivation to keep going.
How do I know if I’m on track to achieve my long-term financial goals?
Regularly monitoring your progress towards your long-term financial goals is essential to staying on track.
You can use financial planning tools and software to track your progress and adjust your plan as needed. You can also work with a financial advisor or planner to evaluate your progress and make any necessary adjustments to your plan.
Can I adjust my long-term financial goals as my situation changes?
Yes, it’s important to be flexible and adjust your long-term financial goals as your situation changes. Life is unpredictable, and unexpected events can impact your financial situation. Review your financial plan regularly and adjust it as needed to ensure that it aligns with your current situation and goals.
Need some more long-term goals? Check out The Top 10 Good Financial Goals That Everyone Should Have. If you’re a baby boomer, check out 5 Financial Goals for Baby Boomers.
Long-term financial goals are an essential part of financial planning. They help you define your aspirations and create a roadmap for achieving them.
Long-term goals aren’t easy to achieve. But why?
Could it be that motivation wanes over time? Perhaps external circumstances change. Maybe it has to do with the feasibility of the goals.
Many people have trouble sticking to something over the course of a single year let alone several years or decades.
Perhaps that’s why long-term goals – like most financial goals – are so difficult to achieve.
How do we fight against whatever it is that holds us back from achieving these financial goals? Is it possible to win?
Yes. It is.
Today I’d like to share with you some ways you can achieve your long-term financial goals. I won’t claim it will be easy, but it will be worthwhile.
So whether you need to pay off debt, build an emergency fund, save for your kids’ college education, or invest for retirement, here are some ways you can make it hap’n, cap’n.
Why Long-Term Financial Goals Are Important
Long-term financial goals provide direction and motivation for your financial decisions. By defining your long-term goals, you will have a clear picture of what you want to achieve and what steps you need to take to get there. Setting long-term financial goals can help you:
Stay focused on your priorities: Setting long-term financial goals will help you prioritize your financial decisions and avoid getting distracted by short-term financial needs or impulses.
Achieve financial stability: Long-term financial goals can help you create a safety net, build wealth, and prepare for unexpected events such as medical emergencies or job loss.
Enjoy the benefits of compound interest: Investing in long-term goals, such as retirement or education, can help you take advantage of the power of compound interest and grow your wealth over time.
1. Capture your long-term goals in your to-do list.
Long-term goals of the financial sort are usually more like projects than individual tasks.
For example, if you want to pay off your debt, chances are that you don’t just have one credit card to pay off – you might have three credit cards, a vehicle loan, and a student loan to overcome (if not more).
“Pay off debt” would be the project. “Pay off Visa #1” would be the task.
The truth is that without writing down your projects and tasks within a task management system of some type, you’re much less likely to accomplish your long-term goals.
There’s just something about seeing your long-term goals on paper (or on a screen) that makes them real. The very act of writing them down is a type of commitment.
Give it a whirl. Write down your long-term financial goals and review them on a regular basis.
2. Don’t bury your long-term goals.
It’s not enough to write down your long-term financial goals. Additionally, you need to make them readily available to your eye.
One idea that I’ve found works well is to write down your goals on a whiteboard where you can’t help but see them. But that’s not for everybody.
The point is that you need to find a way to see your long-term goals in the context of all your other goals (namely, your short-term goals). If only your short-term, urgent goals are displayed for you to see, you’ll tend to focus on those instead of kicking butt on your long-term goals.
Don’t bury your long-term goals. They’re important too!
3. Dedicate certain days of the week to long-term goals.
One helpful tip I derived from Strategic Coach was to dedicate certain days of the week to certain goals. This has proved to be very helpful in my own life, and I believe it will in yours, too.
For example, you could dedicate a certain day of the week to managing your finances and brainstorming ways to improve your financial future. Perhaps you have a day off of work that would work best for you.
Now, I can hear you saying, “Oh Jeff, if I only had a day for such tasks – I’m way too busy with other stuff!” That’s fair.
But here’s the thing, you don’t just have to make this day about finances – you can make it about your other long-term goals too. Add in health, family, and other areas of responsibility. Consider this day (or these days) of the week to be all about bettering yourself and your life. Can’t you make time for that?
4. Prioritize your long-term goals properly.
When it comes to long-term financial goals, you need to properly prioritize them. There are some preliminary goals that should only take you less than a month, like setting up a budget and cutting expenses, but we’ll leave that for another article.
What are some common long-term financial goals and in which order should you complete them? Generally, I recommend you complete the following long-term financial goals in the order they are displayed below:
Build Your Emergency Fund
Think of your emergency fund as the foundation of your financial future. Without some liquid money, you’re going to be out of luck when financial disaster strikes. Believe me, they happen.
Your car engine might explode. Your kneecap might explode (ouch). Your water heater might explode. There are so many things that can explode . . . and it’s not easy to just walk away from those explosions while keeping your cool. It’s stressful!
But you know what would make those situations a little less stressful? You guessed it: an emergency fund baby!
Wipe Out Your Debt
Once you have your foundation in place, it’s time to knock out that debt. This can take several years or a few months – it depends on how much debt you have and how quickly you can shovel money at it.
Write down all of your debts and attack them one by one. It’s easier that way.
Start Investing for Retirement
Now it’s time to start investing for your latter years. Why? It’s possible that your earning potential can go down when you’re physically unable to work. Who knows, you might have a self-sustaining business upon reaching retirement age, but don’t count on it. Invest for the future!
Helping people retire well is what I do.
Start Saving for Other Long-Term Goals
This might include saving for your kids’ college education, purchasing a new vehicle, saving for a home renovation, or another goal that will take some time.
