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Editor’s Note: Since the writing of this article, President Biden signed the debt ceiling bill on June 4, canceling the federal student loan payment pause as of Aug 30, or “60 days after June 30.” Later this month, the Supreme Court will decide whether the Biden-Harris Administration’s Student Debt Relief Program can proceed. Loan payments are expected to resume in October.

Student loans are a significant issue in the United States, where consumers have more than $1.7 trillion in total student loan debt. In 2021, the average federal student loan debt per borrower was just over $37,000. And 20 years after students enter college, half of borrowers still owe $20,000 in student loans.

Broken down by degree levels, the debt increases. Graduate students who receive a degree leave school with an average of nearly $70,000 in debt. Law students are saddled with an average of $180,000; and medical students owe $250,000 on average for total student loan debt.

With so many borrowers and so much debt, it begs the question, “Should all student loan debt be forgiven?”

Who’s in Favor?

By a 2-to-1 margin, voters do support at least some student loans being forgiven, according to a poll from Politico and Morning Consult. And 53% of voters from the same poll support Biden’s extension of student loan payments through August.

Proponents of canceling student loan debt point out that the government is partially responsible for this debt crisis. Because many states slashed higher education funding after the 2008 recession, tuition at both public and private colleges has gone up steeply, and many students have been forced to take out even more in loans.

Unfortunately, the increase in student loan balances hasn’t gone hand in hand with a bump in post-college salary. The result is a national situation where borrowers owe increasingly more in student loans but don’t have the paycheck to aggressively tackle their balances.

Although the government has created income-driven repayment options that seek to keep monthly student loan payments affordable, signing up isn’t without its downsides.

Since these income-driven plans often lengthen loan terms, borrowers may pay significantly more interest on their loans over time. Also, any forgiven balance at the end of their loan term is typically treated as taxable income.

Why Forgiving Student Loan Debt a Isn’t a Slam-Dunk

There are several reasons why forgiving student loan debt may not be a straightforward positive. The first is that, according to U.S. tax laws, debt that’s forgiven is a taxable event. Under income-driven student loan repayment plans, for instance, if you make consistent, on-time payments for the life of the loan (20 or 25 years, depending on when you borrowed), any balance remaining at the end of your loan term is forgiven — but whatever’s forgiven is considered taxable income.

The second issue pundits raise with this plan is that it’s being sold as a stimulus: If the government forgives people’s student loan debt, they’ll put money back into the economy, the thinking goes. But forgiving debt isn’t the same as handing people a check.

And finally, the federal government so far isn’t planning to forgive student loans that borrowers hold with private lenders, which average over $54,000 per borrower.

Alternative Options to Canceling Student Loan Debt

Instead of targeting only student loan borrowers who qualify for relief, the government could provide a stimulus check to all Americans, and Americans could decide for themselves how to use it.

If someone has $10,000 in outstanding student loans, for example, they might prefer to use a check to put a down payment on a house or pay off high-interest credit card debt.

Then there’s the higher education system itself. Canceling or forgiving student loan debt may provide only temporary relief as long as tuition levels continue to rise. As it stands, future generations will be saddled with just as much, if not more, student debt than Americans currently have today.

Tackling Your Student Loan Debt

There’s no telling when or if some form of more long-term relief might appear for student loan borrowers. If you’re struggling under the weight of your student debt, there are strategies that might help:

•   Alternative payment plans: Federal student loans come with a variety of repayment options, one of which might suit your situation.

•   Direction of overpayments: If you make extra payments on your student loans, you may instruct your servicer to apply them to your principal, rather than the next month’s payment plus interest. This will help pay off your loans faster.

•   “Found” money: If you receive a work bonus or tax refund, applying it to your student loans can help reduce your balance faster.

•   Refinancing: Refinancing student loans (private and/or federal) into one new loan with a private lender could lower your monthly payment and interest rate, and make it easier to manage payments. Just know that refinancing federal student loans with a private lender means losing access to federal repayment and forgiveness programs.

Recommended: Can Refinanced Student Loans Still Be Forgiven?

The Takeaway

There is no quick fix for student loan debt, which will take further discussion from stakeholders on all sides.

If you are struggling with your own student loan debt, there are options to consider. You can apply for an income-driven repayment plan, apply for student loan deferment or forbearance on your federal student loans, or refinance your loans with a private lender. Keep in mind, though, that refinancing disqualifies you from federal benefits you may otherwise be eligible for.

