[Targeted] Discover: Add An Authorized User & Get $50 When You Make A Purchase

Update 5/12/22: Deal is back and valid until 6/16/22. Subject line is Don’t miss out on $50 Cashback Bonus and bonus is $50 instead of $25. Some people also see a $25 bonus.

Update 1/26/22: Deal is back and valid until 3/21/22.

Update 10/28/21: Deal is back and valid until 12/20/21.

Update 7/31/21: Deal is back and valid until 9/22/21. Hat tip to FM

Update 3/18/21: Deal is back and valid again until 4/10/2021. Hat tip to reader Celia

The Offer

Targeted offer sent out via e-mail, subject line is ‘This $25 cash back could be yours’

  • Discover is offering some cardholders a bonus of $25 when you add an authorized user and make a purchase (no minimum) by November 30, 2020

The Fine Print

  • Valid until November 30, 2020

Our Verdict

Better than previous Discover authorized user bonuses that required $3,000 in spend. Worth doing if targeted.

Hat tip to reader Hiep T

Source: doctorofcredit.com

Stochastic Oscillator – Meaning, Formula & What This Indicator Measures

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Developed by George Lane in the late 1950s, the stochastic oscillator is a technical analysis tool that has become a staple for short-term traders. The tool is a momentum oscillator, which measures price changes over time to tell you the momentum of a move. High momentum trends are likely to continue, and decreasing momentum points to a reversal on the horizon . 

The stochastic oscillator generates buy and sell signals based on patterns in price movements and a historic reaction to those patterns. 

But what exactly is the stochastic oscillator, and how can you use it to become a more successful trader?

What Is the Stochastic Oscillator?

The stochastic oscillator is a technical indicator that compares the most recent closing price of a financial asset to a high-low range of prices over a period of time, generally 14 days. This comparison helps to determine if the asset is experiencing overbought or oversold conditions. 

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At its core, the tool is a momentum indicator, pointing to both the direction and vigor of price movements. The general idea is that if the asset is trending up, the current price will be closer to the highest high for the period, generating a high reading; when it’s trending down, the current price will be closer to the lowest low, generating a low reading. 

Moreover, Lane theorized that momentum changes before price changes, meaning that signals from this momentum oscillator should happen prior to major price movements. It’s used to determine the strength of current trends, find trend reversals, and help determine the best time to buy and sell assets. 

How to Calculate the Stochastic Oscillator

This indicator is popular among traders and is widely available on most trading charts. So, there’s a strong chance you’ll never have to calculate the oscillator readings on your own. Nonetheless, it’s best to know the inner workings of the tools you use.  

In most cases, the stochastic oscillator uses a 14-day time frame, but you can adjust the time frame to fit your needs.

Here’s how to calculate this indicator:

Stochastic Oscillator Formula

The formula for the stochastic oscillator is as follows:

((C – LP) ÷ (HP – LP)) x 100 = K

The following key applies when using the formula above:

  • C – Most recent closing price
  • LP – Lowest price in the data set
  • HP – Highest price in the data set
  • K – Oscillator reading

Traders who use the stochastic oscillator use two trendlines. The K-line is a plot of the readings of the oscillator, also known as the fast stochastic or the signal line. The D-line, or slow oscillator, is the three-day simple moving average (SMA) of the oscillator’s reading. 

Signals are generated based on the reading of the oscillator and crossovers between the signal line and the D-line. 

Example Calculation

Let’s say ABC stock closed at $100 today. Over the past 14 days, the stock has traded between a low of $95 and a high of $109. The formula to determine the oscillator reading for this example is:

(($100 – $95) ÷ ($109 – $95)) x 100 = 35.71

How to Read the Stochastic Oscillator

Assets are considered overbought when the oscillator reading is 80 or above and oversold when the reading is 20 or below. Overbought assets may have unjustifiably high prices and can be due for a pullback, whereas oversold assets may be priced below their true value and ripe for a rebound.

The oscillator is range-bound, meaning that its reading will always fall between zero and 100. Traders read the indicator at a glance, knowing the closer the number is to zero, the more oversold it is, and the closer it is to 100, the more overbought it is. 

Traders also read the indicator by plotting two trendlines on the financial asset’s chart: the signal line (oscillator reading) and the D-line (three-day SMA of the oscillator). Traders then analyze the relationship between the two lines to determine buy and sell signals. 

Trading Strategies Using the Stochastic Indicator

Traders commonly use three strategies when employing the stochastic indicator in their trading plan. Those strategies include:

Overbought/Oversold Strategy

The overbought/oversold strategy is the most simple strategy to follow using this indicator. All you’ll need to do is look at the reading with the following in mind:

  • 80 or Above: Sell Signal. Stochastic readings at 80 or above suggest the asset being analyzed is overbought, which means the price is likely nearing resistance and a bearish reversal may be on the horizon. 
  • 20 or Below: Buy Signal. Stochastic readings of 20 or below suggest the asset being analyzed is at oversold levels. This means the price of the asset is nearing support and a bullish reversal may be coming. 

When using the overbought/oversold strategy, the signals are most accurate when both the fast and slow readings of the oscillator are above 80 or below 20. 

Let’s look at Apple’s stock chart with stochastics from the beginning of April 2022 (below). The oscillator appears as a sub-chart below the main stock chart:

In the stochastics chart at the bottom of the image, the signal line is represented in black and the baseline is red. Both readings in this chart are over 80, suggesting the stock is overbought and likely to make a bearish reversal.  

Stochastic Crossover Strategy

The stochastic crossover strategy is a bit more involved than the overbought/oversold strategy, but it’s a great way to verify signals from the other stochastic strategies. The crossover strategy uses both the K-line and the D-line plotted on a financial asset’s chart. 

Once the lines are plotted, traders look for crossovers, or points where the faster-moving K-line crosses over the slower-moving D-line. When the crossover is in the upward direction, it acts as a buy signal, suggesting recent prices are increasing. When the crossover is in the downward direction, it acts as a sell signal, suggesting recent prices are decreasing. 

Let’s look again at Apple’s chart, with the sub-chart below the main chart showing the red and black lines plotting the stochastic oscillator:

Note that the fast Stochastic (K) is plotted in black and the slow stochastic (D) is plotted in red. Each time the black line crosses above the red line, it acts as a buy signal, suggesting prices are likely to head up moving forward. When the black line crosses below the red line, it’s a sell signal, suggesting Apple’s stock will fall ahead. 

Stochastic Bull/Bear Strategy

The bull/bear strategy uses the divergence between price action and the movement of the stochastic oscillator to determine when reversals might take place. 

For example, if a stock is trending down and mints a new low, but the stochastic oscillator reads a higher low, the divergence could mean the downtrend is coming to an end and the bulls will take control soon. This is known as a bullish divergence. 

On the other hand, when a price is on the uptrend and hits new highs, but the stochastic oscillator produces a lower high, a bearish divergence is taking place, suggesting declines could be ahead. 

The Relative Strength Index (RSI) vs. the Stochastic Oscillator

The relative strength index (RSI) and stochastic oscillator are both momentum oscillators, made to generate the same types of signals. The difference is the underlying data and methodology the two use. 

The stochastic oscillator is based on the relationship between the most recent closing price and the recent range of prices.

The RSI, by contrast, measures the velocity (or speed) of price movements rather than the relationship between recent prices and the closing price of an asset. 

Because these indicators are based on different points of data, they are often used in conjunction with one another before a trade is made, each helping to verify the signals of the other. 

Stochastic Oscillator Limitations

As a technical indicator, the stochastic oscillator has proven its worth time and time again, but it’s not perfect. The biggest limitation to the indicator is the potential for false signals, where the indicator suggests a move is coming that doesn’t come to fruition. 

Due to the potential for false signals, it’s important to use the stochastic indicator in conjunction with other technical indicators when making your trades. 

Stochastic Oscillator FAQs

Technical indicators are complex topics that often lead to questions. Some of the most common questions surrounding the stochastic oscillator are answered below:

What Do K and D Mean?

K is the reading for the oscillator that acts as the signal line when plotted on a trading chart. D is the abbreviation used to describe a three-day moving average of K. Traders plot both K and D on trading charts and analyze the relationship between the two trendlines to generate buy and sell signals. 

What Is a Slow Stochastic Oscillator?

The slow stochastic oscillator is known as the D-line and is another term for the three-day moving average of the oscillator’s reading. The slow stochastic is used for two reasons:

  1. Generate Signals. The K-trendline crossing above or below the D-trendline generates buy or sell signals. 
  2. Verify Signals. Traders using the overbought/oversold strategy focus primarily on the K-reading in the oscillator. But they can also use the slow stochastic (D-line) to verify whether the asset is in overbought or oversold territory because it moves more slowly than the fast stochastic (K-line).

What Are the Two Lines in the Stochastic RSI?

The Stochastic RSI, or StochRSI, applies the formula for the stochastic oscillator to RSI data, combining the two methods to determine the strength of a trend. As with the traditional stochastic oscillator, the two most-used trend lines in the Stochastic RSI are K (the signal line) and D (the baseline). 

Final Word

The stochastic oscillator has become one of the most widely used technical analysis tools in financial markets. Whether you’re trading stocks, forex, cryptocurrency, or any other asset, paying attention to the stochastic reading and crossovers has the potential to generate compelling buy and sell signals. 

