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Apache is functioning normally

May 29, 2023 by Brett Tams

Certificates of deposit (often simply called CDs), by definition are time deposits. You give your money to the bank and then promise not to touch it for a specific length of time. In general, the longer you agree to let the bank keep your money via a CD investment, the higher the interest rate you will receive.

If certificates of deposit offer higher returns than a savings account, then why doesn’t everybody use them? The primary reason is that a CD investment is less liquid than a savings account in that you can’t just move money in and out without penalty as you can in a savings account. You can take your money out of a CD before it “matures,” but you are docked interest when you do. In fact, it is typical for a bank to penalize the interest amount even if it hasn’t been earned (meaning you could lose part of your principal if you close your CD early).

Anatomy of a CD

I was fortunate to win a $1,000 6-month certificate of deposit from ING Direct recently. (I never win anything!) Looking at it might be instructive:

Reviewing this screenshot, you can see that a certificate of deposit has an initial value (in this case, $1,000), an interest rate (3.50%), and a term (6 months). In other words, this is very much like a loan that I am making to the bank.

You can also see that the bank has an “Early Redemption Policy” that states that I would sacrifice three months’ interest if I chose to redeem this CD early, whether the interest has been earned or not. Because I have held the CD less than a month, I would actually sacrifice part of my principal if I were to close the account now.

When this CD investment matures on April 9th, I will have $1,017.28. Obviously $17.28 isn’t a huge return, but it’s important to remember that interest rates are low right now. (Also consider that if my $10,000 emergency fund were all in CDs, I would earn $172.80 in six months.)

Another important difference to be aware of is that, unlike a savings account, a certificate of deposit ends after a set amount of time. What happens at the end of the term depends on the arrangements you have (or have not) made with your bank. (I explain this further below.)

CD Tips and Tricks

A certificate of deposit is a great way to put your savings on steroids, so to speak, but there are ways to make them even better. Here are a few tips and tricks that can help you get the most out of your investment.

Use CDs to beat falling interest rates. When the Federal Reserve cuts short-term interest rates, you feel the pinch in your savings account. Certificates of deposit are a great way to buy yourself “protection.”

When you see a rate drop coming, open another CD. For example, the Federal Reserve just cut short-term rates another 0.50 percent last week. I would be shocked if banks didn’t follow suit, lowering the interest on their savings accounts. ING Direct could go as low as 2.25 percent.

When you see an interest drop coming, take some money from your savings account and throw it into a 6- or 12-month certificate of deposit, locking in the higher rate. (My web research hasn’t revealed what causes CD rates to move, but they do not move in lockstep with savings accounts.)

Climb the CD investment ladder. Just as you might use dollar-cost averaging to profit from fluctuations in the stock market, you can use a “CD ladder” to profit from fluctuations in interest rates.

Say you have $5,000 to invest. To build a CD ladder, you would invest the money in CDs with staggered maturation dates:

$1,000 in a one-year CD
$1,000 in a two-year CD
$1,000 in a three-year CD
$1,000 in a four-year CD
$1,000 in a five-year CD

As each CD matures, you immediately invest your money in a new five-year CD, effectively maintaining the one-year stagger, or ladder. You won’t earn the best possible rate of return, but you will earn a good one, and your income will be relatively constant. The CD ladder is also a form of diversification: you’re not betting all your money on one interest rate.

Protect yourself with parallel CDs. One of the biggest risks to your investment in a certificate of deposit is the need for early withdrawal. What if something happens and you need to pull the money out? As we’ve seen, this can be expensive. Nickel at Five Cent Nickel suggests mitigating your risk with parallel certificates of deposit.

Again, assume have $5,000 that you’d like to put into CDs. Instead of opening a single certificate of deposit for the full amount, consider opening multiple CDs. You might open three CDs at once, for example: two $1,000 CDs and one $3,000 CD.

This gives you a buffer in case you need to get at the money early. If you find you need $500, you can break a single $1,000 CD and the rest of your money is safe from penalty.

Related >> Beginners’ Guide to Investing

Beware of auto-renewals. Nicole wrote last week because she was surprised to find that her certificate of deposit at Countrywide had automatically renewed at the maturation date. Many (most?) banks will do this unless you instruct them not to.

If you know you’re ready to pull your money out of a certificate of deposit, be sure to contact your bank to find out the proper procedure for doing so. Nicole found herself locked into another twelve month CD when she needed the money now. If she broke the contract, she would be forced to sacrifice 180 days interest, whether earned or not.

(Note that Nicole’s story had a semi-happy resolution. She knows to speak up when something seems wrong. Countrywide wouldn’t let her out of the CD investment entirely, but “I was able to negotiate a compromise to transfer the money to a 3-month CD, rather than the 12 month CD. Although the interest rate is lower, I will be out in 3 months, which isn’t too bad.”)

Shop around. As with any financial decision, it pays to shop around for CD rates. You may find that your local bank actually offers a better deal on certificates of deposit than the online banks.

For example, my local credit union only offers 0.35% on its regular savings account, but its CD rates are competitive with (and sometimes higher than) ING Direct. Since I keep my checking account at the credit union, it might make sense for me to hold my CDs there. (In this case, however, they’re not high enough to make me switch; I’d rather track everything in one place at ING.)

Here’s my list of current CD rates from online banks.

CDs in Practice

I’m new to the certificate of deposit, but I can already see some uses for it. My $10,000 emergency fund, for example, is currently earning 2.75%. I may instead create a series of parallel CDs, as described above.

Also, I’m saving for my Mini Cooper. That money is also earning 2.75%. I’m nowhere close to buying the car, though, so I might as well put it into a certificate of deposit, too.

Though certificates of deposit are new to me, I’m sure that most of you have been using them for years. What tips and tricks can you offer? Do you have favorite sources for CD investments? How do you decide which money to keep there and which to keep in a savings account?

Identifying the Best CD Rates

It is important to think through how best to use a certificate of deposit in your overall financial plan, but it starts with understanding your goals and how a CD can help you reach them. Interest rates change constantly, so having up-to-date rate information is critical to identifying the best CD rates and terms to make the most of your investment. We have made the whole process easier in a convenient page that is updated weekly with the most current interest rates.

Different strategies can help you capitalize on fluctuating interest rates too.
A CD ladder can help you maintain a relatively constant income no matter how current CD rates change. A parallel CD strategy can help you maintain some accessibility to your funds during the term. Richard Barrington’s post can help you understand how to find the right CD but do shop for the highest CD rates and terms regularly to maximize your return. Bookmark this page as well so you can easily come back to our table to check rates and terms as often as you want.

Current Certificate of Deposit Rates

An online account is arguably one of the most convenient ways to manage CDs and, generally speaking, online banks offer higher rates than traditional brick-and-mortar institutions. The following listings of online banks are updated weekly too, and a little more information about each bank is given next to each listing as well. Credit unions and savings associations are also sources of CDs and other deposit accounts.

CD Basics

A certificate of deposit, or CD, is a deposit account that is generally considered a very low-risk investment. You might also hear it described as a time deposit because it is not a liquid asset that can be accessed on demand. Instead, the amounts deposited into a CD are expected to remain untouched for a specific period of time, which is the term of the CD. In exchange, the bank will pay you a fixed rate of interest.
Example investment: You put $10,000 in a 5-year certificate of deposit at an interest rate of 1.75%. At the end of five years, with interest compounded daily, you would have $10,914.

Early withdrawal penalty – The full value of the CD (your principal plus the interest earned) is accessible when the term has been reached; however, there is usually a penalty if you withdraw your funds before the end of the term. This means that the bank will keep a portion of the interest earned, which could also cut into the original principal balance if the CD has not accrued enough interest to satisfy the entire penalty yet.

For example, if a depositor wishes to close a one-year CD account after two months but the bank’s policy states that an early withdrawal penalty equal to three months’ interest would be due in that event, then the bank will dip into the depositor’s principal balance to make up for the shortfall between the interest earned and the penalty. Early withdrawal penalties vary from bank to bank, and this is another important item to consider as you shop for the best CD rates and open your new account.

Fixed interest rates – Even though interest rates change regularly, banks usually offer a fixed interest rate that doesn’t fluctuate, allowing you to lock in that particular rate for the entire term of your CD. Banks are willing to fix the interest rate, which is generally higher for certificates of deposit than for most savings accounts, because the funds remain on deposit with the bank untouched for that specific period of time. (In general, the longer the term, the higher the interest rate for a CD.)

FDIC insurance – The Federal Deposit Insurance Corporation insures most certificates of deposit so that the balance of your CD will be paid to you even if the banking institution becomes insolvent for some reason. The standard deposit insurance coverage limit is $250,000 per depositor, but it is important to verify the amount of FDIC insurance that applies to the particular CD accounts you open.

High Interest CDs that Can Double Your Interest Income

According to the FDIC, five-year CD rates (certificates of deposit or CDs) are currently averaging just 0.75 percent nationally. Fortunately though, not all CDs are created equally. Here are 10 CDs that offer at least double the interest income that today’s average account provides:

iGOBanking. Forget the awkward name and focus on the rate: Annual percentage yield (APY) is 0.35 percent on a five-year CD. iGOBanking is the online division of Flushing Bank. Though Flushing Bank is quite small, with deposits of less than $600 million according to FDIC data. The minimum deposit is just $1,000, so the iGOBanking CD is readily accessible. The penalty for early withdrawal is 12 months now. (Rate as of July 5, 2016.)
EverBank. EverBank has made a commitment to offering high interest rates by pledging to keep its CD rates in the top 5 percent of comparable products. With a 1.76 percent APY on its 5-year CD, it seems to be living up to that pledge. (Rate as of July 5, 2016.) EverBank’s 17 branches are all in Florida, but its products are available to a national audience online, and with more than $10 billion in deposits, they have built up a fairly substantial customer base. The minimum to open is a reasonable $1,500, but the only catch is a hefty penalty for early withdrawal — equal to 900 days of interest on its five-year CD.
Nationwide Bank. This online banking affiliate of the insurance giant offers a five-year CD with a 1.95 percent APY for balances between $0 and $9,999.99 and a minimum of $500 to open. That APY bumps up to 2.00 percent for deposits of $100,000 or more. These strong rates do require a long-term commitment, since the early withdrawal penalty is 360 days of interest. (Rates as of July 5, 2016.)
Barclays Bank. Barclays is an international banking powerhouse, and it offers a very competitive five-year CD with a 2.65 percent APY. This rate applies to its online CD, which has the added advantages of having no minimum balance requirement and the penalty for early withdrawals is 180 days. (Rate as of 05 March 2018.)
GS Bank. GS Bank’s five-year CD has a 2.00 percent APY and a user-friendly $500 minimum deposit to open. There is a 270-day early withdrawal penalty, so make sure you are committed for at least a couple years if you choose this product. (Rate as of July 5, 2016.)
BBVA Compass. Though most of these highest-yielding CDs are found at online banks, BBVA Compass also offers a traditional, branch-based alternative with 716 locations. The account minimum is just $500, and the rates may reach as high as 2.00 percent APY for a four-year term, depending on which branch location you visit. Rate collected within: Birmingham, AL: 0.50%(Rate as of July 5, 2016.)
Ally Bank. One of the leaders in online banking, Ally has built itself up to more than $40 billion in deposits. The 1.65 percent APY on its five-year CD is well over twice the national average, but there is a 150-day early-withdrawal penalty. Still this CD is an excellent choice even if you think that rates might rise within the next five years. (Rate as of July 5, 2016.)
Sallie Mae. Sallie Mae is probably better known for student loans, but it also offers online deposit products, including a five-year CD with a 1.80 percent APY and a $2,500 minimum deposit. The early withdrawal penalty is equal to 180 days of interest. (Rate as of July 5, 2016.)
Discover Bank. Though the Discover name is more commonly linked to credit cards, Discover Bank also has more than $40 billion in deposits. Its five-year CD rate offers an APY of 1.85 percent with a $2,500 minimum deposit to open and an early withdrawal penalty equal to what can be up to 18 months of interest. (Rate as of July 5, 2016.)

The above are not necessarily the 10 highest-yielding five-year CDs in the country. They were chosen because their rates are at least twice the national average, they are available in multiple states and they have relatively user-friendly websites. You may find additional options in your area, but the points discussed above can still provide you with some framework for what criteria to consider — including rates, minimums and penalties — when choosing a CD.

Have you been able to find CD rates that rival these? If so, please add a comment below. Don’t forget to include the details: name of the bank, state, rate, when you opened the account with this rate, and whether you can open the account online or must appear in person.

Source: getrichslowly.org

Apache is functioning normally

May 26, 2023 by Brett Tams

In the past decade, we’ve seen a major transformation in the banking sector. As the world continues to digitize, the financial landscape has shifted in response, giving birth to a plethora of online banking services. One such innovation that has garnered widespread adoption is online checking accounts.

As a key financial tool, a checking account serves as a lifeline for day-to-day transactions, paying bills, and generally managing one’s finances. But with online checking accounts, convenience, accessibility, and often better rates and lower fees have made them an attractive alternative to traditional banks.

10 Best Online Checking Accounts

These best online checking accounts offer a range of features, from high annual percentage yield (APY) to robust mobile apps, all designed to meet the varying financial needs of users. Here are our top 10 picks for 2023.

1. Chime Checking Account

Chime, a financial technology company that offers online banking services, is revolutionizing the banking industry with its online checking account that pairs both convenience and value into a single offering.

2. Axos Bank Rewards Checking

Axos Bank is an online-based bank that’s shaking up the banking industry with its online Rewards Checking account, a unique blend of convenience and value.

3. Current Account

Current, a pioneering financial technology company, delivers cutting-edge banking solutions with its Current Account.

4. SoFi Checking and Savings Account

SoFi, a modern financial platform offering a suite of financial services, is setting new standards in the world of banking with its online bank account that combines remarkable earning potential and considerable convenience.