If you do decide to refinance, consider SoFi. SoFi has a quick online application process, competitive rates, and no origination fees or prepayment penalties.

See if you prequalify with SoFi in just two minutes.

SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOSL0523028

Source: sofi.com

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Donating to charity isn’t just a way to have a positive impact on society – it’s also a savvy approach to reducing your tax liability. Schwab suggests people who donate to charity on an annual basis may want to consider a tax-smart strategy known as “bunching,” which involves making at least two years’ worth of charitable contributions in one year. Doing so can allow you to itemize your deductions for that year and increase the size of your tax deduction over the two-period. Consider working with a financial advisor if you need help with tax planning or charitable giving.

Standard Deduction vs. Itemizing

Each year, tax filers must choose between taking the standard deduction or itemizing their deductions. If your individual tax deductions exceed the standard deduction in a given year, itemizing is likely the preferable approach. The opposite also rings true. If the total value of your itemized deductions is less than the standard deduction, you’ll want to claim the latter.

2023 Standard Deduction

  • Single filers and married couples filing separately: $13,850
  • Married couples filing jointly: $27,700
  • Heads of household: $20,800

2022 Standard Deduction

  • Single filers and married couples filing separately: $12,950
  • Married couples filing jointly: $25,900
  • Heads of household: $19,400

Choosing between taking the standard deduction or itemizing is key when determining how to best maximize the tax benefit of your charitable contributions.

When to Bunch Charitable Donations

If you regularly donate to charity but your total itemized deductions fall short of the standard deduction, you may want to consider bunching your contributions. Doing so means you’ll make multiple years’ worth of contributions in the current tax year, pushing your itemized deductions above the standard deduction threshold. You’ll then take the standard deduction in the following year(s) since you won’t be making any additional donations.

To illustrate the potential benefits of bunching, Schwab ran the numbers on a hypothetical couple with no children. Schwab assumed the couple made $10,000 in charitable donations in both 2022 and 2023. Their other deductions for both years total $13,000. By taking the standard deduction ($25,900 in 2022 and $27,700 in 2023) in both years, the couple’s two-year deduction adds up to $53,600 – more than would have been had they itemized in both years.

However, if the couple made two years’ worth of donations in 2022, their itemized deductions would have added up to $33,000. They could have then taken the standard deduction in 2023 and their two-year deduction would have added up to $60,700.

By bunching their charitable contributions, the couple would have lowered their combined taxable income in the two years by $7,100.

Bottom Line

Tax filers who regularly donate to charities should consider how to maximize the tax benefit of their goodwill. Schwab recommends making multiple years’ worth of donations in a single year, so your total itemized deductions exceed the standard deduction. This strategy, which is known as bunching, then calls for you to take advantage of the standard deduction in subsequent years when you won’t be making any donations. Doing so can increase the size of your total deductions over that two-year period and lower your taxable income.

Tips for Reducing Your Tax Bill

  • A financial advisor can help you assess your tax situation and potentially limit how much you end up owing Uncle Sam. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Capital gains can increase the amount of money you ended up owing the government each year. However, harvesting tax losses can help offset those gains. And if your tax losses exceed your capital gains, the IRS permits you to deduct up to $3,000 worth of excess losses from your total income for that year.
  • If you’re approaching retirement and thinking about moving to a new state, consider the tax environment for retirees in that state. SmartAsset’s retirement tax friendliness tool provides an in-depth look at the places with the best and worst tax environments for retirees.

Photo credit: ©iStock.com/donald_gruener, ©iStock.com/aschecky, ©iStock.com/shapecharge

Patrick Villanova, CEPF®
Patrick Villanova is a writer for SmartAsset, covering a variety of personal finance topics, including retirement and investing. Before joining SmartAsset, Patrick worked as an editor at The Jersey Journal. His work has also appeared on NJ.com and in The Star-Ledger. Patrick is a graduate of the University of New Hampshire, where he studied English and developed his love of writing. In his free time, he enjoys hiking, trying out new recipes in the kitchen and watching his beloved New York sports teams. A New Jersey native, he currently lives in Jersey City.

