• Home
  • Small-Business Marketing Statistics and Trends
  • What Is Mobile Banking?
  • How Student Loans Affect Credit Score?
  • Refinancing an Inherited House
  • How to Build a Kitchen?

Hanover Mortgages

The Refined Mortgage Lending Company & Home Loan Lenders

advisor

Apache is functioning normally

June 8, 2023 by Brett Tams

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

Posted in: Financial Advisor, Student Loans Tagged: 2, 2021, 2022, Administration, advisor, affordable, All, AllPar, AllSLR, AllStud, average, balance, Bank, before, Benefits, best, biden, bonus, borrowers, College, companies, Consumers, court, Credit, credit card, Credit Card Debt, Crisis, Debt, debt ceiling, debt crisis, deferment, down payment, down payment on a house, Economy, education, event, FDIC, federal loans, Federal Student Loan Forgiveness, federal student loans, Fees, Financial Advisor, financial tips, Financial Wize, FinancialWize, Forbearance, Fresh Out of School, future, General, government, higher education, hold, holiday, house, Housing, How To, in, Income, interest, interest rate, InvestSLR, Law, Legal, lenders, Life, loan, Loans, LOWER, Make, manage, Medical, member, money, More, needs, new, NMLS, offers, or, Origination, Other, paycheck, payments, plan, Planning, plans, president, President Biden, principal, programs, Raise, rate, Rates, Recession, Refinance, refinancing, refinancing student loans, Refund, repayment, resume, rise, Salary, School, second, sofi, states, stimulus, stimulus check, Strategies, student, student debt, student loan, student loan debt, student loan forgiveness, student loan payment, Student Loan Repayment, Student Loans, student_loan, students, Supreme Court, targeting, tax, tax refund, taxable, taxable income, The Economy, time, tips, tuition, under, unique, united, united states, waiver, white, white house, will, work

Apache is functioning normally

June 7, 2023 by Brett Tams

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

Posted in: Apartment Decorating, Taxes Tagged: 2022, 2023, About, advisor, Amount Of Money, before, Benefits, best, Blog, Capital Gains, charitable contributions, charitable deduction, charitable donations, charitable giving, charity, Children, city, contributions, couple, couples, Credit, deductions, donations, environment, Fall, filing jointly, Finance, Financial Advisor, financial advisors, Financial Goals, Financial Wize, FinancialWize, Free, free time, get started, Giving, goals, government, household, How To, impact, in, Income, Investing, irs, itemized deductions, itemizing deductions, kitchen, liability, LOWER, Make, making, married, money, More, Moving, new, New Jersey, new york, NJ, one year, or, Other, Permits, Personal, personal finance, Planning, ready, Recipes, retirees, retirement, right, Schwab, short, single, smart, society, Sports, standard deduction, tax, tax deduction, tax deductions, tax liability, tax planning, taxable, taxable income, taxes, time, tips, value, work, working

Apache is functioning normally

June 7, 2023 by Brett Tams

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

Posted in: Banking, Insurance, Life Insurance Tagged: Activities, activities of daily living, Advanced, advice, advisor, affordable, age, All, annuities, annuity, assets, bed, before, Benefits, Blog, Budget, companies, company, cost, Credit, depression, Disability, discover, Eating, employer, Entrepreneurs, evergreen_simplefeed_delay, existing, expenses, expensive, Finance, finances, Financial Advisor, financial advisors, Financial Goals, financial management, Financial Wize, FinancialWize, Free, future, get started, goals, government, great, health, Health Insurance, history, hold, home, homes, How To, in, Income, Insurance, insurance premiums, Invest, Investing, investment, IRA, Life, life insurance, life insurance benefits, life insurance policy, list, Live, Living, long-term care, long-term care coverage, long-term care insurance, long-term care insurance covers, long-term care policy, Make, making, Medicaid, Medical, Medicare, medications, mental health, military, money, More, needs, net worth, offer, offers, or, Other, Personal, plan, planner, Planning, policies, protect, protection, ready, Research, retirement, Review, right, risk, save, savings, Sell, settlement, shopping, short, simple, South, South Africa, surgery, sustainable, term insurance, timeline, timing, tips, traditional, under, Underwriting, what disqualifies you from long term care insurance, will

Apache is functioning normally

June 7, 2023 by Brett Tams

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

Posted in: Personal Finance, Saving And Spending Tagged: 2, 2021, About, actual, advice, advisor, age, All, apartment, Apps, ask, before, best, big, bitcoin, bmw, Books, Borrow, brokers, Budget, Budgeting, build, Buy, Buying, car, commission, cost, crypto, cryptocurrency, day trading, decisions, dogecoin, ethereum, Finance, finance gurus, Financial advice, financial advisors, Financial Freedom, Financial Goals, Financial Literacy, Financial Wize, FinancialWize, foundation, Free, freedom, frugal, get rich quick, goals, gold, good, green, Gurus, hours, How To, in, Income, income level, Invest, Investing, Investing Advice, Investing Strategy, investment, investments, Investor, investors, lease, Life, Lifestyle, Live, Living, luck, Luxury, Make, Make Money, making, Manhattan, market, markets, Media, millennials, mistake, money, More, Move, Moving, myths, new, new york, new york times, office, ok, opportunity, or, Other, Personal, personal finance, play, pretty, Purchase, rental, restaurant, retirement, rich, right, risk, robinhood, robo-advisors, ROI, save, Saving, savings, Sell, sellers, shares, short, Side, simple, social, Social Media, Spending, stock, stock market, stocks, The Stock Market, The Wall Street Journal, TikTok, TikTok influencers, time, tips, trading, turkey, under, wall, Wall Street, warren, warren buffet, wealth, will, winter, working, young

Apache is functioning normally

June 7, 2023 by Brett Tams

The maximum monthly Social Security benefits a person can get in 2023 is $4,555 if they wait until age 70 to claim their benefits. The maximum amount of benefits a married couple can receive would be $9,110 if both of them are separately able to claim the maximum amount of $4,555. But there are a lot of caveats and other things to understand about maximizing your Social Security benefits—let’s take a deeper dive. If you’d like personalized assistance preparing for retirement, consider working with financial advisor.