However, like any other financial tool, the oscillator isn’t perfect. Traders should consider using it in conjunction with other technical indicators when researching opportunities. 

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.

Source: moneycrashers.com

What Is Home Title Insurance – Policy Costs, Coverage & Need

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You’re all settled into your dream home — the one you saved up years to afford. You’ve unpacked every last moving box, arranged the furniture, and made the first payment on your mortgage. Life is good.

Then, one day, you hear a knock at the door. The person standing there hands you an official-looking document and tells you the now-grown child of a previous owner is suing you. They believe the property belongs to them, and they have the previous owner’s will to prove it.

You know you need to hire a lawyer. But you’re all tapped out after paying tens of thousands of dollars for the down payment. You’re in a serious bind — one that could get worse if the person suing you prevails. But if you had home title insurance, you probably wouldn’t have to pay out of pocket to defend yourself. 

What Is Home Title Insurance?

Home title insurance, or simply title insurance, is a special but common type of real estate insurance that protects your financial interest in a specific piece of property. 

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You can buy title insurance on your primary residence, second home, or any investment property you buy directly. You don’t need title insurance to invest in real estate indirectly, such as through publicly traded real estate investment trusts or real estate crowdfunding. 

Most forms of insurance provide financial protection against future losses. For example, homeowners insurance protects against costs related to damage to or theft from your home. Title insurance protects against future losses too, but it covers out-of-pocket expenses associated with future ownership disputes.

Title insurance also covers a lot of upfront work that happens before you even own your home. After you make an offer on a new property but before you close, your title insurance premium covers the cost of investigating the title. It also covers the cost of fixing any title issues, such as old liens or ownership disputes, before they cause greater financial harm. 

What Does Home Title Insurance Cover?

Title insurance policies typically have three functions:

  • Cover the cost of investigating the chain of title, the official ownership records of the property in question
  • Cover the expense of fixing any problems discovered during this investigation 
  • Pay future legal expenses for any action against or attempts to collect money from the current owner resulting from any undiscovered issues 

Though title insurance policies vary from state to state and provider to provider, they always cover the cost of conducting a title search. A title search is a thorough examination of relevant public records to determine whether any problems exist with the title. These records are typically held with the city or county where the property is located.

Ideally, a title search looks at the entire history of a property stretching back to its original platting or subdivision. That’s generally done by scrutinizing the property’s abstract, a document containing the complete chain of ownership and historical liens. 

A comprehensive title search doesn’t stop there. Since abstracts can be incomplete or contain erroneous information, title searchers rely on other sources, such as local tax records, previous owners’ wills, and past court judgments.

Curing or Resolving Problems

Title insurance policies also cover the cost of resolving or “curing” most title problems uncovered during the search, which insurance professionals call “defects.” Common title defects include:

  • Liens for unpaid property taxes, known as tax liens
  • Construction liens — also known as mechanics’ liens — for unpaid construction, renovation, or repair bills
  • Liens for other unpaid debts that used the home as collateral
  • Court judgments, such as a post-divorce judgment awarding part of the property to a former spouse

Old liens or judgments don’t necessarily jeopardize the sale. But in rare cases, the title search does uncover egregious problems with the title that make it difficult to proceed. 

For instance, the title searcher might discover the seller doesn’t really own the property and thus doesn’t have the right to sell it or that a previous deed transferring the property was forged and the true owner can’t be located. 

In such cases, the lender could refuse to issue a mortgage on the property and force the buyer to walk away.

Finally, title insurance policies cover future costs arising from title disputes. For example, if you have a valid title insurance policy, you won’t have to pay out of pocket when a building contractor stiffed by the previous owner sues you.

In the rare event a court rules the most recent transfer of the property was invalid, your title insurance policy compensates you for any loss of equity in the property. That might occur if it’s discovered a previous owner deeded the property to a third party in a previously undiscovered will, for example.

A title insurance policy’s coverage limit is usually equal to the property’s assessed value when the policy is issued. The lender’s appraisal sets that value.

Types of Title Insurance

Title insurance comes in two basic forms: lender policies and buyer policies. 

As the buyer, you’re generally responsible for paying the full cost of both policies. That expense is one of many closing costs. However, in a buyer’s market, you may be able to work out a cost-sharing arrangement with the seller or even convince them to cover the entire cost.

Either way, each policy type works slightly differently. 

Owner’s Title Policy

Also known as an owner’s title policy, a buyer’s policy protects your ownership interest as the buyer and future property owner. That interest increases with time, which means your financial liability for any title issues also increases with time. 

Owner’s title insurance is not mandatory. However, the cost is a fairly small share of total closing costs, and going without it could have serious financial consequences, so it’s worth the investment.

Your owner’s policy remains in force for as long as you own the property, even after you pay off your mortgage. 

Lender’s Title Policy

Also known as loan policies, lender policies protect the mortgage lender’s interest in the property, which usually decreases over time. For this reason, they tend to cost less than buyer’s policies.

Lender policies remain in force for the entire life of the loan or until you refinance the loan, at which point the lender obtains a new policy.

How Much Does Home Title Insurance Cost?

Like other types of insurance, title insurance policies wrap their fees into a single charge called a premium. Unlike most other types of insurance, title insurance premiums don’t recur every month or year. You pay them all at once during closing.

Some of the factors that affect title insurance premiums include:

  • The value of the property — typically, more expensive properties have higher title insurance costs
  • The amount of work necessary to maintain accurate, up-to-date information on the covered and adjacent properties
  • The amount of work necessary for the title search and examination
  • The amount of work required to cure any defects or adverse interests uncovered by the title search
  • The expected cost of compensating the insured parties for any title defects

The average title insurance policy carries a one-time premium of about $1,000, which covers all upfront work and ongoing legal and loss coverage. However, premiums vary substantially. They can range from less than 0.5% to more than 1% of the purchase price.

State regulation also plays an important role in title insurance premiums. Some states tightly regulate the industry, severely limiting how title insurers can structure their policies and how much they can charge.

In other jurisdictions, title insurance regulation is lighter, and insurers have more leeway to set rates. For example, Wisconsin allows title insurers to follow a “file-and-use” standard, where they can change rates on the fly as long as they notify the state within a set time frame.

Do You Need Title Insurance Coverage?

You’re not required by law to purchase an owner’s title insurance policy. In that sense, you don’t “need” owner’s title insurance.

But choosing not to buy title insurance for yourself could be a very costly mistake. There’s a reason your lender has title insurance. It has seen far too many examples of title issues causing serious financial hardship for homeowners and doesn’t want any part of them.

Without title insurance, you could be held liable for old liens, fines, and other debts attached to the property. Yes, even if the owner who was supposed to pay them is long gone. As the current owner of record, it falls to you to make the creditor whole.

If you’re not able to pay old debts that come to light, you risk losing the property to foreclosure. That’s most commonly for unpaid property taxes, which can be hefty. If you can’t pay the bill for back property taxes and can’t work out a payment plan, the city or county could seize your property and sell it in a tax foreclosure auction.

How to Choose the Right Home Title Insurance Policy

You’ll receive a title insurance recommendation at some point during the underwriting process. Depending on how real estate transactions work in your state, this recommendation might come from your mortgage lender, title agent, real estate agent, or real estate attorney.

Title insurance costs and policy terms rarely vary much between insurers operating in the same jurisdiction. And purchasing title insurance is just one of many things you must do to close on a mortgage loan, so you might feel tempted to act on this recommendation without a second thought.

But you don’t have to. A federal law known as the Real Estate Settlement Procedures Act prohibits anyone from forcing you to use a particular title insurance company. As a real estate buyer, you always have the option to shop around for an owner’s title insurance policy and choose the provider that best fits your needs. You can’t shop around for a lender policy, though.

Because title insurance is so standardized, the most important factor to consider when shopping for an owner’s policy is price. The first closing estimate you receive from your lender should include a line item stating the estimated total cost of your owner’s policy. That’s your number to beat — you want a cheaper policy.

To find that policy, search online using terms like “owner’s title insurance policy in [your state].” Visit each provider’s website and look for pricing information. If you’re lucky, you’ll find actual prices listed on the site, but don’t be surprised if you don’t. A quick phone call should get you a ballpark estimate. 

If you’re buying lender’s insurance and owner’s insurance from the same company, ask about a bundle discount. They won’t necessarily offer one unless you ask. And if the seller bought the home less than 10 years earlier, ask the title company for a reissue rate — basically, an extension of the seller’s current policy.

Once you have several quotes, choose the lowest one. Make sure the policy you end up selecting covers a full title search, defect curing, and future legal expenses. 

Final Word

Title insurance doesn’t come cheap. Depending on factors like where the property is located, how much it’s worth, and how many times it has changed hands over the years, your owner’s title insurance policy could cost anywhere from less than 0.5% to more than 1% of the purchase price.

Add in the lender’s title policy, which is typically cheaper but by no means free, and you’re looking at a sizable addition to your closing costs.

But does that mean title insurance is a bad deal? Hardly. It’s a drop in the bucket compared to the total cost of homeownership, and the protection it provides is potentially invaluable. Though title issues are relatively unlikely to arise on any given property, title insurance ensures you’re not financially liable for past debts or legal expenses related to those issues. 