Source: smartasset.com

Apache is functioning normally

From assistance with daily activities to medical support, long-term care insurance is designed to provide financial protection when you face chronic illness, disability or cognitive impairment. However, pre-existing conditions, advanced age, health issues and disabilities can disqualify you from getting coverage. Here are the ins and outs of long-term care insurance, a list of health conditions that insurance companies deem uninsurable and alternative solutions to help you get the care you need on a modest budget. You may want to talk to a financial advisor to get specific advice for your situation.

What Is Long-Term Care Coverage?

Long-term care insurance provides coverage for the costs associated with long-term care services. Specifically, it helps individuals pay for assistance with activities of daily living (ADLs) or medical services needed due to a chronic illness, disability or cognitive impairment.

Long-term care services support various activities, such as bathing, dressing, eating, toileting and movement. It can also cover services nurses, therapists and home health aides provide. Some policies may even cover care in nursing homes, assisted living facilities or adult day care centers.

In addition, this insurance aims to help individuals protect their assets and savings from being depleted by the high costs of long-term care. These costs can be substantial and standard health insurance doesn’t cover them. Likewise, Medicare and Medicaid don’t cover these expenses except under specific circumstances and eligibility criteria.

When an individual has long-term care insurance, they pay regular premiums to the insurance company. If they require long-term care services in the future, the insurance policy can provide benefits to cover a portion of the costs up to the policy’s coverage limits. The specific benefits and coverage provided by long-term care insurance policies can vary, so reviewing and understanding the terms and conditions before purchasing a policy is essential.

It’s worth noting that long-term care insurance is generally more expensive and harder to obtain as you get older or have pre-existing health conditions. Therefore, it’s advisable to consider purchasing long-term care insurance earlier in life when premiums are more affordable and eligibility requirements are more flexible.

What Disqualifies You From Long-Term Care Insurance?

Insurance companies consider certain factors disqualifying or exclusionary when you apply for long-term care insurance. These factors can vary between providers, but here are common reasons that may result in disqualification from long-term care insurance:

  1. Pre-existing conditions: Insurance companies often review an applicant’s medical history to assess their risk. For example, if you have certain pre-existing conditions, such as Alzheimer’s disease, Parkinson’s disease or certain forms of cancer, the insurer may decline or exclude coverage for those conditions.
  2. Age: Some insurance companies have age restrictions and may not offer coverage to individuals beyond a certain age, typically around 80 or 85. The cost of premiums also tends to increase as you get older. Conversely, you can’t be younger than 18 when purchasing coverage.
  3. Existing disabilities or impairments: If you already have a disability or impairment that requires long-term care, insurance companies may consider it a high-risk factor and decline coverage.
  4. Cognitive impairments: Severe conditions like dementia may disqualify an individual from obtaining long-term care insurance. Insurers assess the risk associated with cognitive decline and may exclude coverage for related care needs.
  5. Terminal illness: Individuals with a terminal illness may not be eligible for long-term care insurance, as the policy aims to cover long-term care needs rather than end-of-life care.
  6. Recent hospitalizations or surgeries: Insurance companies may impose waiting periods or exclude coverage for pre-existing conditions if an applicant has recently been hospitalized or undergone a significant surgery.
  7. Substance abuse or mental health disorders: Some insurers may decline coverage or exclude certain conditions related to substance abuse or specific mental health disorders.
  8. Declining health: If an applicant’s health is already in decline, insurance companies may deny coverage or charge higher premiums to account for the increased risk.
  9. Criminal history: If crimes appear on your personal record, insurance companies might refuse to provide coverage, particularly if you have any felonies in your past.

Remember, not all insurance providers have the same criteria and the availability of long-term care insurance and the specific conditions they cover can vary. Therefore, when considering long-term care insurance, it’s recommended to consult with multiple insurance companies, carefully review the policy terms and conditions and seek advice from an insurance professional or financial planner specializing in long-term care planning.

Examples of Uninsurable Health Conditions

Because each insurance company has underwriting guidelines and practices, the specific list of uninsurable conditions can vary between providers. That said, here are some health conditions that insurance providers typically perceive as high-risk:

  • AIDS/HIV
  • Alzheimer’s Disease, dementia and other forms of cognitive issues
  • Ankylosing spondylitis
  • Amyotrophic Lateral Sclerosis
  • Bipolar Disorder or other depression with the use of antipsychotic medications
  • Cardiomyopathy
  • Cerebral Atrophy (Paralysis)
  • Cerebral Palsy
  • Cirrhosis of the Liver
  • Confusion
  • Current Cancer and Metastatic Cancer
  • Cushing’s Syndrome
  • Cystic Fibrosis
  • Huntington’s Disease
  • Kidney Disease requiring dialysis
  • Multiple Sclerosis
  • Muscular Dystrophy
  • Myasthenia Gravis
  • Parkinson’s Disease
  • Schizophrenia
  • Scleroderma
  • Spinal Cord Injury
  • Significant Stroke/Cerebral Vascular Accident (CVA)
  • Systemic Lupus