What Are Social Security Benefits?

The Social Security Administration provides retirement income to most American workers as well as benefits to qualifying disabled people. Qualifying retirees can begin their Social Security benefits between the ages of 62 and 70. The longer you wait, the higher your monthly payments will be.

For instance, a single person born in 1970 that made $70,000 in annual income would get $27,588 in annual Social Security benefits if they started taking their benefits when they turned 62. If that same person waited until the age of 70 to claim Social Security, their annual benefits would be $48,993. You can get an estimate of what your annual Social Security benefits will be at different ages and different average incomes with SmartAsset’s free calculator.

How Do Benefits Differ for Single People and Married Couples?

First, it’s helpful to know how Social Security benefits are calculated. There are two main elements to figuring out how much money you’ll get each year from Social Security.

  • Averaged indexed monthly earnings: The Social Security Administration will take a look at the amount you earned each month over up to 35 years of employment. They’ll identify the years where you earned the highest amounts, then average your monthly earnings.
  • The age at which you retire: As discussed above, the longer you wait to receive your Social Security benefits, the larger your payments will be. You can receive your benefits as early as 62, but by waiting a few years you will see larger amounts.

In many cases, married couples will collect two separate Social Security checks based on their own earnings record and the age at which they decided to claim their benefits. Rather than having a maximum married benefit limit, the maximum amount they would receive would be double the maximum benefits for a single person.

This is different in the case of a spouse that didn’t work or didn’t work long enough to qualify for Social Security benefits. These people will often qualify for spousal benefits instead, which max out at half of the working spouse’s Social Security benefit amount. Again, the maximum amount of the benefit will be determined by when you choose to begin claiming benefits and, in this case, your spouse’s average earnings over their lifetime. 

What’s the Maximum Social Security Benefit Married Couples Can Receive?

In 2023, if you retire at your full retirement age, the maximum monthly Social Security retirement benefit would be $3,627. For a married couple who are both receiving the maximum amount and both retired at full retirement age, that amount would be $7,254. That amount would be less for a person who retires at age 62 ($2,572) and more for a person who retires at 70 ($4,555).

So for example, if a married couple both qualified for the maximum amount and both held off on claiming their Social Security benefits until age 70, they could receive $9,110 in monthly benefits in 2023. A married couple in which one spouse didn’t work and instead qualified for spousal payments would max out at $6,832.50—the maximum benefit for the working spouse and half that for the spouse that didn’t work.

 How Can I Get the Maximum Social Security Benefit?

To ensure that you qualify for the maximum benefit of $4,555 a month, you’ll need to work for 35 years earning a salary that is equal to or greater than the wage cap for that entire time. In 2023, the wage cap is $160,200.

However, only a very small percentage of workers will qualify for the maximum amount. In 2021, the Congressional Research Service reported that only about 6% of workers earned more than the wage cap amount, a percentage that has remained “relatively stable” over time.

To earn the highest benefit possible as a married couple, both partners should try to earn as much as possible during their working years and put off claiming their benefits until as close to age 70 as possible.

The Bottom Line

The maximum monthly Social Security benefit of $4,555 is only available to high earners who wait to claim their benefits until the age of 70. The maximum benefit a married couple could collect would be twice that—$9,110—and require both of them to earn $160,200 or more over 35 years of work. Stay-at-home spouses who haven’t worked enough to qualify for their Social Security benefits can claim spousal benefits of up to half of their spouse’s monthly benefits.

Retirement Planning Tips

  • A financial advisor can offer advice on any of your Social Security, Medicare or retirement savings needs. 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’re not sure you’ve saved enough for retirement, our retirement calculator can help. Use it to determine your estimated Social Security benefits, how much money you need to retire and how much annual income you’ll need in retirement.

Photo credit: ©iStock.com/kiattisakch, ©iStock.com/ljubaphoto, ©iStock.com/yacobchuk

Source: smartasset.com

Posted in: Retirement, Starting A Family Tagged: 2, 2021, 2023, About, Administration, advice, advisor, age, average, Benefits, Blog, calculator, claiming social security benefits, couple, couples, Credit, double, earning, earnings, Employment, evergreen_simplefeed_delay, Financial Advisor, financial advisors, Financial Goals, Financial Wize, FinancialWize, Free, get started, goals, helpful, high earners, home, in, Income, Main, married, married benefit, max out, Medicare, money, More, needs, offer, or, Other, payments, Planning, Preparing for Retirement, ready, Research, retirees, retirement, retirement age, Retirement Income, Retirement Planning, retirement savings, right, Salary, savings, security, single, social, social security, social security benefits, social security benefits for married partners, spousal social security benefits, spouse, stable, time, tips, will, work, workers, working

Apache is functioning normally

June 7, 2023 by Brett Tams

If you owe federal income tax and can’t pay in full, the IRS Fresh Start program can help you get caught up. Fresh Start was established by the federal government in 2011 to offer some relief to taxpayers and curb predatory practices by the IRS. Under the Fresh Start Initiative, eligible taxpayers can enroll in a payment plan to clear their tax debt or negotiate an agreement to pay less than what’s owed. Either one could help you get back on track financially if you have an outstanding tax bill. You can also talk to a financial advisor about how to manage your tax liability going forward.

Understanding IRS Fresh Start

The IRS Fresh Start program or Fresh Start initiative was established in 2011 to help eligible taxpayers manage past-due tax debts. The program is designed to aid people who don’t have a prior history of unpaid taxes and aren’t subject to a federal tax lien.

Fresh Start offers help in one of four ways:

  • Payment plans
  • Offers in compromise
  • Currently not collectible status
  • Penalty abatements

The main goal of the Fresh Start program is to help individuals and business owners resolve their federal tax debt, without being unfairly penalized by the IRS. That includes allowing taxpayers who might otherwise be subject to a tax lien to avoid that scenario.