5. Ally Bank Interest Checking Account

Ally Bank, renowned for its customer-centric digital banking services, provides a comprehensive offering through its Ally Bank Interest Checking Account.

6. Consumers Credit Union Serious Interest Checking

Consumers Credit Union, committed to enhancing its members’ financial prosperity, offers an appealing solution with its Serious Interest Checking®, a high yield checking account.

7. Quontic High Interest Checking

Quontic Bank, committed to maximizing customer earnings and supporting financial inclusivity, offers a high interest checking account that combines convenience, high-yield potential, and an innovative digital banking experience.

8. Alliant Credit Union High-Rate Checking

Simplicity and high yields are the cornerstone of Alliant Credit Union’s High-Rate Checking account, a solution tailored to meet the needs of modern-day banking customers, whether they’re on-the-go or prefer traditional banking methods.

9. Schwab Bank Investor Checking

Charles Schwab brings its robust reputation in the investment sector to banking with its Schwab Bank Investor Checking account, designed for those seeking seamless integration of banking and investing.

10. Navy Federal Credit Union Free EveryDay Checking

Navy Federal Credit Union’s Free EveryDay Checking is an easy-to-use, accessible banking solution for everyone.

What is an online checking account?

An online checking account operates much like the checking accounts you’re accustomed to at traditional brick and mortar banks, with the primary difference being that it’s mostly or entirely digital. They are provided by online banks, credit unions, and even financial technology companies that are not banks themselves.

Online checking accounts have surged in popularity for a variety of reasons. Their major draw is the convenience and flexibility they offer. With these accounts, you can deposit cash, pay bills, transfer money, make debit card purchases, and even deposit checks digitally using the bank’s mobile app. This means that all your transactions can be completed without visiting a physical branch location.

Additionally, online only banks typically offer higher annual percentage yields (APY) than traditional banks, meaning your money grows faster. The absence of physical branches translates into reduced overhead costs for these financial institutions, enabling them to pass on the savings to customers in the form of higher interest rates and lower fees. These accounts also often have lower minimum balance requirements and monthly maintenance fees compared to their brick-and-mortar counterparts.

Lastly, many online banks are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), providing the same level of safety for your deposits as traditional banks.

Criteria for Evaluation

Selecting the best online checking accounts was not a task taken lightly. We’ve considered a variety of factors in our analysis to ensure that our picks provide a mix of the most advantageous features for diverse financial needs. Here are the key criteria we used in our evaluation:

Annual percentage yield (APY): We considered the APY offered on the checking accounts. Higher APY means your money grows faster, making it a key feature to look for in an account.

Monthly fees and other costs: Monthly maintenance fees can eat into your savings. We favored accounts with low or no monthly fees. We also looked at other potential costs like overdraft fees, out of network ATM fees, and foreign transaction fees.

ATM access: Easy and wide-ranging access to ATMs is crucial. We considered online banks with large ATM networks and those that offer ATM fee reimbursements.

Customer service: Exceptional customer service is important, especially for an online only bank where in-person assistance is not an option. We assessed the quality of customer service provided by each bank.

Mobile app experience: A great mobile app can make managing your money a breeze. We evaluated the usability, functionality, and reliability of each bank’s mobile app.

Additional features: Other features like early direct deposit, mobile check deposits, cash back rewards, and savings tools can add value to online checking accounts. We considered these additional features in our review.

How to Choose the Right Online Checking Account for You

Choosing the right online checking account is crucial. It can simplify your financial management, enhance your monetary gains, and align with your lifestyle needs. Below are key factors to consider in making an informed decision:

Financial Habits: Evaluate your typical financial behaviors. Do you frequently use ATMs, and will you need access to an extensive, fee-free ATM network? If you regularly maintain a high balance in your checking account, an interest-earning account could be beneficial. Conversely, if you tend to keep a low balance, consider an account with no minimum balance requirement to avoid potential fees.
Goals: What are your financial goals? If you’re aiming to save, consider an account that earns interest. If you’re focused on investing, select an institution that offers seamless integration between checking and investment accounts.
Lifestyle: Assess your lifestyle and daily needs. Do you travel often and need an account that doesn’t charge foreign transaction fees? If you prefer digital banking, look for accounts with robust online platforms and mobile apps that allow for easy money management on the go.
Fees: Examine the fee structure carefully. Consider potential monthly maintenance fees, overdraft fees, and ATM fees. Look for accounts offering fee waivers or reimbursements.
Customer Service: Exceptional customer service is crucial, particularly for an online bank. Look for 24/7 customer support, availability of live chat, and timely response to queries.
Security: Ensure that the bank employs stringent security measures to protect your account from fraud or unauthorized transactions. Features like two-factor authentication, alerts for suspicious activity, and FDIC insurance are vital.

Bottom Line

In today’s fast-paced, digital age, online checking accounts provide a convenient, accessible, and often more financially rewarding alternative to traditional banking. However, the key to making the most of these benefits is to choose the right account based on your individual needs, lifestyle, and financial goals.

By carefully considering factors like your financial habits, goals, lifestyle, potential fees, customer service, and security measures, you can find an online checking account that not only meets but exceeds your expectations. Remember, your checking account is at the heart of your financial life – choose wisely.

Frequently Asked Questions

Are online checking accounts safe?

Yes, online checking accounts are safe as long as they’re offered by a reputable bank or credit union that has FDIC or NCUA insurance. This insurance protects your money up to $250,000 per depositor.

Can I deposit cash into an online checking account?

Depositing cash into an online checking account can be more challenging than with a traditional bank. Some online banks have agreements with certain ATM networks or retail outlets where you can deposit cash. You can also deposit cash into a traditional bank account and then transfer it to your online account.

What should I do if I need to write a check?

Many online banks offer free or low-cost checkbooks. However, if you seldom write checks, you may not need a physical checkbook. Instead, you can use the bank’s online bill pay service, which sends a check or electronic payment to the recipient on your behalf.

Do online banks offer customer service?

Yes, most online banks offer robust customer service options, including phone support, live chat, email, and often extensive FAQ sections on their websites. Some even offer 24/7 support.

Source: crediful.com

Apache is functioning normally

May 26, 2023 by Brett Tams

In the past, you had to drive to your bank and work with a teller to manage your deposit accounts. These days, however, you have the option to complete virtually any banking need with any device that has internet access. You can pull out your smartphone and deposit a check. Or you may use your laptop to check your account balance.

That’s where banks called neobanks come in. It’s no surprise that neobanks are more popular than ever before. Let’s take a closer look at what they are and how they work so you can decide whether a neobank makes sense for your particular situation.

20 Best Neobanks

While traditional banks take up more market share than neobanks, you can still find a good amount of them if you do your research and shop around. The right neobank for you will depend on your unique lifestyle, needs, and preferences. To help you hone in on the ideal option, here’s our list of the top neobanks of 2023.

1. Chime

Founded in 2012, Chime is a financial technology company that offers banking services from The Bancorp Bank, N.A. and Stride Bank N.A. The Chime Checking Account is free of monthly maintenance fees and no minimum balance requirements.

Its perks include early direct deposit, automated savings features, access to over 60,000 or more fee-free ATMs, and free debit card replacement. In addition, you can take advantage of SpotMe and get up to $200 in fee-free overdrafts.

There’s also a Chime’s Savings Account, which offers a competitive interest rate with no cap on the amount of interest you can earn. Other services include Secured Chime Credit Builder Visa® Credit Card that doesn’t require a credit check, making it a suitable option if you have limited credit. Chime should be on your radar if you prefer a one-stop-shop for all of your banking needs.

You can read our full Chime review to learn more.

2. GO2bank

For more than a decade, Green Dot Corporation has specialized in alternative banking products. In 2013, GoBank made its debut as the first digital bank offering digital financial services. Then, in 2021, the company launched GO2bank, its second online bank.

GO2bank stands out from other neobanks which require you to sign up online because you can pick up their debit cards in person at Walmart and other popular retailers. GO2bank’s bank account tends to be a popular product in addition to its secured credit card that can help you build credit.

For a comprehensive overview, read our full GO2bank review.

3. Current

Since its inception in 2015, Current, which is not a bank, but a fintech company based in New York City, has partnered with Choice Financial Group and Metropolitan Commercial Bank to offer banking services. Its flagship products are a personal checking and debit card you can access via a mobile app on any iOS or Android device.

Even though Current’s product line is limited, the neobank prides itself on no shortage of perks and benefits. You can get your deposit up to two days early and earn cash back for debit card spending from more than 14,000 merchants. Additionally, Current doesn’t charge minimum balance fees or bank transfer fees and offers fee-free ATM withdrawals from ATMs in the Allpoint network.

If you would like to learn more, take a look at our Current review.

4. Revolut

Founded in 2015, Revolut is one of the largest European neobanks, serving more than 16 million customers. It has expanded its footprint to the U.S. market and has plans to become one of the most reputable neobanks in the world.

Revolut is unique in that it offers a wide array of financial services, such as bank accounts, debit cards, peer-to-peer payments, cryptocurrency, and currency exchange. It supports both individual consumers and businesses with more than 30 currencies. For a neobank with a diverse lineup of offerings, Revolut has you covered.

To learn more, read our full Revolut review.

5. Quontic Bank

Quontic Bank is a full-service, FDIC-insured online bank that was founded in 2002. It offers a range of banking products and services, including checking and savings accounts, credit cards, mortgages, and business banking solutions.

They offer some of the best annual percentage yields (APYs) in the industry. Quontic accounts come equipped with no overdraft fees, no incoming wire transfer fees, no monthly service fees, and access to over 90,000 surcharge-free ATMs.

Quontic also has a savings accounts feature called “Roundup”, which makes saving money simple and easy. In addition, they have a responsive U.S. based customer service team available to assist with any questions or concerns.

Read our full Quontic review for more information.

6. Dave

When Dave began in 2017, its sole focus was paycheck advances. Over time, it evolved to offer a checking account with no minimum balance requirements. If you become a Dave customer, you can receive early access to your paycheck, without a credit check or interest charges.

Dave also offers handy built-in budgeting features and doesn’t charge overdraft fees or ATM fees, as long as you use an ATM from the MoneyPass network. Dave may make sense if you’d like the option for small cash advances to get you through a financial hiccup from time to time.

See also: Free Online Checking Accounts: No Opening Deposit Required

7. Albert

Albert began as a money management app in 2016, but is now a personalized banking service that has attracted over 6 million customers. This digital banking account offers cash back and a range of benefits.

These including no-interest cash advances of up to $250, integrated budgeting and savings tools, and annual savings bonuses of up to 0.10%. There are no minimum balance requirements or overdraft fees. However, there is a minimum monthly fee of $4. Keep in mind that you’ll need to have an external bank account to open an account with Albert.

8. Varo

Varo Bank began in 2015 as a fintech company that partnered with The Bancorp Bank. In 2020, it acquired its own national banking charter, making it different from other neobanks you might come across. Even though Varo operates as an actual bank, it focuses on online banking via its website and mobile app.

Its checking account is free of monthly fees and there’s no minimum balance requirement. Plus it comes with a debit card. In addition, Varo partners with more than 55,000 ATMs through the Allpoint ATM network.

We can’t forget its other perks, such as contactless payments, credit cards with reporting to the major credit bureaus, early direct deposits, and no foreign transaction fee or transfer fees. Varo might be worthwhile if you’re looking for a checking account with all the bells and whistles.

Read our Varo Bank review to learn more.

9. Aspiration

Aspiration was founded in 2013 under the motto “Do Well. Do Good.” It partners with financial institutions like Coastal Community Bank and Beneficial State Bank to offer cash accounts, savings accounts, and a few investment accounts.

Aspiration’s most popular product is the Aspiration Spend & Save Account, which is a hybrid of a checking account and savings account. There’s also the Zero credit card, which offers cash back and plants a tree every time you make a transaction. Aspiration can be a good fit if you’d like to get rewarded for your spending and like the idea of one account for your checking and savings goals.

Read our full review of Aspiration to learn more.

10. Bluevine

Bluevine made its debut in 2013 as a fintech company with a mission to improve banking for small and mid-sized business owners. Its flagship product is the Bluevine Business Checking. It’s completely free and comes with a competitive annual percentage yield and unlimited transactions. This is rarely seen in the world of business checking.

In addition to the business checking account, Bluevine offers financing products, such as lines of credit of up to $250,000. Bluevine should be on your radar if you’re a business owner in search of fast, convenient startup banking and financing.

11. SoFi

Social Finance or SoFi entered the market as a student loan refinance company. Recently, however, the fintech company received its own bank charter to offer digital banking services. You can use the SoFi Checking and Savings combo account to manage your spending and saving needs in one place.

Fortunately, SoFi doesn’t charge monthly maintenance fees, overdraft fees, and ATM fees. Additional perks and extras include no-fee overdraft coverage, sub accounts for various savings goals, and additional products like credit cards, cryptocurrency trading, and retirement accounts, like an individual retirement account.

Read our full review of SoFi to learn more.

12. Acorns

Acorns has a reputation as an easy-to-use micro investing app. Since 2012, many people have downloaded it on their iOS or Android devices to invest their spare change. Over time, Acorns has expanded to offer a checking account.

You can open Acorns Checking for free and enjoy perks such as no monthly or overdraft fees, early direct deposit, mobile check deposit, and access to a network of 55,000 ATMs.

The checking account seamlessly integrates into the Acorns micro investing feature. Plus when you use your Acorns debit card, you can earn cash back at participating retailers and use it to invest, along with your spare change. If you’d like to get started with investing, Acorns is worth considering.

13. One

One is a neobank owned by Walmart. It offers a budget-friendly overdraft program with customized budgeting and savings options for its customers. One’s banking account allows users to organize their money into subaccounts called Pockets.

Pockets offer saving rates of 1% on up to $5,000 for any customer and 1% on up to $25,000 for customers with direct deposit. Additionally, One provides fee-free overdraft coverage of up to $200 for customers with direct deposits of at least $500 per month.

