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Home Lifestyle Sustainable fabrics that are taking over home décor
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What is the true cost of home ownership? A closer look at which is best between a 30 year fixed mortgage rate or a 15 year fixed mortgage rate…
Have you ever been a situation where you wanted to buy something really bad? Maybe it was something that you wanted really bad, but you really didn’t quite need it.
Just for hypothetical sake, let’s say you really need (I’ll say want) the new Apple iPad and with its nice entry prices of $499. You have to buy it, but unfortunately, you don’t have the cash right now, so you buy it on credit.
Everyone else is doing it, why not you?
Needing a line of credit you head to the first lender and they strike you a deal that will allow you to pay it back over 3 months of $200 per month.
Over the 3 months you’ll pay a total of $600 of which $100 is interest. Not sure you if you’re getting the best deal you shop around and head to the 2nd lender.
The 2nd lender entices you with a sweet offer that only makes you pay $125 month but you do so for a 6 month period. The grand total you’ll pay is $750 of which $250 is interest.
Although with the second lender you pay less per month, it takes you longer to own your iPad and you end up paying one and a half times what it is actually worth! How bad do you really need it?
If a similar situation, would lender would you borrow from? As I’m sure you can tell, there is a lot of similarity in buying a home. When you’re deciding between a 15-year mortgage and a 30-year mortgage, be sure to consider and weigh all the pros and cons before making your decision.
In general, the reason most homebuyers take out a 30-year mortgage is because they cannot afford (or think they cannot afford) a higher monthly payment.
But if you can find a way to make a 15-year mortgage rate work within your budget, it could really pay off in the long run.
You would own your home sooner and pay less for it (ultimately), and you would probably also lock in your mortgage at a lower interest rate.
For example … Let’s say you want to buy a house for $300,000. If you took out a 30-year fixed rate mortgage at 6.5%, you’d pay around $1900 per month. In the end, you will have spent $300,000 on your house, and $382,633 on interest. That’s a total of $682,633 … over twice the price of your home.
If you bought the same house with a 15-year fixed rate mortgage at 6.0%, your monthly payment would be about $2,532.
However, at the end of 15 years, you will have spent only $455,682. That’s $300,000 on the house and only $155,682 on interest.
That’s $226,951 less than with the 30-year mortgage!
That “extra” money could be invested, used to fund your child’s education, used to renovate the house, etc.
It’s up to you to decide if the additional money paid each month is worth the long-term payoff.
But remember … the term is shorter, too. Imagine owning your home before your kids start college.
You’re only sacrificing monthly for 15 years, and then … no more payments. It’s all yours!
Being over zealous in paying down your home mortgage does have it risks. The first
What are the downsides? Well, the most obvious downside is that the monthly payment is higher.
This can mean significantly altering your spending habits.
Another downside: by paying less interest, you’ll get less of a tax deduction.
While the attraction of having your house paid off in 15 years sounds exciting, it’s a pipe dream for many. My wife and I had toyed with the idea of choosing a 15-year mortgage for our new house, but when we started to crunch the numbers we realized that we were dreaming and dreaming big.
Our solution was to make an extra payment per year.
For example, if you use the example above, a $300,000, 30-year fixed-rate mortgage at 6.5% and if we contribute just $200 extra each month (0r $2400 per year) toward the principle, we could potentially pay off our mortgage nearly 7 years sooner and save over $100,000 in interest.
For us, we get the benefit of paying off the mortgage sooner while not having to be tied down to a higher monthly payment in case we have any unexpected jolts to our income later on in life. Typically, this is the same method that I would suggest to most.
There’s a lot of value in flexibility and leaving your options open.
Source: goodfinancialcents.com
You can pay rent with any credit card and earn rewards on the entire payment. But even if your credit limit can accommodate the transaction, there’s a catch: You generally have to use a payment portal that tacks 2% to 4% onto the transaction. That’s more than enough to offset any rewards you’d earn.
Bilt Mastercard offers a way around that. It has a built-in rent payment portal that lets you pay your rent without the transaction fee. You earn a 1% return on those rent payments too.
Transaction-fee-free rent payments with rewards is Bilt Mastercard’s biggest selling point, but it’s not the card’s only notable feature. Bilt Mastercard has some additional upsides — and downsides — to consider before you apply.
