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Apache is functioning normally

June 9, 2023 by Brett Tams

Are you considering term life insurance?

If so, then you are probably considering the amount of time that you should take for the extent of the term. Of the 20, 25 and 30 year term policies, for most people the 25 year term life insurance is going to be the best for the overall benefits.

20 and 30 year term life insurance is generally for more specialized cases and they do have their uses, but 25 year term life insurance fits more people overall, especially younger families who are just starting out, although, they can benefit people in different age groups as well.

Term life insurance is very important to handle the financial burden of a loved one who passes away. The needs of the family are still present when the breadwinner is no longer around.

If you’re like most Americans, if you were to pass away, you would leave your family with thousands of dollars in debt. The majority of families would have no way to pay for all of these unpaid expenses, but that is where life insurance comes in. It can give your family the resources they need to get through this difficult time without adding financial stress.

Choosing the right length for your type of life insurance needs to be geared towards the expected financial burdens which include paying the mortgage, auto loans, and other bills while covering the funeral expenses. It’s important that you find a balance between choosing the right term length and the perfect premium amount.

What follows are the advantages gained from choosing a 20, 30 or 25 year term life insurance policy.

20 year term vs. 25 year term

A 20 year term life insurance policy works well for middle aged and older people in covering the remaining expenses on their mortgages. These are the groups of people that in the next decade, they won’t have any children relying on their income.

Plus, with the children having grown up, making sure that the funeral expenses are covered.

However, a 25 year term policy may be just as beneficial depending on the circumstances, especially if their children have not quite left home yet. Those extra few years can make a difference in terms of coverage.

So, for 20 year term vs. 25 year term, the advantage for most people falls to the 25 year term policies.

25 year term vs. 30 year term

The 30 year term policy is generally more suited for young couples just starting out, especially if they have just purchased their first home on a 30 year mortgage.

This will ensure that if anything were to happen to them, they will be able to pay off the mortgage and not have to worry about losing the roof over their heads.

A 25 year policy is generally more suited for people who have already started paying on their mortgage for a few years or have taken out a shorter-term mortgage.

Again, depending on your circumstances you should choose the policy that extends your coverage just enough past your mortgage and kids growing up and leaving home.

For many, the 25 year term life insurance policy is more than enough while the 30 year term leans more towards longer commitments.

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Expenses

You should not only consider the length of the term life insurance, but the amount as well to cover all of your expenses that incur if the breadwinner of your family should pass away.

These expenses include;

  • Mortgage
  • Funeral
  • Household Bills for the next 6 months
  • Cash reserve for unexpected expenses

These are only a few of the factors that you should consider when deciding how large of a policy you need to purchase.

25 Term Term Life Quotes

Here are some sample quotes on a 25-year term life insurance policy for a female.  It should be noted that not all of the top life insurance companies offers the 25-year option.

Sex AGE $250,000 Term Life Insurance Policy Cheapest Quote 1 Cheapest Quote 2 Cheapest Quote 3

Female 30 Face amount $250,000 SBLI $15/mo Protective $15/mo American General $16/mo

Female 40 Face amount $250,000 SBLI $22/mo Protective $23/mo American General $24/mo

Female 50 Face amount $250,000 SBLI $48/mo Protective $49/mo American General $53/mo

Here’s a screenshot that shows sample quotes for a 25-year term policy for a 30-year-old male.

As you can see, the quotes don’t have banner life insurance company in the mix, but some other great carriers are there.

The final amount should be to cover what you either may not have considered or for unexpected situations such as the family member dying away from home and needing transportation.

All in all, covering your expenses with term life insurance can greatly ease the immediate financial burden and bring about a little peace of mind when it comes to the financial situation.

You should also consider how much income your family would lose if you were to pass away and how would they replace that income? If you’re the main income-earner, your family could struggle to replace your salary. It’s important that your policy gives them enough time to find another source of income.

There is no “magic number”, but most insurance experts suggest that you purchase a policy that is around ten times your annual salary. This will give your loved ones plenty of time to recover and get back on their feet.

With such a large policy, a lot of applicants think they won’t be able to afford a policy that is ten times their salary but don’t worry, in most cases the policy premiums are much cheaper than you might think.

There are several ways that you can get a more affordable insurance policy without having to sacrifice any of the quality or coverage amount. The best way is to compare all of your insurance options before you make a decision. More than likely, the first company that you call isn’t going to have the lowest monthly premiums. Because there are so many companies that sell life insurance, it could take several days for you to call them and receive insurance quotes for your policy. Instead of wasting your time, let us bring the lowest rates to you. Simply fill out the quote form on the side with your information and we will provide you with the best rates.

We are independent agents, which means that we don’t work for one specific company. Instead, we represent some of the best-rated companies across the United States.  Because we don’t work for one company, we are committed to bringing you the best policy to fit your needs, regardless of which company sells it.

Aside from comparing policies, there are several other ways that you can save money on your life insurance policy. One of those ways is to improve your health and kick your bad habits.

After you complete the paperwork for your applications, the company is going to send out a paramedic to complete a simple medical exam. During this exam, the company will look at your basic vital signs, like blood pressure, heart rate, cholesterol, weight, and they will also take a blood and urine sample. The medical exam doesn’t take long, but it will have a huge impact on your chances of being accepted for the policy and how much you’ll pay every month. If you want to save money, take the time to improve your health. If you think that your health is too poor or you have serious health complications, you can always choose a no-exam medical policy. You can get the coverage without the exam, but you will pay more for the plan.

The other sure-fire way to save money is to kick your bad habits like smoking cigarettes. A smoker buying life insurance is going to pay twice as much (sometimes three times as much) regardless of the rest of their health. If you want to get a policy for the most affordable rates, it’s time to kick those bad habits and enjoy some extra money in your pocket every month.

Source: goodfinancialcents.com

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Apache is functioning normally

June 9, 2023 by Brett Tams

“Persistently high inflation and the recent spike in lending rates will trigger a correction in the UK (Aa3 negative) housing market,” Moody’s Investor Service said in a report.

Matt Cardy | Getty Images News | Getty Images

LONDON – The U.K.’s biggest bank temporarily withdrew mortgage deals via broker services on Thursday, as the effect of higher interest rates ripples through the British housing market.

HSBC told CNBC Friday that it was reviewing the situation regularly, but did not specify whether the new deals would differ from its previous offerings. Higher rates are a possibility, given that the Bank of England is continuing to increase interest rates.

It comes eight months after hundreds of mortgage deal offers were pulled in one day after market chaos at the time sparked concerns about rising base rates.

In a statement issued Friday, HSBC said: “We occasionally need to limit the amount of new business we can take each day via brokers. All products and rates for existing customers are still available, and we continue to review the situation regularly.”

The banking group said the protocol was in order to ensure it meets “customer service commitments” and stressed that it remains open to new mortgage business.

Soaring rates

The HSBC decision comes as analysts expect mortgage rates to soar and housing prices to plummet in response to the increased base rate.

A large number of fixed-rate mortgage deals is set to expire this year, leaving homeowners vulnerable to the impact of interest rate hikes, according to economic research company Capital Economics.

The organization made an upward revision to its mortgage rate forecasts, which showed borrowers would be “subject to a larger interest rate shock than … previously envisaged.”

“Those coming to the end of a 2-year fix will see a particularly large increase in the cost of their mortgage. While those refinancing a 5-year fix this month may see their mortgage rate jump from 2.1% to 4.9%, those on a 2-year fix will see an increase from 1.4% to 5.2%,” Capital Economics said in a note published Thursday.

There are also warnings that house prices will tumble in the next two years, with credit ratings agency Moody’s forecasting a 10% decline. 

“Persistently high inflation and the recent spike in lending rates will trigger a correction in the UK (Aa3 negative) housing market,” Moody’s Investor Service said in a report.

The Halifax House Price Index showed that U.K. house prices were flat in May after a 0.4% fall in April, while the average U.K. property now costs £286,532 ($360,000).

In February, U.K. house prices experienced their sharpest contraction since November 2012, according to building society Nationwide.

Watch CNBC's full interview with the Bank of England's Andrew Bailey

Prices tumbled 1.1% year-on-year, logging their first annual decline since June 2020.

The Bank of England raised its interest rate to 4.5% from 4.25% as the central bank attempts to tackle high inflation that currently sits well above the 2% target, at 8.7%. 

The Organization for Economic Cooperation and Development predicts the U.K. will have the highest inflation rate out of all advanced economies this year.

Lenders and homeowners will be watching the central bank closely for its next base rate decision on June 22. It is widely expected the bank will agree its thirteenth consecutive increase.

Source: cnbc.com

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Apache is functioning normally

June 9, 2023 by Brett Tams
Home Decor Market in the U.S Set to Surpass $158,929.1 million ;

According to a new report published by Allied Market Research, titled, “U.S. Home Decor Market by Product Type, Income Group, Price, Distribution Channel & Category: Opportunity Analysis and Industry Forecast, 2020-2027,” The U.S. home decor market size was valued at $125,813.0 million in 2019, and is estimated to reach $158,929.1 million by 2027, registering a CAGR of 8.0% from 2020 to 2027. In 2019, the floor covering segment accounted for significant contribution in the U.S. home decor market share, and is expected to grow at a CAGR of 8.4% throughout the forecast period.
The U.S. home decor market has witnessed significant growth over the years, and is expected to grow at a steady pace during the forecast period. This is attributed to the fact that market players are focusing on developing eco-friendly products, owing to rise in environment awareness. The floor covering segment occupied the largest share in the overall home decor market in 2019, and is expected to maintain its leading position throughout the forecast period, owing to the wide adoption of floor coverings,

The home decor market in U.S. is driven by surge in disposable income and improvement in living standards. Moreover, the rise in affinity of consumers toward consumer-friendly home décor products are anticipated to boost the demand for home decor products. However, availability of low-quality and counterfeit products and fluctuations in the prices of raw materials used to manufacture these products restrain the market growth. Conversely, surge in demand for trendy and unique furniture is anticipated to provide lucrative opportunities for the U.S. home decor market growth.

Request For Sample :- https://www.alliedmarketresearch.com/request-sample/7140

The U.S. home decor market is segmented based on product type, distribution channel, price, income group and category. Depending on product type, the market is divided into furniture, home textile, and floor covering. By distribution channel, it is fragmented into supermarkets & hypermarkets, specialty stores, e-commerce, and others. Based on the price, the market is segmented into premium and mass. Based on the income group, the market is segmented into lower-middle income, upper-middle income, and higher income. Based on category, the market is segmented into eco-friendly and conventional.

According to the U.S. home decor market analysis the floor covering segment generated the highest revenue in 2019, and is expected to remain dominant throughout the forecast period. The flooring segment is also expected to witness the highest growth rate of 8.4% from 2020-2027.

According to the U.S. Home Decor market forecast based on distribution channel, the specialty stores segment was the highest contributor to the U.S. market in 2019 and is expected to remain dominant through 2020-2027. However, the E-commerce segment is expected to grow at a higher growth rate through the forecast period.

Based on the price, the mass segment was the highest contributor to the U.S. home decor market in 2019 and is expected to remain dominant through 2020-2027. However, the premium segment is expected to grow at a higher growth rate through the forecast period

Based on the income group, the higher income segment was the highest contributor to the U.S. home decor market in 2019 and is expected to remain dominant through 2020-2027. The upper-middle income segment is expected to grow at a notable growth rate through the forecast period.