14. Cheese

Cheese is a digital banking platform that was launched in March 2021 and caters specifically to the immigrant and Asian American communities. It offers up to 10% cash back at 10,000 businesses, including Asian-owned businesses and restaurants.

Cheese’s customer support is available in English and Chinese, with more languages to be added in the future. One of the benefits of opening an account with Cheese is that accounts earn interest and do not have monthly fees or ATM fees when using the national MoneyPass ATM network.

15. Unifimoney

Unifimoney is a money management and investment app that helps you manage your banking, investing, and borrowing needs all in one place. It caters to account holders who earn at least $100,000 per year but have significant amounts of student debt. You can download Unifimoney to pay bills, deposit checks, and write checks.

It’s unique in that it also allows you to refinance student loan debt and can create a diverse investment portfolio with particular stocks, cryptocurrencies, precious metals, stocks, and exchange-traded funds (ETFs).

In addition, you can turn to Unifimoney for insurance products, like car insurance and health savings accounts (HSAs). If you’d like to get started with Unifimoney, open the Unifimoney high-yield checking account with as little as $100.

16. NorthOne

Headquartered in New York and founded in 2016, NorthOne offers digital business banking services. If you’re a startup, entrepreneur, or small business owner, NorthOne can be a good fit. It differs from other banks that serve businesses in that there are no transaction limits that require premium upgrades.

You can open a business bank account for a flat $10 monthly fee and won’t have to worry about additional fees for deposits, transfers, ACH payments, or app integrations. In addition, you’ll get to create as many “Envelopes” or sub accounts as you want so you can save for payroll, taxes, and other business needs.

17. Oxygen

San-Francisco based Oxygen focuses on two accounts: the free thinker account for individuals and the pioneer account for business users. Even though it doesn’t charge fees, like monthly fees, ACH fees, and overdraft fees, you will have to pay an annual fee that can go up to a few hundred dollars.

While most neobanks don’t allow for cash deposits, Oxygen does. As long as you have an Oxygen bank account, you can make deposits at GreenDot locations, which are usually located inside popular retailers, like Walmart, Walgreens, and CVS. If you don’t mind paying an annual fee and like the convenience of being able to deposit cash, Oxygen is worth exploring.

18. Bella

Bella is a fairly new player in the neobanking space. Its partner bank is nbkc bank, which allows it to provide banking services. With Bella’s checking account rewards program, you can receive a random percentage of cash back on randomly selected purchases.

The cash back amount may be anywhere from 5% to 200%. Like most neobanks, Bella doesn’t charge monthly fees, ATM fees, and overdraft fees. You can also opt for a no-fee savings account. Bella accounts are FDIC insured for up to $5,000,000.

19. Lili

Lilli services small business owners and believes that managing two accounts is a hassle. That’s why this neobank offers a single account you can use for both your business and personal transactions.

Come tax time, Lili will eliminate financial stress and let you automatically save a certain percentage of your income into a “tax bucket.” Plus, it produces quarterly and yearly reports instantly, reducing your tax prep costs. While the Lili Standard account is free, Lili Pro will run you a couple dollars per month.

If you upgrade to Lili Pro, you’ll get cashback rewards on all your debit purchases and 1% interest on your savings accounts. Lili could be a solid pick if you’re a freelancer or solopreneur hoping to simplify your finances.

20. Monzo

Monzo is a UK-based neobank that just opened up to the U.S. market in late 2022. All accounts are insured by the FDIC for up to $250,000. Plus fee-free withdrawals are available at more than 38,000 ATMs.

Furthermore, Monzo is similar to Aspiration as it strives to protect the planet. Additionally, this neobank offers budgeting tools that can help you meet various savings goals.

What is a neobank?

Often called challenger banks, neobanks have recently entered the financial services industry and challenged banking norms. Most neobanks are financial technology or fintech companies that offer the same banking services you may find at traditional banks, like Bank of America or PNC.

But they promote innovation and act like digital only banks or online banks as they don’t have any physical branches and operate via apps. Most of these apps are user-friendly and loaded with a variety of handy features, such as early deposit and savings tools to simplify the banking experience. They are specifically designed to give you greater control of how you manage and spend your money.

Also since neobanks don’t have any physical branches, their overhead costs and customer acquisition costs are low and enable them to offer more affordable banking products and services. Many neobanks let you choose from a number of free and paid premium subscription services.

Are neobanks safe?

Since neobanks are fairly new and different from many traditional banks, you might wonder whether they’re safe. Fortunately, most of them are very safe because they operate within a regulated market.

These financial institutions typically work with U.S. banks to offer FDIC-insured accounts, which protect your money from potential bank failures and the losses that come with them. To help determine if a neobank is safe, check out their ratings and reviews on reputable websites like the Better Business Bureau (BBB).

Neobanks vs. Traditional Banks

To further explain neobanks and their modern spin on traditional banking, let’s take a closer look at how they differ from traditional banks.

Neobanks

Neobanks operate without physical branches. To take advantage of their offerings, you’ll likely need to download an app and provide some personal information.

While you can expect fewer banking and credit products than you’d find at traditional banks, you’ll reap the benefits of lower fees and extras that improve the overall banking experience.

Some neobanks have decided to expand their lineup of products and services to create more of a one-stop-shop you’d get from a traditional bank. Since most neobanks don’t earn money from lending, like incumbent banks, their business model depends on interchange fees or transaction fees, which usually come from debit cards. They might also charge for premium accounts and extra features.

Traditional Banks

Traditional banks often have brick-and-mortar locations across the country or in a specific geographic region or area. But many of them also have digital banking divisions in which you can perform banking services online.

Most banks focus on strong customer relationships and earning interest through loans as well as account fees from banking, lending, and investing. They typically target customers who appreciate customer engagement and a traditional in-person banking experience.

See also: Best Alternatives to Traditional Banks

Pros & Cons of Neobanks

Just like all types of financial institutions, neobanks have benefits and drawbacks you should consider, including:

Pros

Lower fees: Compared to traditional banks, neobanks offer lower fees. That’s because they don’t have the high overhead costs associated with the upkeep of physical branches.
Higher rates: Neobanks often pride themselves on higher interest rates on their checking and savings accounts. This can make it easier and faster for you to save money.
Convenience: Perhaps the greatest benefit of neobanks is the convenience they bring. You can perform a variety of banking tasks, like depositing checks or making payments from your smartphone device, round-the-clock.
Easy access: You can manage your banking 24/7 without ever having to leave your home and visit a local branch. All you have to do is download an app from the app store.
Simple setup: It’s usually fast and easy to open an account with neobanks. Many of them will approve you, regardless of your credit score or credit history.
Focused services: While most neobanks don’t offer all the services you might find at traditional banks, the few services they do provide focus on service quality and are typically loaded with perks and benefits. For example, you can get a no fee checking account with cash back rewards.

Cons

No bank charters: Neobanks don’t have bank charters. Instead, they often partner with traditional banks to insure their products. Before you move forward with a neobank, ensure they partner with a Federal Deposit Insurance Corp or FDIC-insured bank and offer their own FDIC insurance.
Customer service restrictions: Since neobanks operate on app instead of through physical branches, customer service can be a downside. You may have to turn to chatbots or social media for basic banking questions and support. If you notice fraud in your account, it may be more difficult to resolve the issue.
Fewer services: Traditional banks usually pride themselves on a long list of services, including loans, wealth management, and brokerage services. Neobanks, however, tend to limit their offerings to checking accounts and savings accounts.
Unproven track record: Neobanks are still in the startup phase as many made their debut within the last few years. This means that they may fail and force you to look elsewhere for your banking needs.
Require knowledge of technology: While most neobank apps are intuitive and designed for the average person to use with ease, they may still be inconvenient for some people. If you don’t consider yourself tech literate, a neobank might not make sense.

Bottom Line

There’s no denying that neobanks have revolutionized the banking industry and financial industry. If your primary goal is convenience and you prefer mobile or online banking, a neobank can be a great alternative to a traditional bank or legacy bank. Just make sure you explore all your options and read the fine print before you choose one.

Source: crediful.com

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May 25, 2023 by Brett Tams

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The savings offers that appear on this site are from companies from which MoneyCrashers.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MoneyCrashers.com does not include all savings companies or all savings offers available in the marketplace.

Years ago, finding a bank meant heading downtown and choosing from whichever options were available there. The Internet dramatically lessened the importance of physical branches and made it possible to bank from anywhere at any time.

Virtually all banks with physical locations have online portals, but a growing number now do the bulk of their business online. Some have ties to community banks and may have physical branches in select regions. Others exist only in the digital realm and have no physical branches.

What follows is a list of the best online banks on the market today.

Best Online Banks of May 2023

These are the best online banks on the market right now.

Each does at least one thing really well, whether it’s offering a potent lineup of budgeting and money management tools or delivering savings and CD rates well above the national average. Our top pick offers the most value for the greatest number of potential customers, in our opinion.

Unless otherwise noted, all the accounts on this list come with FDIC insurance up to $250,000 per account.

Best Overall: American Express® National Bank, Member FDIC

The American Express® High Yield Savings Account has a solid yield on all balances with $0 maintenance fees, a $0 minimum opening deposit, and a $0 minimum balance. The current savings yield is 3.90% Annual percentage Yield (APY) as of May 16, 2023.

Want to tie up your money for a while at a higher interest rate? Choose from seven CD options ranging from six months to five years.

CD yields are very good across the board: 3.00% Annual Percentage Yield (APY) on the longest-term product (60 months or 5 years) and 4.25% on the 12-month CD. Early withdrawal penalties are:

90 days’ interest for terms under 12 months
270 days’ interest for terms between 12 and 48 months (four years)
365 days’ interest for terms between 48 and 60 months (five years)
540 days’ interest for terms of 60 months or longer

Additional features:

Extensive lineup of personal credit products, including premium credit cards like The Platinum Card® from American Express
Move money between up to three external bank accounts in short order
24/7 customer service

Apply Now

Best Credit Union: Alliant Credit Union

When is an online bank not an online bank? When it’s an online credit union.

There’s no better branchless option than Alliant Credit Union. As a credit union, Alliant exists for its members rather than stockholders so they will always put you first.

Alliant has a comprehensive lineup of checking and savings accounts, like:

High-Rate Savings, a high yield savings account for goal-oriented savers (currently 3.10% APY¹)
High-Rate Checking, a checking account with competitive interest rates
Certificates of Deposit, which help you earn more with set interest rates for a fixed period of time (currently yielding 5.00% APY)
Kids Savings, a custodial account that helps you teach sound money management concepts to kids 12 and younger
Teen Checking, a joint account for kids aged 13 to 17 — there when you’re ready to loosen the reins

Additional features:

Get access to over 80,000 in-network ATMs with Alliant
No monthly service fee with eStatements
Low minimum deposit and balance requirements
Bank anywhere, anytime with the Alliant mobile app

Sign Up for Alliant Savings

Insured by NCUA

(¹For important additional disclosures, please refer to the corresponding footnote at the Sign Up link directly above.)

Best for High Yields: CIT Bank

CIT Bank offers several different accounts with category-leading yields:

Savings Connect has one of the best yields of any bank account, online or off: 4.50% APY.
Platinum Savings has an outstanding yield when you maintain a balance of $5,000 or more (4.75% APY) and a so-so yield when you don’t (0.25% APY).
Savings Builder yields up to 1.00% APY for accountholders who can meet minimum balance or deposit requirements.
The CIT Bank Money Market account has a very good yield on all balances (currently 1.55% APY) with no monthly maintenance or service fees.
Multiple CIT Bank CDs offer above-average yields, led by the 11-month CIT No Penalty CD at 4.80%

Additional features:

No monthly service fee
No early withdrawal penalty for No Penalty CDs
No ATM fees in-network
CIT may reimburse up to $30 in outside ATM fees
Earn interest on eligible eChecking funds

Sign up for CIT Bank

Best for Investors: Wealthfront

Wealthfront is a next-generation banking service that’s ideal for day-to-day money management. Its Cash Account features high-interest checking, no account fees, and a host of value-added features — and you can open an account with just $1.

But Wealthfront made its name in the investment business, and there’s where it continues to shine. Key features include:

Build semi-customized, automatically rebalanced, globally diversified portfolios of low-cost index funds optimized with daily tax-loss harvesting
Just $500 minimum to invest
Pay an annualized management fee of 0.25% assets under management (AUM) on all balances
Choose from individual and joint taxable accounts, IRAs, and 529 college savings plan accounts
Portfolio line of credit that lets you tap up to 30% of your account value once you have $25,000 or more under management
Consolidated view of all your accounts through Wealthfront’s free DIY financial planning tool

Additional features of the Wealthfront Cash Account include:

4.55% APY (variable) on all balances
$1 minimum opening deposit
No account fees
No overdraft fees
FDIC insurance on balances up to $5 million
Get paid up to two days early with direct deposit
Put your money to work in the market within minutes when you use your Cash Account to invest in a Wealthfront Investment Account
Mobile check deposit
Free bill pay and peer-to-peer (P2P) transfers
Complimentary debit card and free in-network ATM access
For a limited time, get $30 bonus cash when you open a Wealthfront Cash Account and fund your new account with at least $500 in new money. Terms apply.

Sign Up for Wealthfront

Money Crashers, LLC receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Money Crashers, LLC is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.

Best for Customer Support: Albert

Albert is a powerful financial app that makes spending, saving, and investing easy. It’s among the growing crop of financial solutions that offer early payday with eligible direct deposit, and its automated savings and investing features put it well ahead of the pack.

But where Albert really shines is on the customer service front. The platform has a dedicated team of in-house financial experts — called Geniuses — to help you make sense of your money. That puts it heads and shoulders above its crop of fellow digital money management apps.