By prioritizing your long-term goals in the proper way, you can ensure that should you experience a slump in income, you aren’t wiped out due to a lack of financial planning.
5. Discover and focus on your motivations.
I’m convinced that one of the main reasons people don’t accomplish their long-term goals is because they really haven’t discovered their motivations.
For example, everyone knows it’s a good idea to pay off debt. It’s a financial goal that’s been embedded in our minds by countless financial advisors. But unless you discover your motivation for paying off debt, chances are you’ll give up before you achieve your goal.
In fact, if you’re paying off debt for the sake of paying off debt, you might as well give up now. You’re not going to be motivated enough to get the job done.
Instead, focus on some common motivations that can become your motivations. Here are some great reasons why people want to pay off debt:
To not have to pay interest on their purchases
To free up money for vacations
To free up money for investing for retirement
To not have to worry about those bills
To reduce the amount of stress in their lives
To free up the time it takes managing debt to focus on family
These are just a few of the motivations of others. What’s your motivation?
Assign a motivation for every long-term goal you have. Otherwise, you’re just trying to accomplish your long-term goals for the sake of accomplishing them – that’s not a real motivating factor if you ask me!
Long-Term Goal Examples
Long-term financial goals can take many forms, depending on your values, aspirations, and time horizon. Here are some examples of long-term financial goals in the SMART framework:
Example 1: Save for Retirement
Specific: Save $1 million by age 65 for retirement.
Measurable: Save $500 per month in a retirement account.
Achievable: Based on current income and expenses, it is feasible to save $500 per month for retirement.
Relevant: Retirement is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal by age 65.
Example 2: Pay off Debt
Specific: Pay off $30,000 in credit card debt.
Measurable: Pay $500 per month towards credit card debt.
Achievable: Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.
Relevant: Paying off debt is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal within 5 years.
Example 3: Invest in Education
Specific: Save $50,000 for a child’s college education.
Measurable: Save $200 per month in a 529 college savings plan.
Achievable: Based on current income and expenses, it is feasible to save $200 per month for college education.
Relevant: Investing in education is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal in 18 years.
Example 4: Buy a House
Specific: Save $100,000 for a down payment on a house.
Measurable: Save $1,000 per month in a high-yield savings account.
Achievable: Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.
Relevant: Buying a house is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Achieve this goal in 5 years.
Example 5: Start a Business
Specific: Launch a profitable business in the next 5 years.
Measurable: Develop a business plan and secure funding within the next 12 months.
Achievable: Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.
Relevant: Starting a business is a long-term financial goal that aligns with personal values and aspirations.
Time-bound: Launch the business within the next 5 years.
Long-Term Goal
Specific
Measurable
Achievable
Relevant
Time-bound
Save for Retirement
Save $1 million by age 65 for retirement.
Save $500 per month in a retirement account.
Based on current income and expenses, it is feasible to save $500 per month for retirement.
Retirement is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal by age 65.
Pay off Debt
Pay off $30,000 in credit card debt.
Pay $500 per month towards credit card debt.
Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.
Paying off debt is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal within 5 years.
Invest in Education
Save $50,000 for a child’s college education.
Save $200 per month in a 529 college savings plan.
Based on current income and expenses, it is feasible to save $200 per month for college education.
Investing in education is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal in 18 years.
Buy a House
Save $100,000 for a down payment on a house.
Save $1,000 per month in a high-yield savings account.
Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.
Buying a house is a long-term financial goal that aligns with personal values and aspirations.
Achieve this goal in 5 years.
Start a Business
Launch a profitable business in the next 5 years.
Develop a business plan and secure funding within the next 12 months.
Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.
Starting a business is a long-term financial goal that aligns with personal values and aspirations.
Launch the business within the next 5 years.
Need More Long-Term Goal Examples?
Knowing I’m not the only goal-setting freak that exists in this world, I asked fans from the Good Financial Cents Facebook page what their long-term goals (big shout to the Fincon community for contributing, too!).
Fincon Community Long-Term Goals
Here’s a great list of examples of long-term goals:
Bob Lotich at SeedTime.com says:
[I want] to provide a comfortable life for my family, to have enough cash to maintain a flexible lifestyle, and to use everything else to financially support charities and organizations that are making a huge impact on the world.
Ryan Guina at TheMilitaryWallet.com says:
[I want] to become financially independent. What this means to me: to have no consumer or mortgage debt and have enough resources in savings and investments to cover my everyday living expenses without relying upon income from my job. This will provide more freedom in pursuing activities based on fulfillment vs. the need to generate revenue.
Larry Ludwig at InvestorJunkie.com says:
[I want] to be financially free. I define it specifically as to accumulate $10,000,000 in investment assets that can generate at minimum 4% per year of income.
Teresa Mears at LivingOnTheCheap.com says:
[I want] to support myself, both now and in retirement, and enjoy life. What else is there?
Steve Chou at MyWifeQuitHerJob.com says:
[I want] to generate enough income so that I can spend more time with my family and be there for the kids. Growing up, my parents worked their butts off so I could go to a good school but I didn’t see them very often during the week. With my kids, I’m going to send them to a good college and always be present.
Grayson Bell at DebtRoundup.com says:
[I want to] build a business and a financial stockpile to allow my family and I to travel when and where we want to. I don’t want to be stuck due to a job or financial situation. This will require scaling my business and looking for more opportunities to expand my passive income streams.