Bilt Mastercard is a rewards credit card with no annual fee. It’s one of the few credit cards that waives transaction fees on rent payments, significantly reducing the cost of paying rent with a credit card.
Bilt Mastercard has an above-average rewards program that earns points on everything you buy — double and triple points on common purchases like travel and dining. Heavy spenders can move up the Bilt Rewards hierarchy, earning points toward travel, experiences, or even a down payment on a house.
Bilt Mastercard has a few unusual features that set it apart from most rewards credit cards.
Yes, Bilt Mastercard is legitimate. While Bilt itself isn’t very well known, this credit card is backed by Wells Fargo, one of the biggest banks in the United States (and world).
Funds held with Wells Fargo are FDIC-insured, and it’s one of the few banks qualifying as “too big to fail,” so it’s not going anywhere. If it does, we all have bigger problems than whether this one credit card is a scam.
Bilt Mastercard touts its transaction fee-free rent rewards. But that’s just one feature on a much bigger menu.
Bilt Mastercard has a tiered rewards program. The rewards you earn depend on what category your purchase falls into. But overall, it’s a generous rewards program.
You have to make at least five transactions in a statement period to earn rewards for that period. That rules out using Bilt Mastercard for rent payments only.
You can redeem Bilt rewards for:
Redemption minimums and values vary, but if you travel regularly, the most reliable value comes from transfers to airline and hotel partners. Otherwise, rent payments are your best bet.
Bilt’s rewards program has four tiers based on your annual point earnings. Each tier unlocks new benefits:
If you wish, you can allow Bilt to report your rent payments to the three major credit bureaus (Experian, Equifax, and TransUnion). That may help you build credit faster, especially if you don’t have many other credit accounts. But it can also hurt you if you stop paying rent for any reason or you’re late on rent payments.
Bilt Mastercard has some potentially valuable non-rewards travel benefits too.
Bilt Mastercard has some other complimentary benefits:
From day one, Bilt Mastercard’s APR is 20.99%, 23.99%, or 28.99%, based on your creditworthiness. There’s no introductory APR promotion for purchases or balance transfers.
Bilt Mastercard has no annual fee or foreign transaction fees. Other fees may apply, including balance transfer and cash advance fees.
Bilt Mastercard has relatively laid-back standards. It’s not for people with bad credit, but your application may be approved, even if your FICO credit score is below 700. For more information, see our article about good versus bad credit scores.
Bilt Mastercard has an above-average rewards program, multiple perks and benefits for renters, and some potentially valuable benefits for cardholders who use rideshare and restaurant delivery services.
Bilt Mastercard is missing some common rewards card features and falls flat on purchases outside the dining and travel categories, among other disadvantages.
Bilt Mastercard really leans into its rent payment benefits, but if you zoom out, it looks like a fairly typical travel and dining credit card. So before you apply, see how it stacks up against another popular credit card that rewards dining and travel: the Chase Sapphire Preferred Card.
| Bilt Mastercard | Chase Sapphire Preferred | |
| Dining Rewards | Unlimited 3x | Unlimited 3x |
| Travel Rewards | Unlimited 2x | Unlimited 2x or 5x |
| Base Rewards | 1x (limited only on rent) | Unlimited 1x |
| Double Points Day | Yes | No |
| Travel Credit | None | $50 on eligible hotels |
| Sign-Up Bonus | None | Yes |
| Rent Transaction Fee | None | Yes |
| Annual Fee | $0 | $95 |
Bilt Mastercard is the best credit card to use for rent payments because it waives the customary transaction fee, which can add 2% to 4% to the cost, depending on which payment portal you use. It has some other benefits too, including unlimited 3x rewards on dining purchases and unlimited 2x rewards on travel purchases. And it has no annual fee.
But Bilt Mastercard has some meaningful drawbacks. It lacks a sign-up bonus or 0% APR introductory promotion, and its baseline rewards rate is low. Most important, you have to make at least five transactions in a statement period to earn rewards for that period, which rules out getting it just to use on rent payments or infrequent use in general.
Still, Bilt Mastercard is a contender if you’re a renter in the market for an entry-level rewards credit card.
Source: moneycrashers.com
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your financial details.