Additional features:

Albert Cash. This is the place to manage your day-to-day spending money with Albert. Earn up to 20% back on eligible debit card purchases and get paid up to two days early with qualifying direct deposit. Use the Albert Instant cash advance feature to get up to $250 from your next paycheck with no hidden fees.
Albert Savings. Albert’s Smart savings engine sizes up your cash flow and sets aside funds automatically so that you’re always moving toward your financial goals. Set specific goals within the app, such as building an emergency fund or saving for your next vacation. And get cash bonuses on your Albert Savings every year.
Albert Investing. Start investing with as little as $1 using Albert’s guided investment platform. Choose your own stocks or themes, or have Albert do it for you.

Sign Up for Albert

Best for Debit Card Rewards: GO2bank

GO2bank is a low-friction online bank with a mobile-friendly bank account (no monthly fee with eligible direct deposit) and impressive yields on savings (4.50% APY²on savings up to $5,000).

Eligible electronic gift card purchases in the app earn up to 7% cash back; Amazon eGift Card purchases in the app earn 3% cash back. Terms and conditions apply.

Additional features:

No minimum opening deposit or ongoing balance requirement
Avoid the $5 monthly fee with an eligible direct deposit
Get paid up to two days early with ASAP Direct Deposit^{TM 3}
Deposit cash at participating retail stores, subject to fees and deposit limits
Enjoy up to $200 in overdraft protection with opt-in and eligible direct deposit.*
Earn 4.50% APY paid quarterly on savings up to $5,000 — over 10 times the national average savings rate²

* $15 fee may apply to each purchase transaction not repaid within 24 hours of authorization of the first transaction that overdrafts your account. Overdrafts paid at GO2bank’s discretion.

Sign Up for GO2Bank

¹Active GO2bank account required to receive an eGift Card. eGift Card merchants subject to change.

²GO2bank, Member FDIC. Interest paid quarterly on the average daily balance of savings during the quarter up to a $5,000 balance and if the account is in good standing. 4.50% Annual Percentage Yield (APY) as of April 2023. APY may change before or after you open an account. The average national savings account interest rate of 0.39% is determined by the FDIC as of 4/18/23. Visit https://www.fdic.gov/regulations/resources/rates/ to learn more. Fees on your primary deposit account may reduce earnings on your savings account.

³Direct deposit early availability depends on the timing of the payor’s payment instructions and fraud prevention restrictions may apply. As such, the availability or timing of early direct deposit may vary from pay period to pay period. The name and Social Security number on file with your employer or benefits provider must match your GO2bank account exactly or GO2bank will decline your deposit.

Best for No Account Fees Ever: Rewards Checking via Upgrade

Rewards Checking via Upgrade⁴ has a slew of user benefits, but its defining feature couldn’t be simpler: no account fees, ever.

That’s right. As a user, you pay no account fees — no annual fees, overdraft fees, transfer fees, or ATM fees charged by Rewards Checking by Upgrade¹.

There’s more, of course. Additional features of Rewards Checking via Upgrade include:

2% cash back on purchases at convenience stores, drugstores, restaurants, and bars, and on utility bills and certain monthly subscriptions²
Earn up to $500 cash back per year at the 2% rate
Earn 1% cash back on all other eligible purchases

Get up to five third-party ATM fee rebates each month¹
You may receive discounts on loans and cards through Upgrade³
FDIC Insured up to $250,000 through Cross River Bank, Member FDIC

Sign Up for Rewards Checking via Upgrade

1 There are no account fees, overdraft fees, annual fees, or transfer fees associated with Rewards Checking accounts. Rewards Checking charges no ATM fees, but third-party institutions may charge you a fee if you use their ATM/network or if you use your Upgrade VISA® Debit Card internationally. Upgrade will rebate any ATM fee charged by another institution for debit card withdrawals in the United States, up to five times per calendar month. To be eligible to receive third-party ATM fee rebates in any calendar month for eligible ATM withdrawals made during that month, customers must have (i) an open Rewards Checking account and (ii) either maintained an average daily balance in their account of at least $2,500 in the prior calendar month or made direct deposits into their account totaling at least $1,000 during the prior calendar month. As a courtesy to new customers, Upgrade will provide third-party ATM fee rebates for up to the first 2 calendar months after account opening regardless of account activity. Some limitations apply and terms and conditions may change. Please refer to the applicable Cross River Bank Deposit Account Agreement and Upgrade VISA® Debit Card Agreement and Disclosures for more information.

2 Rewards Checking customers accrue 2% cash back on common everyday expenses at convenience stores, drugstores, restaurants, and bars – including deliveries – and gas stations, as well as recurring payments on utilities and monthly subscriptions including phone, cable, TV and other streaming services, and 1% cash back on all other debit card charges. 2% cash back is limited to $500 in rewards per calendar year; after $500, customers accrue 1% cash back on all eligible debit card charges for the remainder of the year. Some limitations apply. Please refer to the applicable Upgrade VISA® Debit Card Agreement and Disclosures for more information.

3 The interest rate on a new loan or credit line through Upgrade may be up to 20% lower than would otherwise be applicable without this discount, as long as you have an active Rewards Checking Account. Additional terms may apply. Please refer to the applicable Truth-in-Lending Disclosure and Loan Agreement.

4 Upgrade is a financial technology company, not a bank. Rewards Checking services provided by Cross River Bank, Member FDIC. Upgrade VISA® Debit Cards issued by Cross River Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Personal Loans made by Upgrade’s bank partners. Personal Credit Lines are issued by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. The Upgrade Card is issued by Sutton Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

Best for Automated Budgeting: Douugh

Douugh is a money management app that makes it easy to stay on top of your day-to-day financial obligations while saving for a rainy day — and happier days too.

A single mobile-friendly dashboard makes it all possible.

How? That’s down to Salary Sweeper, an AI-enabled feature that automatically allocates income to two protected “jars”:

Your Bill Jar, complete with a virtual card of its own
Your Savings Jar, which is actually a customizable array of single-purpose savings buckets

The rest is yours to spend as you please using a debit card accepted by millions of merchants worldwide. Best of all, you never have to give manual budgeting a second thought.

Additional features:

Enjoy a free checking account with a Mastercard debit card
Use Apple Pay, PayPal, and other payment apps to make purchases online and IRL
Lock and unlock your card and change your PIN within the app — without calling customer service or visiting a branch.

Sign Up for Douugh

Best for Debt Refinancing: SoFi Checking and Savings

Need to refinance the student loans you’ve been carrying for years with no end in sight?

Open a SoFi Checking and Savings account, then head over to SoFi’s student loan refinancing portal to check out your options. SoFi is a category leader in the education loan refinancing business, with incredibly low rates, flexible terms, and an array of reasonable repayment options.

And since you’re also in the market for a new online bank, you’ll enjoy these great SoFi Checking and Savings perks and features:

No minimum opening deposit or balance requirement
Rate discounts on SoFi loans
Free peer-to-peer (P2P) transfers
Customized financial planning
Member-exclusive offers from SoFi partners
A referral program that pays up to $310 per successful referral
Up to 3.75% APY on eligible balances

Plus, for a limited time, sign up for SoFi Checking and Savings and earn a $250 opening bonus when you set up direct deposit of at least $1,000 into your account

Sign Up for SoFi Checking and Savings

Best for Teens and Young People: Copper Banking

Copper is a banking solution for teens age 13 and older — and their parents too.

It’s built around the Copper Card, a personalized debit card that leverages Apple Pay technology to facilitate seamless online and in-person transactions.

The Copper App allows parents to monitor spending and instantly send money in seconds. For teens, its Automatic Saving feature encourages saving — a lifelong financial habit — by automatically setting aside a portion of each paycheck or inflow.

Additional features:

Copper has a wealth of financial literacy content for parents and kids alike — it’s one of the best financial education tools around
Withdraw cash for free at over 55,000 ATMs
All Copper Accounts are FDIC-insured up to $250,000 through Evolve Bank & Trust

Sign Up for Copper

Best for Potential Returns on Savings & Spending: PrizePool

PrizePool is a truly unique financial app — the only FDIC-insured deposit account provider that offers users the chance to earn serious money based on your saving and spending habits.

PrizePool offers two ways to win:

Savings Balances: Get 1 ticket for PrizePool’s prize drawings for every $1 on deposit in your savings account, every day. So if you have $1,000 in your account, you get 1,000 tickets every day.
Debit Card Purchases: Earn 30 tickets for every $1 spent, plus get the chance to have your purchases reimbursed.

PrizePool holds a weekly drawing every Friday. There are almost 6,000 cash prizes every week, including a $10,000 grand prize drawing at least once every six weeks.

Additional features:

Earn 0.30% APY on eligible savings balances
Deposits are FDIC-insured up to $250,000
Refer new users to PrizePool and get 10% of their prize winnings forever

Sign Up for PrizePool

Best for Freelancers and Self-Employed People: Lili

Lili offers a totally free checking solution with a slew of value-added features designed to simplify your financial life.

Its core product is built with freelancers in mind, but it’s appropriate for a range of use cases, from solopreneurs to folks who supplement 9-to-5 income with side hustle revenue.

With powerful, automated tax savings and expense categorization tools, Lili eliminates the need to juggle separate bank accounts for business and personal needs — it’s just one deposit account for your entire financial life.

Additional features:

No minimum opening deposits or ongoing balance requirements and no account fees
Pay virtually anywhere with a Visa debit card that’s accepted worldwide

Lili’s Tax Bucket tool automatically sets aside funds earmarked for income tax payments
Utilize expense management and categorization tools that simplify business budgeting, cash flow management, and year-end accounting
Get real-time alerts for every transaction (and other account activities too)
Make mobile check deposits through the Lili mobile app
Make cash deposits at more than 90,000 retail locations across the U.S., including CVS, Walgreens, and Rite Aid
Get paid up to two days early with early direct deposit
Enjoy fee-free withdrawals at about 38,000 ATMs nationwide

For $9 per month, Lili Pro adds even more valuable features:

A premium Visa Business Debit Card that delivers cash-back rewards
BalanceUp, a fee-free overdraft solution that covers up to $200 in would-be overdrafts
Advanced expense tracking that helps business owners maximize their tax deductions
A savings account that pays interest

Sign Up for Lili

Best for Savers: Quontic Bank

Quontic Bank got its start as a New York City community bank that catered to thrifty types.

Today, Quontic’s branch-based banking options represent just a small fraction of its offerings. With a nationwide digital footprint, Quontic delivers category-leading checking and savings yields for consumers and small-business owners from all walks of life — all with no monthly service fees:

Cash Rewards Checking: Earn unlimited 1.5% cash back on qualifying debit card transactions after meeting the $100 minimum opening deposit.
Bitcoin Rewards Checking: Earn 1.5% Bitcoin on qualifying debit card transactions. The minimum opening deposit is $500. This account may not be available in all states.
High Interest Checking: Make 10 or more qualifying debit card point-of-sale transactions of $10 or more per statement cycle to earn interest at competitive rates based on account balance. The minimum opening deposit is $100.
High Yield Savings: Earn interest at category-leading rates (currently 4.25%) after meeting the $100 minimum opening deposit.
Money Market: Earn solid yields (currently 4.75%) after meeting the $100 minimum.
CDs: Quontic CDs have terms ranging from six months to three years and competitive yields that generally increase in proportion to term. The minimum opening deposit is $500. Early withdrawal penalties may apply.

Additional features:

Tap to pay with the Quontic Pay Ring — the first wearable debit card
Choose from an array of home loans, including community development loans that go beyond your traditional credit profile
Take advantage of special loans for foreign nationals and recent immigrants

Sign Up for Quontic Bank

Best for Borrowers: Discover Bank

Discover Bank is a full-service online bank with a wide range of deposit accounts. It’s a great (almost) one-stop shop for your digital financial needs.

Discover Bank’s real differentiator is its comprehensive lineup of secured and unsecured credit products. That includes unsecured personal loans, which many online banks don’t bother with due to perceived risk.

You’ll find home loans, home equity products, student loans, credit cards, and personal lines of credit here too.

Discover Bank’s deposit account options include:

Cashback Debit: This checking account has no yield, but you can earn 1% cash back on up to $3,000 in qualifying debit card spending each month. There’s no monthly maintenance fee.
Online Savings Account: This account has a very strong yield on all balances — currently 3.90% APY. There’s no maintenance fee or minimum to open.
Money Market Account: With a minimum opening deposit and balance requirement of $2,500, this account has competitive yields on all balances. Its two balance tiers cleave at $100,000, but yields on higher balances barely exceed those on lower balances. Enjoy a free, optional debit card, and no maintenance fee. There’s also no minimum balance fee, despite the minimum balance requirement.
Traditional CDs: CD terms range from three months to 10 years. Yields range widely, peaking on longer-term CDs. You need $2,500 to open any CD.

Additional features:

Structure any money market or CD as a traditional, Roth, or SEP IRA
Or roll over your 401(k), 457 deferred compensation plan, annuity, or IRA from another institution
Enjoy a coast-to-coast network of 60,000 fee-free ATMs
Enjoy 24/7 support by phone, live chat, and email
Make mobile check deposits from anywhere
Enjoy free, instant P2P money transfers

Sign Up for Discover Bank

Methodology: How We Select the Best Online Banks

We use several key factors to evaluate online banks and surface the very best ones for our readers. Each relates in some way to the overall user experience, and you’ll see many represented in our “Best For” categories above.

Available Account Types

The best online banks offer a range of different deposit account types: free checking, savings, CD, and money market accounts, among many others.

Truly comprehensive online banks go even further, with less-common account offerings like savings IRAs, jumbo CDs, and more. More accounts doesn’t necessarily mean a better banking experience, but it’s helpful if you’re looking for a one-stop financial shop.

Interest Rates

Online banks tend to have higher yields — interest rates paid to the account holder — as well as lower interest rates on certain types of loans, if offered.

You shouldn’t count on that though. It’s important to shop around and choose an online bank that consistently offers significantly better rates. Not all do.

Account Minimums

The best online banks have low or no minimum balances and low or no minimum opening deposit requirements on checking, savings, and money market accounts.