And in a worst-case scenario, title insurance could mean the difference between staying in your home and losing it to foreclosure. 

When you put it that way, home title insurance sounds like a bargain.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com

How to File a Homeowners Insurance Claim (After a Loss)

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If you have a mortgage, it’s very likely you also have an active homeowners insurance policy. Virtually all mortgage lenders require borrowers to carry home insurance, which helps protect the value of their investment — and yours.

You might not think much about your policy. The typical homeowner goes many years without filing a home insurance claim and some never have to. But it’s nice to know your policy is there when disaster strikes.

But insurance companies don’t just send you money when something goes wrong. That’s why it’s important to know what you should expect if and when the time comes to file a claim.

How to File a Homeowners Insurance Claim

Homeowners file home insurance claims for all sorts of reasons, from physical damage caused by storms or fires to monetary losses caused by theft or burglary to injuries sustained by guests on the premises. 

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The details of the claims process depend on what happened along with factors specific to the property insurance company. But if you follow this step-by-step guide, you can easily file and manage a homeowners insurance claim. 

1. File a Police Report (if Applicable)

If you have reason to believe you’re the victim of a crime, file a police report as soon as you become aware of it. Common crimes involving residential property include:

  • Vandalism
  • Arson
  • Burglaries and break-ins
  • Home invasions
  • Theft of personal property

To file the report, call your local police department’s nonemergency phone number or visit its website and look for an option to report a crime online. Only if the crime is still in progress or you believe there’s an ongoing threat to your safety should you call 911.

You must provide official identification, such as a driver’s license number, and may be required to visit the police station in person. Expect to meet a police officer or detective at your home as well, as they’ll need to document the damage. Get the name and badge number of every investigator on the case — the insurance company might need this information later.

Don’t clean anything until they tell you it’s OK to do so. And don’t be surprised if it takes them a few days to get to you, especially if you live in an area where property crime is relatively common.  

Don’t file a police report if your home sustained damage in a natural disaster such as a storm, wildfire, or flood. You should only involve the police if you’re the victim of a person or group of people acting maliciously or negligently.

2. Contact the Insurance Company

Next, contact the insurance company or your insurance agent to begin the claims process. 

Most insurance companies make it easy to file straightforward claims online. Expect to work through a claims representative or your insurance agent for more complicated or high-value claims. 

If you’ve set up an online account with your insurance company, log in and look for a Claims tab or button. It should point you in the right direction — either to the digital forms you’ll need to complete or submit or to a phone number you can call to start the process.

During your initial conversation with the insurance company representative, ask:

  • Whether the claim is likely to be covered by your policy based on your description
  • For a rough estimate of the claim value
  • By when you must file the claim
  • What they need from you to process the claim, including any repair cost estimates

3. Document the Damage

If you filed a police report, ask your contact at the police department if you can use the photos and notes they took at your property. 

If you didn’t file a police report or you have trouble getting photos and detailed notes from the department, do the following:

  • Take as many photos as possible of the damage
  • Make a detailed home inventory of damaged, destroyed, or missing items
  • Write up a detailed summary of what happened to the best of your recollection

Even after documenting the damage, don’t clean anything up or make any cosmetic repairs until an insurance company representative visits the property or tells you it’s OK to tidy up. Otherwise, they might not get a complete picture of the damage and might lowball your payout.

4. Make Temporary Repairs Only if Absolutely Necessary

There are two exceptions to the don’t-clean-up rule. If either applies, make temporary repairs as soon as you’ve finished documenting the damage.

First, if the property is unsafe due to structural damage or other hazards, hire an engineer to recommend repairs and a building contractor to execute them. You might need to relocate temporarily to a hotel or short-term rental until they complete the repairs.

Second, if not repairing the damage would make it worse, do whatever’s necessary to stabilize things. For example, if your roof is open because a tree limb crashed through it, remove the limb and replace that section of the roof before the next rainstorm — or at least fit a tarp over the hole so it doesn’t leak. Any amount of water coming into your home’s living area will cause further damage and increase your total repair costs.

Keep all invoices and receipts associated with these repairs, even if you do the work yourself. You can include them with your claim and may qualify for reimbursement.

5. Submit the Claim

Next, complete your insurance claim. Fill out a proof-of-loss form — the claim form — and provide:

  • Details about what caused the loss
  • The part or parts of your home damaged if it’s not a total loss
  • An inventory of the personal property damaged, destroyed, or stolen
  • The estimated value of the loss or damage
  • The police report if you have one
  • Photos or video of the damage
  • Receipts for costs incurred before the company approved your claim, including for emergency repairs and additional living expenses

If the claim has a liability component — say, a guest or worker sustained a serious injury on the property — include additional documentation like:

  • Any medical records related to the claim, such as itemized medical bills 
  • Any legal records or correspondence related to the claim, such as letters from attorneys representing people injured on the property
  • Contact information for third parties involved in the claim, such as health care providers and lawyers

Submit everything through your insurance company’s online claims portal, by fax, or by mail. If you still owe money on your mortgage, notify your mortgage servicing company of the claim. They might want to hold the payout in escrow while your home is being repaired and could be entitled to keep a portion of it. 

6. Prepare for the Insurance Adjuster Visit

Most home insurance claims require a site visit by an insurance claims adjuster. That’s the person who confirms the damage or loss occurred, determines how extensive it is, comes up with a more precise estimate of the value, and confirms it’s covered by your policy.

If the damage is confined to a single part of the home or property and is clearly visible from the outside, you might not need to be around when the adjuster arrives. But if they need to enter your home or inspect less obvious signs of damage, you must be on-site. They might ask you to be there anyway, as there’s a good chance they’ll want to interview you in person.

Before the adjuster arrives, do the following:

  • Write your story in note form to ensure you have clear, truthful answers during the interview
  • Organize photos and videos of the damage in case the adjuster misses anything 
  • Make notes of specific damaged items or parts of the home you definitely want the adjuster to see
  • Write down any questions you have about the process so you can ask them in person

7. Get Repair Estimates

Once the adjuster confirms the damage is covered and gives you an estimate of its value, get repair estimates from local contractors. Look for contractors that:

  • Are licensed in your home state for the type of work you need done
  • Are adequately bonded and insured — ask the contractor for their insurance company’s name and call them to ensure the contractor has a paid-up policy 
  • Accept payments from home insurance companies, as your insurer might insist on paying part of the settlement directly to the contractor
  • Have good reviews from previous clients and few or no complaints with customer protection organizations like the Better Business Bureau

Get at least three quotes for each repair job. Don’t automatically go with the lowest estimate — you want the job to get done right the first time. However, ensure the total value of all repair estimates is comfortably below the estimated settlement amount your adjuster gave you. If the cost of the job increases due to hidden damage or higher-than-expected costs for labor or materials, you could end up spending more than you get from your insurer.

8. Track the Claim & Follow Up

After submitting the claim, use your insurance company’s online claim tracking tool to monitor its progress. You should be able to access this tool through your online account. If you don’t have one, now is a good time to set one up. 

Follow up with the claims department if you don’t see any progress on your claim for several weeks. Most states require insurers to approve or deny claims within a certain period after filing, typically 30 to 40 days.

Respond promptly if the insurance company contacts you by phone, email, or snail mail. They might need more information to process your claim, and failing to respond could delay processing or even result in a denial.

9. Review the Settlement Offer

If your home insurance claim is approved, your insurance company will present you with a settlement offer. This is a proposed payout based on the assessed value of the damage and the cost of repairs necessary to bring the property back to its previous condition.

If you feel the first settlement offer is fair, tell the insurance company you accept it and prepare to receive the payout. If you believe the offer is too low, you can contest it. 

Your chances of getting a higher offer will be much better if you can provide repair estimates from licensed contractors and show that the insurer’s offer isn’t enough to cover the rebuilding costs.

If the insurer continues to lowball your settlement offer, you can hire a public adjuster. This is an independent insurance adjuster whose job is getting you the best possible settlement, not saving the insurance company money. They negotiate with the insurance company on your behalf and advocate for a higher payout.

But a public adjuster doesn’t come cheap. They’ll most likely charge a percentage of the total insurance payout — typically between 15% and 30%, with the proportion declining as claim value increases. For bigger claims where the insurance company’s initial offer was insultingly low, you’ll probably recover this cost and then some. For smaller claims, hiring a public adjuster might not be worth it.

10. Receive the Payout & Make Repairs

Once you’ve accepted the settlement offer, figure out how the insurance company plans to pay it.

For simple claims that involve straightforward repairs, expect the insurance company to cut you a check or execute an electronic transfer for the full balance of the payout. It’s your responsibility to put that money toward repairs and other expenses stemming from the incident.

If your claim is larger or requires complicated repairs, you won’t receive a lump sum for the full payout. 

If you paid for temporary repairs or paid out of pocket to live somewhere else because your house was unsafe, expect a direct payment for part of the claim value. The insurer might even issue this payment before your claim is officially approved.

If you still have a mortgage, the lender is entitled to a portion of your payout. Expect them to hold their portion in an escrow account you or the repair contractor can draw on to pay for repairs as needed. If you live in a condo or co-op, your community manager or homeowners’ association may do the same.