IRS Fresh Start Tax Relief Options

As mentioned, there are four avenues taxpayers can use to get tax relief through the Fresh Start initiative. Each one is designed to meet a different type of need.

If you’re interested in seeking tax relief through Fresh Start, here’s how the options compare.

  • Payment plans: The IRS offers short- and long-term payment plans, also referred to as installment agreements, to eligible taxpayers. Short-term plans must be paid in full within 180 days while long-term plans may allow you up to 84 months to repay tax debt, depending on how much you owe.
  • Offer in compromise: An offer in compromise allows you to repay tax debt for less than what you owe. You must be able to prove a financial hardship that prevents you from paying what you owe in full. If approved, you’d need to be able to pay the IRS an agreed-upon amount to settle your tax debt in a series of periodic payments.
  • Currently not collectible status: Currently not collectible status allows you to claim financial hardship and temporarily pause your obligations to repay your tax debt. While your account is marked as currently not collectible, the IRS cannot take any collection actions against you and must halt any levies, including bank account levies and tax refund offsets.
  • Penalty abatement: When you fail to pay taxes on time, penalties and interest can accrue. Penalty abatement allows you to get some relief from penalties if you owe a significant amount of tax debt.

Who Qualifies for IRS Fresh Start Relief?

Generally speaking, you may qualify for help through the Fresh Start program if you:

  • Owe federal income tax
  • Don’t have a history of unpaid taxes
  • Are not yet subject to a federal tax lien
  • Cannot pay your tax bill in full

If you’re specifically interested in a payment plan, your ability to qualify can depend on how much you owe. You may qualify to apply online for a long-term payment plan if you owe $50,000 or less in combined tax, penalties and interest, or for a short-term plan if you owe $100,000 or less. Business owners can apply online for a long-term payment plan if they’ve filed their tax return and owe $25,000 or less in combined tax, penalties and interest.

The IRS approves Offers in Compromise on a case-by-case basis. To apply, you’ll need to have filed all required tax returns and made the required estimated payments. You can’t be in a bankruptcy proceeding and you must have filed a valid tax extension. Approval is based on your:

  • Ability to pay
  • Income
  • Expenses
  • Asset equity

The IRS encourages taxpayers to explore payment plan options before applying for an Offer in Compromise.

You’ll need to contact the IRS to apply for currently not collectible status if you’re experiencing a significant financial hardship. The IRS may ask you to file any past-due tax returns if you haven’t done so and you’ll likely need to provide documentation proving your hardship situation. Late payment penalties and interest will continue to accrue on your account.

If you receive an IRS notice for back taxes, the notice may include instructions on how to apply for penalty abatement. You’ll need to call the IRS and provide some information to the IRS about your taxes and financial situation. You can also submit Form 843, Claim for Refund and Request for Abatement if you’re not able to call.

IRS Fresh Start Advantages and Disadvantages

The Fresh Start program is designed to offer some benefits to people who are dealing with unpaid tax debt. Specifically, this program can help you to avoid:

  • IRS levies
  • Federal tax liens
  • Wage garnishments
  • Criminal penalties

Once you qualify for Fresh Start relief through a payment plan or Offer in Compromise, you’re automatically sheltered from those types of outcomes since you’re making an effort to resolve your debt with the IRS.

Claiming currently not collectible status can also create some breathing room financially if you’re experiencing an extreme hardship that leaves you unable to pay what you owe. Penalty abatement, meanwhile, can reduce some of what you owe in penalties to the IRS.

Fresh Start is not a perfect solution, however. If you enroll in a payment plan, then penalties and interest will continue to accrue until the balance is paid in full. So, the total paid can exceed more than your actual tax balance due.

If you’re interested in an Offer in Compromise, it’s also important to keep in mind that getting approved can be challenging. The IRS wants to collect as much of your unpaid tax debt as possible. If you’re unable to provide sufficient proof of a hardship that keeps you from paying in full, you may be denied. In that case, you’d have to reconsider a short- or long-term payment plan.

The Bottom Line

IRS Fresh Start can help you get out of a tax debt hole if you owe money to the federal government. If you also owe state income tax, you’d need to reach out to your state tax authority to discuss repayment options. The most important thing to remember if you owe taxes is that some action is better than none since your obligation to pay won’t go away.

Tax Planning Tips

  • Staying on top of your tax situation can help you avoid being hit with a surprise bill when it’s time to file your return. Talking to a financial advisor about how to minimize your tax liability can ensure that you’re paying enough to stay in favor with the IRS, without paying more than you need to. 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.
  • The simplest way to avoid IRS tax penalties and interest is to pay what you owe by the filing deadline. If you don’t have cash readily available to pay, you might consider getting a personal loan to pay instead.

Photo credit: ©iStock.com/dragana991, ©iStock.com/bojanstory, ©iStock.com/FatCamera

Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.

Source: smartasset.com

Posted in: Apartment Decorating, Taxes Tagged: About, action, actual, advisor, agreements, aid, All, ask, asset, at what age do seniors stop paying taxes, balance, Bank, bank account, Banking, bankruptcy, before, Benefits, Blog, business, Buying, Children, citibank, clear, Credit, credit cards, Debt, Debts, discover, equity, estate, Estate Planning, evergreen_simplefeed_delay, expenses, Finance, Financial Advisor, financial advisors, Financial Goals, financial hardship, Financial Wize, FinancialWize, Free, Fresh start, get started, goal, goals, government, history, hole, home, home buying, How To, how to minimize, in, Income, income tax, Insurance, interest, Investing, irs, IRS fresh start, lake, liability, liens, loan, Main, making, manage, money, More, negotiate, News, north carolina, offer, offers, or, paying tax debt, payments, Personal, personal finance, personal loan, plan, Planning, plans, PRIOR, proof, reach, ready, Refund, repayment, retirement, return, returns, right, room, Series, short, Small Business, South, South Carolina, state tax, student, tax, tax levies, tax liability, tax lien, tax liens, tax planning, tax refund, Tax Return, tax returns, taxes, the balance, time, tips, under, virginia, wants, will

Apache is functioning normally

June 7, 2023 by Brett Tams

By Jason Price 4 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited April 18, 2014.