In addition, if you require help with activities of daily living or live in a care facility, companies will likely consider your conditions uninsurable. Likewise, if you use a wheelchair, walker, cane, stairlift or hospital bed, you may be ineligible. Furthermore, oxygen therapy also disqualifies you from coverage in most situations, as do disability benefits, with the possible exception of military benefits.

Remember, this list is not exhaustive and the availability of coverage for these conditions can vary between insurance providers. Insurance companies may also consider factors such as the severity and stability of the condition, the age of the applicant and other individual circumstances when assessing insurability.

Long-Term Care Health Qualifications

Typically, individuals aged 65 and above are eligible for long-term care insurance, even if they have a notable health condition. Nonetheless, eligibility depends on specific criteria each insurance company sets. For instance, certain companies may mandate a specific level of net worth or income to qualify, while others focus on your medical conditions and history.

In other words, your eligibility for long-term care insurance rests with the insurance company. Therefore, it’s crucial to research the criteria of long-term insurance providers to identify the one that aligns with your circumstances.

How to Pay For Long-Term Care without Long-Term Care Coverage

When shopping around for long-term care coverage, you might have disqualifying health conditions or discover that the insurance premiums aren’t realistic for your budget. If so, you can pay for long-term care through other means, such as:

  • Self-Funding: If long-term care insurance is not feasible, you can adopt a simple approach of living on a reduced budget to save and invest more. It’s an excellent idea to set aside money regularly for investment purposes, whether through a 401(k), an IRA or a non-retirement investment account.
  • Group Plan Coverage: If your employer offers long-term care insurance as a benefit, you may be eligible for enrollment regardless of your health history. Taking advantage of such coverage is advisable if you have a chronic condition, as it may allow you to continue it even after leaving the employer.
  • Long-Term Care Annuity: Consider investing in a long-term care annuity, where you make a lump sum payment and receive a consistent, specified income for the rest of your life. Long-term care annuities often include provisions to assist with long-term care expenses.
  • Hybrid Life Insurance/Long-term Care Policy: Some life insurance policies come with a long-term care rider, making it easier for individuals with chronic conditions to qualify for coverage. These policies combine life insurance benefits with the option for long-term care coverage.
  • Short-Term Care Policy: Instead of a long-term care policy that provides coverage for multiple years, you can choose among short-term care policies offering coverage for a year or less. While the benefits may not be as extensive as traditional long-term care insurance, having some coverage is better than none.
  • Medicaid: Individuals with limited income and countable assets below certain thresholds may be eligible for long-term care services covered by Medicaid, a government program.
  • Life Insurance Policy Settlement: If you currently hold a life insurance policy, pursuing a long-term care life settlement is possible. To do so, you can sell the policy and use the proceeds to cover long-term care expenses.

The Bottom Line

Long-term care insurance covers the costs associated with long-term care services, assisting individuals with activities of daily living (ADLs) and medical services related to chronic illness, disability or cognitive impairment. It aims to protect assets and savings from the high expenses of long-term care, which are often not covered by standard health insurance, Medicare or Medicaid. Therefore, researching and evaluating options is essential to find the most suitable approach for individual circumstances.

Tips for Qualifying for Long-term Care Insurance

  • Long-term care looks different for everyone because of the endless combinations of health conditions and financial circumstances. As a result, there’s no simple answer for how to navigate long-term care and financial management in retirement. Fortunately, an experienced financial advisor can help establish a sustainable plan for your golden years. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • As with many aspects of retirement, timing is crucial for long-term care insurance. If you’re unsure how your timeline matches your long-term care situation, here’s how to know when to apply for long-term care insurance.

Photo credit: ©iStock.com/gustavofrazao, ©iStock.com/kazuma seki, ©iStock.com/yellowpicturestudio

Ashley Kilroy
Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.

Source: smartasset.com

Apache is functioning normally

One thing I love about Millennials and Zoomers is how freely we share advice.