Alternatively, your lender or homeowners association may simply review and approve the proposed settlement amount, clearing the insurance company to send it to you. If that’s the case, you won’t need to go through an escrow account.

The insurer should also send you a portion of the payout directly. You can use it to cover repair costs without going through the escrow account or getting lender approval.

Ensure you understand how the insurer plans to divide your payout and when you can expect each installment. You don’t want contractors to add late payment fees to your already-hefty repair bills or place a lien on your house because you didn’t have enough money to pay them.

What to Do If Your Homeowners Insurance Claim Is Denied

What happens if the insurance company denies your claim? You have options. 

Start by reviewing your claim and insurance policy. It’s possible you missed an exclusion in your policy that clearly rules out the type of claim you made. If that’s the case, the denial is probably legitimate, and you might not have recourse.

If your insurer sent a letter or digital message explaining why it denied your claim, read it carefully. The message should explain the company’s reasoning in plain English and offer clues as to what you can do to get the company to reconsider. If you’re unclear on anything in this letter, call the insurance company’s claims department and ask them to review your file.

If your homeowners insurance policy covers the issue that prompted the claim, it’s possible the insurer denied it because you didn’t provide clear evidence of damage or loss. More or better photos and videos of the damage or more supporting documentation related to a liability claim might be enough to get the insurer to reconsider.

Home Insurance Claim FAQs

If you still have questions about filing a home insurance claim and working through the home insurance claims process, this quick list of frequently asked questions can help.

How Long Does the Home Insurance Claims Process Take?

It depends on how complicated the claim is. Many states require home insurance companies to approve or deny claims within a certain period, often 30 to 60 days. Simple claims can take just a few days to approve.

Insurers typically make the first payment within 30 to 60 days of approving a claim. Depending on the amount of repair work required, further payments might not come for weeks or months. The last payment for a total rebuild might not come for a year or two.

Does Home Insurance Cover Temporary Living Expenses?

Yes, provided your policy specifically says they are. Look for references to “loss-of-use coverage” or “Coverage D,” depending on the insurer. 

Most policies include loss of use coverage. If you’re unsure your policy covers temporary living expenses, review your policy documents or call your insurance company to confirm. 

If you don’t have it yet and don’t want to pay out of pocket for temporary housing, consider adding it before you actually need it. Doing so will raise your premiums a bit, but you’ll be protected if your house becomes uninhabitable for a time. 

Will Filing a Claim Affect My Home Insurance Rate?

Probably. It’s possible your policy allows you a mulligan — that is, it ignores the first claim on the policy when recalculating your rates. Check your policy documents to see if you’re so fortunate.

Otherwise, expect your premium to increase after you file a claim. How much depends on the type of claim you file and your previous claims history.

Insurers are more forgiving of one-off claims and weather-related claims homeowners can’t control. They’re less forgiving of claims related to burglary, theft, and property damage caused by guests. 

They especially frown on liability claims arising from unsafe conditions at your property. In fact, it’s common for insurers to drop homeowners who file liability claims. And your premiums may increase by more for subsequent claims than for the first one made on your policy.

Can I Keep Any Leftover Payout Funds After I Make Repairs?

Often, yes. But some caveats apply:

  • Restrictions Written Into the Policy. Many home insurance policies don’t expressly prohibit homeowners from keeping unused settlement funds. But some do. If yours does, you must return the balance to the insurer once an inspector approves the repairs.
  • Contingent on Inspection. For bigger jobs, expect an adjuster to verify the work is proper and complete. If they suspect you skimped so you could pocket the payout, they may require you to do more work or simply ask for the unused funds back.
  • Funds Withheld or Held in Escrow. You’re not entitled to keep any portion of the payout held in escrow by your lender or withheld by the insurance company pending completion of repair work. If you don’t end up needing those funds, don’t expect to see them.

Final Word

Filing a home insurance claim takes time and can cause considerable frustration. However, it’s often the best way to reduce the financial burden of damage or losses caused by storms, burglars, or unruly guests. If you don’t have an umbrella insurance policy, a home insurance claim might be your best — and perhaps only — protection from a potentially ruinous lawsuit.

However, you shouldn’t file a home insurance claim lightly. Doing so is likely to raise your premiums. Depending on the type of claim, your insurer might even choose not to renew coverage. That could force you to scramble to find backup coverage, likely at a higher cost than before.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com

What Is a Stock Market Benchmark? – How to Measure Index Performance

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When researching investment opportunities or financial markets, you often hear something compared to something called a benchmark. You might see statements like “outperforming benchmark returns” or “lagging the benchmark.” 

Based on context, we can surmise that these terms mean an investment is performing better or worse than something, but what exactly is that something? What does a stock market benchmark mean for the average investor? 

Find out what benchmarks are and how you can use them to your advantage when investing.

What Is a Stock Market Benchmark (Index)?

A stock market benchmark, sometimes called a market index or benchmark index, is a carefully selected group of stocks meant to measure the overall performance of a group of equities or the market as a whole. Benchmarks are used as a standard or baseline against which specific investments or a portfolio’s performance can be measured.

You own shares of Apple, Amazon, Tesla. Why not Banksy or Andy Warhol? Their works’ value doesn’t rise and fall with the stock market. And they’re a lot cooler than Jeff Bezos.
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History of the Stock Market Benchmark

The first market index was created by Charles Dow and Edward Jones in 1884. The index was called the Dow Jones Transportation index and tracked the performance of the large railroad companies that were seen as a reflection of the United States economy at the time. 

That index evolved to become one of the best-known benchmarks, the Dow Jones Industrial Average, which today includes 30 of the largest industrial companies that represent the U.S. economy.  

Another classic market index was created by the Standard Statistics Company in 1923. Within a few years, the company developed 90 indexes that would be computed on a daily basis. 

The Standard Statistics Company evolved to become one of the biggest names on Wall Street: Standard & Poor’s, or S&P. Through a merger, the company’s name recently changed once again to S&P Dow Jones Indices. The company’s flagship index, the S&P 500 composite, is the most widely used benchmark in the U.S. today. 

Types of Benchmarks

Over the past century or so, benchmarks have become a crucial part of the complex machine that is the stock market. However, it’s important that you use the appropriate benchmark for what you plan to measure and compare — more on this later. 

There are several types of benchmarks investors use, each measuring different market segments. The most common types of benchmarks are:

Market Capitalization-Focused

The central theme to some indexes is market cap, or size of the constituents listed within it. There are four primary types of market-cap-focused indexes:

1. Blue Chips

A blue-chip benchmark is designed to track the results of the largest, most successful companies on the market. These companies are known for producing relatively predictable gains and revenue growth. 

The flagship blue-chip index in the United States is the Dow Jones Industrial Average. The Dow tracks 30 of the largest and most successful publicly traded companies in the U.S. 

2. Large-Cap

Large-cap stocks represent companies worth $10 billion or more. These are some of the largest companies in the world and tend to be leaders within their respective industries. Large-cap indexes list a diverse group of stocks in this category, tracking and measuring the performance of very large companies. 

The most popular large-cap index is the S&P 500, which tracks the 500 largest publicly traded companies in the U.S. It represents around 85% of the country’s total market cap.  

3. Mid-Cap

Mid-cap stocks represent companies worth between $2 billion and $10 billion. These companies tend to be just finding their footing in their respective industries. They’re not quite as predictable as large-cap stocks, but offer the potential for meaningful growth as these companies continue to grow and evolve. 

Mid-cap indexes are made up of a diversified list of these companies, giving investors the ability to track the performance of mid-sized companies. 

One of the most popular benchmarks in this category is the Russell Midcap Index, which is made up of the 800 smallest companies on the Russell 1000. 

4. Small-Cap

Small-cap indexes include stocks representing companies worth between $500 million and $2 billion. 

These companies are often in the beginning to intermediate stages of business, or may be experienced players in relatively small markets. A small-cap benchmark shows investors how smaller publicly traded companies are faring.

One of the most popular small-cap indexes is the S&P 600, the small-cap index also maintained by Standard & Poor’s that includes 600 smaller U.S. companies.. 


There are several sectors across the stock market. Some of the most popular include technology, biotechnology, energy, and consumer goods. Each sector is represented by a long list of benchmarks. 

One of the best examples of a sector-focused index is the Nasdaq. Known as a tech-heavy index, a large percentage of its constituents are within the technology and biotechnology sectors. 


Some indexes have a central focus on an investment strategy. These usually fall into one of the following categories:

  • Growth Stocks. Growth-focused indexes track a diversified group of stocks known for producing compelling revenue, earnings, and price growth. One of the most popular in this category is the Russell 3000 Growth Index. 
  • Value Stocks. Value-focused indexes track a diversified group of stocks that are believed to be undervalued when compared to their peers. Investors believe that by investing in these stocks, they’ll outperform the market as the stocks recover from recent lows. One of the most popular in this category is the S&P 500 Value Index. 
  • Income Stocks. Income-focused indexes track stocks known for paying the highest dividends. One of the most popular benchmarks in this category is the S&P 500 Dividend Aristocrats. 

Asset Class Focused

Stocks aren’t the only asset class on the market, nor are they the only class of assets with a benchmark index to track them. Indexes exist to track bonds, commodities, futures, and more. If it’s an asset class, there’s likely an index that covers it.