If you’ve read about mutual fund investing, or perhaps discussed it with someone knowledgeable on the subject, the topic of fees and expenses most likely came up in the conversation. For someone who isn’t a financial advisor or broker, mutual fund fees and expenses can be quite a confusing subject. How do you know when you’re paying them and how can you (or should you) avoid them?

Obviously, the more you can minimize fees and expenses when investing in mutual funds, the more you can maximize your returns. That seems like a good thing, right? So, let’s explore what these fees and expense are and how they can sneak up on you if you don’t have some knowledge of the subject.

Mutual Fund Operating Costs

These expenses are required to operate or manage the mutual fund. The management of a mutual fund requires certain costs such as brokerage fees, marketing, legal, accounting, etc. They are typically paid out of fund assets, so investors indirectly pay them.

Within the operating expenses you may find 12b-1 fees. These fees are used for advertising and selling the funds. According to the Sound Mind Investing handbook, more than two-thirds of all stock funds charge some marketing related expenses to shareholders.

Sales Charges or Loads

There are funds with loads and without loads. No-load funds don’t charge you any fees when you buy or sell the fund. You typically buy the funds yourself versus working with someone who sells them to you. A load fund includes a sales charge when you work with a financial planner, insurance agent or with a stock broker. The load is a sales commission for their services to help you find a fund.

There are different types of loads, so you have to be knowledgeable to understand what you may be charged.

Class A Funds

Class A funds are the easiest to understand. The front-end sales commissions are charged up front when you purchase the fund.  They tend to have lower 12b-1 and operating expenses.

Class B Funds

A back end load, or class B fund is handled differently and can be the trickiest to understand. Back-end commissions are charged on your earnings when you sell a fund within the first years of owning it. It’s usually 5% the first year and decreases a 1% per year for 4 or 5 years. Brokers are paid through 12-b1 marketing fees included as a line item in the operating expenses of the fund. These expenses are usually the highest, so keep in mind you’re still paying even thought there isn’t any front-end sales charge.

Class C Funds

Finally, a class C fund doesn’t charge any front end or back end sales load. The fund charges the 12-b1 marketing fees for every year you own the fund. Brokers are usually paid on a quarterly basis from these fees.

Don’t Think You’re Not Paying

I started working with a financial advisor a few years ago who was referred to me by my employer. It was one of those situations were the financial institution was asked to help employees with retirement planning. I decided to roll – over a previous 401(k) into an IRA and also asked for some retirement planning advice.

I was foolish to think the services were free. I said I wanted to avoid funds with sales loads, but I really didn’t know what I was talking about. The mutual funds which I was advised to purchase were Class C funds. I suppose this is fine given I didn’t want to take the time to pick funds myself, but I do know now I’m paying for the services I requested.

As I become more informed, I’ll transfer my IRA to a discount brokerage account to manage myself, or consider fee based financial planning where I pay the broker a fee for his services versus by the commissions or 12-b1 marketing fees from my investments.

I suppose loads or the marketing fees are fine if you want someone else to make the investing for you. But, studies say these funds don’t produce any better results than no load funds.

Final Thoughts

To wrap up, I’d like to remind you (and me) that we are financial stewards. Not only is it our responsibility to plan a budget each month and spend responsibly; we are to manage investments wisely and know the conditions of our flocks.

Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations (Proverbs 27:23-24).

I don’t think I knew the conditions of my flocks very well by not considering the costs associated with my investments. To increase your knowledge I recommend The Sound Mind Investing Handbook by Austin Pryor. The book is a step-by-step guide to managing money and investments from a Biblical perspective. It has helped me get a better understanding of investing in general and the expenses and fees associated with some mutual funds.

Another good resource to consider using is a handy mutual fund cost calculator from the US Securities and Exchange Commission website. The SEC Cost Calculator estimates the cost of investing in any mutual fund. You just need to have the mutual fund prospectus and your investment information to get the inputs.

What about you? I’m interested in getting your thoughts on paying mutual fund loads. Good or bad? Or, is it okay for someone to own load funds and rely on someone else to help pick your investments for you as long as you know the condition of your flocks?

Resources

Related Posts

Source: biblemoneymatters.com

Posted in: Investing, Money Basics, Retirement Tagged: About, Advertising, advice, advisor, agent, All, assets, Austin, bible, book, Broker, brokerage, brokerage account, brokers, Budget, Buy, calculator, commission, commissions, cost, earnings, employer, expense, expenses, Fees, fees and expenses, Financial Advisor, Financial Planning, Financial Wize, FinancialWize, Free, front, fund, funds, General, good, great, guide, in, Insurance, insurance agent, Investing, investment, investments, investors, IRA, Learn, Legal, Links, LOWER, Make, Make Money, manage, Managing Money, Marketing, money, Money Matters, More, mutual funds, or, plan, planner, Planning, price, Purchase, retirement, Retirement Planning, returns, right, sales, SEC, securities, Sell, selling, stock, time, versus, work, working

Apache is functioning normally

June 7, 2023 by Brett Tams

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.

Photo credit: ©iStock.com/tuan_azizi, ©iStock.com/JLco – Julia Amaral, ©iStock.com/Sunan Wongsa-nga

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

Posted in: Banking, Insurance Tagged: 2, 2022, About, Activities, activities of daily living, advisor, age, assets, at home, Austin, Auto, auto insurance, average, backpacking, basics, before, Blog, Books, business, Buy, buyers, Buying, calculator, cnbc, complicate, cost, Credit, decision, entrepreneurship, evergreen_simplefeed_delay, expensive, Family, Features, Finance, Financial Advisor, financial advisors, Financial Goals, Financial Plan, Financial Wize, FinancialWize, Free, freelance, gender, get started, goals, good, government, guide, health, Health Insurance, health plan, healthy, history, home, homes, How To, in, Income, Insurance, insurance coverage, Investing, Life, life insurance, Living, living at home, long-term care, long-term care coverage, long-term care insurance, long-term care options, LOWER, man, Medicaid, Medicare, men, More, Move, Music, needs, net worth, new, new york, new york times, nursing home, or, Other, Personal, personal finance, plan, premium, price, protect, Purchase, ready, retirement, right, room, states, texas, The Wall Street Journal, time, timing, tips, value, volunteering, wall, Wall Street, washington, wealth, when to buy long-term care insurance, will, women

Apache is functioning normally

June 6, 2023 by Brett Tams

If you live or work in Delaware, it’s important to find the right bank for your unique goals. Fortunately, there are plenty of options at your disposal.