Based on the category, the conventional segment was the highest contributor to the U.S. home decor market in 2019 and is expected to remain dominant through 2020-2027. The eco-friendly segment is expected to grow at a highest growth rate through the forecast period

Request For Customization :- https://www.alliedmarketresearch.com/request-for-customization/7140

Key findings of the study

The U.S. home decor market was valued at $125,813.0 million in 2020 and is estimated to reach $158,929.1 million by 2027, growing at a CAGR of 8.0% through the forecast period.
Based on product type, the floor covering service segment would witness the fastest growth, registering a CAGR of 8.4% during the forecast period.
In 2019, based on distribution channel, the specialty stores segment held the highest share, accounting for nearly half of the U.S. home decor industry.
In 2019, based on the price, the mass segment was the most prominent segment and is expected to grow at a significant CAGR throughout the forecast period.
Conventional segment was the dominant segment in 2019, accounting for a considerable share in the U.S. market.

Reason to Buy:
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✅ The key findings and recommendations highlight crucial progressive industry trends in the U.S. home decor market , thereby allowing players to develop effective long-term strategies in order to garner their market revenue.
✅ Develop/modify business expansion plans by using substantial growth offering developed and emerging markets.
✅ Scrutinize in-depth global market trends and outlook coupled with the factors driving the market, as well as those restraining the growth to a certain extent.
✅ Enhance the decision-making process by understanding the strategies that underpin commercial interest with respect to products, segmentation, and industry verticals.

Buy Now :- https://www.alliedmarketresearch.com/checkout-final/7bae5e49f5f5eca8ac191bd69a42647b

Check Our Related Reports :-
Hair Salon Equipment Market https://www.alliedmarketresearch.com/hair-salon-equipment-market-A06838

Handheld Marijuana Vaporizer Market https://www.alliedmarketresearch.com/handheld-marijuana-vaporizer-market-A06857

Home Care Products Market https://www.alliedmarketresearch.com/home-care-products-market-A06832

Our Trending Research Report:-
Kitchen Appliances Market :- https://www.openpr.com/news/2299156/kitchen-appliances-market-expected-to-reach-377-70-billion

Household Vacuum Cleaners Market :- https://www.openpr.com/news/2308150/household-vacuum-cleaners-market-is-expected-to-reach-16-657

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Allied Market Research is market research, consulting, and advisory firm of Allied Analytics LLP. Founded in 2013, the firm has been instrumental in offering high-quality syndicated and customized market research reports, consulting services, and useful insights to leading market players, startups, investors, and stakeholders. Driven by the aim to eliminate sub-standard data and become a successful partner for organizations, Allied Market Research has been innovating continuously, expanding the product & service portfolio, and implementing the client-first approach since its inception. With the clientele spanning more than 7,000 organizations that also include a majority of Fortune 500 companies, AMR has a proven track record of helping and serving the global clientele and playing a major role in their success.

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Apache is functioning normally

June 9, 2023 by Brett Tams

Applying for a life insurance policy often involves multiple steps and can take longer than getting other types of insurance. Let’s take a look at what’s commonly involved in the life insurance application process so you can proceed with confidence.

Term or Whole?

Before applying for life insurance, it’s a good idea to consider such things like how much coverage you need, how much you’re prepared to pay for premiums, and which riders you might like to include. You’ll also need to figure out whether a term life or permanent life policy makes sense for you. Whole life insurance is one type of permanent life insurance.

Term life and whole life insurance have important differences. Term life tends to be simpler and more straightforward. Someone purchases a policy for a certain dollar amount and term, and then has life insurance coverage for the designated time period (10, 20, 25, or 30 years, for example).

If the policyholder keeps up premiums and dies within that term, beneficiaries will receive the appropriate payout. Monthly payments are generally fixed with term life policies.

Reasons people choose term life include:

•   Term policies almost always cost less than whole life, sometimes significantly so.

•   Policyholders predict they’ll have enough money saved by the time the policy expires.

•   Beneficiaries are expected to be financially independent by the time the term expires.

Whole life policies, which also require regular payments, are intended to last the holder’s entire lifetime — there is no expiration date. They can cost up to 10 times as much as a term life policy because part of that money is invested into what’s called the policy’s cash value.

Policyholders can typically borrow against their cash value at an interest rate that’s specified in their policy. They may also be able to cash in their policy to receive money; that action closes out the whole life policy. Whatever is left over after the policyholder dies will be distributed to beneficiaries.

Recommended: 8 Popular Types of Life Insurance for Any Age

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The Application Process

When you’re ready to get the ball rolling on obtaining a policy, the first step is to fill out an application with your carrier of choice. The insurance company will review the application for completeness. If any information is missing, they’ll likely follow up to ensure that the application is completely filled out. Some carriers may conduct a phone interview when someone applies, while others do so only if an application is incomplete.

Recommended: How to Buy Life Insurance in 9 Steps

The Underwriting Phase

Next comes the underwriting phase, which every applicant goes through. There are two tracts of underwriting available: traditional and accelerated. The traditional tract requires a medical exam, and your blood and urine samples may be collected. The accelerated tract typically does not require a medical exam or blood or urine tests.

During this time, the insurance company will review your application for a wide range of factors that may include:

•   Your age

•   Your gender

•   Your current health

•   Your personal health history, including prescriptions

•   Your family health history

•   Your lifestyle and personal habits (for instance, a history of alcohol abuse or tobacco use)

•   Your occupation

•   How frequently you participate in hobbies that could be considered high risk

•   Other factors, including your driving record

The insurance company uses this information along with actuarial tables to determine your risk profile, or how much of a risk you are to insure. Your risk profile can impact how much coverage you qualify for and at what cost.

Medical Exams

A life insurance carrier will sometimes require a medical exam before issuing a policy.

The exam may be similar to a person’s regular annual physical. A medical tech will likely ask questions that are similar to those on the application, and a professional will conduct a physical exam. It can include measuring height and weight, checking blood pressure, and taking blood and urine samples.

In some cases, an EKG may be performed to measure the electrical activity of the heart. Men over age 50 may need to have a prostate-specific antigen test done to check prostate health.

When medical exams are required in applying for life insurance, it’s part of the underwriting process that helps a carrier understand the risk level of insuring the applicant. The tests performed can indicate if a person has high blood pressure and/or high cholesterol, elevated glucose, or other health issues.

Contestability

Some people may be tempted to downplay personal health issues when filling out a life insurance application. That is never a good idea. If someone didn’t fully disclose the truth about their state of health and died within two years of getting a policy, the insurance company can delve into the details. If information is found to be lacking or inaccurate, the carrier could deny beneficiaries the death benefit.

The Takeaway

Applying for life insurance often starts with deciding how much coverage you need, how much you’ll pay in premiums, and whether a term life or permanent life policy is right for you. Once you’ve finished comparison shopping and weighing your options, the first step is to fill out an application with the carrier of your choice and then undergo an underwriting process. During this time, the insurance company will consider a number of factors, including your age, gender, current health, personal health history, family health history, and lifestyle. A medical exam may also be required. The insurer uses this information, along with actuarial tables, to determine your risk profile, which can impact how much coverage you qualify for and at what cost.

If you’re shopping for life insurance, SoFi has partnered with Ladder to offer competitive life insurance policies that are quick to set up and easy to understand. You can apply in just minutes and get an instant decision. As your circumstances change, you can easily change or cancel your policy with no fees and no hassles.

Complete an application and get your quote in just minutes.

FAQ

Are there advantages to applying for life insurance when you’re young?

Yes, because carriers generally base policy price on risk factors, buying a policy when you’re young and healthy typically means lower premiums. Plus, with some term life insurance policies, buyers can lock in pricing when they purchase, and locking in at a low rate can be a financial plus.

Can I change the specifics of a life insurance policy — for example, change the amount of coverage?

Yes, some insurance carriers do allow this kind of flexibility. Current policyholders should check with their carrier. New applicants can check with the carrier to see what kind of flexibility is provided.

Is having employer-sponsored life insurance enough?

Maybe. While having this benefit is good, these policies are generally in the amount of one to two times an employee’s salary. That’s typically not enough to address debt and provide sustained financial help to beneficiaries, which is why it may make sense to purchase a second policy. Plus, employer plans may not be portable: If the employee leaves the company, the policy may be terminated.

What’s the right amount of coverage?

Each person’s situation is unique. Some use the DIME formula to determine the right amount. That acronym stands for Debts, Income, Mortgage, and Education. What will be needed to cover all of those bases? To streamline the process, you might want to calculate your life insurance needs.

Does it make sense to use an agent when buying life insurance?

Possibly. An agent can educate a consumer about what’s involved in getting a life insurance policy. This can be especially helpful if the process seems overwhelming. Many agents work on commission, so using one that does charge a commission can cause the cost of the policy to go up. Higher commissions are typically charged on whole life policies than on term life. However, not all agents charge a commission.



Coverage and pricing is subject to eligibility and underwriting criteria.

Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.

Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, Social Finance. Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under Ladder Life™ policies. SoFi is compensated by Ladder for each issued term life policy.

SoFi Agency and its affiliates do not guarantee the services of any insurance company.

All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

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.
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Source: sofi.com

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Apache is functioning normally

June 9, 2023 by Brett Tams

We’re kicking off the week with another update on the house. Things with the renovation are continuing to progress quite nicely. The walls are actually primed and ready for the finishes to start coming in. That means I’ve got some serious decision making to do. Right now, lighting is on the top of my mind. Light fixtures are the jewels you add to every room. They are often what give a space its personality. And so I won’t lie; selecting lighting is stressing me out!  You don’t want your choices to be like a bad pair of boots – something you regret for seasons to come. And with no less than eight – yes I just said 8 – chandeliers to select, I’ve got my work cut out for me.

My goal is to strike the delicate balance between a statement-making fixture and something that’ll feel timeless for years and years! to come. I’ve turned to a lot of Parisian apartments and remodels of NYC brownstones as my inspiration. They always feature amazing Victorian details like crown molding, ceiling medallions and ornate fireplaces with modern fixtures. This is exactly the type of look I’m gong for.

The key? Finding pieces that fit together – kind of like a family does. Sure everyone looks a little different, but like siblings, you just want them all to get along nicely.

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From the dining room to the kitchen, entryway and bedrooms master, guest and nursery, I’ve got the opportunity to really mix and match styles, genres and looks as you move throughout the house. Thankfully, YLighting has a litany of choices all in one place. I’ve slowly but surely been whittling down options to create my short list of fixtures that might make the final cute. Here are my current top contenders.

Ylighting-rounduo

> 1. Mini Mikado Chandelier
> 2. Brass Diamond Pendant
> 3. Orb Pendant Light
> 4. Brass FLOS Pendant
> 5. Tom Dixon Beat Light
> 6. Glass Globe Pendant Light
> 7. Black Pendant Light
> 8. Menu Franklin Chandelier

I see the large black pendant setting a striking scene in the dining room. The Orb Pendant light could be fantastic as a major statement in the kitchen. The brass Flos pendant might be exatly what I need over my free standing tub in the master bathroom. And how crazy cool would the Mini Mikado Chandelier look in our entry? I’m still doing some hemming and hahing so I would love your thoughts! Have you ever picked lighting for an entire home? How did you go about it? Any advice would be greatly appreciated. And of course I’ll be sure to share what makes the final cut.

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Source: apartment34.com

Posted in: Quick Cash Tagged: 2, About, advice, All, apartments, balance, bathroom, Bedrooms, black, Choices, decision, Decor, dining, dining room, entry, entryway, Family, Financial Wize, FinancialWize, fireplaces, franklin, Free, goal, guest, home, Home Tours, house, in, Inspiration, kitchen, light fixtures, lighting, list, Make, making, master bathroom, modern, Move, nursery, nyc, opportunity, Our Loft Life, personality, place, ready, remodel, renovation, right, room, short, space, this old victorian, update, victorian, work

Apache is functioning normally

June 9, 2023 by Brett Tams

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.


If you have been trading for a while, then there is a good chance that you have made some trading mistakes along the way.

Unfortunately, it is part of learning how to trade.

After all, trading is a skill that takes time to learn.

Trading mistakes are part of the learning process. I know that sucks to hear, but it is the truth.