A great example of indexes in this category is the S&P U.S. Treasury Bond Index, which tracks the performance of a highly diversified group of bonds issued by the U.S. Treasury.  


Risk-focused indexes are largely used to determine the level of volatility and variability in the market, helping investors understand what they’re up against in the battle between the bears and bulls. 

One of the most popular risk-focused indexes is the CBOE Volatility Index (VIX). 

How to Use a Benchmark

Benchmarks have become incredibly valuable tools for investors. Here are the different ways to use them:

Index Investing

With so many people tracking benchmark indexes, it was only a matter of time before they were used as investments themselves. These days, there’s a long list of index funds, which are mutual funds or exchange-traded funds (ETFs) that make investments that track the movement of an underlying index. These funds are based on an underlying index instead of the investment decisions of a fund manager. 

The index investment strategy (indexing) is centered around investing in these funds. Individuals investing in a benchmark index’s performance benefit greatly from heavy diversification. Indexing removes much of the research and decision-making from the process of managing investment portfolios. Index investors know the fund’s performance is likely to be very similar to that of the underlying index. 

Measure Portfolio Performance

Another common use for benchmarks is to measure the performance of your investment portfolio. All you need to do is compare your portfolio’s performance to the appropriate benchmark to see how well you’re stacking up. 

For example, if your portfolio is tech-heavy, consider comparing your performance to that of the Nasdaq. If your portfolio is outpacing the index, you’re in good shape. If it’s underperforming a comparable benchmark, it’s time to adjust your holdings because there’s more money to be made elsewhere. 

Gauge Economic Performance

Stock market indexes aren’t just a tool for understanding the performance of different segments of the market. Widespread benchmarks that focus on the market as a whole also tell you quite a bit about the state of the economy. 

After all, the economy and equities market are closely correlated. 

When economic conditions are good, stocks tend to be up. Conversely, when economic conditions look grim, stocks tend to be down. Paying attention to the movement in the largest flagship benchmarks for any economy will paint a picture of that economy’s health. 

Gauge Market Performance

The stock market is known for moving through a series of peaks and valleys. Benchmarks can be used to give you a clear picture of the market and market sentiment. 

In the U.S., the best benchmark for this is the S&P 500 index. That’s because the index lists 500 of the largest publicly traded companies in the U.S., representing 85% of the country’s market cap. 

With such a large representation of the domestic market, when the S&P is up, you can safely assume that stocks are generally trending in the upward direction, and vice versa. 

Measure Historical Performance

History tends to repeat itself. Although past performance isn’t always indicative of future results, the world’s most successful investors often use historical performance as a way to predict the returns they may generate. 

Tracking benchmarks throughout history gives you an idea of how the index has performed over time, the levels of volatility generally experienced, and the risk and reward associated with investing in the section of the market measured by the index.  

Determine Market Timing

Warren Buffett famously told investors to buy when fear is high and sell when greed sets in. Benchmarks can tell you when those emotions are taking hold in the market. 

CNNMoney created the Fear & Greed Index to help investors measure market sentiment when determining the best time to buy and sell stocks. Many other benchmarks can also be used to determine market sentiment to help you decide when to make your moves. 

Final Word

Stock market benchmarks have been around for more than a century and have proven to be valuable tools for investors and economists alike. Whether you compare your portfolio to a benchmark during rebalancing or invest directly in index funds, these tools are integral in the search of stock market success. 

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.

Source: moneycrashers.com

Why a Pension Lump Sum Option Is Better Than an Annuity Payment

Often, the decision to take a pension annuity option over an available lump sum option rests on which option provides the greatest income. And that makes perfect sense if all of the other factors relating to this decision are excluded from the due diligence process.

But when considering all the factors that accompany this decision, whether to take a pension annuity option over an available lump sum option becomes more about control than it does the amount of the payment.

The Problems with Pensions

Today we are seeing fewer pensions than we did 20 years ago, and there is a reason for this downward trend.  The truth is that pensions are facing systemic problems, which is why we see private sector companies replacing these defined benefit plans with defined contribution plans, such as 401(k)s.

There was a time when employees worked until they could no longer physically do their job, and when they retired they died shortly after. What we see today is employees retiring much sooner in the cycle and living longer, which translates to significantly higher pension costs that are simply unsustainable.

Speaking of sustainability, historically pensions have used 4.5% to 7.5% to calculate their projection of benefits and with interest rates far below this range, it goes a long way in improving the optics of the plans, but does very little to change their actual solvency. 

Interest rates have been far below these percentages for decades and when you couple that fact with a projected 10-year benefit period you can see how the math appears great on paper. But the reality is that if someone retires in their 50s (which is most often the case when a pension is involved) and live well into their 70s and 80s, you can see that 10-year estimates are short of reality.

Nearly 1 million working and retired Americans are currently covered by pension plans that are in imminent danger of insolvency, according to a 2017 Daily News article.

So, what happens if a pension is unable to pay its promised benefits? According to The Heritage Foundation, the Pension Benefit Guaranty Corporation (PBGC), which is similar to the FDIC, found that for a promised benefit of $24,000 a year, they are insured only up to $12,870. 

To compound the problem, this insurance has the same problem as the FDIC. The FDIC has billions in reserves but has exposure to trillions of dollars in banks accounts.  The same issue exists within the PBGC. The promise of insurance benefits is not mathematically supported. If PBGC goes insolvent, that $12,870 promise is really only able to cover $1,500 under the insurance benefit.

The concern here is that when you retire and are relying on an annuity payment from a pension, you are placing a lot of trust in the pension calculations. And if the calculations are off, there is not enough insurance to recover the loss.

A Lump Sum Gives You More Control of Your Assets

I began this article by suggesting that the decision to take a pension annuity payment over an available lump sum option often rests on which option provides the greatest income. But when you add it all up, the decision to accept a lump sum offer is more about controlling and preserving your future income sources than it is the annuity payment you are promised from the pension.

Now, I am not suggesting that all pensions are destined to go broke, but there should be consideration for this possibility when structuring your income sources that are designed to sustain you for the rest of your life.

By accepting a lump sum from the pension, you gain the control over your income assets.  Even if the income generated from the lump sum is less than the promised annuity payment from the pension, you gain control over the assets.

Even without the risk of a default, this lump sum option is a significant factor when you consider the following:

  • Your income needs can fluctuate in retirement, and the control of the assets backing your income gives you flexibility to meet your income needs.
  • You’re in a better position to take care of your spouse if you were to predecease them by owning the assets and leaving them behind for your spouse to continue to receive income.
  • Your heirs can be the beneficiary of the assets after you and your spouse pass when a pension is guaranteed to disinherits your heirs since it doesn’t pass to your children. In some cases, a child could receive a vested portion of the pension not already paid out. 
  • You have access to the assets if there comes a time in your life when you may need cash, and having control over the assets grants you that option.

If You Must Go with an Annuity, Single-Life Option Gives You More Control

Of course, not all pensions have a lump sum option, which means you have no choice but to accept an annuity payment.  If that is you, there are a few things to consider before selecting your irrevocable annuity option.

As with a lump sum, the idea is to move as much into your control as possible. It can be tempting to accept a reduced benefit to support a spouse or loved one after your passing, but this option only hands more control over to the pension.

A single-life annuity option is often your highest monthly benefit, and it is the quickest way to get the most from the pension in the shortest period of time. The downside to electing this option is that it can leave your spouse with an income shortage because payments would stop after your passing. That is why if you are married and choose to make this election, your spouse must sign off on that decision.

So, you have two options to protect your spouse:

  • You can buy insurance outside of the pension. With this option you would accept the single-life benefit, taking the highest annuity payment and then paying a premium to an insurance contract that would pay a lump sum to the surviving spouse or children if you predecease them. This approach also gives you the flexibility of canceling the policy if circumstances change and the benefit is no longer needed.
  • Or you can buy insurance through the pension. In this case you would go for a joint-and-survivor annuity, electing to take a reduced annuity payment in exchange for the benefit to continue to your spouse if you were to predecease them. Essentially, you are paying for the insurance with your lower benefit amount. It is worth mentioning that this benefit only has one beneficiary, so it would disinherit the children if you choose this option.

The Hidden Costs of a Joint-and-Survivor Benefit

One important factor when going with a joint-and-survivor annuity is the cost of buying the insurance through the pension.  Of course, you have premiums in either scenario but when purchased within a pension there are unique circumstances that most people completely overlook.
If your pension has a cost-of-living adjustment built into it, you should recognize that because a joint-and-survivor benefit is lower, it will receive a smaller cost-of-living increase than a single-life benefit would, which means that the difference between what the maximum benefit and the reduced benefit would be compounds over time. That translates to an ever-increasing cost for the insurance against inflation.

A quick example of this: Say you have a maximum benefit of $5,000 per month with a single-life annuity, and a reduced benefit $4,000 per month with a joint-and-survivor annuity. That leaves you with a monthly cost for the insurance of $1,000 per month. When you factor in a cost-of-living adjustment of 3%, that is 3% on the benefit being received. So 3% on $5,000 would be $150, whereas 3% on $4,000 would be $120, a difference of $30 per month. This income gap compounds over time. Projected out over 20 years, the gap grows to over $1,800 per month.