In addition to its beautiful beaches, affordable housing, and historical landmarks, the First State is home to many reputable banks that are member FDIC for your peace of mind and ideal for your personal or business finances.

Welcome to Delaware

13 Best Banks in Delaware

While some have local branches throughout the state, others are online only. To make your search for the ideal financial institution a bit easier, we’ve done the heavy lifting for you and listed the best banks in Delaware below.

1. The Bank of Delmarva

The Bank of Delmarva is a small community bank with branches in Ocean City, Salisbury, and Sussex County. Its lineup of personal banking accounts and services includes the best checking accounts, savings accounts, money market accounts, CDs, and IRAs.

If you’re a small business owner, rest assured that it offers business loans, commercial products, and merchant services. Compared to other banks in the state, it offers low fees and competitive interest rates. Plus, it’s earned stellar reviews for its customer service. We can’t forget the intuitive mobile app you can use to manage your banking while you’re out and about.

2. Chime

Chime is a digital bank redefining traditional banking norms. With no physical branches, Chime stands out by providing a simple yet intuitive suite of financial products, all managed from their highly rated mobile app. The bank offers a fee-free1 checking account, a savings account, and a secured credit card.

The checking account, with no minimum balance and no overdraft fees, is particularly impressive. Its standout feature, SpotMe5, allows qualifying users to overdraw by up to $200 without fees. Meanwhile, the savings account is made appealing with an automatic savings feature, making it simple to save without thinking.

Notably, Chime gives the benefit of receiving paychecks up to two days early2 with direct deposit setup, a major plus for budgeting and financial planning. Its secured credit card is also a boon, helping users build credit over time through responsible usage and consistent payments.

3. TD Bank

TD Bank is a solid pick for a national bank with a handful of locations in the First State. With TD Bank, you can expect a plethora of products and services, no fees on international transactions, and a highly rated mobile banking app.

From personal and business checking accounts and savings accounts to personal loans, IRAs, and mortgages, TD Bank truly offers it all. If you open an account, you might qualify for a generous bonus. Also, if you’re a student or young adult, you won’t have to worry about monthly maintenance fees or service fees. You might also be able to waive these fees if you maintain a high balance in your accounts.

4. M&T Bank

M&T Bank has many locations in Delaware in cities like Wilmington and New Castle. Even if you don’t live in an area with a physical M&T location, you can enjoy digital banking and conveniences like Zelle transfers and mobile deposits. When it comes to checking accounts, M&T Bank offers four options.

The EZ Choice Checking is your best bet for a basic, free checking account while MyWay Banking is a checkless account that doesn’t charge overdraft fees. MyChoice Plus is an interest-bearing account, just like MyChoice Premium, which offers competitive rates on loans and other products.

In addition to these noteworthy checking accounts, you’re sure to appreciate M&T’s large ATM network and no monthly fees.

5. Artisans’ Bank

Artisans’ Bank has served Delaware since 1861. Today, it has 12 branch locations in the First State as well as two commercial lending offices. Artisans’ list of personal banking products includes checking accounts, savings accounts, money market accounts, debit cards, and branded credit cards with cash back rewards.

The bank also serves small businesses in Delaware with small business banking products such as business bank accounts, business credit cards, and business loans. Even though Artisans’ is a local bank with a physical presence, it offers online banking services so you can manage your accounts online.

6. Capital One

Capital One is a large bank with a reputation for no minimum deposit requirements or monthly maintenance fees. While there are no Capital One branches in Delaware, the bank is worth considering if you prefer online banking. You can apply for and manage personal and business accounts online.

Speaking of accounts, its flagship account is the 360 Performance Savings that makes it a breeze to earn interest on your hard earned money. In addition to an impressive interest rate, there is no minimum balance required so you can open an account with any amount. Other perks there is a highly rated mobile app and free credit card monitoring.

7. Axos Bank

Axos Bank is a digital bank with competitive interest rates on checking and savings accounts, which are free of monthly fees and ATM fees. Even if you live in Delaware, you can perform your banking through Axos online or via the intuitive mobile app, which comes with mobile check deposits, fund transfers, and mobile bill pay.

The bank’s checking accounts offer rewards while the savings accounts stand out for their ATM cards. Speaking of ATMs, Axos Bank will reimburse you for ATM fees on many of its accounts. In addition to its personal banking products, Axos specializes in new mortgages, mortgage refinancing, HELOCs and home equity loans, car loans, personal loans, and managed investment portfolios.

8. Barclays Bank

Barclays Bank operates in Wilmington. It’s a global bank that serves all U.S. states with several banking products. Even though there is only one branch in Delaware, it offers an online portal and a highly rated mobile app so you can bank from anywhere.

As a customer, you’ll enjoy benefits like a high interest rate on high-yield savings accounts and CDs. If you do open a CD with Barclays, you’ll also reap the benefits of low withdrawal penalties. In addition, the bank’s customer service line is available seven days a week to answer any questions or concerns you might have.

9. Community Bank Delaware

Community Bank Delaware is exactly what it sounds like: a community bank based in Delaware. Since it’s locally owned and managed, it focuses on personalized customer service and community support.

At this bank, you’ll find checking accounts, personal savings accounts, time deposits, personal loans, personal credit cards, mortgages, and home equity loans. Community Bank also serves local small business owners with products to support their business operations, such as checking accounts, business savings accounts, business credit cards, and merchant services.