CDs generally do have minimum deposit requirements, even at the best online banks, but there’s lots of variation. Look for deposits at or below the $1,000 mark, if possible.

Monthly Maintenance Fees

Free is always better than not free, right?

Not necessarily. Some of the best online banks around charge modest monthly fees. In exchange, they offer a wealth of value-added features and services that can earn or save you money (and sometimes both at the same time).

That said, we do give preference to banks that don’t charge monthly fees at all. Because everyone could use a break.

Other Account Fees

The trusty monthly maintenance fee is just the most visible bank fee. Others include:

ATM fees (in-network and out-of-network)
Wire transfer fees
Excess transaction fees
Early withdrawal penalties
Minimum balance fees

Traditional banks are notorious for nickel-and-diming their customers. By contrast, most online banks do charge at least some fees, but they’re predictable and clearly disclosed on their websites and applications.

For example, many online bank CDs come with early withdrawal penalties. These can be equivalent to as little as one month’s interest on shorter-term CDs but may range up to 24 months of interest on very long-term CDs.

All else being equal, we prefer online banks that charge few if any fees — and hidden fees are a dealbreaker.

Investment and Tax-Advantaged Options

Many online banks stick to core banking services, like checking and savings. But a growing number of online banks offer a wider array of options for people who’d like to be able to do all their banking in the same place.

We’re particularly fond of online banks that offer tax-advantaged account options, such as savings IRAs and CD IRAs. We also like online banks that have in-house investment platforms — whether they’re self-directed brokerages like Ally Invest or low-cost robo-advisors like Wealthfront.

Credit Options

All online banks have at least one deposit account product. That’s what makes them online banks.

A smaller but growing number make loans or issue lines of credit — including credit cards — as well. Common online bank credit products include:

Mortgage loans, including purchase loans and refinance loans
Home equity products, including home equity loans and lines of credit
Auto loans
Student loans and student loan refinancing products
Personal loans
Credit cards and other types of credit lines

We don’t hold it against online banks that don’t make loans — it’s a big step for many a lean bank. But we do look out for banks that have taken the leap.

Budgeting and Money Management Features

Budgeting is hard to do right. That’s why we’re big fans of online banks with built-in budgeting and money management tools.

The more automated these tools are, the better. In fact, some make our list of the top budgeting apps on the market. Truly “set it and forget it” money management saves the typical consumer hundreds if not thousands of dollars per year.

Online Banking FAQs

Still have questions about online banks and managing money online? We have answers.

How Much Does Online Banking Cost?

Online bank rates, yields, and fees are subject to change at banks’ sole discretion. For up-to-date information about specific accounts and bank policies, check their websites or call customer service.

That said, online banks are generally more affordable than traditional banks. They’re less likely to charge monthly maintenance fees on checking and savings accounts, and many have fewer hidden fees too.

What’s the Interest Rate on an Online Bank Account?

That also depends on the individual bank. But many online accounts feature higher yields relative to those of traditional banks.

That’s because online banks have less overhead than traditional banks. They don’t need to pay to keep big, centrally located branches open or pay people to work at them. Their operations are more efficient, which allows them to pass the savings on to customers via higher rates and lower fees.

How Do You Enroll in Online Banking?

It depends on the bank and how its website or app is structured, but it’s usually straightforward. In fact, with an online-only bank, enrollment is usually automatic. You don’t have to complete a separate application or even click a button to activate your account.

However, you will need to create a unique username and password to get started. You may be asked to do this as part of the initial application process or once your account is approved. You’ll also need to link at least one external funding source to transfer money into your account.

Can You Get a Mortgage From an Online Bank?

Some online banks offer home loans (mortgages) and other credit products. These banks tend to be larger online banks with high name recognition, like Ally Bank and Capital One Bank. Look for a “Mortgages” or “Home Loans” tab on the homepage or in your account dashboard.

Be aware that some online banks outsource mortgage origination to other companies. In other words, if you apply for a mortgage through your bank, your loan officer might actually work for someone else. This isn’t necessarily a bad thing, but it could mean a different level or style of service than you’re used to.

And don’t expect your online bank to offer better mortgage rates than other lenders. The mortgage loan business is highly competitive, and direct lenders with even lower overhead may be able to undercut online banks.

How to Choose the Best Online Bank — Or Several

The institutions on this list offer a great combination of FDIC-insured banking products, solid yields, open access, and helpful customer service.

Before choosing one, take a closer look at the features that set it apart from the competition: rewards checking, flexible withdrawal terms for CDs, particularly high account yields, a socially responsible corporate philosophy, and so on.

And remember that, unlike in the old days, your banking choices aren’t bound by geography or other restrictions. If you can’t settle on a single online bank, why not open accounts at multiple banks and compare your experiences?

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

Apache is functioning normally

May 24, 2023 by Brett Tams

Did the movie “The Big Short” go right over your head? Does Nasdaq sound more like a foreign country than a stock market index? When you hear about bear markets and bull markets, do you envision adorable cartoon mammals browsing for fresh produce at a local farmers market?

You’re not alone.

The stock market can be confusing, and if you’re not a financial wizard in the Wall Street inner circle, you might be tempted not to bother with stock and options trading at all. But you’d be missing out.

That’s where apps like Robinhood come in. In this Robinhood review, we’ll discuss how Penny Hoarders can go from novice traders to expert stock market gurus, no matter how much or how little they have to invest.

What Is Robinhood?

Robinhood offers a unique brokerage account with commission-free investing from your smartphone. Robinhood has been around for the better part of a decade — the company launched April 18, 2013. Its two founders, Vladimir Tenev and Baiju Bhatt, met at Stanford University as roommates and eventually moved to New York City to build finance companies.

Upon seeing firsthand how Wall Street insiders and powerhouse firms paid almost nothing when trading stocks while average Americans had to pay a commission fee for every trade, they instead headed to California to develop a financial product that allowed everyone to trade easily and affordably.

The resulting financial product, of course, was Robinhood. The company today is headquartered in Menlo Park, California.

Robinhood has not been without its challenges. It’s famous for serious outages during market surges in 2020 and its role in the early 2021 market chaos related to the Reddit forum called r/wallstreetbets, where it restricted member access to securities like GameStop, Nokia and AMC. More recently, Robinhood laid off 23% of its staff, just one example of the massive tech industry layoffs in 2022, and also has been in the news for questionable trades.

However, Robinhood’s overall mission to make stock market trading accessible for everyone is admirable, and it is one of many investment and trading tools that seeks to put power back in consumers’ hands to elevate the financial status of the average American.

That’s a product that, even with its flaws, we can get behind.

What Tradable Securities Does Robinhood Offer?

The Robinhood platform is a great solution for free(!) trading of stocks, options, ETFs (exchange-traded funds) and ADRs (American Depositary Receipts), as well as cryptocurrency trading. The trading platform requires no minimum balance, offers fractional shares and includes plenty of educational resources. While Robinhood is most known for trading stocks and crypto, you can also use it for cash management.

Robinhood does not, however, offer access to mutual funds and bonds.

In 2021, Robinhood began to offer IPO access, meaning investors could purchase shares of stock in new companies at the IPO price before they go public. And in 2022, it introduced individual retirement accounts, or IRAs.

What Can You Trade on Robinhood?

U.S. exchange-listed stocks
U.S. exchange-listed ETFs
Options contracts for U.S. exchange-listed stocks and ETFs
ADRs for more than 650 globally listed companies
Cryptocurrency

What Can’t You Trade on Robinhood?

Foreign-domiciled stocks
Select OTC equities
Preferred stocks
Tracking stocks
Stocks that trade on foreign exchanges
Royalty trusts
Units
Closed-end funds
Mutual funds
Bonds
Fixed-income trading
New York registry shares
Limited partnerships
Chinese securities affected by the Nov. 2020 executive order
Spanish ADRs

How to Get Started with Robinhood

To sign up with a Robinhood brokerage account, simply visit the website and press the black “sign up” button.

Hot Tip: Robinhood is currently offering one free fractional share upon signup. There are 20 fractional shares available to choose from. To generate its 20 offers, Robinhood chose the two largest S&P 500 companies within each of the top 10 sectors based on market cap.

To open an account with Robinhood, you have to meet a few individual requirements:

You must be 18 or older.
You need a valid Social Security Number (Note: You may not use a Taxpayer Identification Number).
You must be a legal U.S. citizen, U.S. permanent resident or have a valid U.S. visa and have an address in the 50 states or Puerto Rico (exceptions made for members of the U.S. military stationed outside the country).

The Robinhood trading platform is accessible via the web or app (iOS and Android).

The process of activating your account can take some time. You’ll start by submitting an application. While Robinhood reviews the application, you can queue one deposit to fund your account, but you won’t be able to use that money to make trades until account approval.

Typically, Robinhood will take a few days to either approve your application or request more information. If they request more information or documentation, be prepared to allow five to seven days for review.

How Much Does Robinhood Cost?

Trading with Robinhood is free. That’s the whole reason its founders launched the company: free stock trading for regular people. That means you won’t pay commissions on equity trades or options trades. However, you could wind up having to pay account transfer fees, wire fees, check fees and live broker fees, among others.

In addition, Robinhood Gold allows you to trade on margin at a 7.75% annual rate (11.75% for non-Gold members). It also allows you to make bigger deposits with faster fund access. This fee for the margin account is $5 per month.

Robinhood Gold, Explained

Margin trading means trading with borrowed money. If you invest in a bad stock and lose money on the investment, you’ll owe that money back.

For example, say you borrow $500 to invest in a stock worth $500. But that stock plummets to $100. You will still owe the remaining $400 back to Robinhood. That’s what makes margin trading a little too risky for novice traders.

Not only that, but if you borrow more than $1,000 to trade on margin, you’ll owe 7.75% yearly interest on that borrowed money above that $1,000.

Because Robinhood is targeted at new investors — and margin trading is a risky practice that can break even the savviest stock market gurus — we recommend that you invest with your own money, and make sure it’s money that, if lost, will not financially ruin you.

In fact, one of our biggest stock trading tips for beginners is to stay away from margin trading.

So How Else Does Robinhood Make Money?

If Robinhood is commission-free and not everyone uses Robinhood Gold, how does Robinhood make money off you? Robinhood spells this out transparently on its website:

Rebates from market makers and trading venues: Robinhood has developed relationships with market makers and trading venues that pay Robinhood rebates for directing orders to those makers and venues. In the industry, this is known as payment for order flow (PFOF).
Stock loans: Robinhood can loan stocks held in your account to traders and hedge funds for short selling. Robinhood gets to keep the money it makes from this; you as the investor do not share in the wealth.
Income from cash: If you have idle cash sitting uninvested but haven’t moved it into a cash management account, Robinhood earns interest on that cash.
Cash management account: Every time you use the debit card for your cash management account, Sutton Bank (the card issuer) earns a fee, which it shares with Robinhood.
Robinhood Gold: Robinhood makes money off every Gold subscription, both from the monthly fee and from margin interest.

Robinhood Review: Key Features

In this section, we will break down some of the hallmark features of Robinhood.

Robinhood: At a Glance

Feature	Details	More Details
Trading fees	$0	n/a
Account minimum	$0	n/a
Tradable securities	Stock options	ETFs ADRs; crypto
Mobile app rating	4.2 on App Store	4 on Google Play
Customer support	Talk to a live agent 24 hours a day, 7 days a week	30-minute guarantee
Other key features	Fractional shares	IPO access
Beginner perks	Educational resources	Free stock at sign-up

Commission-Free

Robinhood’s schtick has long been that it offers commission-free trading. That means you will spend $0 for stock trading and $0 for options trading. ETFs also are commission-free.

This was the original mission of the founders, but in the time since launching their revolutionary idea, some of the bigger, traditional players, like Fidelity and Charles Schwab, have latched onto the same idea — and are backed by a better customer support system and a better-supported platform.

That has meant the Robinhood trading platform has had to find new ways to differentiate, like cryptocurrency and fractional shares. More on these below.

No Account Minimum

Of course, you will need to put money in your account to invest, but Robinhood does not have an account minimum, nor does it charge you for having a low or zero balance. And with fractional shares being an option, you can get started investing with as little as a dollar in your account.

Note: To purchase a security on margin (through Robinhood Gold), you need to have at least $2,000 in your account. This is not a Robinhood requirement but rather a regulation set by the Financial Industry Regulatory Authority (FINRA).

Cryptocurrency Trading

Cryptocurrency is still a foreign concept to many investors, but just because something is new and scary (also, it’s been around since 2009, so it’s hardly new anymore) doesn’t mean you shouldn’t invest. Not all brokers allow you to buy and sell cryptocurrency, but Robinhood offers support for multiple cryptocurrencies, including Bitcoin, Dogecoin and Ethereum, with Robinhood Crypto (open 24/7).

In keeping with the whole “Robinhood is free” theme, Robinhood charges 0% for crypto exchanges. Some competitors charge up to 4%.

Fees

Not only does Robinhood offer free trades on stocks, options, ETFs and ADRs, it also has no account fees, inactivity fees or ACH transfer fees. Robinhood Gold, as mentioned, currently costs $5 a month.

Mobile App

Robinhood was created in the heart of Silicon Valley in Menlo Park, so, unsurprisingly, its mobile app is streamlined and easy to use. At the time of writing, the Robinhood app had 4.2 stars in the App Store based on more than 4 million reviews.

Its website, too, is streamlined. It doesn’t have a lot of extras, which is great if you are a novice trader. A more senior investor may find the site lacking, however.

Customer Support

While Robinhood offers customer support, this seems to be the biggest issue raised by members. Customer review sites often are littered with complaints that customer service is virtually nonexistent, especially pre- and post-market.

In an effort to improve its relatively low-rated customer support options, Robinhood rolled out a new customer service feature in 2021. This allows customers to request a call back, 24/7. Robinhood promises an agent should call within 30 minutes.

No Mutual Funds and Bonds

While commission-free stocks, options, ETFs and even crypto are a big pro of Robinhood, its lack of mutual funds and bonds can be frustrating for traders who want to diversify. As far as retirement accounts go, mutual funds are a key part of a retirement investment strategy.