Case in point, there are now countless wealth coaches and personal finance gurus on TikTok recording their best tips on saving, investing, and achieving financial freedom faster.

And we’re hungry for their advice. According to CNN, the hashtag “#personalfinance” alone has a total of four billion views, with “#financialliteracy” and “#financetiktok” not far behind.

However, while the intent is always sound, the tips themselves aren’t. There are some misguided and potentially devastating personal finance myths being perpetuated on TikTok these days, so I am here to address them head-on.

Let’s debunk seven of the most common TikTok money myths before you make a potentially dangerous financial move.

What’s Ahead:

1. “You can (and should) get rich quick”

Debunked: 7 TikTok Money Myths - "You can (and should) get rich quick"

The implication

“Get rich quickly and easily by following my personal finance advice.”

Here’s how to instantly spot a personal finance influencer who abides by a “get rich quick” philosophy: just look for the lime green Lamborghini in the background.

Once they’ve given you a few seconds to lust after their six-figure Italian whip, they’ll start telling you how they “turned $5,000 into $723,000” by following “three simple rules of investing” or some such promise. Sounds appealing.

The reality

Multiplying money on that scale, in that little time, always involves a staggering amount of risk, luck, or both. This is assuming, of course, that the influencer is even being 100% truthful – and that background Lambo isn’t a rental.

It’s entirely possible that this person really has gotten extremely lucky on some clandestine investing opportunity, but lottery winners aren’t financial advisors.

Actual financial advisors, and their very rich clients, will give you this advice: 

“Get rich slowly.”

If you wouldn’t spend your life savings on lottery tickets, you shouldn’t get your financial advice from TikTok influencers who got lucky, either. The key is to get rich without the risk, and here’s exactly how to do it, step-by-step.

2. “Day trading is easier than you think”

The implication

Historically, only the rich and well-connected could make money on the stock market. But now that we have apps like Robinhood and Webull, everyday investors like you and me can buy, sell, and trade stocks ourselves, getting rich in the process just like day traders on Wall Street.

The reality

97% of day traders lose money.

That’s according to a large-scale study of day traders, where the researchers concluded:

“We show that it is virtually impossible for individuals to day trade for a living, contrary to what course providers claim.”

By contrast, “only” 70% or so of gamblers in Vegas lose money, according to the Wall Street Journal. So your money is safer on the roulette table than taking a TikTokers’ investing advice (but still, don’t gamble).

3. “Rich people look rich”

Debunked: 7 TikTok Money Myths - "Rich people look rich"

The implication

Earn big, spend big. As your income level rises and you start to feel “rich,” it’s time to start acting like it. Get a luxury apartment, lease a Mercedes, and don’t hesitate to buy that $2,000 purse.

Besides, what’s the point of working hard if you’re not playing hard?

This one is definitely more of an implication than a direct piece of advice. I don’t know of any TikTokers who are outright saying “spend all of your money” – but there are certainly plenty who are leading by example.

The reality

Rich people become rich precisely because they don’t spend money – they invest it. There’s a saying by famous-yet-frugal YouTuber Scotty Kilmer that I think about all the time:

“Broke people buy BMWs, and rich people buy Toyotas.”

Rich (or soon-to-be-rich) people know that if they buy a Toyota instead of a BMW at age 30, and invest the $30,000 difference at 10% APY, they’ll have:

  • $77,812 when they’re 40.
  • $201,825 when they’re 50.
  • $843,073 when they retire at 65.

The point of this anecdote isn’t to throw shade at Bimmer, but rather, to highlight how rich people think differently before making a purchase. They don’t think:

“How much can I afford?”

But rather:

“How much can I save and invest?”

In short, rich people don’t lead extravagant lifestyles – they lead frugal, yet comfortable lifestyles now so they can live however they want later.

4. “Live on a shoestring budget”

The implication

On the complete other side of the spectrum, there are TikTokers who advocate a shoestring lifestyle, where rigorous budgeting and extremely limited pleasure spending are the only viable pathways to financial freedom.

The reality

It’s totally OK to buy nice things and treat yourself.

In the previous example, yes, a BMW costs $30,000 more than a Toyota – and if you invest that money instead of buying a fancier car, you’ll have a fortune waiting for you by retirement.

That being said, if the BMW brings you joy and makes you happy (and you can afford it), buy it.