Additional banking solutions include online banking, wire transfers, cashiers checks, night depositary services, direct deposit, and safe deposit boxes.

10. PNC Bank

PNC Bank is a national bank with over 30 branches in cities such as Dover, Bear, Wilmington, and Newark. Its deposit accounts and other products are designed to meet all your banking needs. Virtual Wallet Spend is a combination checking and a long term savings account with a generous sign-up bonus and features like online bill pay, free mobile banking, and a debit card.

While there is a monthly maintenance fee, you can avoid this monthly fee if you maintain a direct deposit balance. PNC also offers loans, such as mortgages, home equity lines of credit, auto loans, personal loans, student loans, and refinancing products. With the PNC mobile app, you’ll be able to manage your accounts while you’re on the go.

11. Ally Bank

Ally Bank is an online bank with competitive rates on savings accounts, money market accounts, and CDs. Thanks to its low overhead costs, Ally doesn’t charge monthly maintenance fees or impose minimum balance requirements.

You can access your money and make cash transactions at more than 43,000 ATMs through the Allpoint network, which Ally has joined. If you have certain savings goals, you’ll love Ally’s “buckets” feature. With the buckets, you’ll be able to organize your funds and receive personalized recommendations that allow you to save.

12. Wells Fargo

Wells Fargo is one of the largest banks in the U.S. with no shortage of physical branches and ATMs throughout Delaware so you can easily deposit cash. Just like most large banks, Wells Fargo offers a full suite of banking products, such as checking accounts, savings accounts, credit cards, home loans, personal loans, and auto loans.

Investment and retirement accounts as well as wealth management services are available too. You can invest on your own or take advantage of a financial advisor that will help you come with a personalized financial plan. Whether you’re an individual or a small business owner, you’re bound to find what you’re looking for at Wells. If you open an account, you may be eligible for a cash sign on bonus.

13. WSFS Bank

WSFS Bank is a regional bank and a subsidiary of a financial services company called WSFS Financial Corporation. Based in Delaware and Greater Philadelphia, WSFS Bank is known as one of the oldest banks in the country.

It offers a wide range of personal banking services, like checking accounts, savings accounts, credit cards, loans, and wealth management. Its certificates of deposit (CDs) feature competitive interest rates you might not be able to find elsewhere and the WSFS Bank Philadelphia Union Visa® Debit Card comes with contactless pay and access to more than 670 ATMs in Delaware and Philadelphia.

At WSFS Bank, you can also take advantage of business banking services, like SVP management, cash management, and merchant services.

Delaware Banking Options

There are three main types of banks in Delaware, including national banks, community banks, and online banks. Here’s a brief overview of each one.

National Banks

National banks are large banks that can be seen throughout Delaware and other states. These banks typically offer a long list of products for individuals and business owners, such as checking accounts, savings accounts, retirement accounts, credit cards, and mortgages. Some examples include TD Bank, Wells Fargo, and PNC Bank.

Community Banks

Community banks are designed to serve local communities in Delaware. You’ll find that these banks prioritize personal customer service. Community Bank Delaware and the Bank of Delmarva are two community banks in the First State.

Online Banks

Online banks operate online and don’t have physical locations in Delaware. Since their overhead costs are lower than banks with brick-and-mortar branches, online banks usually provide lower fees and higher interest rates. Chime, Axos Bank, Ally, and UK-based Barclays Bank are great online banking options in Delaware.

Bottom Line

Delaware has plenty of banks and other financial institutions to help you meet your financial goals. Before you choose one, consider your priorities and weigh the pros and cons of all your options.

If you like an in-person banking experience, a community bank might make sense. On the flip side, if you prefer online and mobile banking, an online bank is likely the way to go. Good luck with your search for the best bank in Delaware.

Frequently Asked Questions

How do Delaware banks keep my money safe?

Most banks insure your deposits up to 250,000 with the FDIC or Federal Deposit Insurance Corporation. Other services like fraud protection can also give you some peace of mind for your linked accounts.

What are the most popular banks in Delaware?

The banks with the most branches in Delaware include PNC Bank, M&T Bank, and WSFS Bank. If in-person banking is important to you, these banks should definitely be on your radar.

Can I open a bank account in Delaware as a non-resident?

Yes. In most cases, you can open an interest earning account or business savings account even if you don’t live in Delaware. You’ll likely need an Individual Taxpayer Identification Number (ITIN).

Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.

1. Out-of-network ATM withdrawal fees may apply with Chime except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

2. Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. Chime generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.

5. Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each at least once every 34 days. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.

Source: crediful.com

Posted in: Credit 101 Tagged: 2, 2023, 360 Performance Savings, About, ACH, advisor, affordable, affordable housing, All, AllY, app, Appreciate, ATM, Auto, Auto Loans, automatic, balance, Bank, bank account, bank accounts, Banking, banks, barclays, basic, before, Benefits, best, Bill Pay, bonus, brick, Budgeting, build, build credit, builder, business, Business Credit, business credit cards, business loans, capital one, car, car loans, cash back, Cash Back Rewards, castle, CD, CDs, certificates of deposit, Checking Account, Checking Accounts, Chime, choice, Cities, city, Commercial, Commercial lending, Community Bank, Community banks, company, cons, contactless, Convenience, country, Credit, credit card, credit cards, customer service, Debit Card, debit cards, Delaware, deposit, deposit insurance, Deposits, Digital, Direct Deposit, discover, earn interest, earning, equity, experience, FDIC, Features, Federal Deposit Insurance Corporation, Fees, finances, Financial Advisor, Financial Goals, Financial Plan, Financial Planning, Financial Services, Financial Wize, FinancialWize, fraud, Free, free checking, fund, funds, goals, good, great, HELOCs, historical, history, home, home equity, Home equity loans, home loans, Housing, in, Insurance, interest, interest rate, interest rates, international, Invest, investment, IRAs, lending, list, Live, Loans, Local, low, LOWER, luck, Main, maintenance, Make, making, manage, market, member, mobile, Mobile App, Mobile Banking, money, money market, money market accounts, More, Mortgage, mortgage refinancing, Mortgages, most popular, needs, new, no fee, offer, offers, Offices, oldest, Online Banking, Online Bill Pay, Operations, or, organize, Other, overdraft, overdraft fees, party, payments, peace, Personal, personal banking, Personal Loans, plan, Planning, PNC, Popular, portfolios, premium, priorities, products, pros, Pros and Cons, protection, questions, rate, Rates, refinancing, retirement, retirement accounts, Reviews, rewards, right, risk, safe, save, savings, Savings Account, Savings Accounts, Savings Goals, search, secured credit card, shortage, Side, simple, single, Small Business, Spending, states, student, Student Loans, suite, td bank, Technology, time, timing, traditional, unique, virtual, visa, wealth, wealth management, wells fargo, will, wire transfers, withdrawal, work, young, Young Adult