Fractional Shares

True to its goal of making growing financial wealth more accessible to average Americans, Robinhood released fractional share options in late 2019. This means, if you can’t afford an expensive stock valued at, say, $1,000, you could instead buy a fraction of the stock, maybe $100 worth of it, or even just $10.

Right now, Robinhood allows you to buy as small as one-millionth of a share. Just like full shares, trading of fractional shares can be done in real time and is commission-free.

Recurring Investments

Another tool that Robinhood has introduced in recent years is recurring investments, which is a nice pairing with a fractional share investment strategy. For example, if Company X’s stock hovers around $200, you can set up a recurring investment in a fractional share at $25/week. Within roughly eight weeks, you could own a full share.

Most brokers structure recurring investments as buying by the share, which typically leaves your account funded with some uninvested cash. But Robinhood’s recurring investments are structured as buying by a dollar amount, which makes the best use of all your invested cash.

IPO Access

New in 2021, Robinhood gave customers access to purchase stocks in upcoming IPOs (initial public offerings) at the IPO price. No minimum account balances or special status requirements are necessary.

Cash Management Account

Another cool feature of Robinhood is the associated cash management account. You can have your paycheck deposited here, use it to pay bills and deposit checks, and, of course, fund your account. Like a proper bank account, this account gives you access to more than 75,000 fee-free ATMs (pretty much everywhere Mastercard is accepted) and comes with a debit card. And the best part: It earns 1.5% APY (4.65% APY for Gold members). For reference, the FDIC says the average interest rate for a savings account is 0.33% APY. And because the account is operated through a network of banks, you’ll get more than the typical $250,000 FDIC insurance; instead, the account is insured up to $1.25 million.

Educational Resources

A lot of now-outdated Robinhood reviews mention the lack of educational resources. We couldn’t find anything to be less true of Robinhood. Perhaps in response to some of those reviews, Robinhood has stepped up its game, with plenty of online resources on the website as well as a daily financial newsletter called Robinhood Snacks. Robinhood markets it as a “3-minute newsletter with fresh takes on the financial news.”

Pro Tip

Serious investors keep up with this kinds of news. It may not have the same appeal as celebrity gossip, but it will help you make wise decisions investments decisions.

Robinhood makes it easy to access news from Reuters, Cheddar, WSJ Markets, etc. Upgrading to Robinhood Gold gets you access to Morningstar, Nasdaq and Nasdaq Totalview Level 2 Market Data.

What Customers Are Saying About Robinhood

Because of Robinhood’s role in the recent GameStop market chaos and following layoffs in 2022, many angry investors and emboldened Redditors spoke their minds online, meaning Robinhood’s current ranking on sites like the Better Business Bureau (BBB) and Google Play is suffering. This is more a reflection of reviewers’ overall criticisms of capitalism, hedge fund managers and the 1% than it is on Robinhood, which, if you take a step back, is really trying to help the average investor.

Pros and Cons of Robinhood

There’s a lot to love about Robinhood, especially if you are a new trader. More experienced traders may prefer a different approach to trading, however. Weigh these pros and cons before deciding on a Robinhood brokerage account.

Pros

The educational content is great if you are new to the stock market and want to learn the language.
The cash management account makes it easy to fund your investments and earns a decent APY.
You can strategize by combining fractional shares and recurring investments to diversify your assets and minimize uninvested cash, no matter how much you have to invest.
The commission-free trading and no account minimum truly make this accessible to anyone who wants to invest.
Robinhood gives you the option of investing in cryptocurrency and access to IPOs.
The mobile app and online trading platform are known for their ease of use.
There are no account or trading fees, nor are there account inactivity or ACH transfer fees
Robinhood is running a promotion wherein you get free fractional share upon signing up.

Cons

The role Robinhood played in limiting investments in squeeze stocks (like GameStop) in early 2021 brought the original mission of the company into question. The 2022 layoffs didn’t help.
Customer support is lacking, especially compared to larger brokers. Robinhood customers complain that customer service is especially challenging pre- and post-market.
Robinhood lacks mutual funds and bonds.
By not charging investors commission, Robinhood instead makes money through the payment for order flow, a common standard among online brokers. Some critics say this is a conflict of interest.

Are There Alternatives to Robinhood?

If you want to stay away from major players like TD Ameritrade and Charles Schwab, Robinhood is arguably the most popular trading tool.

Its most notable competitor is Webull. Both Robinhood and Webull have their advantages; it truly comes down to your personal preferences. But Robinhood and Webull aren’t your only options. In fact, we’ve rounded up the best investment apps currently offered; choosing the right app depends on your own specific needs and investment strategy.

Frequently Asked Questions (FAQs) About Robinhood

Still have questions about opening a Robinhood account? We’ve provided answers to some of the questions our readers are most commonly asking.

Is Robinhood Safe?

Yes, Robinhood is a safe platform for investing. Robinhood is a member of the SIPC (Securities Investor Protection Corporation), meaning your funds are insured up to $500,000. Robinhood also is regulated by the Securities and Exchange Commission (SEC).

Is Robinhood a Brokerage Account?

Yes, Robinhood offers a brokerage account as its key offering, but you can also open a cash management account with Robinhood.

Does Robinhood Pay Dividends?

Robinhood processes your dividends automatically, crediting cash to your account by default.

Is Robinhood Gold Worth It?

Most investors will be fine with Robinhood’s free investing accounts. Being a Robinhood Gold member is ideal for margin trading, but we don’t recommend this unless you are a more seasoned investor.

Timothy Moore covers banking and investing for The Penny Hoarder from his home base in Cincinnati. He has worked in editing and graphic design for a marketing agency, a global research firm and a major print publication. He covers a variety of other topics, including insurance, taxes, retirement and budgeting and has worked in the field since 2012. Freelancer Lauren Richardson contributed to this post.

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Source: thepennyhoarder.com

Apache is functioning normally

May 24, 2023 by Brett Tams

In Best Low-Risk Investments for 2023, I provided a comprehensive list of low-risk investments with predictable returns. But it’s precisely because those returns are low-risk that they also provide relatively low returns.

In this article, we’re going to look at high-yield investments, many of which involve a higher degree of risk but are also likely to provide higher returns.

True enough, low-risk investments are the right investment solution for anyone who’s looking to preserve capital and still earn some income.

But if you’re more interested in the income side of an investment, accepting a bit of risk can produce significantly higher returns. And at the same time, these investments will generally be less risky than growth stocks and other high-risk/high-reward investments.

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Determine How Much Risk You’re Willing to Take On

The risk we’re talking about with these high-yield investments is the potential for you to lose money. As is true when investing in any asset, you need to begin by determining how much you’re willing to risk in the pursuit of higher returns.

Chasing “high-yield returns” will make you broke if you don’t have clear financial goals you’re working towards.

I’m going to present a large number of high-yield investments, each with its own degree of risk. The purpose is to help you evaluate the risk/reward potential of these investments when selecting the ones that will be right for you.

If you’re looking for investments that are completely safe, you should favor one or more of the highly liquid, low-yield vehicles covered in Best Low-Risk Investments for 2023. In this article, we’re going to be going for something a little bit different. As such, please note that this is not in any way a blanket recommendation of any particular investment.

Best High-Yield Investments for 2023

1. Treasury Inflation-Protected Securities (TIPS)

Let’s start with this one, if only because it’s on just about every list of high-yield investments, especially in the current environment of rising inflation. It may not actually be the best high-yield investment, but it does have its virtues and shouldn’t be overlooked.

Basically, TIPS are securities issued by the U.S. Treasury that are designed to accommodate inflation. They do pay regular interest, though it’s typically lower than the rate paid on ordinary Treasury securities of similar terms. The bonds are available with a minimum investment of $100, in terms of five, 10, and 30 years. And since they’re fully backed by the U.S. government, you are assured of receiving the full principal value if you hold a security until maturity.

But the real benefit—and the primary advantage—of these securities is the inflation principal additions. Each year, the Treasury will add an amount to the bond principal that’s commensurate with changes in the Consumer Price Index (CPI).

Fortunately, while the principal will be added when the CPI rises (as it nearly always does), none will be deducted if the index goes negative.

You can purchase TIPS through the U.S. Treasury’s investment portal, Treasury Direct. You can also hold the securities as well as redeem them on the same platform. There are no commissions or fees when buying securities.

On the downside, TIPS are purely a play on inflation since the base rates are fairly low. And while the principal additions will keep you even with inflation, you should know that they are taxable in the year received.

Still, TIPS are an excellent low-risk, high-yield investment during times of rising inflation—like now.

2. I Bonds

If you’re looking for a true low-risk, high-yield investment, look no further than Series I bonds. With the current surge in inflation, these bonds have become incredibly popular, though they are limited.

I bonds are currently paying 6.89%. They can be purchased electronically in denominations as little as $25. However, you are limited to purchasing no more than $10,000 in I bonds per calendar year. Since they are issued by the U.S. Treasury, they’re fully protected by the U.S. government. You can purchase them through the Treasury Department’s investment portal, TreasuryDirect.gov.

“The cash in my savings account is on fire,” groans Scott Lieberman, Founder of Touchdown Money. “Inflation has my money in flames, each month incinerating more and more. To defend against this, I purchased an I bond. When I decide to get my money back, the I bond will have been protected against inflation by being worth more than what I bought it for. I highly recommend getting yourself a super safe Series I bond with money you can stash away for at least one year.”

You may not be able to put your entire bond portfolio into Series I bonds. But just a small investment, at nearly 10%, can increase the overall return on your bond allocation.

3. Corporate Bonds

The average rate of return on a bank savings account is 0.33%. The average rate on a money market account is 0.09%, and 0.25% on a 12-month CD.

Now, there are some banks paying higher rates, but generally only in the 1%-plus range.

If you want higher returns on your fixed income portfolio, and you’re willing to accept a moderate level of risk, you can invest in corporate bonds. Not only do they pay higher rates than banks, but you can lock in those higher rates for many years.

For example, the average current yield on a AAA-rated corporate bond is 4.55%. Now that’s the rate for AAA bonds, which are the highest-rated securities. You can get even higher rates on bonds with lower ratings, which we will cover in the next section.

Corporate bonds sell in face amounts of $1,000, though the price may be higher or lower depending on where interest rates are. If you choose to buy individual corporate bonds, expect to buy them in lots of ten. That means you’ll likely need to invest $10,000 in a single issue. Brokers will typically charge a small per-bond fee on purchase and sale.

An alternative may be to take advantage of corporate bond funds. That will give you an opportunity to invest in a portfolio of bonds for as little as the price of one share of an ETF. And because they are ETFs, they can usually be bought and sold commission free.

You can typically purchase corporate bonds and bond funds through popular stock brokers, like Zacks Trade, TD Ameritrade.

Corporate Bond Risk

Be aware that the value of corporate bonds, particularly those with maturities greater than 10 years, can fall if interest rates rise. Conversely, the value of the bonds can rise if interest rates fall.

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4. High-Yield Bonds

In the previous section we talked about how interest rates on corporate bonds vary based on each bond issue’s rating. A AAA bond, being the safest, has the lowest yield. But a riskier bond, such as one rated BBB, will provide a higher rate of return.

If you’re looking to earn higher interest than you can with investment-grade corporate bonds, you can get those returns with so-called high-yield bonds. Because they have a lower rating, they pay higher interest, sometimes much higher.

The average yield on high-yield bonds is 8.29%. But that’s just an average. The yield on a bond rated B will be higher than one rated BB.

You should also be aware that, in addition to potential market value declines due to rising interest rates, high-yield bonds are more likely to default than investment-grade bonds. That’s why they pay higher interest rates. (They used to call these bonds “junk bonds,” but that kind of description is a marketing disaster.) Because of those twin risks, junk bonds should occupy only a small corner of your fixed-income portfolio.

High Yield Bond Risk

In a rapidly rising interest rate environment, high-yield bonds are more likely to default.

High-yield bonds can be purchased under similar terms and in the same places where you can trade corporate bonds. There are also ETFs that specialize in high-yield bonds and will be a better choice for most investors, since they will include diversification across many different bond issues.

5. Municipal Bonds

Just as corporations and the U.S. Treasury issue bonds, so do state and local governments. These are referred to as municipal bonds. They work much like other bond types, particularly corporates. They can be purchased in similar denominations through online brokers.

The main advantage enjoyed by municipal bonds is their tax-exempt status for federal income tax purposes. And if you purchase a municipal bond issued by your home state, or a municipality within that state, the interest will also be tax-exempt for state income tax purposes.

That makes municipal bonds an excellent source of tax-exempt income in a nonretirement account. (Because retirement accounts are tax-sheltered, it makes little sense to include municipal bonds in those accounts.)

Municipal bond rates are currently hovering just above 3% for AAA-rated bonds. And while that’s an impressive return by itself, it masks an even higher yield.

Because of their tax-exempt status, the effective yield on municipal bonds will be higher than the note rate. For example, if your combined federal and state marginal income tax rates are 25%, the effective yield on a municipal bond paying 3% will be 4%. That gives an effective rate comparable with AAA-rated corporate bonds.

Municipal bonds, like other bonds, are subject to market value fluctuations due to interest rate changes. And while it’s rare, there have been occasional defaults on these bonds.

Like corporate bonds, municipal bonds carry ratings that affect the interest rates they pay. You can investigate bond ratings through sources like Standard & Poor’s, Moody’s, and Fitch.

Fund	Symbol	Type	Current Yield	5 Average Annual Return
Vanguard Inflation-Protected Securities Fund	VIPSX	TIPS	0.06%	3.02%
SPDR® Portfolio Interm Term Corp Bond ETF	SPIB	Corporate	4.38%	1.44%
iShares Interest Rate Hedged High Yield Bond ETF	HYGH	High-Yield	5.19%	2.02%
Invesco VRDO Tax-Free ETF (PVI)	PVI	Municipal	0.53%	0.56%

6. Longer Term Certificates of Deposit (CDs)

This is another investment that falls under the low risk/relatively high return classification. As interest rates have risen in recent months, rates have crept up on certificates of deposit. Unlike just one year ago, CDs now merit consideration.