The outcome goal is to learn from those trading mistakes.

Then, you can realize what you did wrong so you do not repeat those same mistakes.

However, more than not, it is more common to repeat the same mistake over and over again.

If you are ready to recognize trading errors and learn how to overcome them, then keep digging in. Take notes and adjust your trading plan accordingly.

We will cover emotional trading mistakes, technical trading errors, and option trading mistakes.

Learn how to avoid common trading mistakes. These common mistakes in stock trading can have you lose more than planned. Learn how to improve trades and achieve a higher profitability.

What Are Trading Mistakes?

Trading mistakes are errors made by traders when you enter trades, either to purchase stocks or options.

More than likely, you will see the same type of trading error happening over and over again.

Trading mistakes are very common, but they do not have to lead to complete panic.

In order to minimize the chances of making a costly mistake, traders should adhere to their trading strategy. Additionally, traders should always trade with a clear head and stay disciplined.

There are plenty of trading mistakes you can avoid by being smart and adjusting your trading plan where needed.

Why Understanding Trading Mistakes Is Important for Long-term Success

Trading mistakes are the result of traders taking losing trades, which can result in poor overall performance.

Mistakes that occur during trading often include not paying attention to the market, not understanding risk, not having a well-thought out trading strategy, and being bad at managing the trade.

Whatever the reason, trading errors occur and it is how we react to them that matters.

Long-term success in trading is not a goal that can be accomplished overnight.

Achieving long-term success with active trading requires patience, discipline, and practice.

It is easy to get caught up in day-to-day successes and forget to commit to a long-term plan. As traders, it is important to be able to recognize our mistakes so that we can learn from them and move forward.

Top 5 Trading Mistakes

A picture of crumbled paper to show the top trading mistakes.

As you will see, we compiled a long list of trading mistakes. Each trader will see some of those trading errors in themselves. Some are small trading mistakes while others are detrimental.

First, we are going to focus on the top five trading mistakes first. This will make or break your success as a trader.

The following are five common trading mistakes that traders make and how to avoid them.

#1 – No Trading Plan

Trading without a plan means you enter a trade without knowing your next step.

No trading plan means that traders are not able to set clear goals, establish risk-reward ratios, and avoid common pitfalls that can occur during a trade. This makes it difficult for traders to know when they should be buying, selling, or holding.

Trading without a plan is risky because it can lead to losses that are much higher than they need to be.

When starting out in trading, it is important to remember that we can only focus on what we can control. This means that we should not worry about things we cannot change, such as the past or the behavior of other traders. Instead, we should form a trading plan and stick to it so that we can succeed in the long run.

Creating your trading plan will happen with many revisions. The goal of the trading plan is to set your overall strategy for trading.

Also, you need to have a specific trading strategy for each trade you enter.

Avoid by: Spending time to develop a trading plan. Revise as needed. Stick to it.

#2 – Risk Management Plan is Missing

A picture showing how important a risk management plan is.

A risk management plan is essential for traders and it should be included in any trading plan.

Without a risk management plan, traders are more likely to make emotional decisions that can lead to costly mistakes. For many traders, this is the hardest thing for them to manage.

It is possible to create a risk management plan as your overall trading plan.

In your risk management plan, you must decide (in advance) how much money you are willing to lose based on the amount of profit you perceive to make. For instance, you are willing to risk $300 in order to make $1000.

Many day traders focus on a 2:1 reward-to-risk ratio. Personally, I look for stronger reward-to-risk ratios greater than 3:1.

Avoid by: Understand how risk is a part of making a profit. Set your risk tolerance and do not deviate from it.

#3 – Not Keeping a Trading Journal

One of the most important aspects of successful trading is keeping a journal.

This not only helps you keep track of your trades and performance, but it can also help you remember what worked and what did not. Journaling is so helpful and such an overlooked task.

Your trading journal is the perfect place to take notes, keep track of your wins and losses, and record market movements so that you can learn from past mistakes.

At the end of every trading session, you should take some time to analyze your trades.

  • What went well?
  • What didn’t go well?
  • Why did you make that particular trade?
  • What was your entry strategy?
  • What was your exit strategy?
  • Where was the overall market momentum?
  • Did you control your emotions?
  • What grade would you give yourself?

This analysis is important so that you can learn from your mistakes and improve your trading skills. Stay motivated to continue learning about trading and keep more profit.

Avoid by: Start journaling. Spend time after exiting a trade and the market day to understand what happen and why you did a certain trade.

#4 – Watching Too Many Stocks

Picture of a busy stock chart.

Watching too many stocks can lead to a decrease in returns and overall confusion on what is happening with your watchlist.

As a result, it is important to be selective.

The same can be said of stock scanners. If you are watching too many variables and possibilities, you can quickly become overwhelmed.

When you develop your trading plan, you need to decide how you find stocks.

Personally, I prefer to focus on a handful of stocks and a few key metrics. Then, watch them closely and trade accordingly.

As a new trader, I would pick about 5-10 stocks to analyze.

Avoid by: Revise your watchlist to half what you are currently watching.

#5 – Actually Exiting Trade as Planned

Above we talked about creating a trading plan and having a trading strategy for each trade taken.

But, the trading mistake happens when you do not exit the trade as planned.

This could be because of “hopemium” that the stock price will recover and you will get back your loss.

Our “hopemium” is that the stock price keeps rising and you will make more money.

Either one can be damaging to your trading account.

You created a plan. As a disciplined trader, you must follow your plan either to maximize your current profit or protect your risk against further losses.

Avoid by: Exiting at your set targets. Period.

12 Typical Emotional Trading Errors

Trading is 80% mental and 20% execution. Okay, I am not sure that there is an official study to back it up. But, I do know as a trader that emotions play heavily into your overall profit.

The typical emotional trading errors that traders make when they are in a trade are overconfidence, jumping into trades before the proper analysis is completed, and inability to take losses.

This is where most of the trading mistakes are made.

When first starting out in trading, it is easy to get caught up in the prospect of making a lot of money quickly. However, most traders find that trading is not easy to do and make common emotional trading errors.

Let’s dig into these emotional mistakes first and then we will follow up on the technical trading mistakes.

1. Letting emotions impair decision making

Emotions are an important part of decision-making, but it can be dangerous to allow them to influence our decisions. We should also take into account that emotions can often lead us astray.

It is clear that emotional trading can lead to bad decision making and, ultimately, financial losses.

When investors let their emotions take over, they are not thinking logically and may make impulsive decisions. For example, they may sell stocks when the market is down in order to avoid further losses, even though the stock may rebound soon after.

In order to be successful traders, it is important to stay calm and rational when making decisions.

Overcome by: Stick to your trading plan and take emotion out of the equation.

2. Unrealistic Profit Expectations

You go into every single trade expecting a home run! Enough money to achieve your dreams overnight!

These types of profit expectations will have you throwing your risk management plan out of the window and set you up for failure with greed, overconfidence, and impatience.

Be realistic about your expectations with trading activity.

Overcome by: Go for base hits. Small consistent wins.

3. Greed

Picture of someone grabbing a wad of cash in greed.

Greed is a deep-seated need for more profit without regard to the chart or market conditions.

The common rationale is hopefully the stock will go up. Typically, you hold your position too long and end up losing some of your gains.

Greed can manifest in many different ways, and people with greed often neglect their own needs in order to attain more.

Overcome by: Set an OCO bracket to exit the trade at your specified level. Take you out of the equation.

4. Fear of Missing Out (FOMO)

You fear that you missed out on a trade, so you decide to jump in. As a result, you are risking more than you should.

This trading mistake is common, especially with online trading communities.

As a result, you may buy at the high and watch the stock reverse.

Overcome by: Realize that there will be missed opportunities. That is part of the game. There will always be another chance.

5. Fear

In many cases, fear is a reaction to why or why not we enter a trade.

For any trader, they may become frozen unable able to make a decision as their mind is wrapped in fear. At the same time, they are either missing out on potential profits or unable to exit a trade due to mounting losses.

Overcome by: This is a real emotion that you must overcome. Take the time and read resources to help you overcome being paralyzed by fear.

6. Overconfidence after a profitable trade

Picture of a guy throwing money after a profitable trade.

The overconfidence that comes with success can lead to a loss of profits.

When a trader has a winning position, they may become overconfident and make bad decisions because of the previously profitable trade.

For example, they may not take their profits off the table when there is an opportunity to do so or increase their position size when they should be taking profits. This could lead to them losing all of their winnings and more.

Overcome by: Take a break from trading for a few days or a week after a big win.

7. Entering a Trade Based on Your Gut

The process of entering a trade based on your gut is, essentially, following your “gut feeling” and buying or selling shares after the market opens. This is seen as a more risky and less profitable strategy than following a more traditional market timing approach.

Trading is all about making calculated decisions and sticking to a plan.

Trading based on your gut feeling or emotions will only lead to costly mistakes.

Overcome by: Before entering into any trade, make sure you have a solid strategy in place and know all the rules. Only then should you start trading.

8. Not reviewing trades

Picture of a notebook to journal trades.

Not reviewing trades is a common problem for many traders. Traders who don’t review their trades tend to be more likely to make mistakes in their trading and over-trade, which can result in losses.

You will make the same mistake over and over again until you realize the root of the problem.

This is how you move from a losing average to a winning percentage.

Overcome by: Let your journal be your friend. Document everything including your emotions.

9. Following the Herd

Many people enjoy following the herd with stock trading, especially online platforms on Reddit, Discord, or Twitter.

You may decide to follow a certain group of people in order to be fed stock picks or updates.

This can be risky because there is no sound foundation to base your trade upon.

Overcome by: Trade your style and let that fit you.

10. The Danger of Over-Confidence

The “beginner’s luck” experienced by some novice traders may lead them to believe that trading is the proverbial road to quick riches.

Over-confidence is the belief that one’s abilities, knowledge, or qualities are better than average.

This over-confidence is a risk factor for certain types of mistakes and other negative outcomes as it leads to complacency, a lack of preparation, and an overestimation of one’s abilities.

Overcome by: Realize your limitations and watch for overconfidence to appear.

11. The Importance of Accepting Losses

Losses are always a part of trading life, but they can be overwhelming when they occur.

It is important to recognize that losses are in fact an inevitable part of growth and development as a trader.

Overcome by: Journal all of your losses. Look for patterns to appear. Adjust your trading strategy as appropriate.

12. Quit Your Job Too Fast

Quitting your job too fast is not a good idea, as it will force you to place trades that may not be the best set-ups.

Day trading can be a very risky venture, and it is possible to lose everything you have invested.

It is important to be aware of the risks before getting started. More importantly, do not quit your job too fast. This can lead to losses in your investments and could potentially put you in a worse financial situation than you were before.

Overcome by: Keep trading as a side hustle. Hone your trading skills and build up a reserve fund that will cover your monthly expenses. You will know when you are prepared to leave your 9-5.

Common Mistakes in Stock Trading

Picture of a guy realizing his common mistakes in stock trading.

According to a study by the U.S. Securities and Exchange Commission, technical trading mistakes are actually fairly common among individual investors.

Mistakes in technical trading can be two-fold, either due to lack of knowledge or poor execution.

The most common mistakes are buying at the top and selling at the bottom, overtrading, and not taking the time to properly understand how trading works.

Now, let’s dig into all of the common trading mistakes I see.

1. Overtrading

Let’s start by talking about overtrading. This is a mistake that I see many people make. It is also a mistake that could have been easily prevented if you had just done your research before placing the trade.

Overtrading or placing more orders than you should do is the most common mistake.

Many new traders will simply open up their platform, look at the market, and place a trade. They are often chasing after the last couple of candles or they see an opportunity to get in “on the cheap”.

The problem with this approach is that you have no idea if this is a good trade or not. You are simply taking a shot in the dark and hoping for the best.