Apache is functioning normally

June 6, 2023 by Brett Tams

Taxes are unavoidable but that doesn’t mean you have to pay more than you owe. What happens to your tax liability with proper financial planning? The simple answer is that it can allow you to minimize what you owe while preserving more of your income to fund your financial goals. Talking to a financial advisor is a good first step in creating a strategy for effectively managing tax liability.

Understanding Tax Liability

Tax liability refers to the money that an individual, business or organization owes to a federal, state or local tax authority. A simpler way to think of your tax liability is the difference between your taxable income and the tax deductions you’re able to claim.

As a general rule of thumb, earning a higher income can result in a higher tax liability. The U.S. uses a graduated tax system, which means that income and tax rates move together. As income increases, so does your tax rate.

The amount you pay in taxes is determined by your income, but capital gains can also affect your tax liability. That’s important to know if you’re focused on investing and building wealth, as higher net-worth individuals may face a steeper tax liability if they’re reaping capital gains from investments.

What Happens to Your Tax Liability With Proper Financial Planning?

Managing your tax liability is important as it can directly influence how much of your income or investment earnings you get to keep. The more income and assets you have to work with, the easier it becomes to build wealth.

Proper financial planning can help you implement strategies that are designed to minimize taxes while maximizing income and assets. Having a solid financial plan in place can generate significant tax savings year by year. You can then use those savings to generate additional income through investments, grow your retirement accounts and increase your net worth.

Does financial planning require you to work with a financial advisor? Not necessarily. You could always go it alone. But there are some distinct advantages to having a financial advisor help you formulate a plan for managing tax liability.

Financial advisors have extensive knowledge about how tax planning can affect your financial plan. A good advisor is also familiar with the tax code and the latest tax rules. Even if you think you have a relatively straightforward tax situation, a financial advisor may be able to pinpoint areas where you can improve tax efficiency that you might have missed.

Financial Planning Strategies for Minimizing Tax Liability

There are different ways to approach tax planning in order to reduce your tax bill, depending on the specifics of your situation. If you’re working with a financial advisor to create a tax plan, then it may include any or all of the following.

Retirement Planning

Retirement planning is a focal point of a solid financial plan, particularly with regard to taxes. Aside from ensuring that you have enough money to retire, it’s also important to consider how much of your savings you’ll be able to keep once you start making withdrawals.

In terms of how you plan for retirement, your financial advisor may suggest any of the following:

  • Maxing out annual contributions to a traditional 401(k) or to a Roth 401(k) if you have that option.
  • Contributing money to a traditional or Roth IRA each year.
  • Funding a Health Savings Account (HSA) if you have that option with a high deductible health plan.

If you’re self-employed or own a business, you might open a solo 401(k), SEP IRA or SIMPLE IRA to save for retirement instead. It’s important to understand the tax treatment of different retirement savings options.

For example, traditional 401(k) plans and traditional IRAs allow for tax-deductible contributions. Qualified distributions are taxed as ordinary income in retirement. Roth accounts don’t offer a tax deduction, but you can make withdrawals tax-free when you retire.

A Health Savings Account is not a retirement account, per se. It’s meant to be used to save money for medical expenses, but it can double as a source of retirement income since you can withdraw funds for any purpose after age 65 without a tax penalty. You’ll just owe regular income tax on withdrawals.

Investment Planning

Investment planning is related to retirement planning, but it can include different aspects of managing tax liability. For instance, say that you’re investing through a taxable brokerage account, which is subject to capital gains tax. Your financial advisor can offer different strategies for managing tax liability, which may include:

  • Holding investments longer than one year to take advantage of the more favorable long-term capital gains tax rate.
  • Choosing tax-efficient investments, such as exchange-traded funds (ETFs), which can trigger fewer turnover events than traditional mutual funds.
  • Harvesting tax losses to offset some or all of your capital gains for the year.

Your advisor may also be able to guide you on how to deduct expenses related to investment properties if you own one or more rental homes. They could also help with executing a 1031 exchange if you’re interested in swapping out one property for another to minimize capital gains tax.

Tax Deductions and Credits

Tax deductions reduce your taxable income, which can help to push you into a lower tax bracket for the year. There are numerous expenses you might be able to deduct, including:

  • Mortgage interest
  • State and local taxes
  • Charitable donations
  • Business expenses
  • Self-employment expenses
  • Medical expenses
  • Student loan interest

Tax credits, meanwhile, reduce what you owe in taxes on a dollar-for-dollar basis. For instance, if you owe $1,000 in taxes and qualify for a $1,000 tax credit, the credit can wipe out what you owe. Some credits are refundable which can increase the size of your tax refund for the year. A financial advisor can walk you through the various deductions and credits you might be eligible to take in order to reduce your tax liability.

Withdrawal Planning

As you approach retirement, it’s important to consider how you’ll withdraw the money that you’ve saved. Your advisor can discuss different strategies for withdrawing money from a 401(k), IRA or taxable brokerage account so that you’re not overpaying taxes or draining your retirement reserves too quickly.

Your advisor may also discuss ways to tax-friendly ways to create supplemental income in retirement, such as purchasing an annuity or taking out a reverse mortgage.  An advisor can also help you figure out when to take Social Security benefits to maximize your payment amount and how to coordinate those benefits with other sources of income in retirement.