Wills are an essential part of estate planning, leaving instructions for how to distribute your assets and possessions after you die. Trusts are a common tool in estate planning as well, serving as a way to manage assets both before and after your death. If your will conflicts with a trust that you have set up, the trust will typically prevail. This is because, in most cases, the assets in a trust don’t technically belong to your estate any longer. They are legally owned by the trust itself, so the terms of your will don’t affect them. For help with estate planning, consider working with a financial advisor.
A last will and testament is a legal document that directs how to distribute your assets after your death. Among other issues, a will establishes:
Wills are an essential part of estate planning. When you die, everything that you own is collectively known as your estate, which then gets distributed among your heirs.
If you leave a will, your estate is distributed according to your wishes and that process is overseen by someone you select, known as the executor. If you die without a will, known as dying intestate, your estate is distributed according to the inheritance law of your jurisdiction. That process is overseen by someone appointed by the probate court, known as an administrator.
Under typical circumstances a will is managed through and by probate courts. Your executor will file your will with the court which in turn oversees the entire process of settling your affairs and distributing the estate’s assets. For most estates, the probate process is largely a formality. The court makes sure that your will is legal, that your estate pays its debts and that your executor has the access they need to distribute your assets.
The same process occurs if you die without a will. In that case, the probate court appoints an administrator and the court then ensures that the administrator distributes your assets according to the local inheritance laws.
A trust is a legal entity created to hold, manage and oversee property. Every trust has four main components:
When you create a trust, you put assets in its name. Once you do that the assets belong to the trust itself, not you. This is the same as with any other property transfer. The trust is a legal entity capable of owning assets, paying taxes and making distributions, so once you put something in its name that property legally belongs to the trust itself, not you.
In creating a trust, you also establish its terms. You name the trustees and the beneficiaries, and set out the terms for how the trustees should manage the trust and its assets. This includes instructions for what assets the beneficiaries will receive, along with how and when. For instance, you can leave instructions for your trustee to distribute your funds equally among your children after you die.
There are two main circumstances in which a will can conflict with a trust. First, a will might give instructions that conflict with the terms of a trust that already exists. For example, your will might include language that leaves the family home to your children, while earlier in life you placed that house in a trust for tax purposes. Second, a will might give instructions that conflict with the terms of a trust that doesn’t exist yet, or which hasn’t yet received its assets. For example, your will might include language that distributes your investments among your children, while another section of the will might include language that places your investments in a family trust.
In the first case, the terms of the will have no authority. A will cannot override a trust that already exists, nor can it distribute or manage property already held in an existing trust. If a trust exists and holds its assets, those assets belong to the trust itself. They are not part of your estate and, as a result, are not subject to the terms of your will.
If your will gives instructions that conflict with the terms of a trust, your will’s terms will apply to the assets in your estate and the trust’s instructions will apply to the assets in the trust. The designated beneficiaries will receive their assets according to the terms of the trust.
In the second case, your will is not actually conflicting with any existing trust. Instead, it is internally contradictory and will be resolved according to local inheritance law. You can leave instructions in your will to put assets in trust. This can apply to a trust that already exists, where your will puts assets into a trust that you created earlier. It can also apply to a testamentary trust, where your will instructs the executor to create a new trust and put assets into it.
In both cases, these assets belong to your estate when you die. This means that the terms of your will govern how those assets are distributed. If one section of your will conflicts with the section of your will which creates or contributes to the trust, then the issue is that your will is internally contradictory. The trust itself is not in question, just the will.
In that case the probate court and your executor will have to determine the exact nature of the internal conflict in your will. They will then resolve that conflict according to state and local inheritance law.
Your will still cannot supersede how an existing trust manages its assets. But conflicts in your will can prevent new assets from being added to the trust. This is why, if you plan on making or managing a trust, it’s wise to have a lawyer help you write these documents.
Wills and trusts are, generally, the two most significant vehicles for estate planning. Broadly speaking, if you are looking to leave assets to your heirs, you will likely use one or both of these. While a full exploration of the subject is beyond the scope of this article, there are some good rules for when you should use a will vs. a trust. Wills and trusts are not mutually exclusive; their control over specific property is. Any given asset can either be put in trust or distributed by a will – but not both. However, you can manage your estate in general by putting some assets into a trust and distributing others through a will.