Robert Farrington at TheCollegeInvestor.com says:
[I want] to generate enough passive income to replace my current income. This will require a long-term strategy of earning more money (through my salary and side hustles) and investing the excess. The goal, of course, is to retire early while still being able to provide the quality of life I want.
My Lifetime Goals
Long-term goals can be difficult to articulate but deserve to be written down. I previously shared my lifetime goals on this post. Looking them over I recognize I would make a few tweaks, but; for the most part, they are still align with what I want to achieve in life. Here’s a look:
1. Spiritual leader of my household. I want my kids to see me first as a God-loving father who puts his faith first before success. I want to continually love and support my wife, and do so in an Godly manner.
2. Live a long and filling life with my wife and family. Raise my kids with the philosophies of: working hard, but not sacrificing “work” for what you love; love first; and treat people with respect (Golden Rule)
3. Have several multiple-system driven businesses that produce >$100,000 a month of passive income.
4. Live in multiple countries (5+) for an extended period of time (minimum 3 weeks) with entire family
5. Inspire over 1,000,000 people to invest in themselves. This can be through traditional investing (Roth IRA, 401k), obtaining a higher degree or certification, or investing in a small business.
6. Be a successful entrepreneur and best-selling author of numerous works. I want to be recognized as as a hard worker who put his family and faith first.
The Bottom Line – Long-Term Financial Goals
Setting long-term financial goals is an important step towards achieving financial stability and building wealth. By defining your values, aspirations, and time horizon, you can create a roadmap that aligns with your priorities and guides your financial decisions.
Remember to monitor your progress, stay motivated, and seek professional advice when needed. With discipline and perseverance, you can achieve your long-term financial goals and secure your financial future.
Here’s your homework
I want you to implement at least one of these strategies for reaching your long-term goals over the next year. When the year is over, write me. Tell me how well the strategy worked out for you. I want you to put your heart and soul into one or more of these strategies.
Why? I want you to see success.
Make it hap’n, cap’n!
FAQs – Long-Term Financial Goals
How do I balance saving for long-term goals with short-term needs?
It’s important to strike a balance between saving for your long-term financial goals and meeting your short-term needs. You can achieve this by creating a budget that allocates some of your income towards both short-term and long-term goals.
This way, you can address your immediate financial needs while also making progress towards your long-term goals.
How can I stay motivated to achieve my long-term financial goals?
Staying motivated to achieve your long-term financial goals can be challenging, especially if your goals are several years away.
One way to stay motivated is to break your long-term goals into smaller, manageable milestones. Celebrate each milestone as you reach it, and use the progress you’ve made as motivation to keep going.
How do I know if I’m on track to achieve my long-term financial goals?
Regularly monitoring your progress towards your long-term financial goals is essential to staying on track.
You can use financial planning tools and software to track your progress and adjust your plan as needed. You can also work with a financial advisor or planner to evaluate your progress and make any necessary adjustments to your plan.
Can I adjust my long-term financial goals as my situation changes?
Yes, it’s important to be flexible and adjust your long-term financial goals as your situation changes. Life is unpredictable, and unexpected events can impact your financial situation. Review your financial plan regularly and adjust it as needed to ensure that it aligns with your current situation and goals.
Need some more long-term goals? Check out The Top 10 Good Financial Goals That Everyone Should Have. If you’re a baby boomer, check out 5 Financial Goals for Baby Boomers.
This is another guest post from JoeTaxpayer. On my blog, I’ve shared several articles that discussed the Roth IRA conversion event of 2010 in great length and detail. While this is can be a great opportunity for many, there are several instances that a conversion does not. I looked to JoeTaxpayer to share some pros and cons of the Roth IRA conversion and for unforeseen consequences that could result.
There’s been much hype regarding the ability for anyone to convert their retire money to Roth regardless of their income. Many professional planners and writers of financial blogs have offered compelling reasons why one should convert. Today, I’d like to share some scenarios where you might regret that decision.
You don’t have a crystal ball
All signs point to higher marginal rates, this is one factor that prompts the advice to convert, but who exactly would that impact, and by how much? Let’s look at the first risk of regret. You are single, and an above average wage earner, just barely in the 28% bracket. (This simply means your taxable income is above $82,400 but less than $171,850, quite a range). Any conversion you make now is taxed at 28%, by definition. You get married, and start a family quickly, your spouse staying home. That same income can easily drop you into the 15% bracket as you now have three exemptions, and instead of a standard deduction, you have a mortgage, property tax and state tax which all put you into Schedule A territory and a taxable income of less than $68,000. Now is when you should use the conversion or Roth deposits to take advantage of that 15% bracket, before your spouse returns to work and you find yourself in the 25 or 28% bracket again. It’s then that you should convert enough (or use Roth in lieu of traditional IRA) to ‘top off’ your current bracket.
Life isn’t linear
It’s human nature to expect the next years to be very similar to the past few. Yet, life doesn’t work quite that way. The person who makes more money year on year, from their first job right through retirement is the exception. For more people, there are layoffs, company closings, major changes in family status, disability, and even death. Except for permanent disability or death, the other situations can be considered opportunities to take advantage of a full or partial Roth conversion. If one should become disabled, the ability to withdraw that pretax money at the lowest rates is certainly preferable to having paid tax on it all at your marginal rate.