The key to achieving financial mindfulness isn’t to spend less – it’s to spend more mindfully on the things that truly matter to you. There are influencers out there who say you should stop going out to eat cold turkey because a restaurant meal for two can easily exceed $60 or even $100.

But financial mindfulness says that if that meal helps you build a relationship with someone, it’s worth it.

Draconian saving can be just as misguided as wanton spending. The key, then, is to determine how much you can safely spend each month, and then to spend that money on the people and things that bring you the most joy.

5. “Cryptocurrency will make you rich”

Debunked: 7 TikTok Money Myths - "Cryptocurrency will make you rich"

The implication

This one’s pretty straightforward, and I have heard it straight from countless TikTokers’ mouths: crypto will make you rich.

Forget the corrupt, manipulated stock market – Bitcoin, Ethereum, and Dogecoin will bring prosperity and financial salvation to Millennials and Zoomers.

I mean, what other investment vehicle has provided anything even close to the 750,000,000% ROI that Bitcoin has since 2011?

I got rich off crypto and you will, too – hop aboard before it’s too late.

The reality

Cryptocurrency is like a fast-moving, rickety roller coaster at the county fair. The foundation hasn’t completely crumbled, but the wooden boards and screws holding it up are falling off with each passing car.

Hop aboard the crypto train at your own peril.

It’s true that Bitcoin has had a miracle run since 2011, rising from $0.008 to a peak of around $65,000 in April 2021 and making a lot of people very, very rich. But even diehard crypto fans have acknowledged that a “Bitcoin winter” is coming – that is, if it hasn’t already.

The Bitcoin winter is just one of the many huge risks to a crypto investment. The others (like China’s clampdown on mining) are fast approaching the roller coaster’s foundation with a sledgehammer.

Can Bitcoin still make you rich? Maybe, but there are plenty of safer rides at the carnival.

6. “Just copy the investments of rich people”

The implication

You can’t copy athletes to win gold medals, nor can you copy New York Times Best Sellers to sell more books.

However, you can totally copy the investing strategy of rich people to get rich.

In fact, they want you to copy them – either because your investment makes their investment more valuable, or simply out of the goodness of their heart. Warren Buffet famously shares his trades with the public so they can borrow and benefit from his wisdom.

So why spend 14 hours a day researching good trades when you can just copy someone else’s homework – especially when they ask you to?

The reality

Rich people can afford to make extremely risky investments and lose money that you and I can’t afford. For that reason, they shouldn’t always be followed into battle.

Warren Buffet is also famous for admitting when he’s made a mistake. In 2014, he confessed that he’d held onto shares of Tesco for way too long, costing him and his investors $444 million. Berkshire Hathaway’s investors may have been able to shrug off the loss, but any outsiders emulating Buffet’s moves may have been screwed.

Copying the investments of rich people may be a viable strategy if their investments fit within your financial goals and risk tolerance. For help determining whether that’s the case, you want to talk to a wealth advisor.

7. “You don’t need a wealth advisor”

Debunked: 7 TikTok Money Myths - "You don't need a wealth advisor"

The implication

Thanks to zero-commission trading platforms, you no longer need to buy and trade stocks through a sweaty stockbroker in some Manhattan office.

By that same logic, the emergence of robo-advisors and the fountains of free financial advice on TikTok have eliminated the need for old-fashioned wealth advisors. After all, why give someone 2% of your hard-earned gains when it’s never been easier to invest your money yourself?

The reality

The recent trifecta of online brokers, robo-advisors, and personal finance gurus on social media has done wonders empowering Millennials and Zoomers to handle our money better. The TikTok DIYers certainly have one thing right: it’s never been easier to make your own trades.

However, despite birthing a renaissance in financial literacy, nothing on TikTok can replace the tailored, one-on-one advice you’d get from a professional wealth advisor.

Robo-advisors can personalize your investing strategy to an extent, but they can’t play a direct role in helping you navigate the markets and make good decisions. 

Summary

There’s plenty of sound personal finance advice on TikTok, but it only takes one bad tip to cost you money.

For that reason, it literally pays to separate the wheat from the chaff. Not everyone who’s made money is a skilled investor – some are just lucky.