In general, wills have the benefit of simplicity.
While wills do not have the tax and probate benefits of a trust, the truth is that these concerns are frequently overstated. The federal estate tax only applies to large estates, beginning at $12.92 million at time of writing. And the probate process can take some time, but it typically is only lengthy and complex for particularly large or contentious estates. If you have an ordinary scope of assets, the odds are good that neither taxes nor probate will be a burden for your heirs.
Yet, at the same time, wills are one-shot instruments. This makes good for making simple distributions and leaving direct instructions. But once the terms of the will have been carried out, the estate is closed.
The result is that wills are often a good choice when you want to leave someone an asset in its entirety, such as leaving an amount of cash or a home to one single heir. They are also good for small and mid-sized estates, as a trust would impose additional costs and complications in order to solve tax and probate issues that these estates likely will not have. Finally, wills are good for leaving instructions beyond the scope of assets, such as arranging for the care of minor children and pets.
In general, trusts have the benefit of third-party management.
When you put money into a trust you legally hand it over to a third party. This creates costs and complications that a will does not have. The trust will require instructions and terms, and you will need to pay for a trustee to oversee the trust’s assets.
This same process, however, means that your estate moves out of your name. You can do this before death, through a living trust, after death, through a testamentary trust, or in totality, through what is known as a pour-over will. This last is a will which bequeaths all of your property to a trust, so there is no risk of accidentally leaving any assets to the probate process.
Moving assets out of your name makes trusts good for estates that are large enough to trigger tax and probate concerns, such as if your estate is worth more than $13 million at time of writing. They are also good for people who want to leave ongoing instructions after they die, for example, if you would like to ensure that a piece of property remains in the family without being sold. Finally, trusts are good for people who anticipate contested issues, as the trust will avoid the probate process that opens the door for heirs and debtors to challenge the estate.
When you’re trying to decide whether to leave assets in a will or a trust, a good rule of thumb is this:
Wills are a good choice when you have a simple transfer to make. If you want to leave someone money or property to own outright, and you are not a multimillionaire, a will may be your best option. Trusts are a good choice when you have a large or complex issue of inheritance. If your estate is worth several million dollars, or you want to ensure that your assets are transferred and managed in a specific way, a trust may be your best option.
A will cannot override the terms of an existing trust. Once assets belong to a trust, they are not part of your estate and your will has no authority over them. However, if your will has terms to put assets into a trust, internal contradictions can prevent that transfer from taking place.
Photo credit: ©iStock.com/courtneyk, ©iStock.com/monkeybusinessimages, ©iStock.com/fizkes
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your financial details.
Wills are an essential part of estate planning, leaving instructions for how to distribute your assets and possessions after you die. Trusts are a common tool in estate planning as well, serving as a way to manage assets both before and after your death. If your will conflicts with a trust that you have set up, the trust will typically prevail. This is because, in most cases, the assets in a trust don’t technically belong to your estate any longer. They are legally owned by the trust itself, so the terms of your will don’t affect them. For help with estate planning, consider working with a financial advisor.
A last will and testament is a legal document that directs how to distribute your assets after your death. Among other issues, a will establishes:
Wills are an essential part of estate planning. When you die, everything that you own is collectively known as your estate, which then gets distributed among your heirs.
If you leave a will, your estate is distributed according to your wishes and that process is overseen by someone you select, known as the executor. If you die without a will, known as dying intestate, your estate is distributed according to the inheritance law of your jurisdiction. That process is overseen by someone appointed by the probate court, known as an administrator.
Under typical circumstances a will is managed through and by probate courts. Your executor will file your will with the court which in turn oversees the entire process of settling your affairs and distributing the estate’s assets. For most estates, the probate process is largely a formality. The court makes sure that your will is legal, that your estate pays its debts and that your executor has the access they need to distribute your assets.
The same process occurs if you die without a will. In that case, the probate court appoints an administrator and the court then ensures that the administrator distributes your assets according to the local inheritance laws.
A trust is a legal entity created to hold, manage and oversee property. Every trust has four main components:
When you create a trust, you put assets in its name. Once you do that the assets belong to the trust itself, not you. This is the same as with any other property transfer. The trust is a legal entity capable of owning assets, paying taxes and making distributions, so once you put something in its name that property legally belongs to the trust itself, not you.