Transferring your 401(k)
The Roth conversion is available for holders of 401(k) (and other) retirement accounts as well as holders of traditional IRA accounts. Back in October 07, I cautioned my readers on a somewhat obscure topic they need to be aware of when considering a transfer from the 401(k) to their IRA and the same caution exists for conversion to a Roth. Net Unrealized Appreciation refers to the gains on company stock held within your 401(k). The rules surrounding this allow you to take the stock from the 401(k) and transfer it to a regular brokerage account. Taxes are due only on the cost of that stock, not the current market value. The difference up to the market value at time of sale (thus the term Net Unrealized Appreciation) is treated as a long term capital gain. Current tax law offers a top LT Cap Gain rate of 15%. A loss of 10% or more if you are in the 25% bracket or higher and convert that company stock to a Roth.
Taking Money At Retirement
Given the low saving rate of the past decades, all projections point to fewer than the top 10% of retirees coming close to ‘retiring in a higher bracket.’ Consider how much taxable income it would take to be at the top of the 15% bracket in 2010. For a couple, the taxable income needs to exceed $68,000. Add to this two exemptions, $3,650 ea, and an $11,400 standard deduction. This totals $86,700. Using a 4% withdrawal rate, it would take $2,167,500 in pretax money to generate this annual withdrawal. What a shame it would be to pay tax at 25% to convert only to find yourself with a mix of pre and post-tax money that puts you toward the bottom of that bracket. Whose marginal rates do you believe will rise? Couples making less than $70,000? I doubt it. What’s the risk? That you should be in the 25% bracket at retirement? That’s still break even in the worst scenario.
What About Your Beneficiaries
While a tax-free inheritance might be great for the kids, a properly inherited, properly titled Beneficiary IRA can provide them a lifetime of income. Consider, if you leave a portion of your traditional IRA to your grandchild, a 13 year old, his first year RMD (required minimum distribution) will only be about 1.43% of the account balance. For a $100,000 account left to him, this RMD falls shy of the current $1900/yr limit before he is subject to the kiddie tax. To insure that he doesn’t withdraw the full remaining amount at 18 or 21, consult a trust attorney to set up the right account for this purpose. If left to your own adult children, the advantage can go either way depending on their income and savings level.
Are You a Philanthropist?
If you don’t have individual heirs you wish to leave your assets to, the ultimate poke at Uncle Sam is to leave your money to charity. No taxes at all are due. Leaving Roth money to charity just means that our government already got its piece of the pie.
Avoiding Roth IRA Conversion Regrets
Today, I’ve shared with you some scenarios that are cause for regretting a conversion. As I always caution my readers, your situation may differ from anything I addressed here, and your unique needs are all that matters. If you have any questions on when or if a conversion makes sense for you, post a comment and we’ll be happy to discuss.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please see a tax professional before implementing any sort of IRA conversion. Joe TaxPayer is not affiliate or endorse by LPL Financial.
Many people think of large national banks when they think of banking. However, regional banks can often offer a more personalized and localized banking experience. They may also have lower interest rates and fees than larger banks.
In this article, we’ll examine the best regional banks in terms of customer service, fees, and interest rates. This list is a great place to start if you’re looking for a new place to do your banking or simply want to compare your current bank to others in your area.
Best Regional Banks in the West
Bank of the West
Bank of the West is a large regional bank based in San Francisco, with hundreds of locations nationwide. It offers standard deposit accounts, such as checking, savings, CDs, and money market accounts.
Checking accounts have varying terms and fees, some of which can be waived by signing up for paperless statements. The bank also has a low-interest Choice Interest Checking account and two savings accounts with fee waivers for maintaining a minimum balance.
First Interstate Bank
First Interstate Bank is the largest bank in Montana and 73rd in the US. Established in 1916, it has 313 locations.
Its headquarters are in Billings, but it has locations throughout the states of Idaho, Montana, Oregon, South Dakota, Washington and Wyoming.
Umpqua Bank
Umpqua Bank is the largest bank in Oregon and 75th in the US. Established in 1953, it has 219 locations, headquartered in Roseburg.
It offers a unique Go-To app that allows customers to text a banker for questions or advice. The bank also offers multiple checking accounts, money market accounts and CD terms, with a low deposit requirement to open a money market or savings account.
Union Bank
Union Bank is a full-service bank based in San Francisco, with over 350 branches in California, Washington and Oregon. It offers online, mobile, and telephone banking options in addition to traditional branch banking.
Products include checking, savings, money market, CDs, credit cards, mortgages, loans, insurance and investment services.
Best Regional Banks in the Southwest
BOK Financial
BOK Financial is the largest bank in Oklahoma and 55th in the US. Established in 1910, it has 118 locations and is headquartered in Tulsa. It offers a variety of financial products, including savings, checking, money market, CDs, IRAs, credit cards, and mortgages.
First National Bank Texas
First National Bank Texas (FNBT) was founded in 1901 in Killeen, Texas. Today, it serves customers at over 300 locations across Texas, New Mexico, and Arizona.
The bank offers a variety of personal banking products, including checking accounts, savings accounts, money market accounts, and CDs, and more.
Frost Bank
Frost Bank is based in San Antonio, Texas. Established in 1868, it has 171 locations and 1,700 ATMs throughout Texas.
The serves customers in most of the state’s larger metro areas. It offers a range of products including checking and savings accounts, loans, investing, insurance and wealth management services to help customers manage and grow their money.
MidFirst Bank
MidFirst Bank is the largest privately owned bank in the US. It operates 75 branches in 3 states, with most located in Oklahoma, Arizona, and Colorado. Its headquarters is in Oklahoma City.
MidFirst provides a range of banking options, including multiple types of checking accounts, and the possibility to waive monthly service fees.