The Bottom Line

Knowing what happens to your tax liability with proper financial planning is important for creating a long-term strategy for growing wealth. Handing over more money than you need to in taxes doesn’t offer any tangible benefit and it can be problematic if it leaves you with less money to save and invest. Having a trusted financial advisor to work with can ensure that you’re meeting your tax obligations without shortchanging your goals.

Financial Planning Tips

  • Tax planning can seem complicated if you’re not well-versed in the Internal Revenue Code. 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.
  • Robo advisors can offer a more affordable way to manage financial planning, as the fees may be lower than what traditional advisors charge. However, it’s important to know what you’re getting for the money. For example, some robo-advisors offer tax loss harvesting but not all of them do. Additionally, robo-advisors aren’t really equipped to offer one on one advice about tax planning or investing. Those are good reasons to consider working with a human advisor instead, even if it means paying a slightly higher fee.

Photo credit: ©iStock.com/Wasan Tita, ©iStock.com/Extreme Media, ©iStock.com/Charday Penn

Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.

Source: smartasset.com

Posted in: Apartment Decorating, Taxes Tagged: 1031, 1031 exchange, About, advice, advisor, affordable, age, All, annuity, assets, Banking, Benefits, Blog, brokerage, brokerage account, build, building, building wealth, business, Buying, Capital Gains, capital gains tax, charitable donations, Children, citibank, contributions, coordinate, Credit, credit cards, credits, decreasing tax liability, Deductible, deductions, discover, donations, double, earning, earnings, efficient, Employment, estate, Estate Planning, ETFs, events, evergreen_simplefeed_delay, expenses, Fees, Finance, Financial Advisor, financial advisors, Financial Goals, Financial Plan, Financial Planning, financial planning and tax liability, Financial Wize, FinancialWize, Free, friendly, fund, funds, General, get started, goals, good, graduated, Grow, Growing Wealth, guide, health, health plan, health savings account, home, home buying, homes, How To, hsa, in, Income, income tax, Insurance, interest, Invest, Investing, investment, investment planning, Investment Properties, investments, IRA, IRAs, lake, liability, loan, loan interest, Local, LOWER, Make, making, manage, Media, Medical, medical expenses, money, More, more money, Mortgage, mortgage interest, Move, mutual funds, net worth, News, north carolina, offer, one year, or, organization, Other, Personal, personal finance, place, plan, plan for retirement, Planning, plans, proper financial planning, property, rate, Rates, ready, Refund, rental, rental homes, retirement, retirement account, retirement accounts, Retirement Income, Retirement Planning, retirement savings, Revenue, Reverse, reverse mortgage, right, robo-advisors, roth, Roth IRA, save, Save Money, savings, Savings Account, security, self-employed, Self-employment, SEP, sep ira, simple, simple IRA, Small Business, social, social security, social security benefits, sources of income, South, South Carolina, Strategies, student, student loan, supplemental income, tax, tax credit, tax credits, tax deduction, tax deductions, tax liability, tax loss harvesting, tax planning, tax rates, tax refund, taxable, taxable brokerage account, taxable income, taxes, tips, traditional, virginia, wealth, withdrawal, work, working
1 2 … 159 Next »

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • October 2020

Categories

  • Account Management
  • Airlines
  • Apartment Communities
  • Apartment Decorating
  • Apartment Hunting
  • Apartment Life
  • Apartment Safety
  • Auto
  • Auto Insurance
  • Auto Loans
  • Bank Accounts
  • Banking
  • Borrowing Money
  • Breaking News
  • Budgeting
  • Building Credit
  • Building Wealth
  • Business
  • Car Insurance
  • Car Loans
  • Careers
  • Cash Back
  • Celebrity Homes
  • Checking Account
  • Cleaning And Maintenance
  • College
  • Commercial Real Estate
  • Credit 101
  • Credit Card Guide
  • Credit Card News
  • Credit Cards
  • Credit Repair
  • Debt
  • DIY
  • Early Career
  • Education
  • Estate Planning
  • Extra Income
  • Family Finance
  • FHA Loans
  • Financial Advisor
  • Financial Clarity
  • Financial Freedom
  • Financial Planning
  • Financing A Home
  • Find An Apartment
  • Finishing Your Degree
  • First Time Home Buyers
  • Fix And Flip
  • Flood Insurance
  • Food Budgets
  • Frugal Living
  • Growing Wealth
  • Health Insurance
  • Home
  • Home Buying
  • Home Buying Tips
  • Home Decor
  • Home Design
  • Home Improvement
  • Home Loans
  • Home Loans Guide
  • Home Ownership
  • Home Repair
  • House Architecture
  • Identity Theft
  • Insurance
  • Investing
  • Investment Properties
  • Liefstyle
  • Life Hacks
  • Life Insurance
  • Loans
  • Luxury Homes
  • Making Money
  • Managing Debts
  • Market News
  • Minimalist LIfestyle
  • Money
  • Money Basics
  • Money Etiquette
  • Money Management
  • Money Tips
  • Mortgage
  • Mortgage News
  • Mortgage Rates
  • Mortgage Refinance
  • Mortgage Tips
  • Moving Guide
  • Paying Off Debts
  • Personal Finance
  • Personal Loans
  • Pets
  • Podcasts
  • Quick Cash
  • Real Estate
  • Real Estate News
  • Refinance
  • Renting
  • Retirement
  • Roommate Tips
  • Saving And Spending
  • Saving Energy
  • Savings Account
  • Side Gigs
  • Small Business
  • Spending Money Wisely
  • Starting A Business
  • Starting A Family
  • Student Finances
  • Student Loans
  • Taxes
  • Travel
  • Uncategorized
  • Unemployment
  • Unique Homes
  • VA Loans
  • Work From Home
hanovermortgages.com
Home | Contact | Site Map

Copyright © 2023 Hanover Mortgages.

Omega WordPress Theme by ThemeHall