In creating a trust, you also establish its terms. You name the trustees and the beneficiaries, and set out the terms for how the trustees should manage the trust and its assets. This includes instructions for what assets the beneficiaries will receive, along with how and when. For instance, you can leave instructions for your trustee to distribute your funds equally among your children after you die.
There are two main circumstances in which a will can conflict with a trust. First, a will might give instructions that conflict with the terms of a trust that already exists. For example, your will might include language that leaves the family home to your children, while earlier in life you placed that house in a trust for tax purposes. Second, a will might give instructions that conflict with the terms of a trust that doesn’t exist yet, or which hasn’t yet received its assets. For example, your will might include language that distributes your investments among your children, while another section of the will might include language that places your investments in a family trust.
In the first case, the terms of the will have no authority. A will cannot override a trust that already exists, nor can it distribute or manage property already held in an existing trust. If a trust exists and holds its assets, those assets belong to the trust itself. They are not part of your estate and, as a result, are not subject to the terms of your will.
If your will gives instructions that conflict with the terms of a trust, your will’s terms will apply to the assets in your estate and the trust’s instructions will apply to the assets in the trust. The designated beneficiaries will receive their assets according to the terms of the trust.
In the second case, your will is not actually conflicting with any existing trust. Instead, it is internally contradictory and will be resolved according to local inheritance law. You can leave instructions in your will to put assets in trust. This can apply to a trust that already exists, where your will puts assets into a trust that you created earlier. It can also apply to a testamentary trust, where your will instructs the executor to create a new trust and put assets into it.
In both cases, these assets belong to your estate when you die. This means that the terms of your will govern how those assets are distributed. If one section of your will conflicts with the section of your will which creates or contributes to the trust, then the issue is that your will is internally contradictory. The trust itself is not in question, just the will.
In that case the probate court and your executor will have to determine the exact nature of the internal conflict in your will. They will then resolve that conflict according to state and local inheritance law.
Your will still cannot supersede how an existing trust manages its assets. But conflicts in your will can prevent new assets from being added to the trust. This is why, if you plan on making or managing a trust, it’s wise to have a lawyer help you write these documents.
Wills and trusts are, generally, the two most significant vehicles for estate planning. Broadly speaking, if you are looking to leave assets to your heirs, you will likely use one or both of these. While a full exploration of the subject is beyond the scope of this article, there are some good rules for when you should use a will vs. a trust. Wills and trusts are not mutually exclusive; their control over specific property is. Any given asset can either be put in trust or distributed by a will – but not both. However, you can manage your estate in general by putting some assets into a trust and distributing others through a will.
In general, wills have the benefit of simplicity.
While wills do not have the tax and probate benefits of a trust, the truth is that these concerns are frequently overstated. The federal estate tax only applies to large estates, beginning at $12.92 million at time of writing. And the probate process can take some time, but it typically is only lengthy and complex for particularly large or contentious estates. If you have an ordinary scope of assets, the odds are good that neither taxes nor probate will be a burden for your heirs.
Yet, at the same time, wills are one-shot instruments. This makes good for making simple distributions and leaving direct instructions. But once the terms of the will have been carried out, the estate is closed.
The result is that wills are often a good choice when you want to leave someone an asset in its entirety, such as leaving an amount of cash or a home to one single heir. They are also good for small and mid-sized estates, as a trust would impose additional costs and complications in order to solve tax and probate issues that these estates likely will not have. Finally, wills are good for leaving instructions beyond the scope of assets, such as arranging for the care of minor children and pets.
In general, trusts have the benefit of third-party management.
When you put money into a trust you legally hand it over to a third party. This creates costs and complications that a will does not have. The trust will require instructions and terms, and you will need to pay for a trustee to oversee the trust’s assets.
This same process, however, means that your estate moves out of your name. You can do this before death, through a living trust, after death, through a testamentary trust, or in totality, through what is known as a pour-over will. This last is a will which bequeaths all of your property to a trust, so there is no risk of accidentally leaving any assets to the probate process.