Best Regional Banks in the Midwest
Arvest Bank
Arvest Bank is a regional bank based in Bentonville, Arkansas, with over 240 branches in Arkansas, Kansas, Oklahoma and Missouri. It offers checking accounts, savings accounts, money market accounts, and CDs, and its mobile banking app is highly rated in app stores. Accounts can be opened online, but only by residents of the four states the bank serves.
BMO Harris Bank
BMO Harris is the 8th largest bank in North America by assets, headquartered in Chicago and is a subsidiary of the Bank of Montreal. It has over 500 branches in Arizona, Florida, Illinois, Indiana, Kansas, Missouri, Minnesota, and Wisconsin.
Fifth Third Bank
Fifth Third Bank is based in Cincinnati, serving customers in 11 states with over 1,100 branches. It offers various checking and savings accounts, money market account and a wide range of CD terms.
The Fifth Third Momentum Checking account boasts no monthly service fee and provides fee-free access to over 50,000 ATMs across the country. The bank also has low deposit requirements and 24/7 access via its highly rated mobile app.
Huntington National Bank
Huntington National Bank is a full-service bank with over 1,100 branches in 12 states, primarily in the Midwest and Southern regions. It provides a range of products and services including banking, wealth management, and insurance.
The bank offers a free checking account, and 24-hour overdraft forgiveness which allows an extra day to make deposits to avoid overdraft and return fees, and other features.
Best Regional Banks in the Southeast
Cadence Bank
Cadence Bank, a regional giant based in Tupelo, stands tall as the largest bank in Mississippi and ranks 51st nationally. It has a network of 448 locations spread across six states: Alabama, Florida, Georgia, Mississippi, Tennessee, and Texas.
Cadence offers a comprehensive range of financial products, from checking and savings accounts to credit cards, lines of credit, and mortgages.
First Citizens Bank
First citizens Bank, founded in North Carolina in 1898, has a rich history of providing reliable financial services. Its offerings encompass a diverse array of products, such as checking, savings, CDs, credit cards, loans, mortgages, investments, and insurance.
With 586 branches in 22 states, the bank makes banking easy and accessible. It also offers free checking and savings account options with a low minimum deposit requirement.
SouthState Bank
SouthState Bank, the largest regional bank in Florida, was founded in 1992 in Winter Haven. With a presence in six states – Florida, Georgia, Alabama, Virginia, North Carolina, and South Carolina – the bank boasts a network of over 240 branches.
SouthState offers a wide range of banking and investment services to individuals and businesses alike.
Synovus Bank
Based in Columbus, Georgia, Synovus Bank operates 309 branches in five states – Alabama, Florida, Georgia, South Carolina, and Tennessee.
The bank provides a comprehensive range of financial services, including loans, deposit products, investment services, financial planning, and wealth management, empowering its customers to reach their financial goals.
Best Regional Banks in the Northeast
Fulton Bank
Fulton Bank, based in Lancaster, Pennsylvania, is a regional bank with a presence in 5 mid-Atlantic states – Delaware, Maryland, New Jersey, Pennsylvania, and Virginia. With over 250 branches, Fulton Bank offers an array of personal banking products, including checking, savings, money market accounts, and certificates of deposit.
M&T Bank
M&T Bank is a major regional bank headquartered in Buffalo, New York, serving customers in 13 states, with a strong presence in New York, Connecticut, Maryland, Pennsylvania, and New Jersey.
The bank offers a wide range of financial products, including checking and savings, loans, retirement accounts, credit and debit cards, and investment services. With M&T Bank’s basic checking account, there’s no monthly fee.
Valley National Bank
Valley National Bank was established in 1927 and is headquartered in Wayne, New Jersey. It boasts 200 convenient branches across several states, including New Jersey, New York, Florida, Alabama, California, and Illinois.
The bank offers a range of checking and savings accounts, including Rewards Checking and Interest Checking.
Webster Bank
Webster Bank, based in Stamford, Connecticut, operates 177 branches across Connecticut, Massachusetts, Rhode Island, and New York. It offers a comprehensive range of financial products, including checking, savings, and money market accounts, CDs, and lending products.
With 5 different checking accounts to choose from, including an Opportunity Checking account for those seeking second-chance banking, Webster Bank caters to a wide range of banking needs.
Big Regional Banks with Locations in Multiple Regions
Citizens Bank
Citizens Bank is based in Providence, Rhode Island and is the 15th largest bank in the US. It operates over 1,000 branches across 11 states in New England, Mid-Atlantic, and Midwest regions.
It offers various retail, small business and commercial banking products. The bank also has online-only savings accounts and CDs with competitive interest rates and no monthly fees.
KeyBank
Headquartered in Cleveland, Ohio, KeyBank operates over 1,000 full-service branches in 15 states, offering a range of banking products including personal checking, savings, money market, and CDs. The bank is committed to providing excellent customer service, with 24/7 phone support available.
Regions Bank
Regions Bank is the largest bank in Alabama, with its headquarters in Birmingham. Operating over 1,500 branches in 15 states across the South and Midwest, the bank offers 24/7 phone customer service.
In addition to traditional banking services, Regions Bank also provides convenient digital banking features, including mobile and online banking, account management, bill pay, and remote check deposit.
TD Bank
TD Bank is headquartered in Cherry Hill, New Jersey-based with a presence primarily along the East Coast in 15 states. The bank operates 1,200 branches and is the ninth-largest bank in the nation.
TD Bank offers a range of financial products including checking, savings, and money market accounts, certificates of deposits, and credit cards. Additionally, its physical locations offer extended hours to accommodate customer needs.