Overcome by: Only place the A+ setups that you like. Once you have traded so many times per day or week, stop trading.

2. Buying High and Selling Low

We all have heard the saying, “buy high and sell low.” However, too many novice traders do the complete opposite.

This trend happens with one of the emotional mistakes of FOMO; we already dived into that concept earlier.

Overcome by: Follow your trading plan on when to enter and exit the trade. Practice your strategy in a simulated account and master it.

3. Lack of Trading Knowledge

The lack of trading knowledge is a problem for many traders who are not familiar with how the stock market works. This can cause them to make mistakes when buying and selling stocks, which could result in losing a lot of money.

Just because you made a profit once on one stock does not mean that is a repeatable action.

In order to be successful in trading, it is important to have a good understanding of the markets and the strategies involved.

Without proper training, you are likely to make costly mistakes that can cost you money. Trading courses and tutorials are available online and through other resources to help you gain this knowledge and become a successful trader.

Overcome by: Take an investing course. Spend money on your education and not your losses. Here is a review of my favorite day trading course.

4. Following Too Many Strategies

Following too many strategies is a common problem in the investing world, which can lead to poor performance and more costly mistakes.

There are a million and one different approaches on how to trade the stock market, which indicators to use, whose advice you should follow, so on and so forth.

And then, many traders try and couple the strategies together only to quickly learn they may cause more losses than profits.

One way to avoid following too many strategies is by using a set of rules to decide which strategies are appropriate for investing.

Overcome by: Develop your trading plan. Outline the investing strategies you will use. Test any new strategies in SIM first.

5. Do Your Research

The solution to this problem is simple: do your research!

Before you enter a trade, take the time to do some analysis on the asset you are looking at. Look at past price action, news events, and any other relevant information that you can find.

Understand why the market might move in your favor and be able to build a case for it. The more data points you have supporting your position, the better off you will be.

If you are able to build a strong case for why the asset will move in your favor, then you can enter with confidence. This is because if the market does not move in your favor, you will know that it isn’t because of a lack of research on your part.

When you enter with confidence, this will make it easier to hold through the inevitable volatility and price swings.

Overcome by: If you enter without knowing why something is likely to move in your favor, then you are setting yourself up for failure. Do your research.

6. Not Using Stop-Loss Orders

Stop orders come in several varieties and can limit losses due to adverse movement in a stock or the market as a whole.

Tight stop losses generally mean that losses are capped before they become sizeable. However, you may have your stop loss too tight and get stopped out before your stock has room to move.

A corollary to this common trading mistake is when a trader cancels a stop order on a losing trade just before it can be triggered because they believe that the price trend will reverse.

Overcome by: Plan your stop loss in advance. Stick to it as it is part of an overall risk management strategy.

7. Letting Losses Grow

Active traders can be harmed by refusing to take quick action to close a losing trade.

It is important to take small losses quickly and limit your risk in order to stay profitable.

Stop losses can help you avoid larger losses.

While the stock may come back to your buy price, you have increased your risk far beyond what you planned. If your planned loss was $300 and now you are down over $500, it will take that much longer to overcome that growing loss.

Cut your losses. Review the chart. See what a better entry point may be.

Overcome by: If the stock moves past your pre-determined stop, then exit the trade. Don’t trade on hope.

8. Chasing After Performance

Many day traders are tempted to chase stocks, which is a bad reputation in the day trading world.

This happens when they see a stock that has had a large price increase and they think that it will continue to go up. In reality, this is not usually the case, and chasing stocks can lead to big losses.

What goes up must come down, right?

Overcome by: Wait for a better time to enter the trade according to your trading plan.

9. Avoiding Your Homework

It is important to do your homework. If you avoid doing your homework, then don’t expect fast results

Many new traders often do not do their homework before making any investment decisions.

This can lead to costly mistakes that can be avoided by doing some basic research. Trading is a complex process and should not be taken lightly – make sure you are fully prepared before risking your hard-earned money.

Overcome by: If you have not enrolled in an investing course, do that. Set daily goals on how to improve your trading performance that is not based on profit or loss.

10. Trading Difficult and Unclear Patterns

It is important to stick with the patterns and indicators that are clear and unmistakable so you don’t get caught up in any ambiguous or unclear trading signals.

With a little bit of research and understanding, these market patterns can become quite clear.

By forcing a chart to fit in what you want, then you are putting your trading capital at risk.

Overcome by: If you cannot read a clear chart or pattern, then quickly move to the next stock.

11. Poor Reward to Risk ratios

The most common mistake made by traders is poor risk management. This usually means taking on too much risk in relation to the potential rewards, which can lead to heavy losses if the trade goes wrong.

It is important to always have a solid plan for how much you are willing to lose on any given trade and never deviate from it.

What is the Reward to Risk ratio you look for:

  • 1:1 Reward to Risk
  • 2:1 Reward to Risk
  • 3:1 Reward to Risk

Many beginner traders do not want to take on as much risk because their appetite for potential rewards may be lower. It is important for beginners to consider their trading strategies and risk management plans so that they can make the most informed decisions possible.

Risk-to-reward ratios are an important part of trading, and experienced traders are typically more open to risk in order to maximize their potential rewards. This means that they may be more likely to make high-risk, high-reward trades.

Overcome by: Stick to Risk to reward ratios that fit your trading plan.

12. Ignoring volatility

Volatility is the fear and unknown in the market.

The most important thing to remember about investing is that the stock market can be volatile.

A measure of volatility is from the VIX.

Overcome by: Decide how you will trade when the VIX is high and the news is negative.

13. Too Many Open Positions

Entering too many positions is one of the most common mistakes investors make. A portfolio should consist of a handful of top-performing investments that have proven to be good bets over time.

It is unwise to open too many positions in a short amount of time because it could lead to confusion.

This can be risky because if one or two of the positions go south, the entire portfolio can suffer. For this reason, it is important to carefully consider each position before opening it and make sure that all positions are contributing positively to the overall goal.

Overcome by: As an active trader, stick to under 5 open positions. As a long-term investor, look to build a portfolio of 25 stocks over time.

14. Buying With Too Much Margin

Most brokers offer 2:1 or 4:1 margin to cash. While this is tempting to use, it can also give you a margin call.

Margin can help you make more money by increasing your position size, but it can also exaggerate your losses.

Exaggerated gains and losses that accompany small movements in price can spell disaster for a new trader using margin excessively.

Overcome by: Use your cash only. Stay away from using margin.

15. Following Meme Stocks

These are the stocks made popular by many Reddit personal finance groups.

You have probably heard of Gamestop, Blackberry, AMC, or Bed Bath and Beyond as a meme stock.

While these stocks have risen to crazy highs, they have also fallen just as fast. Chasing the high may leave you with a big and painful loss.

Overcome by: Stick to your stock watchlist.

16. Buying Stocks With No Volume

Buying stocks with no volume is a risky idea that involves placing an order on a stock without knowing how much interest there will be in the shares. This can result in losing money if there are no buyers for the shares.

It is important to validate the price of a stock by looking at volume. The volume shows how much interest there is in a stock and can be indicative of future price movement.

When volume is low, it’s best to stay away from buying stocks as it could be a sign that the stock price is not stable.

Overcome by: Trade stocks with a volume of at least 500,000 or higher.

17. Ignoring Indicators

Indicators are things that tell us the market is going up or down. Examples of indicators would be the stock market at a particular point in time, a company’s performance with regards to earnings, the price of a product or service.

Every trader has their own set of indicators they use.

If you have outlined indicators you use in your trading, make sure to follow them regardless if it is against the way you want the stock to move.

Overcome by: Stick to your trading plan for each stock individually.

18. Trading Too Large Position Sizes

Trading too large position sizes is a risk that traders may run into when they hold positions in their portfolios for extended periods of time.

Position size is the amount of money placed on a trade, and the risk is that a trader may lose more than their capital on the trade if it does not go well.

Overcome by: Base your position size on the amount you are willing to lose. Not how much you want to make.

19. Inexperienced Day Trading

In order to be successful in trading, it is important to have a good understanding of the markets and the strategies you are using. Without proper training, it is easy to make costly mistakes.

Too many day traders turn trading into an unnecessary risky game.

To be successful, a day trader must have a solid foundation in how to invest in stocks for beginners.

Overcome by: Practice in a simulated account and make all of your mistakes there before moving to live money.

20. Inconsistent trading size

Inconsistent trading size is when traders are unable to predict what their position size should be in order to meet the trader’s desired profit goal.

Trading size is one of the most crucial aspects of a trading strategy and should be considered carefully. Larger trade sizes come with an increased risk, so it’s important to be aware of your position size when making trades.

Overcome by: Don’t risk too much on one trade. Stick to your risk management plan.

21. Trading on numerous markets

Trading on numerous markets is when a trader invests in stocks, bonds, commodities, crypto, and other securities.

Every type of market moves differently and takes time to understand how to be profitable.

Overcome by: Find your niche and stick to it.

22. Over-leveraging

Leverage is a powerful tool that can be used to magnify gains and losses in a trade. It is important to be aware of the amount of leverage being used in order to effectively manage risk.

Brokers play an important role in protecting their customers by providing margin calls and other risk management tools.

Overcome by: If you feel over-leveraged, sell some positions before your broker gets involved.

23. Overexposing a position

Overexposure is a term used in the investment world to describe the risk that comes with exposing your position too much in the market. When you have overexposed your position, you are putting yourself at risk of losing money if the stock or security you are invested in falls in value.

You are taking on too much risk.

Overcome by: Stick to your risk management plan. Always have cash reverse on hand in case the market reverses.

24. Lack of time horizon

There are different time horizons for various types of trading strategies. It is important to think about the time horizon you are comfortable with before investing in any type of investment.

If you are a day trader, you plan to close your trades before the end of the trading session. As a swing trader, you typically hold trades for a couple of days maybe up to a month. As a long-term investor, you plan to hold your stocks for longer than a year.

Overcome by: Match the time horizon of that investment purchase with your investing goals.

25. Over-reliance on software

Although some trading software can be highly beneficial to traders, it is important not to over-rely on it.

Automated trading systems are becoming so advanced that they could revolutionize the markets. As a result, human traders need to be aware of the potential for these systems to make mistakes and use them in conjunction with their own judgment.

Overcome by: Set alerts before you want to enter or exit a trade. Then, review if the move still follows your trading strategy.

Top Options Trading Mistakes Beginner Traders Make

Picture of a phone and stock chart for

These options trading mistakes are specific to option trading.

Trading options is an advanced strategy. If you have losses trading stocks, wait before you start trading options.

1. Not having a Trading Plan

Every trader needs a trading plan that outlines strategies, game plans, and trade metrics.

When you are trading without a plan, you are essentially gambling and hoping for the best.

This is not a recipe for success in the world of stock trading and is especially true for options traders.

A good trading plan should include chart analysis so that you can make informed decisions about when to buy and sell stocks. If you are using HOPE instead of a trading plan, then you need to find out the right way to interpret the chart because that will give you a better idea of what is happening in the market and how likely it is that your investment will succeed.

Overcome by: Create a specific trading plan based on your option strategy.

2. Not properly Researching Option Contracts

Learning to trade options is like going to school for a whole different trade.

There are way too many technical aspects to discuss in this mistake.

Spend time learning what criteria you want from an options contract to be successful.

Overcome by: Learn how options work and practice trading options in the simulator before going live.

3. Trading without an understanding of the underlying asset

Before you start trading options, trade with stocks.

Every stock moves at its own beat. You need to learn how it moves.

Jumping into options prior to knowing the stock can cause extreme losses. Learn how the underlying asset moves first. Be successful in trading stocks before moving to options.

Overcome by: Learn to trade the stock with shares first. Then, practice in a simulator. Once familiar, then trade live with options.