Read more:

Source: moneyunder30.com

Apache is functioning normally

If you were ever to become disabled or suffer a chronic illness or age-related debility that requires you to pay for help feeding and dressing yourself or similar assistance for an extended period, long-term care insurance could be a valuable thing to have. This insurance pays for services regular health insurance doesn’t cover, including assistance with activities of daily living at home or in an assisted living center or nursing home. Timing is an important consideration when it comes to buying long-term care insurance. If you’re thinking about long-term care insurance, consider talking it over with a financial advisor.

Long-Term Care Insurance Basics

Long-term care insurance can help you pay the costs of receiving extended care in nursing homes and assisted living facilities, as well as in-home assistance with activities of daily living such as bathing and getting dressed. These are costs that health insurance, including Medicare, typically does not cover. Another government health plan, Medicaid, can pay for these services. However, only people with limited financial means can generally qualify for Medicaid.

Long-term care insurance works similarly to other types of insurance. That is, in exchange for paying a premium, usually monthly, the policy will pay providers for the care they deliver or, alternatively, reimburse you for your out-of-pocket costs. However, long-term care insurance has special features that distinguish it from some other types of insurance.

For instance, unlike auto insurance, which is mandatory in most states, long-term care insurance is entirely voluntary and most people do not purchase it. Also, it’s less likely to be provided as a benefit by employers than health and life insurance coverage. Finally, timing is a bigger factor with long-term care insurance. When you buy it is a major consideration. Here’s how to factor timing into the decision.

Do You Need Long-Term Care Insurance?

The cost of long-term care can be daunting. According to LongTermCare.gov, the price of a semi-private room in a nursing home averages $6,844 per month or $82,128 per year. However, that doesn’t mean everybody needs long-term care.

People who have significant assets that they want to protect from having to expend for long-term care are more likely to benefit from long-term care insurance than someone who has a small net worth. Also, good candidates for long-term care insurance generally will have a good income so they can pay the premiums. Gender can also be a factor since women who need long-term care typically need it longer than men.

When to Buy Long-Term Care Insurance

Buying long-term care insurance isn’t cut and dry for everyone and there are a number of things that you need to consider. Chief among these considerations might be the timing of when you buy. If you think you want to buy long-term care insurance, here are considerations on timing:

  • Coverage is permanent: Once you acquire a policy, you are covered for life as long as you keep paying the premiums. Your coverage can’t be canceled except for non-payment or if you voluntarily relinquish the policy.
  • Premiums are expensive: The average premium for a 55-year-old man with $165,000 in immediate coverage in 2022 was $2,220 per year, according to the American Association for Long-Term Care Insurance (AALTCI).
  • Premiums are likely to go up: While your insurer can’t hike your personal premium because you get older or have a claim, it is not uncommon for premiums for groups of policyholders to go up periodically and, sometimes, steeply.
  • Health matters: If you are in less than good health when you apply, your initial premium will be higher than if you buy a policy when you are healthy. For that reason, it’s often better to buy long-term care insurance before your health starts to fail.
  • Age matters: If you are older when you buy long-term care, even if still healthy, you’ll pay more than if you bought at a younger age.
  • You have to qualify to even get coverage: If you are seriously ill or already need long-term care when you move to buy a policy, you may be rejected. Again, the time to buy it is before you need it.

These considerations combine to complicate the decision of when to buy long-term care coverage. For instance, if you buy insurance at a younger age, many years before you are likely to need it, you’ll be paying expensive premiums for many years. And it’s a good idea to keep in mind the fact that, according to the AALTCI, only about half of people who buy long-term care insurance ever use it. The rest have paid their premiums for no tangible financial benefit.

Add it up and the most common time when people buy long-term care insurance is between ages 55 and 65. In many buyers’ estimation, this is the sweet spot between having to pay higher premiums if they wait to purchase and having to pay lower premiums for a longer time if they purchase sooner.

The Bottom Line

Timing is an important consideration when deciding whether or not to buy long-term care insurance. Most purchasers acquire coverage when they are aged 55-65. Waiting longer risks having to pay higher premiums because of advancing age or declining health. Buying sooner means having to pay premiums for a longer period of time before the coverage is likely to be of value. Individual circumstances, such as family health history, personal assets and income also may be important factors in deciding when or even whether to buy long-term care insurance.

Tips for Buying Insurance

  • A financial advisor can help you decide how and whether long-term care insurance fits into your overall financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you are considering buying life insurance, you are probably wondering how much coverage to get. SmartAsset’s life insurance calculator can give you an answer based on your location, age, income and other factors.

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Mark Henricks
Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.

Source: smartasset.com