Truist
Truist Bank is based in Charlotte, North Carolina, with a presence in 17 states and the District of Columbia. With over 2,100 branches, the bank primarily serves customers in the Southern states but also has locations in Indiana, Maryland, New Jersey, Ohio, and Pennsylvania.
Truist offers a range of banking products including checking, savings, money market, CDs, credit cards, and more.
U.S. Bank
U.S. Bank it headquartered in Minneapolis, and it’s the fifth-largest bank by assets in the United States. Its services are primarily in the Western and Midwestern parts of the country with over 2,000 branches in 26 states.
U.S. Bank provides customers with a vast network of ATMs, including those in the MoneyPass network. They offer a comprehensive selection of products, such as deposit accounts and mortgages. Customers can choose to open accounts either in-person or through the bank’s online platform. Its mobile app is also highly rated.
Factors to Consider When Choosing a Regional Bank
When it comes to selecting a regional bank, there are several important factors to keep in mind to ensure you make the right choice for your financial needs. These include:
Location: Ensure the bank has branches and ATMs conveniently located near your home and workplace for easy access and transactions.
Fees: Compare fees such as monthly maintenance fees, overdraft fees, ATM fees, and others to make sure they are reasonable and in line with other regional banks.
Interest rates: Evaluate interest rates and annual percentage yields (APYs) for checking and savings accounts, as well as loans, to get the best deal possible.
Online and mobile banking: Assess the bank’s digital offerings such as online banking and mobile app capabilities to make sure they meet your needs and are user-friendly.
Customer service: Look into the bank’s customer service reputation by reading reviews and asking others. Choose a bank with a strong reputation for assisting customers with their financial needs.
Security: Verify that the bank has robust security measures in place to protect your personal and financial information.
Frequently Asked Questions
What are regional banks?
Regional banks, as per the Federal Reserve Board, are financial institutions with assets between $10 billion and $100 billion, putting them in between community banks and larger national or international banks. However, the definition may vary among different sources.
These banks serve a designated geographic region, usually within one state or a few states, and offer a variety of commercial banking services like checking accounts, savings, mortgage loans, and more.
How do regional banks differ from national banks?
National banks cater to a broad geographical area, spanning across several states and sometimes the entire country. Unlike national banks, regional banks concentrate more on meeting the requirements of their local communities. The scope of service for regional banks can greatly differ, with some serving small regions, while others offer services to larger territories.
What’s the difference between a regional bank and a community bank?
Regional banks are typically bigger and offer a wider range of services compared to community banks. They have multiple branches and ATMs across a state or region, and provide more advanced financial products.
In contrast, community banks are focused on serving the local community and are generally smaller with fewer branches and ATMs. They put a strong emphasis on personal banking services like checking and savings accounts, home loans, and consumer loans. Additionally, they have close ties to the community and often prioritize lending to small businesses and community organizations.
What are some benefits of using a regional bank?
Regional banks often provide a more personal touch and in-depth local knowledge. Additionally, they are connected to the community and offer more flexible lending options. Furthermore, their fees tend to be lower compared to bigger banks.
For those who prioritize low fees, online banks are another option to consider. These banks, also known as digital or online-only banks, have the lowest fees of all banking options, thanks to their lower overhead expenses. They pass the savings on to their customers.
Are there any downsides to using a regional bank?
Regional banks may have fewer branches and ATMs compared to big banks, which can be a disadvantage for some customers. Moreover, they may not offer as many types of accounts or financial products as large banks.
What should I look for when choosing a regional bank?
When choosing a regional bank, take into account elements like its reputation, monthly fees, and available accounts. Additionally, think about its proximity and if it provides online and mobile banking services.
Can I open an account with a regional bank if I don’t live in the region they serve?
It depends on the bank’s policies. Some regional banks may require that you live in the region they serve to open a bank account, while others may be more flexible.
How many regional banks are there in the U.S.?
Based on the Federal Reserve Board’s definition of a regional bank, of $10 billion to $100 billion in assets, there are around 120 regional banks in the U.S.
Everybody likes to talk about how much they’re contributing to their 401(k) plans, or about how much they should be contributing to their 401(k) plans.
That’s important, no doubt.
But the bigger question should be the end game. That’s how much you should have in your 401(k).
That’s the real measure of success or failure of any retirement plan which involves the 401(k) as the main piece.
It’s a tough proposition. Everybody’s in a different situation, as far as age, income, immediate financial condition, and risk tolerance.
There’s no scientific way to determine how much you should have in your 401(k), but we’re going to take a stab at it, by approaching it from several different angles.
We’ll break it down this way…
Table of Contents – What We’ll Cover in this Post:
The State of American Retirement – It Needs Improvement!
Contributing Just Enough to Max-Out the Employer Match Will Fail
You Need to Contribute at Least 20% of Your Income for Retirement
Don’t Randomly Pick Investments for Your 401(k)
And Don’t Let Your Co-workers Tell You What Investments to Pick Either!
While You’re At It – Stay Away From Target Date Funds
If You Have a Roth 401(k) Take Advantage of It
Don’t Forget About the Roth IRA, Too
How Much Should YOU Have in Your 401(k)?
Let’s start with the bad news first…
The State of American Retirement – It Needs Improvement!
According to an article released by CNBC, which looked at data from Northwestern Mutual and Gallup’s 2018 surveys, 21% of Americans have no retirement savings, and the average amount that Americans have saved is $84,821.
A wide majority of those surveyed, 78%, expressed concern that they will not have a substantial amount of retirement money to live on, meaning they will continue to work past retirement age.
Many people do not realize what an advantageous opportunity a 401(k) plan offers. It is the most generous of all retirement plans, one that could alleviate much of the concern Americans are expressing over their financial future.