Moving assets out of your name makes trusts good for estates that are large enough to trigger tax and probate concerns, such as if your estate is worth more than $13 million at time of writing. They are also good for people who want to leave ongoing instructions after they die, for example, if you would like to ensure that a piece of property remains in the family without being sold. Finally, trusts are good for people who anticipate contested issues, as the trust will avoid the probate process that opens the door for heirs and debtors to challenge the estate.
When you’re trying to decide whether to leave assets in a will or a trust, a good rule of thumb is this:
Wills are a good choice when you have a simple transfer to make. If you want to leave someone money or property to own outright, and you are not a multimillionaire, a will may be your best option. Trusts are a good choice when you have a large or complex issue of inheritance. If your estate is worth several million dollars, or you want to ensure that your assets are transferred and managed in a specific way, a trust may be your best option.
A will cannot override the terms of an existing trust. Once assets belong to a trust, they are not part of your estate and your will has no authority over them. However, if your will has terms to put assets into a trust, internal contradictions can prevent that transfer from taking place.
Photo credit: ©iStock.com/courtneyk, ©iStock.com/monkeybusinessimages, ©iStock.com/fizkes
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credit score significantly. Depending if you file for chapter 7 or chapter 13, bankruptcy will stay on your credit report for seven to 10 years. You should also be aware that when you file for bankruptcy, all of your financial information becomes available to the public. The court may also decide on how and when you can spend your money, as well as who you must repay first.
Something else that you can try instead of filing for bankruptcy is checking if you are eligible for an income-driven repayment plan. This allows you to repay your student loan debt at an affordable monthly rate based on your income. Another option is to see if you are eligible for a forbearance. A forbearance puts a temporary hold on your loan payments if you are approved. To get approved you must show that you have some kind of outstanding medical expense or financial obligation. You can also get approved for military or AmeriCorps service. One thing to consider with a forbearance is that your loans still build interest when you don’t pay them.
Next, you can check to see if you meet the requirements for Public Student Loan Forgiveness (PSLF). To qualify you must have made at least 120 qualifying monthly loan payments under a qualified plan while working full-time for a qualified employer.
Some last things to consider before you decide to file are the costs and time it takes to get your loans discharged. Getting student loans discharged is very uncommon, so you will want to be certain you will qualify before you try. If you plan on filing, you should be ready for filing fees and attorney fees — attorney fees average over $1,400 and filing fees are typically around $300. This can be a lot, especially for someone who is looking to file for bankruptcy. That is why it is important to fully understand where you stand with your finances. Many people do not realize what it costs to file for bankruptcy. For some people this is a burden that damages their finances even more. This is why you must be certain that you can do things like pay your rent and buy groceries after filing. If this is too much, then you might want to consider other options.
Proving that your student loans will cause you undue hardship is not an easy task. You will have to demonstrate that paying back your student loans will cause a significant negative effect on you and those who depend on you.
There is no set way to determine or ask someone to demonstrate undue hardship. Courts have the discretion of what methods they use to determine your hardships. A common method used by many courts to prove undue hardship is the Brunner test. To prove undue hardship, you must meet all three factors of the test:
Some courts use a different method of testing for undue hardship known as the Totality of Circumstances Test. For this test the court will review all of your applicable financial assets, future earnings, and expenses. Based on what they find they might rule for undue hardship. This test is different from others because it looks at all aspects that could have an effect on the person, rather than just one or two factors.
Discharging your loans comes at the end of bankruptcy, and you might run into some tough questions along the way. There are a few things you can do to help you understand and complete the process.
As mentioned, getting your loans discharged can be very challenging, especially for someone who is unfamiliar with the process. This is why you will want to seek assistance from a bankruptcy lawyer who is practiced and has been in these situations before. Their professional knowledge will be very useful when it comes to filling out the correct forms and procedures.
When you try to discharge your student loans, you will first have to file for bankruptcy for either chapter 7 or chapter 13. Chapter 7 might discharge your loans if they deem you unable to pay because of undue hardship. Chapter 13 bankruptcy will not get rid of your loans, rather restructure the payments so they are affordable.
Chapter 7
Chapter 13
An adversary proceeding is a lawsuit filed in bankruptcy and basically means that you are making a complaint in court. This is required for bankruptcy because your complaint is your inability to pay your student loans. When you file this proceeding you will need to have proof that you cannot make your loan payments due to undue hardships. This means verifying your income and proving that dependents rely on you, making it impossible to pay your loans.