And if that wasn’t enough of a reason to not buy the insurance from the pension, consider the fact that the longer the pension recipient lives, the fewer years the spouse is receiving the insurance from the pension.  When you think about this, buying the insurance from the pension means that you are accepting an arrangement where you are paying an ever-increasing monthly premium for a decreasing benefit.

And unlike a life insurance policy purchased outside of the pension system, this pension insurance for the spouse only extends to your spouse, unless you were to choose a child as the beneficiary.

Be Careful

Now, if you go with a single-life annuity and choose to purchase the insurance outside of the pension system, it is critical that the type of policy you purchase and the amount of insurance obtained are in alignment with what you need to protect your family.  One misstep in this process can leave your policy at risk of lapsing or expiring, leaving your spouse vulnerable to a significant income gap.

To download my free guide that will take you through the process of determining benefits and the type of life insurance best suited for protecting the benefits, visit www.thepensionelectionguide.com.

Benefits and guarantees are based on the claims paying ability of the insurance company.

Securities offered through Kalos Capital Inc., Member FINRA/SIPC/MSRB and investment advisory services offered through Kalos Management Inc., an SEC registered Investment Advisor, both located at 11525 Park Wood Circle, Alpharetta, GA 30005. Kalos Capital Inc. and Kalos Management Inc. do not provide tax or legal advice. Skrobonja Financial Group LLC and Skrobonja Insurance Services LLC are not an affiliate or subsidiary of Kalos Capital Inc. or Kalos Management Inc.

Founder & President, Skrobonja Financial Group LLC

Brian Skrobonja is an author, blogger, podcaster and speaker. He is the founder of St. Louis Mo.-based wealth management firm Skrobonja Financial Group LLC. His goal is to help his audience discover the root of their beliefs about money and challenge them to think differently. Brian is the author of three books, and his Common Sense podcast was named one of the Top 10 by Forbes. In 2017, 2019, 2020, 2021 and 2022 Brian was awarded Best Wealth Manager, in 2021 received Best in business and the Future 50 in 2018 from St. Louis Small Business.

Source: kiplinger.com

What Is a Moving Average (SMA & EMA) in the Stock Trading World?

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Price action happens fast in financial markets. One minute a stock price may move up, then the next minute it’s heading down. However, most investors pay little mind to the short-term fluctuations in prices. 

But how do investors weed out the noise of short-term volatility in market prices? Many use measurements called moving averages to spot longer-term trends. 

Read on to find out what a moving average is and how you can use this technical analysis tool to improve your investment returns. 

What Is a Moving Average (MA)?

A moving average is a statistical calculation for measuring long-term trends in the stock market. Moving averages smooth the choppy up and down movement the market is known for, making it easier for you to visualize trend direction and strength on a financial asset’s chart. 

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In financial markets, moving averages are used to create a constantly updated average price with closing prices as the central data points. The moving average is a lagging indicator because it uses past prices to determine a trend, rather than trying to predict the future as a forward-looking indicator would. 

How Does a Moving Average Work?

Moving averages work by plotting average prices over a period of time on a chart. Although most interactive charts can do the calculations and plot the moving average for you, it’s important that you understand how these calculations work. 

The moving average starts with the first set of closing prices over the period’s time frame. With each day that passes, the oldest closing price in the average is dropped off and the newest price is added in. 

For example, a 30-day moving average plots the average price over the past 30 days on the chart. This is calculated by adding the closing prices for the past 30 days together and dividing the total by 30. Then, at the close of each trading session, the closing price from the first day of the average is removed and the new closing price is added in. A line plotting these data points represents the moving average.

Check out Apple’s three-month stock chart below, complete with its 30-day moving average drawn in purple:

(Chart courtesy of Yahoo! Finance)

The blue line that tracks the stock’s day-to-day price movements fluctuates rapidly, making it difficult to determine a trend. However, the purple line, the 30-day moving average, smooths out these price movements. This shows that Apple’s stock has been moving downward gradually for the past three months. The stock’s recent upward movement has started to pull the 30-day moving average higher again, however, which suggests a reversal of this downtrend may be on the horizon.  

Types of Moving Averages

There are two different ways to calculate moving averages. Moreover, the time frames used in the calculations make a difference in the data the moving average yields. 

Simple Moving Average (SMA)

The simple moving average (SMA) is the easiest average to calculate. The SMA is made up of the raw price movement data, giving each day in the average an equal weight. The simple moving average plots the mean of price data over a predetermined number of days, with each closing price having an equal importance to the calculation. 

Exponential Moving Average (EMA)

The exponential moving average (EMA) uses the same information but gives more importance to the most recent price data. The calculation for the EMA is a weighted average calculation because of the emphasis it puts on the most recent data.  

This weight is created using a multiplier on the most recent price in the dataset. Multipliers in EMAs are determined using the following formula:

(2 ÷ (Time Frame +1) = Multiplier 

So, for a 30-day EMA multiplier:

(2 ÷ (30 +1) = 0.0645

Multiplying the most recent price by the multiplier puts more emphasis on the most recent data. This results in an EMA that’s higher than the SMA when the most recent stock prices are up and lower when prices are down. 

Take a look at the Apple chart below. The blue line is Apple’s stock price, the 30-day EMA is drawn in red, and the SMA appears in purple.

Notice how the red line (the EMA) reacts to movements in the stock price faster than the purple line (the SMA) does. This sensitivity makes it easier to catch recent price trend reversals by looking at EMA. 

Short-Term vs. Longer-Term Moving Average

The time period covered by the moving average makes a difference as well. Short-term moving averages show short-term trends, while long-term averages signal long-term trends. Oftentimes, investors and traders alike use a mix of short- and long-term averages as indicators that let them know when to jump into or out of an investment. 

Why Use Moving Averages?

There are two reasons investors and traders alike use moving averages:

Most financial markets are volatile in nature. That’s because these markets depend on supply and demand for price movement. When there are more buyers than sellers, the prices of assets rise, and when there are more sellers than buyers, the prices of assets fall. 

With high levels of volatility in financial markets, it may be difficult to determine the direction of a trend and when that trend is making a reversal. Moving averages help investors weed out the noise of short-term price changes and focus on the overall trend at hand. 

To Find Entrance and Exit Signals

Choosing the best time to enter or exit a financial position is one of the most challenging aspects of participating in financial markets. Moving averages help make decisions to enter or exit an investment more simple. 

Professionals use moving average oscillators and crossovers (described below) as signals that determine when they should buy or sell an asset. For example, when a short-term moving average crosses over a long-term moving average, the action acts as a buy signal that suggests it’s time for investors and traders to dive in. 

How to Use Moving Averages

Moving averages are an important part of technical analysis. They make up multiple key indicators that signal when to buy and sell assets. Here’s what you need to know when using these tools. 

Using Simple Moving Averages vs. Exponential Moving Averages

The exponential moving average is far more responsive to price movements because of the heavy weighting placed on the last piece of data in each dataset. This comes with advantages and disadvantages. 

Trends are easier to read when using a simple moving average because it’s less responsive to price movements. However, the EMA is more sensitive to price movements, making reversals easier to spot. EMA generally gives buy and sell signals faster than the SMA, making it a perfect tool for a short-term trader. 

Choosing a Time Frame

The time frame you choose when setting up a moving average makes a big difference in the trend that emerges. 

For example, take a look at the chart for Apple stock below. The purple line is a 30-day moving average while the green line is a 10-day average.

As you see, the 10-day average is more uneven than the 30-day average and the two lines cross several times over the course of three months. Here’s how to know when to use one, the other, or both:

  • Short-Term. Short-term averages are best used when investors and traders are interested in making short-term moves in the market. 
  • Long-Term. Long-term averages are best for determining long-term trends. They’re best used by investors who are interested in buying and holding an asset for a while. 
  • Both. Using short- and long-term moving averages together can help to determine the best time to buy and sell assets. When the short-term average crosses over a long-term average, it’s time to buy, and when it crosses below the long-term average, it’s time to sell. 

Advantages of a Weighted Moving Average

The primary advantage of a weighted moving average like the EMA is that it responds to price movement much more quickly than a simple moving average. This sensitivity helps spot reversals more quickly, giving traders an opportunity to act earlier. The ability to tap into trends early gives a trader a leg up in the market. After all, time is money!

Limitations of Using Moving Averages

Moving averages are an important tool for those accessing markets, but there are limitations to consider. The most notable limitations to moving averages include:

  • Purely Technical. Moving averages are technical indicators that derive their data solely from price movement. Investors should also understand the fundamental factors that explain why the movement is taking place and whether it’s likely to continue. 
  • Lagging. Moving averages are lagging indicators. It’s important to keep in mind that past performance isn’t always indicative of future price movements. 
  • Conflicting Signals. Moving averages can point to different trends when they span different periods of time. For example, a 10-day moving average could signal a buying opportunity at the same time the 200-day moving average for the same stock suggests it’s a long-term loser. 
  • Useless In Erratic Markets. When prices jump up and down frequently, it can be hard to determine a trend using moving averages. 

Trading Signals From Moving Averages

Moving averages are used to generate trading signals known as technical indicators. Some of the most common indicators that use moving averages include:


Moving average crossovers happen when a short-term moving average crosses over a long-term moving average. 