Contributing Just Enough to Max-out the Employer Match will Fail
I often recommend contributing at least enough to a 401(k) plan to get the maximum employer match.
If an employer matches 50% up to 3%, then you contribute 6%. That will give you a combined contribution of 9% per year.
But there’s a problem with this recommendation.
It’s not that it’s bad advice – it certainly makes sense for someone who is struggling with financial limits, and needs a minimum contribution level.
The problem is when the minimum contribution becomes the maximum contribution. There’s no question, 9% is way better than nothing. But if you intend to retire, it won’t get the job done!
The other problem is that the employer match typically comes with a vesting period. That could be up to five years.
If you stay on the job substantially less, you’ll lose some or all of the match. That will drop you down to only your 6% contribution.
An example of contributing just enough to max out the employer match
Let’s assume you’re 35 years old, and earn $50,000 per year.
You contribute 6% of your salary to your 401(k) plan, and your employer matches that at 50%, or 3%.
Over the next 30 years, you earn an average annual rate of return on your investments of 7%.
By the time you’re 65 years old, you’ll have $441,032.
That may seem like a lot of money from where you’re at right now. But when retirement rolls around, it will probably be inadequate.
Here’s why: it’s called the safe withdrawal rate.
It holds that if you limit your withdrawals from your retirement plan to about 4% per year, you will never outlive your money. You can see the wisdom of that, can’t you?
But a retirement portfolio of $441,032 with withdrawals at 4%, is just $17,641 per year, and that’s just $1,470 per month.
Since most employers no longer provide traditionally defined benefit pension plans, you’ll have to live on that, plus your Social Security benefit.
Let’s say that your Social Security benefit is $1,500 per month.
What kind of retirement will you have with an income of $2,970 per month?
You won’t do much better than just getting by on that kind of retirement income. My guess is that you won’t even be retired at all.
You Need to Contribute at Least 20% of Your Income for Retirement
Most people expect that retirement will be more than just getting by.
Retirement isn’t just a number – it’s the sum total of what you will take out of a lifetime of hard work. It should provide you with an income that will give you more than just basic survival.
For that reason, you need to contribute at least 20% of your income to your retirement plan. The only way for most people to do that is through a 401(k) plan at work.
Let’s look at another example. Let’s the same financial profile from the last example, but instead of making a 6% contribution, you instead contribute 20% of your salary. The employer match will remain a 3%, giving you a combined annual contribution of 23% of your income.
What will your retirement look like by age 65?
How about $1,127,066???
4% of $1,127,066 will be $45,083, or $3,756 per month. Adding in $1,500 for Social Security, and you’re up to $5,256, which is more than you earn on your job!
Are you getting excited? You should be.
Don’t Randomly Pick Investments for Your 401(k)
Next to low contribution rates, the biggest problem with most 401(k) plans is poor investment selection.
Sometimes that’s inevitable, because some 401(k) plans just have very limited investment selection. But in other cases, the owner of the plan just makes bad choices.
What makes investment choices bad?
Investing too conservatively, by favoring fixed-income investments for safety
Holding too much company stock, which is a classic case of “putting too many eggs in one basket”
Not having adequate diversification
Adding random investments to your plan, like “hot tip” stocks
Trading too frequently, which causes high transaction fees, and usually doesn’t work anyway
Designing your portfolio in a way that’s inconsistent with your long-term goals
Let’s face it, most people are not investment professionals. That means you can’t rely on your own resources in creating and managing what will eventually become your largest incoming-producing asset.
And that means you need to get help.
One source is Personal Capital. That’s an investment service that doesn’t manage your 401(k) plan directly, but it does provide guidance on how to invest the plan.
They do that through their Retirement Planner and 401(k) Fund Allocation tools.
Another service that’s growing rapidly is Blooom. It’s an investment service that will provide you with investment management for your 401(k) plan.
The service cost just $10 per month, which is a small price to pay to get professional investment advice for your largest asset.
And Don’t let Your Co-workers Tell You What Investments to Pick Either!
One of the complications with 401(k) plan management is the herd mentality.
It happens in most companies and departments. Someone says go to the right, and everyone turns to the right without giving it much thought. We’re virtually programmed to operate that way in an organizational environment.
But it’s financial suicide when it comes to investing for retirement.
We should never presume that a coworker, or even a boss, has some sort of superior knowledge when it comes to investments. That person might be bragging about what he is investing in, maybe to get moral support for his decision.
You, and you alone, will one day need to live on your retirement portfolio. You shouldn’t trust that outcome to what amounts to water cooler gossip.
While You’re at it – Stay Away from Target Date Funds
There’s one type of investment that’s gaining in popularity, and I don’t think it’s a healthy development.
It’s target date funds.
I don’t have a good feeling about them, and that’s why I don’t recommend them.
In fact, I hate target date funds. Does that sound too strong?
Target date funds are one of those innovations that work better in theory than they do in reality.
They start with your retirement date, which is why they’re called “target date funds”. If you plan to retire at age 65, they’ll have tiered plans (which are actually mutual funds).
They have one when you’re 40 years from retirement, another when you’re 30 years out, then 20 years, and 10 years. That may not be exactly how they all work, but that’s the basic idea.
The target dates mostly adjust your portfolio allocation. That is, the closer that you are to retirement, the higher the bond allocation is, and the less that’s invested in stocks.
The concept is to reduce portfolio risk as you move closer to retirement.
That all sounds reasonable on paper.
But it has two problems.
One is target date funds have unusually high fees. That reduces the return on your investment.