So can you file for bankruptcy on student loans? The answer is yes, but you should look into other options first and establish an affordable payment plan. Now that you know what it takes to discharge your student loans this way, and you understand the difficulty and costs that come with proving undue hardship, you can take your next steps. Use a debt-to-income ratio tool to help you plan your payments by determining your ability to afford and pay a loan.
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I can’t believe the Grow Your Dough Throwdown is over!
It’s been an exhilarating ride, and I wish I could say that I was excited to share the results.
Alas, my portfolio got its butt kicked, while my wife’s portfolio, on the other hand, did rather well.
In fact, I think everyone kicked my butt.
Oh, well; life goes on…..
The exciting thing is that the Grow Your Dough Throw Down 2.0 is ready to launch, and I will have details at the end of this post.
Until then, let’s take a look at how I did.
If you recall, previously I had purchased five different stocks with my initial portfolio with TD Ameritrade. Two of my stocks have performed horribly: EHealthInsurance.com and Yahoo.com. My other three were doing okay, but not great. Those were Fidelity Guarantee and Life (an insurance company IPO), Dunkin Donuts, and Bank of New York. After three quarters of the year, my portfolio was down almost $100, and I knew there was no way that I would catch the leader, so I thought to myself, “Why not go big or go home?”
I sold all of my positions, then purchased RIG, which is Transocean, an offshore drilling contractor. I read about Transocean from another stock picker and he absolutely loved it, and I thought with a 17% dividend and a potential to buy on a dip, I might have a chance to walk away with the Grow Your Dough Throwdown title.
My hope fell short. Really short.
As oil continued to drop, so did Transocean’s stock price. My total account value is down to $551.73, for a net return loss of 45% for the year. In case you haven’t figured this out yet, that is not how you Grow Your Dough, not in the very least. I went from having a balanced portfolio to becoming a speculative investor, which is basically what I warn all my clients against.
Luckily, it was only for $1000, and the stock still could come back… ha, ha because you heard that one before. Either way, I definitely did not win the Throwdown, but I don’t think I took last.
Is there a trophy for next to last? 🙂
Ally Invest , then Tradeking, was the brokerage firm that I used to build a Blue Chip portfolio. The stocks I selected were General Electric, Coca-Cola, McDonalds, Microsoft, and Verizon. For the year, the account didn’t do as great as I had hoped, having a total value of $1032.41 at year-end. Three of the stocks ended up being down for the year – General Electric, McDonalds and Verizon – with the other two being up. Either way, we are still up, so I can’t be too unhappy about that.
Motif, which you will hear more about in a sec, was the investment platform that I was least familiar with. The more Motif investing reviews I read and how it is structured, the more I like it, especially for those who are wanting to invest in a specific period over a sector in the market.
I purchased three different Motifs: the Onward Online Ad’s Motif, the Cleantech Everywhere Motif, and the Obamacare Motif. For the end of the year, my portfolio value is $1032.18, barely beating out the Blue Chip portfolio at TradeKing. Once again, I will share more about Motif here at the end of the post.
Out of all of the investment platforms I opened an account with, Betterment was no question the easiest one to get my money funded and then invested. It’s even easier than opening an account at Capital One 360.
For the year, my total account balance is $1060.82. With how Betterment investing works, I just selected my target goal, and then they constructed a portfolio that consisted of 90% stocks and 10% bonds, which are predominantly invested in ETF’s. I’m still a big fan of Betterment, especially for those who know little about investing and want a super slick interface to get started.
The two peer-to-peer platforms in Prosper and Lending Club fared well for the last part of the year as well. Lending Club has a new feature where you can see your account returns, and you can also adjust that for past-due notes. Basically, this feature is for those that make defaults on their loans. For the net annualized return, with Lending Club it was 6.75%, with an adjustment account value of $1050.93.
These notes are currently past due and haven’t defaulted yet, so if those happen to pay my net annualized return for the year, they would be 12.24%, with an account value of $1090.41. Considering how low interest rates are, and having made money off your CDs, even the 6.75% is nothing to sneeze at.