When the short-term moving average, called the signal line, crosses above the long-term moving average, it’s a signal to buy the stock. Conversely, when the signal line crosses below the long-term moving average, the crossover is a sell signal. 

Take a look at the chart below — a three-month chart of Apple stock with a 30-day moving average (purple) and a 10-day moving average (orange):

The shorter, 10-day moving average line in orange is the signal line. When the orange line crosses below the purple line, it suggests it’s time to sell Apple stock. When the orange line crosses above the purple line, it’s time to buy. 

In the chart above, there are two buy and two sell signals. Can you find them?

Moving Average Convergence Divergence (MACD)

The moving average convergence divergence (MACD) is a momentum indicator that’s designed to determine trends and their momentum. The indicator is an oscillator that shows the relationship between two moving averages and the price of an asset. 

The indicator is an oscillator that can be found on most interactive charts. It is derived from the 26-day EMA and the12-day EMA, which creates the MACD line. A nine-day EMA of the MACD acts as the signal line. 

Like with moving average crossovers, traders who use MACD look for crossovers of the signal line and MACD line. When the signal line crosses above the MACD line, it’s considered a buy signal, while a cross below the MACD line is considered a sell signal. 

The MACD data is generally shown in a sub-chart below the main chart:

In the case above, the MACD line is purple and the signal line is orange. Any time the orange line crosses above the purple line, it’s a sign that it’s time to buy the stock. Conversely, when the orange line crosses below the purple line, it’s time to sell. 

Bollinger Bands

Bollinger bands are another oscillator created by plotting lines two standard deviations above and below the SMA. When the price moves closer to the upper band, the asset is believed to be overbought, suggesting it’s time to sell. On the other hand, when the price moves close to the lower band, it suggests the asset is oversold and it’s time to buy. 

See the chart below:

The orange line is a 20-day simple moving average. The space between the upper and lower Bollinger bands is shaded in. Notice that when the price nears the upper band, downtrends tend to follow. On the other hand, when prices near the lower band, Apple stock tends to make a recovery. 

Moving Average FAQs

Naturally, you might have a question or two about moving averages. You’ll find answers to the most common questions below.

What Does a Moving Average Tell You?

Moving averages tell you a few things. First and foremost, they’re great at pointing to trend directions. You can tell an uptrend is taking place when the moving average slopes upward and a downtrend sets in when the average slopes downward. 

Moving averages are also used as technical indicators that signal to investors and traders when to buy and sell financial assets. 

What Is a Good Moving Average to Use?

Simple and exponential moving averages, both short-term and long-term, have their pros and cons. The best moving average to use depends on your needs. 

For example, if you’re looking for a stock that has been trending upward for a long time and is likely to continue, a long-term SMA is the way to go. 

On the other hand, if you’re looking for a short-term opportunity to cash in on a new trend, short-term EMAs are the best bet. 

Which Moving Average Is Best for Swing Trading or Day Trading?

Short-term traders tend to use the EMA rather than SMA. This is because these traders make their money by taking advantage of short-term trends in the market, and the EMA is more responsive to these types of trends. 

What Is EMA In Forex?

The EMA works the same way in forex trading as it does for any other financial asset. It’s a weighted average of prices over a predetermined period of time with extra emphasis given to the newest data in the set. 

What Is a 50-Day Moving Average?

A 50-day moving average is the mean (average) of closing prices of a financial asset over the past 50 trading sessions. The 50-day moving average is one of the more common technical indicators used to spot technical trends in stocks. It is often used to identify key technical support and resistance levels.  

What Is a 200-Day Moving Average?

A 200-day moving average is the mean (average) of closing prices of a financial asset over the past 200 trading sessions.The 200-day moving average is a long-term indicator commonly used to identify much longer-term trends.  

Final Word

Moving averages are a great tool for investors and traders alike. However, they shouldn’t be the only tool in your toolbox. 

Before acting on a moving average signal, investors should research fundamental data that explains why the trend is moving in the direction it is and whether it’s likely to continue. Technical traders should use a mix of different technical indicators for the best shot at success in the market. 

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Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.

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What Is a Trust Fund – How It Works, Types & How to Set One Up

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When most people hear “trust fund,” they think of wealthy people living in fancy estates using them to pass immense amounts of wealth to their heirs. But that isn’t always the case.

A trust fund is simply a legal entity that holds assets of value like property or stocks and bonds on someone else’s behalf (in trust). They’re useful for numerous reasons, including estate planning, protecting assets, avoiding complications during probate, and minimizing taxes.

Trust funds are helpful for estates of varying sizes. But before you set one up, it’s best to understand what it is and what it can and can’t do.

What Is a Trust Fund?

A trust fund is a legal entity that can hold valuable assets on behalf of an individual person, group, or organization. There are many different types of trust fund, each designed to achieve a different goal.

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Trusts give the person establishing them more control over their estate than a will does. They can also provide legal protections or tax benefits that reduce the taxes the person establishing the trust or its beneficiaries may owe.

How a Trust Fund Works

Establishing a trust fund requires three parties:

  1. The Grantor. The person who establishes the trust and places assets into that trust is the grantor. They determine the beneficiaries and any rules or stipulations they wish to put in place, such as only allowing the beneficiary to use the money to pay for college.
  2. The Beneficiary. The person, people, or organization that benefits from the trust is the beneficiary. They don’t own the assets but will benefit from them, often by receiving access at some point or getting monetary distributions from the trust.
  3. The Trustee. The person or organization responsible for managing the trust and its assets is the trustee. They must act as a fiduciary for the beneficiary and follow the rules or stipulations laid out in the trust documents.

To establish a trust, the grantor typically works with a lawyer to draw up a document outlining the terms of the trust, the beneficiaries, the trustee, and the details of how the trust will work. 

For example, a grandparent might establish a trust for their grandchildren, name their children as trustees, and stipulate that they must use the money for their grandchildren’s college education.

One perk for beneficiaries is that they do not pay taxes on their distributions. Instead, the IRS taxes the trust directly.

Trusts are a popular estate planning tool because they’re more binding than something like a will. In the example, the grandchildren must use the trust fund to pay for college costs. If the grandparent instead distributed that money in a will simply noting they want it to go toward college costs, the grandchildren don’t have the same legal obligations to use it for that. 

Types of Trust Funds

One of the benefits of trusts is their flexibility. You can establish one for almost any purpose. And there are many types of trust funds available to suit various needs. 

Living Trusts

Living trusts are trusts that you create while you’re alive. The benefit of a revocable trust is that they let the assets in the trust avoid probate, the process by which the executor of the estate determines how to distribute the property left behind. Probate can be a lengthy process, which living trusts let families avoid.

They come in two primary forms: revocable and irrevocable.

A revocable trust gives the grantor more power over the trust’s assets. The grantor can amend the trust documents at any time after creating a revocable trust, changing the terms of the trust, or naming different beneficiaries. 

Once the grantor dies, a revocable trust becomes an irrevocable trust and cannot be altered.

In contrast, irrevocable trusts are more permanent. Once the grantor establishes an irrevocable trust, they cannot make changes to it or name different beneficiaries without the consent of the current beneficiaries.

An irrevocable trust has additional tax benefits for the grantor. Because they can’t make changes or remove assets after forming the trust, any assets placed in the trust are no longer the grantor’s property.

That means the grantor can take advantage of the annual gift tax exclusion by making gifts to an irrevocable trust.

Testamentary Trust

You can also create a testamentary trust through your last will and testament. Essentially, it instructs the executor to create the trust after your death.

While that means testamentary trusts don’t provide all the benefits of avoiding probate you could get from a living trust, they still carry other benefits. For example, it allows the decedent to establish another kind of trust, like an educational trust, for an heir. It also lets them place more restrictions on how their heirs use the money left behind.

Educational Trust

An educational trust simply specifies the beneficiary must use the assets for educational purposes. It can be revocable or irrevocable.

Depending on the grantor’s wishes, the trust can specify where the beneficiary has to study, what subjects they need to study, how frequently it will make distributions, and what types of expenses it will cover.

For example, it could state that it will only cover the beneficiary’s tuition costs or make a lump-sum distribution each year the beneficiary is in school and leave it to the beneficiary to decide how best to spend the money for education.

Of course, these restrictions could have consequences. If the beneficiary doesn’t go to college or leaves money in the trust once they leave school, you need a plan for what to do with it.

Special Needs Trust

A special needs trust is a trust designed to help care for someone who is disabled or otherwise requires accommodations without disqualifying them from receiving government assistance.

Many government assistance programs require aid recipients to have a limited income or limited assets. If their income rises or they receive a large gift, it can stop them from receiving essential government aid.

A special needs trust can hold assets on behalf of someone receiving government care and ensure the trustee uses those assets to help the beneficiary.

The rules for these trusts can vary from state to state, but they must typically be irrevocable and give the trustee significant control over how to use or distribute the assets.

Charitable Remainder Trust

Charitable remainder trusts allow the grantor to benefit from charitable contribution tax deductions while still receiving income from their assets. In exchange, the funds remaining in the trust go to a charity once the grantor dies.

For example, Brianna could establish a charitable trust and name a local museum as the charity of her choice. If she places $100,000 in the trust, the trust might give her (or another named beneficiary) an annual payment of $5,000 each year until she dies.