4. Buying Out-of-the-Money (OTM) Call Options

Options trading is a risk-based strategy. It’s important to know which strategies are right for you and what the risks of each option type are before putting on an option trade.

One common mistake that many traders make when it comes to option trades is buying out-of-the-money (OTM) call options.

This is because OTM call options are inexpensive and have a range of around 100,000 to 1 million. To avoid this mistake, it’s important to know what the risks of buying OTM call options are and which option strategies are appropriate for you.

Overcome by: Focus on trading In-the-money (ITM) call contracts. Know your strategy.

5. Not Knowing What to Do When Assigned

When you enter into an options contract, you are essentially agreeing to buy or sell the underlying asset at a specific price on or before a certain date.

If the market moves in a way that benefits the buyer of the option (the person who contracts to buy the asset), they can choose to exercise their option and purchase the asset at the agreed-upon price. However, if the market moves in a way that benefits the seller of the option (the person who contracts to sell), then they may “assign” their contract to someone else – meaning that they no longer want to buy/sell the asset, but would like someone else to take on that responsibility.

This can be jarring if you haven’t factored it into your decision-making when trading options, so it is important to be aware of the possibility.

This is why traders need a higher trading level to sell options contracts or verticals.

Overcome by: Be okay with buying the shares if you are assigned. That is a part of your trading plan.

6. Legging Into Spreads

It is a common mistake for traders to get legged into spreads by entering positions when the market price has moved away from their position. They may have gotten caught up in the belief that they are being a “smart” trader by trying to profit from the spread.

The problem is that they are not taking into account that their cost basis must go up in order to maintain the position. If the market price of the underlying goes up, their cost basis must go up as well.

Overcome by: If you are not comfortable with this advanced strategy, then exit your options contract and place a new one.

7. Trading Illiquid Options

Trading illiquid options is a mistake because traders are taking on too much risk, with potentially disastrous consequences.

Illiquid means that the option cannot be bought or sold at the given time.

In other words, the option is not tradable. When traders trade illiquid options, they are taking a risk that their trades will not be executed because there is no liquidity in the market at that time. They have to hope that the market will become liquid again, and they can then sell their position or buy back their option at a lower price.

Overcome by: Check option volume and open interest at your strike place. Verify you have interest in moving your contract.

8. No Exit Plan

It is important to have a plan in case your trading strategy doesn’t pan out as planned.

This will give you the peace of mind that you won’t be left high and dry without an exit strategy.

With options is it more difficult to limit your risk to reward. As a result, you must decide your exit plan in advance.

Overcome by: Develop your trading strategy and include how and when you will exit the option contract.

Ready to Avoid these Trading Mistakes?

Investors are often their own worst enemy when it comes to trading.

They make emotional decisions instead of logical ones, and this leads to them making costly mistakes. Plus there are many technical errors new and seasoned traders are still making.

In order to be successful in the markets, investors must first learn to accept their losses and move on. Only then can they put that mistake behind them and focus on making profitable trades in the future.

In this post, I shared some of the more common trading mistakes that people make and how to avoid them.

Now, you have to work to avoid these trading mistakes and be profitable.

Learn how to avoid common trading mistakes. These common mistakes in stock trading can have you lose more than planned. Learn how to improve trades and achieve a higher profitability.

Know someone else that needs this, too? Then, please share!!

Source: moneybliss.org

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Apache is functioning normally

June 9, 2023 by Brett Tams

With the average cost of college currently at $35,551 per year, most students have no choice but to take out student loans. Whether you go to a public or private university in or out of state, you’ll probably need at least a little help. And we’re here to help you get it.

Students might turn to private student loans instead of or in addition to federal student loans to help cover the cost of tuition and boarding. So how do you choose between the many private lenders — including banks, credit unions, and online marketplaces — out there? We’ve compared many of the top lenders to find those with the best rates, repayment terms, range of options, and more.

But enough suspense. Let’s dive into the best private student loans for you.

What’s Ahead:

Best private student loans

  • Best for flexible repayment terms: SoFi
  • Best for low rates: Credible
  • Best for no cosigner: Ascent
  • Best for cosigner: Earnest
  • Best for graduate students: Sallie Mae
  • Best for student loan refinancing: Splash Financial
  • Best for multi-year approval: Citizens Bank

Best for flexible repayment terms: SoFi

  • SoFi logoFixed APR range – 3.99% – 8.24% APR (including auto-pay discount of 0.25%)
  • Variable APR range – 3.99% – 8.24% APR (including auto-pay discount of 0.25%)
  • Fees – None
  • Prepayment penalty – None
  • Minimum – Minimum $1,000
  • Maximum – Full cost of attendance
  • Loan terms – 5, 7, 10, or 15 years
  • Forbearance – Up to 12 months
  • Minimum credit score – 650

SoFi is a peer-to-peer lender offering private student loans for both graduate and undergraduate students. They also provide private and federal student loan refinancing for those who meet citizenship, employment, credit, and income requirements (minimum $5,000).

SoFi stands out for offering more repayment terms than most as well as the option to put membership points toward your loan balance. You have four repayment choices: 

  • Defer monthly payments until six months after you graduate
  • Pay only interest while in school
  • Make fixed monthly payments of $25 while in school
  • Start making regular monthly payments toward the full balance right away

And should you need student loan relief, SoFi provides Unemployment Protection of up to 12 months to qualified borrowers.

There are two discounts available that can help reduce the cost of your loans. The first is a 0.25% interest rate discount when you schedule automatic payments and the second is a 0.125% rate discount for previous SoFi borrowers.

You’ll need at least fair credit to qualify for a private student loan with SoFi, or you can apply with a cosigner for a better chance of approval. We encourage you to check your rate with no effect on your credit. SoFi offers cosigner release after you’ve made 24 consecutive payments toward the principal and interest.

Read our full review.

Best for low rates: Credible

  • Credible logoInterest rate range – starting at 4.44% fixed APR (with autopay)* and 4.74% Var. APR (with autopay), See Terms*
  • Fees – None
  • Prepayment penalty – None
  • Minimum – $1,000
  • Maximum – Full cost of attendance
  • Loan terms – 5 – 20 years
  • Forbearance – Varies by lender
  • Minimum credit score – Varies by lender

Though not a direct lender, Credible is a good place to go if you’re looking for a private student loan. Credible is an aggregator that partners with top lenders including Sallie Mae, Citizens, Ascent, and more to show you many student loan offers in one place. This is an especially great option if you don’t really know where to start because the platform begins by asking you questions to understand your needs, then shows you what you might qualify for.

To compare your options, you’ll fill out a single application to receive offers from up to eight different lenders. This will show you personalized rates you prequalify for to help you easily find the lowest ones. Although you won’t know your final rate until you actually apply to borrow with your chosen lender, this can give you a good idea of what you might pay. Using Credible to shop loans and check your rate does not affect your credit and the application takes just a couple of minutes to complete.

The Credible Best Rate Guarantee means that if you find a lower interest rate with another lender, you may be eligible for a $200 “Best Rate Reward.”

Credible’s partners do not charge origination fees or prepayment penalties. Also, all eight make it easy to apply with a cosigner and offer cosigner release to eligible borrowers.

Read our full review.

Credible Credit Disclosure – To check the rates and terms you qualify for, Credible or our partner lender(s) conduct a soft credit pull that will not affect your credit score. However, when you apply for credit, your full credit report from one or more consumer reporting agencies will be requested, which is considered a hard credit pull and will affect your credit.

Best for no cosigner: Ascent Loans

  • Ascent logoFixed APR range – 4.62% – 15.43% (including 0.25% autopay discount)
  • Variable APR range – 6.01% – 15.32% (including 0.25% autopay discount)
  • Fees – None
  • Prepayment penalty – None
  • Minimum – $2,001
  • Maximum – $200,000 ($20,000 for Non-Cosigned Outcomes-Based loans)
  • Loan terms – 5, 7, 10, 12, or 15 years
  • Forbearance – Up to 24 months
  • Minimum credit score – Varies

Ascent is a unique private lender for those looking to avoid using a cosigner. They specifically cater to those who want to apply on their own by offering a couple of ways to qualify. There are two types of non-cosigned loans from this lender: credit-based loans and outcomes-based loans. You’ll need at least two years of credit history and an income of $24,000 or more to qualify for a credit-based loan, but you may be eligible for an outcomes-based loan without any credit at all.

Ascent’s outcomes-based private student loans take your future income, not your current income, into consideration. When you apply for this loan, Ascent looks at your GPA, anticipated graduation date, school, program, and more to determine your eligibility. The better your grades and higher-paying your career path, the better your chances. You must be a junior or senior attending school full-time to qualify. 

Interest rates are higher for non-cosigned loans, but there are discounts available. These include a 0.25% autopay discount and a 1% cash-back graduation reward.

While in school, you can pay $25 each month or make interest payments only. Alternatively, you can defer payments for up to nine months after you graduate. You may qualify for up to 24 months of Temporary Hardship Forbearance if you find yourself unable to make payments.

Read our full review. 

Ascent Disclosure:Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 4/17/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores. 

Best for cosigner: Earnest

  • Earnest logoFixed APR range – 4.96% – 8.99% APR (includes 0.25% autopay discount)
  • Variable APR range – 4.99% – 8.94% APR (includes 0.25% autopay discount)
  • Fees – None
  • Prepayment penalty – None
  • Minimum – $1,000
  • Maximum – Full cost of attendance
  • Loan terms – 5 – 20 years
  • Forbearance – Determined on a case-by-case basis
  • Minimum credit score – 650

If you already know you want or need to apply for private student loans with a cosigner, Earnest has excellent cosigned loans. Earnest is a direct lender offering private student loans with low rates and forgiving terms to make repayment easier for student borrowers. 

Applicants must have a credit score of at least 650, an income of at least $35,000, and U.S citizenship to qualify. These might be difficult requirements for a college student to meet, which is why Earnest encourages cosigners. In fact, 66% of Earnest borrowers use a cosigner. However, Earnest does not offer cosigner release, but you may qualify to refinance with this lender under only your name when you graduate.

If you have a great cosigner willing to help you out, Earnest will make it easier for you to hold up your end of the bargain with alternatives to the standard repayment plan. In addition to four different repayment options, they give all borrowers a nine-month grace period after graduation before monthly payments are due and the option to skip a payment once a year if needed. You may also qualify for one of the following assistance programs:

  • Rate Reduction Program – decreased rates and monthly payments for six months
  • Extended Term Program – loan term extension of up to 30 years to reduce payments

Earnest also has more generous loan forgiveness and discharge policies than most.

Read our full review. 

Earnest SLR Disclosure – Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 9.13% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.21%. For loan terms over 15 years, the interest rate will never exceed 9.24%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

Best for graduate students: Sallie Mae

  • Sallie Mae logoFixed APR range – 4.25% – 12.92% (for graduate loans, including 0.25% auto debit discount)
  • Variable APR range – 3.87% – 13.50% (for graduate loans, including 0.25% auto debit discount)
  • Fees – None
  • Prepayment penalty – None
  • Minimum – $1,000
  • Maximum – Full cost of attendance
  • Loan terms – Up to 15 years
  • Forbearance – Determined on a case-by-case basis
  • Minimum credit score – 650

Sallie Mae offers a variety of different loans for both undergraduate and graduate students, but this lender is especially great for graduate private student loans. Let’s get into what makes this option different than others for higher education. 

First, Sallie Mae offers 100% coverage for all of your tuition and living expenses from classes to travel with no cap. After graduating, you can defer payments up to 48 months if you’re going right from school to a fellowship or internship. And unlike most loans of this type, you do not need to be enrolled full-time or even half-time to qualify to borrow.

You’ll have a 94% chance of being approved if you’ve already had a Sallie Mae student loan and you apply for a new one with a cosigner. And if you do use a cosigner, you may be eligible to release them after just 12 consecutive monthly payments made on time.