With Prosper, they currently don’t have the adjusted return, so the total value is $1086.51 for an 8.64% return.
It definitely became a neck and neck race for who was going to win the Grow Your Dough Throw Down. Barely squeaking a victory by less than $14 was Phil Taylor from PTMoney.com. His total value was $1327.05. Below is a screen shot of some of his holdings for the year.
In a very close second place was Rob Berger from Doughroller.net. His account value year-end was $1313.55. Rob went the Tesla, AT&T, and Apple approach to yield his return.
Congratulations fellas, you both did well and definitely take down this CFP®.
I am excited to announce we are going to continue the Grow Your Dough Throw Down into 2015. This time, we are going to have 20 different personal finance bloggers participate.
Motif, which I mentioned above, has agreed to be a sponsor for the event. They are going to create a custom leader board where you will be able to track my Motif, including the other 19 participant Motifs, to see how we are doing on a daily basis. I’m so excited that Motif was pumped about the Grow Your Dough Throw Down this past year, and when they approached me about creating the custom leader board and being a part of it, I was definitely all ears.
More to come!
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The interest rate on Series I savings bonds bonds for the last six months has been an impressive 6.89%. But investors looking to jump into new issue bonds are in for a letdown. According to the Treasury, the rate for I bonds has reset to 4.3%.
The new annualized rate went into effect May 1 and includes a 0.9% fixed rate and a 1.69% six-month inflation rate. If you’re interested in investing in I bonds or other fixed-income instruments, consider working with a financial advisor.
Sure, I bonds are now paying less than they were in recent months. But, as always, things could be worse. The new rate is higher than previous estimates that were made based on known inflation data, which had pegged the rate below 4%. On the other hand, the rate paid on I bonds from May to November 2022 was a whopping 9.62%.
As of March, the annualized inflation rate was 5%, down from 6% in February and much lower than the March 2022 rate of 8.5%. The Federal Reserve’s Open Market Committee has forecast inflation for 2023 to come in between 2.8% and 4.1%, with a median prediction of 3.3% for the year.
The I bond rate is made up of two components: a fixed rate set by the Treasury as well as an added inflation rate that’s adjusted with each auction. Once set, the fixed rate is good for the life of the bond, while the inflation rate is adjusted in May and November. Interest is compounded twice per year.
Because of the lifetime fixed-rate component, buying and holding I bonds when inflation is high can be a profitable strategy once inflation drops. I bond holders who bought between May and November 2001 maintain a fixed rate of 3%, giving them an annualized rate of 6.43% for the next six months.
The highest rate being paid now on previously issued I bond is 7.04% for bonds purchased between May and November 2000. The lowest return is 3.38% being paid on several issues of bonds made when inflation and interest rates were low, with the fixed rate at 0%.
Individual investors can buy up to $10,000 worth of I-bonds each calendar year, as well as an additional $5,000 in paper I-bonds using their tax refund, which they can then convert to their digital account.
I bonds can be purchased only from the TreasuryDirect.gov website. Buyers need to create an account, a process many investors have criticized as complicated and clunky. Besides your personal information, you’ll need to enter your bank account and routing numbers, along with setting up a password and security questions. The bonds are issued electronically, and the minimum purchase amount is $25.
Investors can purchase up to another $5,000 in paper bonds using their federal income tax refunds, or $10,000 for a couple filing jointly. The purchase can be made only when you file your return, using IRS Form 8888, Allocation of Refund.
I bonds can be purchased for children by setting up a “minor account” linked from the purchaser’s own TreasuryDirect account. The account is custodial and can be accessed only by the purchaser. I-bonds also can be purchased as a gift for anyone with a Social Security number, as long as the total of bonds purchased and credited to that Social Security number doesn’t exceed $10,000 that year.
Interest income from the bonds is credited to the value of the bond, rather than being directly paid out to the bondholder. Interest is tax-free at the state and local level but is taxable on your federal income tax return. The tax can be paid when the bonds are redeemed or as the interest is credited during the life of the bond. Bonds sold to pay for qualified educational expenses can be redeemed tax-free.
The rate on new I bonds is lower than the previous issue but still higher than expected. The base rate is higher than before giving investors additional returns if they hold the bonds during periods of lower interest rates.
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Source: smartasset.com