But the key is to invest in certificates with longer terms.

“Another lower-risk option is to consider a Certificate of Deposit (CD),” advises Lance C. Steiner, CFP at Buckingham Advisors. “Banks, credit unions, and many other financial institutions offer CDs with maturities ranging from 6 months to 60 months. Currently, a 6-month CD may pay between 0.75% and 1.25% where a 24-month CD may pay between 2.20% and 3.00%. We suggest considering a short-term ladder since interest rates are expected to continue rising.” (Stated interest rates for the high-yield savings and CDs were obtained at bankrate.com.)

Most banks offer certificates of deposit with terms as long as five years. Those typically have the highest yields.

But the longer term does involve at least a moderate level of risk. If you invest in a CD for five years that’s currently paying 3%, the risk is that interest rates will continue rising. If they do, you’ll miss out on the higher returns available on newer certificates. But the risk is still low overall since the bank guarantees to repay 100% of your principle upon certificate maturity.

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7. Peer-to-Peer (P2P) Lending

Do you know how banks borrow from you—at 1% interest—then loan the same money to your neighbor at rates sometimes as high as 20%? It’s quite a racket, and a profitable one at that.

But do you also know that you have the same opportunity as a bank? It’s an investing process known as peer-to-peer lending, or P2P for short.

P2P lending essentially eliminates the bank. As an investor, you’ll provide the funds for borrowers on a P2P platform. Most of these loans will be in the form of personal loans for a variety of purposes. But some can also be business loans, medical loans, and for other more specific purposes.

As an investor/lender, you get to keep more of the interest rate return on those loans. You can invest easily through online P2P platforms.

One popular example is Prosper. They offer primarily personal loans in amounts ranging between $2,000 and $40,000. You can invest in small slivers of these loans, referred to as “notes.” Notes can be purchased for as little as $25.

That small denomination will make it possible to diversify your investment across many different loans. You can even choose the loans you will invest in based on borrower credit scores, income, loan terms, and purposes.

Prosper, which has managed $20 billion in P2P loans since 2005, claims a historical average return of 5.7%. That’s a high rate of return on what is essentially a fixed-income investment. But that’s because there exists the possibility of loss due to borrower default.

However, you can minimize the likelihood of default by carefully choosing borrower loan quality. That means focusing on borrowers with higher credit scores, incomes, and more conservative loan purposes (like debt consolidation).

8. Real Estate Investment Trusts (REITs)

REITs are an excellent way to participate in real estate investment, and the return it provides, without large amounts of capital or the need to manage properties. They’re publicly traded, closed-end investment funds that can be bought and sold on major stock exchanges. They invest primarily in commercial real estate, like office buildings, retail space, and large apartment complexes.

If you’re planning to invest in a REIT, you should be aware that there are three different types.

“Equity REITs purchase commercial, industrial, or residential real estate properties,” reports Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University and co-author of several books, including The Tools and Techniques Of Investment Planning, Strategic Value Investing and Investment Banking for Dummies. “Income is derived primarily from the rental on the properties, as well as from the sale of properties that have increased in value. Mortgage REITs invest in property mortgages. The income is primarily from the interest they earn on the mortgage loans. Hybrid REITs invest both directly in property and in mortgages on properties.”

Johnson also cautions:

“Investors should understand that equity REITs are more like stocks and mortgage REITs are more like bonds. Hybrid REITs are like a mix of stocks and bonds.”

Mortgage REITs, in particular, are an excellent way to earn steady dividend income without being closely tied to the stock market.

Examples of specific REITs are listed in the table below (source: Kiplinger):

REIT	Equity or Mortgage	Property Type	Dividend Yield	12 Month Return
Rexford Industrial Realty	REXR	Industrial warehouse space	2.02%	2.21%
Sun Communities	SUI	Manufactured housing, RVs, resorts, marinas	2.19%	-14.71%
American Tower	AMT	Multi-tenant cell towers	2.13%	-9.00%
Prologis	PLD	Industrial real estate	2.49%	-0.77%
Camden Property Trust	CPT	Apartment complexes	2.77%	-7.74%
Alexandria Real Estate Equities	ARE	Research Properties	3.14%	-23.72%
Digital Realty Trust	DLR	Data centers	3.83%	-17.72%

9. Real Estate Crowdfunding

If you prefer direct investment in a property of your choice, rather than a portfolio, you can invest in real estate crowdfunding. You invest your money, but management of the property will be handled by professionals. With real estate crowdfunding, you can pick out individual properties, or invest in nonpublic REITs that invest in very specific portfolios.

One of the best examples of real estate crowdfunding is Fundrise. That’s because you can invest with as little as $500 or create a customized portfolio with no more than $1,000. Not only does Fundrise charge low fees, but they also have multiple investment options. You can start small in managed investments, and eventually trade up to investing in individual deals.

One thing to be aware of with real estate crowdfunding is that many require accredited investor status. That means being high income, high net worth, or both. If you are an accredited investor, you’ll have many more choices in the real estate crowdfunding space.

If you are not an accredited investor, that doesn’t mean you’ll be prevented from investing in this asset class. Part of the reason why Fundrise is so popular is that they don’t require accredited investor status. There are other real estate crowdfunding platforms that do the same.

Just be careful if you want to invest in real estate through real estate crowdfunding platforms. You will be expected to tie your money up for several years, and early redemption is often not possible. And like most investments, there is the possibility of losing some or all your investment principal.

Low minimum investment – $10
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10. Physical Real Estate

We’ve talked about investing in real estate through REITs and real estate crowdfunding. But you can also invest directly in physical property, including residential property or even commercial.

Owning real estate outright means you have complete control over the investment. And since real estate is a large-dollar investment, the potential returns are also large.

For starters, average annual returns on real estate are impressive. They’re even comparable to stocks. Residential real estate has generated average returns of 10.6%, while commercial property has returned an average of 9.5%.

Next, real estate has the potential to generate income from two directions, from rental income and capital gains. But because of high property values in many markets around the country, it will be difficult to purchase real estate that will produce a positive cash flow, at least in the first few years.

Generally speaking, capital gains are where the richest returns come from. Property purchased today could double or even triple in 20 years, creating a huge windfall. And this will be a long-term capital gain, to get the benefit of a lower tax bite.

Finally, there’s the leverage factor. You can typically purchase an investment property with a 20% down payment. That means you can purchase a $500,000 property with $100,000 out-of-pocket.

By calculating your capital gains on your upfront investment, the returns are truly staggering. If the $500,000 property doubles to $1 million in 20 years, the $500,000 profit generated will produce a 500% gain on your $100,000 investment.

On the negative side, real estate is certainly a very long-term investment. It also comes with high transaction fees, often as high as 10% of the sale price. And not only will it require a large down payment up front, but also substantial investment of time managing the property.

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11. High Dividend Stocks

“The best high-yield investment is dividend stocks,” declares Harry Turner, Founder at The Sovereign Investor. “While there is no guaranteed return with stocks, over the long term stocks have outperformed other investments such as bonds and real estate. Among stocks, dividend-paying stocks have outperformed non-dividend paying stocks by more than 2 percentage points per year on average over the last century. In addition, dividend stocks tend to be less volatile than non-dividend paying stocks, meaning they are less likely to lose value in downturns.”

You can certainly invest in individual stocks that pay high dividends. But a less risky way to do it, and one that will avoid individual stock selection, is to invest through a fund.

One of the most popular is the ProShares S&P 500 Dividend Aristocrat ETF (NOBL). It has provided a return of 1.67% in the 12 months ending May 31, and an average of 12.33% per year since the fund began in October 2013. The fund currently has a 1.92% dividend yield.

The so-called Dividend Aristocrats are popular because they represent 60+ S&P 500 companies, with a history of increasing their dividends for at least the past 25 years.

“Dividend Stocks are an excellent way to earn some quality yield on your investments while simultaneously keeping inflation at bay,” advises Lyle Solomon, Principal Attorney at Oak View Law Group, one of the largest law firms in America. “Dividends are usually paid out by well-established and successful companies that no longer need to reinvest all of the profits back into the business.”

It gets better. “These companies and their stocks are safer to invest in owing to their stature, large customer base, and hold over the markets,” adds Solomon. “The best part about dividend stocks is that many of these companies increase dividends year on year.”

The table below shows some popular dividend-paying stocks. Each is a so-called “Dividend Aristocrat”, which means it’s part of the S&P 500 and has increased its dividend in each of at least the past 25 years.

Company	Symbol	Dividend	Dividend Yield
AbbVie	ABBV	$5.64	3.80%
Armcor PLC	AMCR	$0.48	3.81%
Chevron	CVX	$5.68	3.94%
ExxonMobil	XOM	$3.52	4.04%
IBM	IBM	$6.60	5.15%
Realty Income Corp	O	$2.97	4.16%
Walgreen Boots Alliance	WBA	$1.92	4.97%

12. Preferred Stocks

Preferred stocks are a very specific type of dividend stock. Just like common stock, preferred stock represents an interest in a publicly traded company. They’re often thought of as something of a hybrid between stocks and bonds because they contain elements of both.

Though common stocks can pay dividends, they don’t always. Preferred stocks on the other hand, always pay dividends. Those dividends can be either a fixed amount or based on a variable dividend formula. For example, a company can base the dividend payout on a recognized index, like the LIBOR (London Inter-Bank Offered Rate). The percentage of dividend payout will then change as the index rate does.

Preferred stocks have two major advantages over common stock. First, as “preferred” securities, they have a priority on dividend payments. A company is required to pay their preferred shareholders dividends ahead of common stockholders. Second, preferred stocks have higher dividend yields than common stocks in the same company.

You can purchase preferred stock through online brokers, some of which are listed under “Growth Stocks” below.

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Preferred Stock Caveats

The disadvantage of preferred stocks is that they don’t entitle the holder to vote in corporate elections. But some preferred stocks offer a conversion option. You can exchange your preferred shares for a specific number of common stock shares in the company. Since the conversion will likely be exercised when the price of the common shares takes a big jump, there’s the potential for large capital gains—in addition to the higher dividend.

Be aware that preferred stocks can also be callable. That means the company can authorize the repurchase of the stock at its discretion. Most will likely do that at a time when interest rates are falling, and they no longer want to pay a higher dividend on the preferred stock.

Preferred stock may also have a maturity date, which is typically 30–40 years after its original issuance. The company will typically redeem the shares at the original issue price, eliminating the possibility of capital gains.

Not all companies issue preferred stock. If you choose this investment, be sure it’s with a company that’s well-established and has strong financials. You should also pay close attention to the details of the issuance, including and especially any callability provisions, dividend formulas, and maturity dates.

13. Growth Stocks

This sector is likely the highest risk investment on this list. But it also may be the one with the highest yield, at least over the long term. That’s why we’re including it on this list.

Based on the S&P 500 index, stocks have returned an average of 10% per year for the past 50 years. But it is important to realize that’s only an average. The market may rise 40% one year, then fall 20% the next. To be successful with this investment, you must be committed for the long haul, up to and including several decades.

And because of the potential wide swings, growth stocks are not recommended for funds that will be needed within the next few years. In general, growth stocks work best for retirement plans. That’s where they’ll have the necessary decades to build and compound.

Since most of the return on growth stocks is from capital gains, you’ll get the benefit of lower long-term capital gains tax rates, at least with securities held in a taxable account. (The better news is capital gains on investments held in retirement accounts are tax-deferred until retirement.)

You can choose to invest in individual stocks, but that’s a fairly high-maintenance undertaking. A better way may be to simply invest in ETFs tied to popular indexes. For example, ETFs based on the S&P 500 are very popular among investors.

You can purchase growth stocks and growth stock ETFs commission free with brokers like M1 Finance, Zacks Trade, Wealthsimple.

14. Annuities

Annuities are something like creating your own private pension. It’s an investment contract you take with an insurance company, in which you invest a certain amount of money in exchange for a specific income stream. They can be an excellent source of high yields because the return is locked in by the contract.

Annuities come in many different varieties. Two major classifications are immediate and deferred annuities. As the name implies, immediate annuities begin paying an income stream shortly after the contract begins.

Deferred annuities work something like retirement plans. You may deposit a fixed amount of money with the insurance company upfront or make regular installments. In either case, income payments will begin at a specified point in the future.

With deferred annuities, the income earned within the plan is tax-deferred and paid upon withdrawal. But unlike retirement accounts, annuity contributions are not tax-deductible. Investment returns can either be fixed-rate or variable-rate, depending on the specific annuity setup.

While annuities are an excellent idea and concept, the wide variety of plans as well as the many insurance companies and agents offering them, make them a potential minefield. For example, many annuities are riddled with high fees and are subject to limited withdrawal options.

Because they contain so many moving parts, any annuity contracts you plan to enter into should be carefully reviewed. Pay close attention to all the details, including the small ones. It is, after all, a contract, and therefore legally binding. For that reason, you may want to have a potential annuity reviewed by an attorney before finalizing the deal.

15. Alternative Investments

Alternative investments cover a lot of territory. Examples include precious metals, commodities, private equity, art and collectibles, and digital assets. These fall more in the category of high risk/potential high reward, and you should proceed very carefully and with only the smallest slice of your portfolio.

To simplify the process of selecting alternative assets, you can invest through platforms such as Yieldstreet. With a single cash investment, you can invest in multiple alternatives.

“Investors can purchase real estate directly on Yieldstreet, through fractionalized investments in single deals,” offers Milind Mehere, Founder & Chief Executive Officer at Yieldstreet. “Investors can access private equity and private credit at high minimums by investing in a private market fund (think Blackstone or KKR, for instance). On Yieldstreet, they can have access to third-party funds at a fraction of the previously required minimums. Yieldstreet also offers venture capital (fractionalized) exposure directly. Buying a piece of blue-chip art can be expensive, and prohibitive for most investors, which is why Yieldstreet offers fractionalized assets to diversified art portfolios.”