You can either defer your payments for six months after you graduate, make fixed monthly payments of $25 while you’re in school, or pay just the interest while you’re in school and during the six-month grace period after graduation. While Sallie Mae’s interest rates are a little higher than some, you can get a 0.25% rate discount for setting up automatic payments.

Read our full review. 

Sallie Mae Disclosures: Borrow responsibly. We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Students and families should evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan. Sallie Mae loans are subject to credit approval, identity verification, signed loan documents, and school certification. Smart Option Student Loans are for students at participating schools and are not intended for students pursuing a graduate degree. Graduate student loans are available for students at participating degree-granting graduate schools. Graduate Certificate/Continuing Education coursework is not eligible for MBA, Medical, Dental, and Law School Loans. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.
1 Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. Payments may be required during the grace/separation period depending on the repayment option selected. Variable rates may increase over the life of the loan. Undergraduate – Advertised variable rates reflect the starting range of rates and may vary outside of that range over the life of the loan. Advertised APRs assume a $10,000 loan to a borrower who attends school for 4 years and has no prior Sallie Mae loans. Associate & Trade School – Advertised APRs assume a $10,000 loan to a borrower who attends school for 1 year and has $10,000 in prior Sallie Mae loans. All Advertised APRs assume a $10,000 loan. Medical School Loan and Dental School Loan APRs assume 4 years in school. Law School Loan APRs assume 3 years in school. MBA Loan, Graduate School Loan for Health Professions, and Graduate School Loan APRs assume 2 years in school.
2 Loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Sallie Mae reserves the right to approve a lower loan amount than the school-certified amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
3 Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 9.63% fixed APR, 51 payments of $25.00, 119 payments of $172.95 and one payment of $121.42, for a Total Loan Cost of $21,977.47. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.07% fixed APR, 27 payments of $25.00, 179 payments of $125.36 and one payment of $49.52 for a total loan cost of $23,163.96. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 2-year in-school period, it works out to a 10.02% fixed APR, 27 payments of $25.00, 119 payments of $153.59 and one payment of $108.14, for a Total Loan Cost of $19,060.35. For a borrower with $10,000 in prior loans and a 1-year in-school period, it works out to a 10.19% fixed APR, 15 payments of $25.00, 179 payments of $117.46 and one payment of $46.27 for a total loan cost of $21,446.61. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years.
4 Example of a typical transaction for a $10,000 Graduate School Loan with the most common fixed rate, Fixed Repayment Option, and two disbursements. For borrowers with a 27-month in-school and separation period, it works out to 12.78% fixed APR, 27 payments of $25.00, 178 payments of $154.24 and one payment of $152.19, for a total loan cost of $28,281.91. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 15 years.

Best for student loan refinancing: Splash Financial

  • Splash Financial logoFixed APR range – 3.29% – 8.49%
  • Variable APR range – 2.49% – 8.65% (including 0.25% autopay discount)
  • Fees – None
  • Prepayment penalty – None
  • Minimum – $5,000
  • Maximum – $500,000
  • Loan terms – 5 – 20 years
  • Forbearance – Varies by lender
  • Minimum credit score – 640

Refinancing your student loans is a good way to lock in a lower interest rate for your existing loans, reduce your monthly payments, and consolidate your debt. As a loan marketplace, Splash Financial offers some of the best refinancing options currently available.

To find a loan with Splash Financial, you’ll complete one application and compare your available offers from a variety of banks and credit unions. Using Splash Financial’s marketplace does not affect your credit or cost anything. If you see an offer you like, you can begin an application directly with a lender partner.

If you didn’t get the rates you wanted the first time around when applying for student loans as a new borrower, refinancing can help you save on interest and simplify repayment. It can also let you assume full responsibility for your loans if you originally borrowed with a cosigner. And if you’re recently married, you can refinance with a partner to combine your balances.

Read our full review.

Best for multi-year approval: Citizens Bank

  • Citizens Bank logoFixed APR range – 4.74% – 12.06%
  • Variable APR range – 3.75% – 11.21%
  • Fees – None
  • Prepayment penalty – None
  • Minimum – $1,000
  • Maximum – Full cost of attendance ($150,000 for all undergraduate and most graduate degrees)
  • Loan terms – 5, 10, or 15 years
  • Forbearance – Up to 12 months at a time
  • Minimum credit score – Not disclosed

If you like the idea of applying once for private student loans and not having to again, you might want to check out Citizens Bank. 

This lender provides multi-year approval for between four and six years to eligible borrowers. If you qualify, you’ll be approved for all the money you need to complete your degree upfront. Instead of filling out a new application each year (and adding hard credit pulls to your report), you’ll request more funding when you need it and Citizens will use only a soft pull to confirm you’re still eligible. Citizens will let you know if you qualify for Multi-Year Approval after you submit your application.

You can enroll in autopay for a 0.25% interest rate discount. may also be eligible for a loyalty discount, an interest rate reduction of 0.25%, if you’re already a Citizens customer with a qualifying savings account, checking account, credit card, or loan (or if your cosigner is a customer). 

99% of borrowers with Citizens use a cosigner. You can apply for cosigner release after you’ve made 36 on-time, full payments in a row if your credit profile is found to be satisfactory. Can defer payments until after graduation but Citizens does not offer income-based repayment.

Federal vs. private student loans

Federal student loans offer many benefits over private student loans and you should go with this option before you even consider private student loans.

But you may not end up choosing one or the other — in fact, it’s not uncommon for a person to have both federal and private student loans. You’ll want to make sure to understand the (many) differences between federal student loans and private student loans and how they work before applying for either.

Requirements to qualify

Overall, federal student loans are a lot easier to get than private student loans. Federal loans are administered by the federal government, not companies or lenders. They do not require a credit check at all when you’re applying, so it doesn’t matter how low your score is. To assess your eligibility, the U.S. Department of Education will determine your financial need and this will be used to create your loan offer.

In contrast, a lot of private lenders are looking for a credit score in the 670 range, which is considered good. It’s pretty hard to have good credit when you’ve never borrowed before, and by “pretty hard” we mean not possible. This is why so many students use a cosigner for private loans – because they need to.

Repayment and relief options

Federal student loans also provide more wiggle room than private loans by offering more opportunities for relief and support.

Both federal and private loans may qualify for forbearance if you’re unable to make payments due to financial hardship, but only federal loans can be forgiven completely. 

Most private loans are not eligible for forgiveness or income-based repayment plans. Income-based repayment plans ensure that your monthly payments make sense for your financial situation and are widely available for federal loans.

Borrowing limits

One advantage of private student loans is higher borrowing limits. Federal loans are given based on your financial need, but you may not qualify to have the full cost of your education covered (even if you can’t pay). Many private loans do not have a maximum borrowing limit and will let you borrow up to the full cost of your education or certificated cost of attendance (COA).

Interest

Federal student loans always have lower interest rates. And because they don’t check your credit, you don’t need a perfect credit history to qualify for the best rates. Even the best private loans come with steep APRs by comparison. 

Also, interest on federal loans is more likely to be tax deductible than interest on private loans.

Fees

This is one where private loans come out on top. Unlike federal student loans, many private student loans don’t charge origination fees. These are fees charged as a percentage of your loan and deducted from your total disbursement.

Should you get a private student loan?

The first question you should ask yourself when looking for ways to fund your education is not whether you should get a private student loan but whether you’ve taken full of advantage of (much cheaper) federal funding and alternatives. 

Federal student loans are a better option than private loans for almost everyone due to the fact that they’re less expensive and more flexible. They don’t require a credit check so you can qualify without any credit, and you’ll spend less over the life of the loan.

With that said, you may need to take out a private student loan if you can’t get all the funding you need from federal loans. This is fairly common, especially if you’re attending a costlier college or university.

But student loans aren’t your only option.

Alternatives to student loans

Student loans are just one way to pay for college. If you’d like to avoid taking out a private student loan or want to reduce the amount of debt you’re taking on, look into these options first.

Financial aid

Maximizing your financial aid should be your first priority when you’re thinking of borrowing money for college. After all, avoiding student loan debt is the goal. With financial aid, you probably don’t have to pay the money back. The Federal Pell Grant, for example, given to students who show exceptional financial need, doesn’t need to be repaid.

You might qualify for federal student aid even if you don’t think you do.

You can apply for federal aid through the U.S. Department of Education by completing the Free Application for Federal Student Aid (FAFSA). The FAFSA assesses your financial situation to determine if you are a good candidate to receive help from the government. This is also the form you’ll complete when applying to see how much you qualify to borrow in federal loans.

Unfortunately, international students are less likely to qualify for most financial aid.

Read more: How to read a financial aid award letter

Scholarships

Scholarships are just another way to get free money. Some student loan borrowers don’t know how to apply for scholarships or think they definitely won’t qualify and don’t bother. But the fact of the matter is that there are foundations just waiting for someone like you to come along so they can hand you money. True story.

Between merit-based and need-based scholarships, there’s usually something for everybody. There are also a variety of options specifically for different types of students such as graduate students, international students, or even those enrolled in particular programs like pre-med or education.

Many private lenders even have scholarship programs you can apply for when applying for a loan. This can help soften the blow a bit when applying for a loan.

Parent PLUS loans

Parent PLUS loans are a type of unsubsidized federal loan parents can take out on behalf of their dependents. Only biological or adoptive parents with clean credit histories (e.g. no delinquencies) can qualify.

PLUS loans are usually used alongside other forms of loans and funding, not as a primary source.

Work-study

If you qualify for federal financial aid, you may also qualify for Federal Work-Study.

Work-study is a well-named program through the Department of Education that lets you work while you study and earn money for college. Work-study jobs are often on campus and may even be in the academic buildings you’re already visiting, and they’re designed to be flexible for students. You can use the money however you need to, for the most part, and it does not count toward your financial aid. You also don’t have to pay it back – it’s yours free and clear.

How to choose a student loan

Student borrowers should consider the following factors when comparing different private and federal student loans.

Fixed vs. variable loans 

Student loans can be either fixed for the entire term of the loan or variable. Fixed means that the interest rate is locked in for the length of the loan and variable means that the interest rate is subject to change.

Should you choose a fixed or variable interest rate?

This is an important question to ask yourself because it’ll ultimately determine how much you’ll pay in interest when all is said and done and your loan is paid off. 

Generally speaking, variable rates on student loans are lower. But long-term, fixed-rate loans often carry less interest. Variable-rate loans will fluctuate over time and there’s the potential for rate hikes, making this the riskier choice.

Note that federal student loans only offer fixed rates while private loans might offer the choice between fixed or variable rates.

Maximum loan amounts

For federal student loans, the maximum loan amounts are between $31,000 and $57,500 for undergraduates and up to $138,500 for graduate students.

Private student loans can have maximum limits of anywhere from $150,000 to $500,000 or may allow you to borrow up to the full cost of your education (including tuition, boarding, and more).

As mentioned, many students require a mix of both federal and private loans. 

Term lengths

For federal student loans, terms are typically available between 10 and 30 years. Most private loan terms are between five and 20 years.

While it might be tempting to just choose the shortest loan term available to get your student loans over with, you need to consider what monthly payments you can realistically take on when they come due.

Repayment terms

There are many different options for repaying your student loan debt. Most private lenders will let you choose to make interest-only payments, fixed payments of a certain amount (such as $25), or full payments while you’re still in school or wait until you’ve graduated to start making monthly payments. 

Each type of repayment comes with its own set of advantages and disadvantages. Interest-only payments, for example, will reduce the amount of interest you pay but will mean that it takes you longer to repay your loan than if you were making payments toward the principal too. 

It’s important to consider all of your repayment options and take advantage of tools such as calculators to understand what you’ll be paying and when.