When Brianna establishes the trust, she receives a tax benefit for making a charitable contribution to the museum. However, she does have to pay taxes on the distributions she receives.

Once Brianna dies, whatever money she left in the trust goes to the museum.

Charitable remainder trusts can be highly complex when it comes to taxes, so it’s essential to work with a tax professional when considering whether one is right for you.

Common Collective Trust Fund

A common collective trust fund is a trust fund managed by a bank or trust company. It combines assets for multiple investors, often pooling assets from things like profit-sharing, pension, and employee stock bonus plans. 

These funds are very similar to mutual funds and are commonly held in employer retirement plans.

Perpetual Trust Fund (Dynasty Trust)

A perpetual trust fund, also called a dynasty trust, is a trust that aims to pass wealth to future generations while avoiding taxes like the estate tax, gift tax, or generation-skipping transfer tax. A properly designed dynasty trust can last for many generations, creating a family dynasty of wealth.

These trusts usually include clauses to change their beneficiaries over time. For example, it might start benefiting the grantor’s children, then change to benefit the grantor’s grandchildren once they reach a certain age or all of the grantor’s children die.

Because the goal of dynasty trusts is to last for a long time or even forever, the grantors of these trusts typically name a financial institution or bank the trustee.

Assets in the trust aren’t the property of any of the beneficiaries, so they can avoid taxes like capital gains and estate taxes. However, they do have to pay income tax on distributions.

Spendthrift Trust

A spendthrift trust is one designed to protect the beneficiary from creditors and their own poor financial habits. These trusts typically give the trustee more control over the assets in the fund.

The effect is that the beneficiary can’t sell the trust’s assets or access significant amounts at once to squander. But neither can creditors if the beneficiary racks up considerable debt.

Social Security Trust Fund

The Social Security Trust Fund is the trust fund the Social Security Administration uses to hold all the assets used to pay benefits like Social Security and disability. It’s not a trust you can create, but almost every American pays into it and hopes to benefit from it someday, so it’s important to know how it works.

The trust fund owns interest-bearing government securities, such as bonds, and gets its funds from payroll tax deductions paid by both employees and employers.

When the benefits paid out by Social Security exceed the income received from payroll taxes, money from the trust fund pays those benefits. When payroll taxes exceed benefits paid, the additional revenue goes into the trust.

As of the Social Security Administration’s 2021 report, the Social Security Trust fund held $2.908 trillion in assets.

Advantages & Disadvantages of Trust Funds

Trusts have many tax benefits and can give the person establishing the trust more control over how the beneficiary ultimately uses their money. However, they’re not perfect for every situation.

Advantages of Trust Funds

Trusts can give their grantors control over their hard-earned money in life and in death, ensuring more of it goes to their beneficiaries than the government. A trust’s many benefits include: 

  1. Grantor Control. The person establishing the trust can set rules for how beneficiaries should use the funds in the trust, and the beneficiary must follow those wishes, even after the grantor dies.
  2. Tax Incentives. Various types of trusts can help the grantor and beneficiary avoid or reduce taxes like capital gains and estate taxes.
  3. Probate Avoidance. When someone dies, their estate goes through probate, a legal process by which the state or executor distributes assets, whether or not they have a last will and testament. Assets in a trust can skip this process, meaning loved ones can access the assets sooner. It also reduces the chance of the grantor’s wishes being ignored.
  4. Privacy. The probate process is public, which means the estate and wishes of someone who dies become public record. Trusts offer a more private option.

Disadvantages of Trust Funds

Though there are advantages to trusts, they aren’t right for everyone. Carefully consider these disadvantages before setting one up.

  1. Limited Benefit for Small Estates. One of the reasons to establish a trust is to avoid taxes. But smaller estates are unlikely to face taxes, anyway. For 2022, the estate tax exclusion is $12.6 million federally, though some states have lower limits. For example, Massachusetts and Oregon have the lowest exclusions as of this writing, taxing estates that exceed $1 million.
  2. Cost. Setting up a trust means working with expensive professionals like lawyers and tax professionals. The cost may exceed the benefit for some.
  3. Finding a Trustee. Establishing a trust means finding a trustee to manage it. You either have to ask a friend or relative to take on this task, which might be a large one depending on the trust’s assets, or pay a professional to handle the work.
  4. Loss of Control. While trusts give the grantor more control in some ways, setting up an irrevocable trust means losing control in others. Once you establish an irrevocable trust, you can’t make changes, which means losing some level of control over your assets.

How to Set Up a Trust Fund

Setting up a trust fund is a multistep process. If you’re looking to create a simple trust, you could finish in a few weeks. If you want to construct a more complicated one with many restrictions and beneficiaries and a large number of assets, you should expect a monthslong process. But the steps you take are the same either way.

1. Figure Out the Goals of Your Trust

The first step to set up a trust fund is to figure out your goals for establishing the trust.

Do you want to use the trust to have more control over how your beneficiaries use your assets after your death? Is avoiding taxes your primary goal? Do you want a way to donate money to charity but retain a stream of income for retirement? 

You can use a trust to accomplish each of these goals, but each requires a different type of trust.

2. Find a Trust Professional

Once you know your goals, you’re ready to sit down with a professional. Most major financial institutions offer fee-based trust services if you have sufficient assets with them. For example, Fidelity manages trusts of $1 million or more. Fees start at 0.45% of the invested assets, but the percentage decreases as you add funds. You can work with the professional to hammer out details.

3. Choose a Trustee

You also have to determine who the trustee and the beneficiary will be. For some types of trusts, such as a dynasty trust, you need a professional trustee, like a bank or financial institution. Other trusts, like educational trusts or spendthrift trusts, more naturally lend themselves to having a family member serve as trustee.

4. Make the Trust Official

Once you’ve worked out the details, your estate planning attorney, the trustee, and any financial advisors will help draft the trust documents. You just have to sign on the dotted line to make it official. 

5. Fund the Trust

Once you’ve signed the paperwork, you’re ready to start funding the trust. You can put pretty much any asset of value into the trust, including cash, real estate, and stocks.

6. Register the Trust

You must register your trust with the IRS so it can get a taxpayer identification number and file tax returns. If you’re working closely with a financial institution to manage the trust, your trustee can help. Otherwise, the tax professional, lawyer, or brokerage company holding the trust’s assets can help register it.

Trust Fund FAQs

Trusts are complicated, and there are many ways to set them up. But first, it’s essential to understand how they work and how you can use them to accomplish your financial goals.

What’s the Difference Between a Trust & a Trust Fund?

People often use the terms trust and trust fund interchangeably, but they’re slightly different things.

A trust fund is the legal entity that contains assets or property for the benefit of someone else. A trust is a legal document outlining the rules of who the trust fund benefits and how the beneficiary can use assets in a trust fund.

How Is a Trust Fund Handled in Probate?

One of the most popular reasons to set up a trust is to avoid the probate process, which can be lengthy and prevent your loved ones from accessing the money you leave behind when you die.

Any assets in a trust avoid probate court and can skip the normal legal process.

Who Should I Make My Trustee?

Naming your trustee can be difficult because you’re trusting that person with managing your assets and following the wishes you outlined in the trust. 

Some types of trusts naturally lend themselves to making a family member the trustee. For example, if you establish a trust to benefit your grandchild, it makes sense to name their parents (your own child) as the trustee.

Longer-term trusts may require a financial institution or a long-lasting entity to serve as the trustee. But that can mean paying management fees.

How Does a Trust Fund Affect Estate Taxes?

You can use a trust fund to reduce or avoid estate taxes to some degree. The IRS considers money placed in an irrevocable trust a gift in the year you place it in the trust.

Each year, taxpayers may make gifts up to a certain amount ($16,000 in 2022) without it counting against their lifetime gift limit. That means the grantor of a trust can add $16,000 to the fund each year and pay no taxes on that amount, reducing their potential estate tax liability.

What Is a Trust Fund Baby?

A trust fund baby is a pejorative term used to describe a young person whose parents or family established a trust fund for them. This trust provides them with a sufficient income to live comfortably without having to work or find significantly gainful employment.

The common image of a trust fund baby is that of a privileged young adult coasting their way through life with little to no responsibilities.

These situations certainly exist, but the term doesn’t accurately describe most people benefiting from trust funds. Trust funds are simply a legal tool people can use to protect their assets and ensure their beneficiaries follow their wishes. 

Many middle-class families use trust funds for reasons as simple as avoiding probate or keeping assets safe from creditors, not to let their children live a life of luxury without having to work.

Final Word

Trust funds are a powerful legal tool you can use for reasons ranging from estate planning and tax avoidance to caring for a loved one. Though they may have a negative reputation as a toll available only to the wealthy, many groups can benefit from using them.

If you’re thinking about setting up a trust fund, it’s also a good opportunity to think about taking inventory of your finances and ensuring everything is in order. You might also consider talking to an estate planning attorney to draft a will if you don’t already have one. Being prepared only benefits your family in the long run.

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TJ is a Boston-based writer who focuses on credit cards, credit, and bank accounts. When he’s not writing about all things personal finance, he enjoys cooking, esports, soccer, hockey, and games of the video and board varieties.

Source: moneycrashers.com