The other is they arbitrarily reduce growth in your portfolio as you move closer to retirement.
That generally makes sense, but not for people who either have a higher risk tolerance, or those who need healthier returns as they move closer to retirement.
Avoid these funds, no matter how hard the pitch is for them.
If You Have a Roth 401(k) Take Advantage of it
A growing twist on the basic 401(k) plan is the Roth 401(k).
It works just like a Roth IRA. Your contributions to the plan are not tax-deductible, but your withdrawals can be taken tax-free.
That’s as long as you are at least 59 ½, and have been in the plan for at least five years.
The Roth 401(k) has two major differences from a Roth IRA.
The first is that the Roth 401(k) is subject to required minimum distributions (RMDs) beginning at age 70 1/2. A Roth IRA is not. (You can get around this problem by rolling your Roth 401(k) plan into a Roth IRA.)
The second is the amount of your contribution.
While a Roth IRA is limited to $5,500 per year (or $6,500 if you are 50 or older), contributions to a Roth 401(k) are the same as they are for a traditional 401(k). That’s $18,000 per year, or $24,000 if you are 50 or older.
This doesn’t mean that you can put $18,000 in a traditional 401(k), and another $18,000 into a Roth 401(k). You must allocate between the two.
It makes a lot of sense to do this. You will lose tax deductibility on the amount of your contribution that goes to the Roth 401(k).
But by making the allocation, you ensure that at least some of your retirement income will be free from income tax.
If your 401(k) plan offers the Roth option, you should absolutely take advantage of it. It’s a form of income tax diversification for your retirement.
Don’t Forget About the Roth IRA, Too
If your employer doesn’t offer a Roth 401(k), then you should contribute at least some of your retirement money to a Roth IRA.
There are income limits beyond which you cannot contribute to a Roth IRA (those limits don’t apply to Roth 401(k) contributions).
For 2019, your income cannot exceed $122,000 per year if you are single, or $193,000 if you’re married filing jointly. Both of those amounts have increased since last year, meaning those whose earnings were on the fringe of the income limit can now contribute to this rewarding retirement account.
Having a Roth IRA, in addition to your 401(k), has several advantages:
It increases your total retirement contributions. If you are contributing $18,000 to your 401(k), plus $5,500 to a Roth IRA, that raises your annual contribution to $23,500.
Roth IRAs are self-directed accounts. That means that you can hold the account with a large investment brokerage firm that offers virtually unlimited investment options.
You will have complete control over how the plan is managed. The account could even invest the account with a robo advisor, which will provide you with low-cost professional investment management. (Two popular choices are Betterment and Wealthsimple.)
You’ll have an account ready and waiting, in case you want to do a Roth IRA conversion. It’s a popular way to convert taxable retirement income into tax-free retirement income.
Set up and contribute to a self-directed Roth IRA account, if you qualify. It’s become a retirement must-have.
How Much Should You Have in Your 401(k)?
With all the above information in mind, how much should you have in your 401(k)?
The answer is: as much as you think you’ll need to retire.
Does that sound too vague?
Let’s start with this…make sure that you have more in your 401(k) than the average person does. Based on the information presented in the chart at the beginning of this article, the average person won’t be able to retire.
You don’t want to be average. You want to be above average. And you need to be.
And don’t be one of those people who pokes along throughout their career, making the minimum 401(k) contribution to get the maximum employer match.
As I showed earlier, that won’t get you there either.
Let’s go through some steps that can help you determine how much money you’ll need when you retire:
Determine how much annual income you’ll need when you retire. The rule of thumb is that you use 80% of your pre-retirement income. That’s a good start, but you should make adjustments for variations. This can include higher healthcare and travel expenses, but lower housing and debt payments.
Subtract pension and Social Security income. You can get a pension estimate from your employee benefits department. For Social Security, you can use the Retirement Estimator tool that will give you an approximate benefit.
Divide the remaining amount by .04. That’s the 4% safe withdrawal rate. It will tell you how large of a retirement portfolio you’ll need to produce the necessary income.
Determine how much you will need to reach that portfolio size. Project how much you will need to contribute to your 401(k) plan and other retirement plans in order to reach the needed portfolio size. Just make sure that your return on investment calculations are reasonable.
Working a Retirement Plan Example
You can get as complicated as you want with this exercise, but let’s keep it simple.
Let’s assume that you earn $100,000 per year. You estimate needed retirement income at 80% of that number, or $80,000 per year.
You expect to receive $30,000 in Social Security income, but are not eligible for a pension. That means that your retirement portfolio will need to provide the remaining $50,000 in income.
Dividing $50,000 by .04 (4%), shows that you will need a retirement portfolio of $1.25 million.
In order to reach $1.25 million by age 65 (you’re currently 40), will require that you contribute 20% of your annual income, or $20,000 per year to your 401(k) plan. This assumes a 3% employer match, and a 7% annual rate of return on your investment.
You can also take the easy route by using an online retirement calculator, like the Bankrate Retirement Calculator.
In order to make his retirement goal, the 40-year-old in our example would need to hit (roughly) the following 401(k) balances at various ages in order to reach $1.25 million by age 65:
At age 45, $110,000
Age 50, $260,000
Age 55, $490,000
By age 60, $800,000
However you calculate how much you should have in your 401(k), what I want you to take away from this article is that the amount that you actually need is way above what you probably have.
At least that’s the case if you’re the average person.
That’s why I recommend that you decide that you’re not going to be average when it comes to your 401(k) plan. If you want a better-than-average retirement, you’ll need to have a better than average plan.