Read more: 20 terms for understanding student loan debt

Fees 

Federal student loans require origination fees, which currently range between 1.057% and 4.228% of the loan amount taken. Origination fees are deducted from your total payout. Private student loans normally don’t charge origination fees or other types of application fees. 

Neither federal nor private student loans charge prepayment penalties if you decide to make your payments early or pay more than what’s due each month.

APR

The annual percentage rate, or APR, is the effective rate on a loan. It includes both the base interest rate and any required fees added to the calculation.

For example, if you borrow $100,000 and pay a 2% origination fee, the net proceeds of the loan will be $98,000. When a 5% interest rate is calculated on the loan, the APR will be slightly higher due to the reduced net loan proceeds.

Your APR will depend on your credit history and the terms of your loan. You may qualify for a discount through some lenders for activities such as enabling autopay or having another account with a bank.

Deferment options

With private student loans, you might have anywhere from six months to a year after graduating before you’re required to start making repayments. With federal student loans, you don’t need to start making payments until six months after you graduate. When payments are due, you may need to defer or pause them if you’re not able to pay.

Student loans may come with a variety of deferment options. For example, federal student loans come with the option to defer payments if you graduate and have trouble finding a job. Private student loans may offer deferment on a case-by-case basis, but the deferment period will vary by lender.

Just note that interest may still continue to accrue during deferment and factor this into your repayment plan.

Forbearance and loan forgiveness policies

Federal student loans offer both forbearance and loan forgiveness. For example, under the Income-Driven Repayment plan, your monthly payment can be reduced to a small percentage — usually 10 or 15% — of your monthly income. 

Under a Public Service Loan Forgiveness plan, your debt can be completely forgiven if you make 120 monthly payments while working full-time for either a government agency or a qualifying nonprofit organization.

With private student loans, loan forgiveness is not an option. However, some will provide forbearance if you experience economic hardship, such as unemployment. Your options depend on which lender you’ve chosen and it’s worth looking into this before borrowing.

Cosigner release terms

You probably won’t need to use a cosigner for federal loans because these don’t have credit requirements, so cosigner release doesn’t apply. However, cosigners are common with private student loans, and you may decide to use one.

If you decide to use a cosigner, they might not be stuck on your student loans until your debt is fully paid off. Many lenders provide a cosigner release option that lets you release your cosigner and continue on the loan alone. If a lender does provide the option for cosigner release, you’ll need to apply and qualify for it by meeting repayment and credit requirements.

Look into the cosigner release terms for any loan you think about taking out and be sure to have a conversation with your cosigner about this too.

How to qualify for a private student loan

If you’ve exhausted all of your options from federal loans to financial aid and scholarships, you might decide it’s time to apply for a private loan. Here’s what you need to know.

Your credit history and income will be used to determine your loan eligibility. If you have a really limited credit history — which is common for first-time student loan borrowers — you may not be able to qualify for a private loan on your own with the terms and interest rate you want. Lenders will also look at your income as a way of determining how risky it is to loan money to you and if you have the financial means to pay them back. Again, many new borrowers don’t meet minimum income requirements.

Some lenders will let you check to see if you prequalify for a loan and show you what rates you might receive with no effect on your credit. If you have this option, use it to avoid submitting more applications than you need to.

If you can’t qualify by yourself, you might want to think about using a cosigner. 

When you use a cosigner, their credit history and income will count in your favor because lenders will look at this information as an extension of your application.

Should you use a cosigner?

Applying for student loans with a cosigner makes you look better to lenders. Using a cosigner means choosing a person with more credit than yourself — such as an older relative or parent — to assume responsibility for your loan along with you. This means that their credit profile will be used to determine your eligibility and interest rates. 

A cosigner must be someone more creditworthy (i.e. less risky to lenders) than yourself. Someone with a good credit score and high income is a good candidate to cosign.

Your cosigner is only partially responsible for your loan when applying. But if you fail to pay your loan back, they become fully responsible for repaying the debt.

There are several factors to consider when you’re making the decision to use or not use a cosigner on your private student loans. Beyond the financial implications of signing their name to your debt, there are personal implications as well. Asking someone to be responsible for your debt is more than just a favor and a decision that shouldn’t be made lightly. 

And if you do end up applying with a cosigner, you might want to have the option to release them as soon as possible. Cosigner release gives you the flexibility to assume full responsibility for your student loan after applying. To qualify for cosigner release, you usually need to make a certain number of consecutive monthly payments – such as 12 or 24 – toward both the principal and interest of your loan. Then, your eligibility as an individual can be reassessed.

Summary

Navigating the process of taking out a private student loan for the first time is a tricky business. But while it isn’t our idea of a good time, it’s definitely worth sitting down and comparing your options before signing your name to thousands of dollars of student loan debt. 

If you start with these private lenders and take your time to make the right decision, you should be in good shape to get the loan you need and borrow responsibly.

Read more:

Source: moneyunder30.com

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Apache is functioning normally

June 9, 2023 by Brett Tams

The mortgage industry has its own language, and in order to understand it, homebuyers need to learn different acronyms and jargon when shopping for a home loan. A typical home loan payment or mortgage payment involves a single payment, which is the sum of four different line items: the loan principal, interest, taxes, and insurance – also referred to as PITI. 

Before you set your sights on a home, know if you can afford the costs by learning what PITI is and how it impacts your monthly mortgage payments.

Grey craftsman home with garage and white accents

What does PITI stand for? 

PITI stands for the loan principal, interest amount, taxes, and insurance on your home – the four major elements that make up mortgage payments. 

Homebuyers often underestimate the true cost of homeownership by failing to take into account property taxes and homeowners insurance. It’s crucial that you budget for all the components of your mortgage payment before purchasing a home.

What is PITI? The four components

Now that we know what PITI stands for, let’s break down each of the four components and analyze the individual elements that make up your monthly mortgage payment.

1) Principal

The mortgage principal is the loan amount before any interest is calculated. This is the base amount of your home purchase price minus any down payment you make. 

We’ll use a hypothetical home purchase for reference; if you buy a home for $450,000 with a 20% down payment ($90,000), your mortgage principal amount will be $360,000.

Over your mortgage term, you pay substantially more than the original $360,000 to the lender in the form of loan interest. The principal is the base amount used for loan calculations to determine if they will extend a loan to you. 

2) Interest

Your mortgage interest rate is what you pay the lender as part of your monthly mortgage payment to borrow the funds to purchase your home. The mortgage lender calculates interest as a percentage of your outstanding principal. If your principal loan is for $360,000 and your lender charges you an interest rate of 6%, this means that you will pay $21,600 (6% of $360,000) in interest for the first year of your mortgage.

Your mortgage interest and principal payments are itemized on a mortgage amortization table. The amortization charts show how much each mortgage payment pays down your principal and interest. When you first start making mortgage payments, most of your monthly payment goes toward interest instead of the principal. 

This split shifts over time, and eventually, the amount you pay toward interest decreases, and more is paid toward the principal. As the principal amount of your loan decreases, you start to earn equity on your home. Equity is the portion of your home that you own outright. Your interest decreases as well, as you only pay interest on the principal amount you have not paid off.

For our example, you will pay $21,600 in interest over the first year of your $360,000 mortgage. By the time you have paid down $260,000 of that principal, your principal amount will be $100,000; at that point, you’ll pay interest of $6,000 annually (6% of $100,000).

3) Taxes

When you own your house, you pay taxes on the property to your local government to maintain roads, emergency services, police, firefighters, schools, and more. Buyers often overlook property taxes when estimating homeownership costs, but it is important to consider this recurring annual cost when you’re searching for your new home. Property taxes vary by location and are the most expensive tax homeowners pay. Taxes may be higher in a newer neighborhood or an area coveted by many homeowners. They are often less if you live just outside coveted neighborhoods and in rural areas. 

The amount of property tax you pay is determined by the local property tax rate and the value of your home. A general guideline to estimate property taxes is to allocate approximately $1 for every $1,000 of your home’s value, paid on a monthly basis.For example, if your home is worth $450,000, you can expect to pay around $450 per month in property taxes or $5,400 per year. 

As part of the home purchase process, most states require that you get an unbiased, official appraisal to estimate your taxes accurately. Your lender usually orders the home appraisal and includes the cost in their list of closing costs. After you close on your home purchase, keep in mind that your local government will regularly reassess properties every few years for tax purposes, which could lead to a change in your tax bill.

4) Insurance

The “insurance” component of PITI refers to homeowner’s insurance and, when it’s required, private mortgage insurance (PMI). Let’s discuss each of these concepts in more detail. 

Private mortgage insurance (PMI)

Your PMI rates depend on how much of a down payment you made and your credit score. If you’re putting down less than 20% on a conventional loan, you’re required to pay for private mortgage insurance (PMI), which protects the lender if you default on your mortgage payments. Once you build at least 20% equity in your home — and your loan-to-value (LTV) ratio is 80% or less — you can get rid of PMI. For FHA loans, a similar mortgage insurance premium has to be paid throughout the life of the loan on any FHA-backed mortgage loan.

If your PMI comes in at a rate of 1%, here’s how you’d calculate a mortgage of $360,000: $360,000 x 1% = $3,600 per year; $3,600 ÷ 12 monthly payments = $300 per month.

living room with fireplace

Homeowners insurance

Most mortgage lenders require a homebuyer to purchase and maintain homeowners insurance over the entire loan term. Homeowners insurance covers you and the lender if something catastrophic happens to the home, and you need to rebuild or move. Most homeowners insurance policies cover your home in the event of a break-in, fire, or storm damage. 

Most insurance companies require you to buy additional coverage for damage from earthquakes or flooding. You can also purchase insurance riders to cover items of significant value, such as an expensive musical instrument, art, or jewelry. If you buy a condominium, you’ll also pay a homeowners association fee. Your lender may consider your HOA fee your insurance as the HOA carries its own insurance that covers the building, and thus you may not need another policy. 

Property insurance amounts can vary among different insurances. It’s wise to shop around after the seller accepts your purchase contract, and before you close on the property, to get a good idea of reasonable rates. Insurance companies consider these factors when calculating an insurance premium:

  • The home’s value
  • Whether you live in an urban area or a rural area
  • Whether you live in an area with high climate risk
  • How close your home is near a fire department or fire hydrant 
  • Whether you have an insurance risk on your property, i.e., something could injure children, such as a trampoline, pool, or specific dog breed 
  • How many insurance claims you make each year for other types of insurance

When estimating your homeowner’s insurance costs, it’s helpful to keep a general rule of thumb in mind. On average, you can anticipate paying approximately $3.50 per every $1,000 of your home’s value in annual homeowner’s insurance premiums. For instance, if your property is valued at $450,000, you can expect to pay around $1,575 per year for insurance coverage, which translates to roughly $131 per month.

How to calculate PITI

Before you start your search for a house, it’s a good idea to calculate PITI to determine your price range and help you find a mortgage option that will fit your budget. The exercise will make you a more rational home buyer and keep you from falling in love with a house outside your price range. 

The simplest way to calculate PITI is by using an online monthly mortgage calculator. Redfin’s mortgage calculator includes the principal and interest, taxes, insurance, HOA, and PMI. You can also add in your location for more accurate estimates.

PITI and the 28% Rule

Your PITI gives you a rough idea of what purchase price range you can afford. One way to identify a purchase price within manageable limits is to use the housing expense ratio. To ensure your ongoing ability to make your mortgage payments, home finance experts typically recommend that your housing costs should be equal to or below 28% of your monthly household budget. If your PITI is more than 28% of your monthly budget, your lender may require you to pay for additional mortgage insurance.

In our example, you can estimate your housing expense ratio by dividing your PITI by your total monthly income. If your household income is $10,000 a month, your PITI will make up about 28% of your monthly budget, well within recommended guidelines. ($2,800/$10,000 = 28%.)

Keep in mind that PITI may just account for just some of your monthly expenses when owning a home. Depending on where you live and how you are paying for your home, there may be additional costs to consider. Additionally, the components that make up PITI are broadly defined here; there is often more complexity that goes into each part of PITI.

How PITI impacts loan approval

During the home buying process, it can be easy to trick yourself into thinking you can afford a more expensive home if you only look at your mortgage’s principal and interest cost without considering the total PITI with taxes and insurance. 

For instance, let’s take a 30-year mortgage on a $450,000 property, assuming a property tax rate of 1.25% ($5,625 per year) and an annual homeowners insurance premium of $3,600. In this scenario, your monthly financial commitment would go beyond just the principal and interest amount, as you would need to allocate an additional $581 to cover taxes and insurance. Understanding and accounting for these factors will provide you with a comprehensive understanding of the actual costs involved in homeownership.

Here is a breakdown of the example discussed above. 

Principal and Interest PITI
Interest rate 7% 7%
20% down payment $90,000 $90,000
Property taxes N/A $450
Homeowners insurance N/A $131
Private mortgage insurance N/A N/A
Monthly payment $1,800 $2,381

How DTI factors in

The principal balance will factor into your debt-to-income (DTI) ratio. Your DTI ratio gives lenders an idea of how capable you are of managing money and the likelihood that you will consistently make your monthly payments. To determine your DTI, the lender uses your total minimum monthly debt obligation and divides it by your gross monthly income to arrive at a percentage. This calculation also includes payments on credit card accounts, auto loans, student loans, and other recurring debt payments. Lenders consider you a higher risk if your DTI ratio exceeds 43%, some lenders will allow a DTI as high as 50%. 

Don’t overlook other housing costs

PITI is just one fundamental concept to understand before applying for a mortgage. As you consider how much house you can afford, you’ll also need to plan for additional costs typically associated with homeownership. These include HOA or condo fees, which can range from $100 to $1,000 per month, with an average of $200 to $300. Additionally, budgeting for repairs and maintenance is crucial, with a general guideline of saving 1% to 5% of your home’s value annually. For a newer $450,000 home, this would mean setting aside $4,500 to $22,500 per year. Utility bills for electricity, water, gas, sewer, cable, trash, and internet should also be factored in, and contacting the utility company or asking the seller or neighbors can help estimate these costs.

The bottom line on PITI

Buying a home is very exciting, but before signing your mortgage contract, know what payment amount you can afford based on PITI and other monthly costs. The more you understand the home buying and mortgage process and the total cost of homeownership, the easier it will be to finalize your purchase decision. Your home purchase represents an important milestone in your life – avoid confusion and uncertainty by gaining a solid understanding of PITI and the cost of homeownership. 

Source: redfin.com

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Apache is functioning normally

June 9, 2023 by Brett Tams

By Contributing Author 10 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 May 20, 2013.

The Roth IRA (and its cousin, the Roth 401k) are getting press lately and with good reason. There is a fear that taxes will need to rise over time and we will all find ourselves retiring in a higher tax bracket than we are in today.

Let’s first take a step back to understand what these account are and how they work.

What Is An IRA, And How Does It Work?

A traditional IRA account or 401(k) account allows you to deposit money into an account prior to having it taxed. If you are in the 25% bracket ($67,900 taxable for married filing joint or $33,950 filing single) you can put $5000 into the IRA ($6,000 if you’re over 50 this year) or you can pay $1,250 in taxes and clear $3,750.

With the introduction of Roth a number of years ago, you have a new choice, to pay the taxes now, clearing that $3,750 and after depositing into the Roth account (or Roth 401(k) where the limits are $16,500 or $22,000 if 50 or older) and not paying any taxes when you withdraw these funds at retirement.

At some level this is a simple choice, pay tax now or pay it later. Let’s think about this a moment. Do you know your current marginal rate? Do you know what “marginal rate” means? A simple way to look at this is that your marginal rate is the (federal) tax you’ll pay on the next $100 of taxable income. You may make over $80,000 and see that your taxes aren’t quite $10,000, but the next $100 is taxed at 25% or $25. An important distinction to understand. Fairmark offers a nicely presented chart to see marginal rates, it’s important that you understand this concept before making any decisions. Knowing your current marginal rate is easy, projecting what it will be at retirement, not so easy. It’s this ‘not knowing’ that may prompt you to go one way or the other, but there are steps you can take to improve your decision process.

When To Put Into A Roth IRA

At the beginning of your career (and younger, if you are working as a teen), there’s a good chance you are in the 15% bracket. Now is a good time to put some money away in Roth accounts.

As your salary increases, you are likely to take on a mortgage, and perhaps start a family. This gives you deductions for the mortgage as well as the additional exemption (and perhaps earnings) of your spouse. If despite that, you are in the 25% bracket or higher, I’d suggest using pretax savings, the traditional 401(k) and IRA accounts. Now is the time in your life to learn to project out what your retirement will look like. Are you on track to have $2 million dollars in pretax accounts? If not, continue to save pretax. Why $2 million? A conservative withdrawal rate is about 4%/yr. This results in $80,000/yr upon retiring, and right now that will put you toward the top of the 15% bracket. Also, keep in mind that few people work 40 years with no break or disruption to their income. Use these disruptions (times you will drop into a lower bracket) to convert funds from a traditional IRA to a Roth, in essence “filling up the bracket” just enough to top it off but not go into the next.

Last, toward the end of your working career, the decision becomes very simple. With retirement only a few years away, you should be able to calculate what your marginal rate will be after you retire. If the same or higher, go with Roth, if it will be lower, go with traditional.

Once retired, continue to take advantage of the Roth conversion option. In 2009 a married couple can have $86,600 in gross income and still be in the 15% bracket. If they are withdrawing say $40,000 per year from pretax accounts, they should consider converting right up to the $86,600 figure and pay the 15%. This money will never be subject to RMDs (required minimum distributions) and when you pass, your heirs will not have to pay income tax on the withdrawals as they would from a traditional account. This also will help you avoid that higher 25% bracket as the equation to calculate your RMD continues to force you to take a larger portion of your account out each year.

Are you currently taking advantage of a Roth IRA? Why or why not? What types of retirement accounts are you investing in and why?  Let us know in the comments!

This is an article by Joe from JoeTaxpayer.com. Stop by his site and subscribe to his feed for more great articles!

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Apache is functioning normally

June 9, 2023 by Brett Tams

Two years and some change into his presidency, Biden busted out his first veto. On March 20th, 2023, the president shut down an attempt to overturn a retirement investing rule that allows fund managers to factor environmental, social, and governance (ESG) considerations into their decision-making processes.

You’re reading about this here because this veto may have a direct impact on countless investors. That is, if it sticks.

We’re here to unpack what went down, why, and what it might mean for you.

What’s Ahead:

Wait, what is ESG investing? 

Wind turbines in field

Before we dig into the timeline leading up to this veto, let’s cover what ESG actually means.

ESG stands for Environmental, Social, and Governance and ESG investing focuses on companies that have clear initiatives and policies in place within these areas.

Examples of environmental factors include:

  • Energy
  • Waste
  • Emissions and pollution
  • Water usage
  • Natural resource usage

Examples of social factors include:

  • Equal pay and opportunity
  • Ethical sourcing
  • Sexual harassment
  • Health and safety
  • Social justice training

Examples of governance factors include:

  • Leadership diversity
  • Information transparency
  • Business ethics
  • Board structure
  • Anti-corruption measures

For instance, a company committed to going carbon-negative that uses renewable energy sources for power might score high marks in the Environmental category. 

ESG factors are non-financial in nature but can often affect a company’s performance. Historically, fund managers have been able to use these factors to analyze investment opportunities, though the Trump administration put rules in place to discourage this. The Biden administration reversed these.

When members of Congress wanted to go back to restricting the use of ESG, Biden flexed his executive veto power.

What happened

Biden facing forward

Let’s break it down, starting with the rule being disputed.

✔️ December 1, 2022: The U.S. Department of Labor issues a final revision of the “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” rule. It clarifies a point of confusion about the use of material ESG factors by investment fund managers.

This final rule permits fiduciaries to consider climate change and environmental, social, and governance factors when making investment decisions or exercising shareholder rights under the Employee Retirement Income Security Act (ERISA).

Under the first version of this rule, proposed in October 2021, a fiduciary’s duty was to choose investments based solely on “pecuniary considerations.” These were defined as economic factors that directly affect an investment’s risk/return.

Many people wondered whether this included ESG factors. These can have objectives that aren’t strictly financial but effects that definitely are, and it wasn’t clear how fiduciaries were supposed to — or allowed — to handle this. Use ESG? Ignore it? 

The rule was revised to allow ESG considerations to be included as a relevant risk factor as long as fiduciaries act in accordance with their plan’s objectives (i.e. prudently) and keep their plan holders’ best interest in mind (i.e. loyally).

❗ February 7, 2023: H. J .Res. 30 is introduced to the House, sponsored by Representative Andy Barr, by the House Education and the Workforce committee. The committee seeks to nullify the Department of Labor rule.

This bill is decidedly anti-ESG. Supporters want to put the kibosh on the DOL rule because they feel that fund managers should not use ESG factors in their decision-making and that doing so could be harmful to investors. 

✔️ February 28, 2023: H.J.Res. 30 passes the House.

✔️ March 1, 2023: H.J. Res. 30 passes the Senate.

❌ March 20, 2023: Biden vetoes this resolution. The bill does not move forward and the rule remains in place.

Why it happened

Regardless of how you personally feel about ESG investing and whether it’s a positive or negative practice, this veto may impact you. 

Essentially, Biden’s veto was in defense of ESG investing, and the message that accompanied his decision expanded on this. The president stated the following: 

“There is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses. But the Republican-led resolution would force retirement managers to ignore these relevant risk factors, disregarding the principles of free markets and jeopardizing the life savings of working families and retirees.” 

His reasoning was that ESG investing is beneficial to investors because it’s realistic. It pays attention to outside factors such as climate change that could have very real impacts on returns for a variety of asset classes. This ultimately provides protection from risk, not increased exposure to it.

Biden’s argument is that allowing managers to make selections more holistically benefits investors. It’s a safer long-term approach to retirement investing since many companies are likely to be impacted by climate change and ESG factors at some point.

Why it matters

Environmental, social, and governance initiatives are unlikely to go away any time soon. In fact, more and more companies are joining the cause with new initiatives and increased transparency. 

When it comes to long-term investing, the goal is to think big picture and reduce risks. But there are two sides to this argument.

The controversy

Supporters of the “Prudence and Loyalty” rule, and now of Biden’s veto, argue that the “big picture” should include ESG factors even though these aren’t exclusively financial because they can have financial impacts. For instance, companies with policies in place to drive social change might garner more business than those that don’t and outperform them.

Opponents of the rule argue that ESG is too politically-charged and pushes an anti-capitalist agenda. Favoring ESG companies in investing could squeeze out other corporations and tilt the market, and this side is concerned that fiduciaries would put too much emphasis on causes rather than numbers (i.e. beliefs > money).

What the veto really means

Fiduciaries are obligated to protect their plan holders’ money. By vetoing this bill, Biden is arguing that ESG investing can help to accomplish this.

Can the bill still pass?

Technically, this isn’t over. There’s still a chance, however slim, that the GOP manages to reverse the rule after all.

But overriding a veto requires a two-thirds majority in Congress, and this is unlikely to happen considering the bill trying to squash the rule was hotly contested.

The takeaway

We’ll be keeping an eye on how this situation unfolds. We’re curious to see if Biden has any other plans for that veto pen, but making political predictions isn’t really what we do here.

Will Biden support ESG initiatives in the future? Maybe, maybe not. Right now, it doesn’t seem like the president is championing anything as much as he is just trying to protect investors.

Read more: 

Source: moneyunder30.com

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