Yieldstreet also provides access to digital asset investments, with the benefit of allocating to established professional funds, such as Pantera or Osprey Fund. The platform does not currently offer commodities but plans to do so in the future.

Access to wide array of alternative asset classes
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Alternative investments largely require thinking out-of-the-box. Some of the best investment opportunities are also the most unusual.

“The price of meat continues to rise, while agriculture remains a recession-proof investment as consumer demand for food is largely inelastic,” reports Chris Rawley, CEO of Harvest Returns, a platform for investing in private agriculture companies. “Consequently, investors are seeing solid returns from high-yield, grass-fed cattle notes.”

16. Interest Bearing Crypto Accounts

Though the primary appeal of investing in cryptocurrency has been the meteoric rises in price, now that the trend seems to be in reverse, the better play may be in interest-bearing crypto accounts. A select group of crypto exchanges pays high interest on your crypto balance.

One example is Gemini. Not only do they provide an opportunity to buy, sell, and store more than 100 cryptocurrencies—plus non-fungible tokens (NFTs)—but they are currently paying 8.05% APY on your crypto balance through Gemini Earn.

In another variation of being able to earn money on crypto, Crypto.com pays rewards of up to 14.5% on crypto held on the platform. That’s the maximum rate, as rewards vary by crypto. For example, rewards on Bitcoin and Ethereum are paid at 6%, while stablecoins can earn 8.5%.

It’s important to be aware that when investing in cryptocurrency, you will not enjoy the benefit of FDIC insurance. That means you can lose money on your investment. But that’s why crypto exchanges pay such high rates of return, whether it’s in the form of interest or rewards.

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17. Crypto Staking

Another way to play cryptocurrency is a process known as crypto staking. This is where the crypto exchange pays you a certain percentage as compensation or rewards for monitoring a specific cryptocurrency. This is not like crypto mining, which brings crypto into existence. Instead, you’ll participate in writing that particular blockchain and monitoring its security.

“Crypto staking is a concept wherein you can buy and lock a cryptocurrency in a protocol, and you will earn rewards for the amount and time you have locked the cryptocurrency,” reports Oak View Law Group’s Lyle Solomon.

“The big downside to staking crypto is the value of cryptocurrencies, in general, is extremely volatile, and the value of your staked crypto may reduce drastically,” Solomon continues, “However, you can stake stable currencies like USDC, which have their value pegged to the U.S. dollar, and would imply you earn staked rewards without a massive decrease in the value of your investment.”

Much like earning interest and rewards on crypto, staking takes place on crypto exchanges. Two exchanges that feature staking include Coinbase and Kraken. These are two of the largest crypto exchanges in the industry, and they provide a wide range of crypto opportunities, in addition to staking.

Invest in Startup Businesses and Companies

Have you ever heard the term “angel investor”? That’s a private investor, usually, a high net worth individual, who provides capital to small businesses, often startups. That capital is in the form of equity. The angel investor invests money in a small business, becomes a part owner of the company, and is entitled to a share of the company’s earnings.

In most cases, the angel investor acts as a silent partner. That means he or she receives dividend distributions on the equity invested but doesn’t actually get involved in the management of the company.

It’s a potentially lucrative investment opportunity because small businesses have a way of becoming big businesses. As they grow, both your equity and your income from the business also grow. And if the business ever goes public, you could be looking at a life-changing windfall!

Easy Ways to Invest in Startup Businesses

Mainvest is a simple, easy way to invest in small businesses. It’s an online investment platform where you can get access to returns as high as 25%, with an investment of just $100. Mainvest offers vetted businesses (the acceptance rate is just 5% of business that apply) for you to invest in.

It collects revenue, which will be paid to you quarterly. And because the minimum required investment is so small, you can invest in several small businesses at the same time. One of the big advantages with Mainvest is that you are not required to be an accredited investor.

Still another opportunity is through Fundrise Innovation Fund. I’ve already covered how Fundrise is an excellent real estate crowdfunding platform. But through their recently launched Innovaton Fund, you’ll have opportunity to invest in high-growth private technology companies. As a fund, you’ll invest in a portfolio of late-stage tech companies, as well as some public equities.

The purpose of the fund is to provide high growth, and the fund is currently offering shares with a net asset value of $10. These are long-term investments, so you should expect to remain invested for at least five years. But you may receive dividends in the meantime.

Like Mainvest, the Fundrise Innovation Fund does not require you to be an accredited investor.

Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency

Final Thoughts on High Yield Investing

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Notice that I’ve included a mix of investments based on a combination of risk and return. The greater the risk associated with the investment, the higher the stated or expected return will be.

It’s important when choosing any of these investments that you thoroughly assess the risk involved with each, and not focus primarily on return. These are not 100% safe investments, like short-term CDs, short-term Treasury securities, savings accounts, or bank money market accounts.

Because there is risk associated with each, most are not suitable as short-term investments. They make most sense for long-term investment accounts, particularly retirement accounts.

For example, growth stocks—and most stocks, for that matter—should generally be in a retirement account. While there will be years when you will suffer losses in your position, you’ll have enough years to offset those losses between now and retirement.

Also, if you don’t understand any of the above investments, it will be best to avoid making them. And for more complicated investments, like annuities, you should consult with a professional to evaluate the suitability and all the provisions it contains.

FAQ’s on High Yield Investment Options

What investment has the highest yield?

The investment with the highest yield will vary depending on a number of factors, including current market conditions and the amount of risk an investor is willing to take on. Generally speaking, investments with the potential for high yields also come with a higher level of risk, so it’s important for investors to carefully consider their options and choose investments that align with their financial goals and risk tolerance.

Some examples of high-yield investments include:

1. Stocks: Some stocks may offer high dividend yields, which is the annual dividend payment a company makes to its shareholders, expressed as a percentage of the stock’s current market price.

2. Real estate: Investing in real estate, either directly by purchasing property or indirectly through a real estate investment trust (REIT), can potentially generate high returns in the form of rental income and appreciation of the property value.

3. High-yield bonds: High-yield bonds, also known as junk bonds, are bonds that are issued by companies with lower credit ratings and thus offer higher yields to compensate for the added risk.

4. Private lending: Investing in private loans, such as through peer-to-peer lending platforms, can potentially offer high yields, but it also carries a higher level of risk.

5. Commodities: Investing in commodities, such as precious metals or oil, can potentially generate high returns if the prices of those commodities rise. However, the prices of commodities can also be volatile and subject to market fluctuations.

It’s important to note that these are just examples and not recommendations. As with any investment, it’s crucial to carefully research and consider all the potential risks and rewards before making a decision.

Where can I invest my money to get high returns?

There are a number of places you can invest your money to get high returns. One option is to invest in stocks, which typically offer higher returns than other investment options. Another option is to invest in bonds, which are considered a relatively safe investment option.

You could also invest in real estate, which has the potential to provide high returns if done correctly. Finally, you could also invest in commodities, such as gold or silver, which can be a risky investment but can also offer high returns.

What investments can I make a 10% return?

It’s difficult to predict exactly what investments will generate a 10% return, as investment returns can vary depending on a number of factors, including market conditions and the performance of the specific investment. Some investments, such as stocks and real estate, have the potential to generate returns in excess of 10%, but they also come with a higher level of risk. It’s important to remember that past performance is not necessarily indicative of future results, and that all investments carry some degree of risk

Source: goodfinancialcents.com

Apache is functioning normally

May 24, 2023 by Brett Tams

Sometimes it can seem like banks always put profits over the people they serve, but several U.S. banks are committed to doing just the opposite.

I found 15 banks that shape their business models around community support and environmental sustainability. Many of them even qualify as B Corporations, which have to abide by legal requirements such as a diverse workforce, sustainable practices, and more.

What’s Ahead:

Overview of the best socially responsible banks

Bank or credit union	Best for	Are they a Certified B Corporation?	Unique feature
National Cooperative Bank	Cooperatives	No	Real estate mortgages for homeowners with low to moderate income
Southern Bancorp	Those who live in rural areas	No	Free financial education center
Amalgamated Bank	Those who support sustainable business	Yes	Donate your spare change with their “Donate the Change” program
Ando Savings	Tracking the effect of your investment	Yes	Auto-save by rounding up debit card purchases
BankPurely	Investing in planting trees	No	One tree is planted for every SavingPurely account opened
Aspiration Bank	Knowing how your spending stacks up to your values	Yes	Investment accounts with fossil fuel-free portfolios
Clearwater Credit Union	Montana small businesses	No	All-in-one banking options
Verity Credit Union	Entrepreneurs in underserved communities	No	Microloans
Virginia Community Capital (VCC)	Real estate entrepreneurs taking on eco-friendly construction projects	Yes	The Revolving Loan Fund that fills financial gaps for investors who can’t afford commercial financing
Central Bank of Kansas City	Tax help and Missouri residents	No	Incentives to invest in economically disadvantaged areas
Carver Federal Savings Bank	Those looking to help support the Black community	No	They donate to local communities
First Green Bank	Those in economically disadvantages areas	No	A loan plan for homeowners who wish to install solar panels
Mascoma Bank	Those living in low-income cities in New England	Yes	Loans for energy-efficient renovations
City First Bank	Those who want to support the development of low-income communities	Yes	Through CDARS, customers can make larger, FDIC-insured deposits
Beneficial State Bank	Those with less than perfect credit	Yes	Underwriters consider factors other than credit score

Best national banks for socially responsible banking

These banks have brick-and-mortar branches, but they’re large enough to have seamless online and mobile account services, as well as multiple resources for customers and borrowers.

National Cooperative Bank

Best Mortgage Lenders of 2021: Which Lender Is Right For You? - National Cooperative Bank The National Cooperative Bank began as a lender to business cooperatives that meet community needs, including grocery stores, health centers, nonprofits, housing co-ops, credit unions, and more.

Cooperatives remain their main lending focus, but NCB also specializes in real estate, mortgages for homeowners with low or moderate incomes, and loans for solar energy installation. They’ve branched into personal banking as well, and personal or commercial accounts can be opened online from anywhere in the United States.

Like many socially responsible banks, NCB prioritizes investments in renewable energy projects, and they don’t invest in fossil fuels.

Some of their standout features include:

Member of the Global Alliance of Banking on Values (GABV), a worldwide banking network with a commitment to economic and environmental sustainability.
Personal checking and savings accounts come with up to 0.50% Annual Percentage Yield (APY).
Retirement accounts include IRAs, Roth IRAs, and IRA rollovers.

Learn more about the National Cooperative Bank.

Southern Bancorp

Southern Bancorp is a huge organization with banking, lending, community development, and more services under its $1.1 billion-asset umbrella, but don’t let the size fool you — this bank provides big solutions for small communities, with a commitment to expanding opportunity in rural areas.

In addition to the basics like checking, savings, and lending, Southern Bancorp has a robust public policy advocacy division where they work to promote laws that have positive financial impacts on working families. There’s also a free financial education center with credit counseling and tax prep services.

Since Southern Bancorp is headquartered, and specializes in, the Arkansas and Mississippi Delta regions, physical branches are mostly in this region. But customers from anywhere in the U.S. can open personal or business accounts online.

The bank’s leadership demographic reflects the community it serves; the CEO and 50% of the board members are Black.

Their unique features include:

A Community Development Financial Institution (CDFI).
Certified B-Corporation or B-Corp — a designation reserved for organizations committed to responsible practices.
Personal checking and savings accounts, including accounts designed for specific financial goals.
Online banking is available anywhere with internet access.
Home, auto, and personal loans.

Learn more about Southern Bancorp.

Amalgamated Bank

15 Banks and Credit Unions Putting Social Responsibility First - Amalgamated Bank Headquartered in New York and Washington D.C., Amalgamated Bank extends online checking and savings account access across the United States. They’re committed to sustainable business practices within their own walls. Employees earn a minimum hourly wage of $20/hour, above the federal minimum, and over 30% of employees are union members. The business strives to be 100% carbon-neutral in its operations.

Amalgamated makes its lending priorities clear from the start. They don’t lend to fossil fuel companies, weapons manufacturers, or private prison operators. Instead, they focus on lending to companies in the solar energy or sustainable food industries. If you invest with Amalgamated, you can opt for a portfolio that’s fossil-fuel-free.

And they’re the first major U.S. bank to endorse HR 40, the bill calling for a national commission to establish reparation payments for Black Americans.

Their standout features include:

Certified B Corp and member of the GABV.
Online personal checking and savings accounts with 0.10%-0.40% APYs.
Restart Checking accounts available for customers with poor credit.
Give-Back savings accounts donate half your interest (0.30% APY) to an organization of your choice.
An optional “Donate the Change” program rounds up your purchases and donates the change to a cause the bank selects.
Over 40,000 free in-network ATMs for customers outside NY and D.C.

Learn more about Amalgamated Bank.

Ando Savings

Ando is another bank that puts the environment front and center. They’ve pledged 100% of their investments to initiatives supporting sustainable practices, like agriculture and public transit.

Investors can track the effect of their own investment dollars in the Ando mobile app’s Impact Center, which traces financial impact across five categories including clean energy, sustainable transportation, and green buildings.

You’ll find the following with Ando:

Spending and savings accounts, as well as a Visa debit card, are available to anyone in the U.S.
Accounts have no fees or minimum balances.
Ando’s Count the Change program helps you “auto-save” by rounding up debit card purchases to the nearest dollar and moving the difference from spending to savings.

Learn more about Ando.

Best online banks for socially responsible banking

These banks are fully digital — not only is the all-mobile bank trendy and convenient, but its format also allows the bank to live a little lighter on the earth, with no energy use from physical branches.

BankPurely

BankPurely is the digital arm of NYC-based Flushing Bank, a bank that invests most of its money in community initiatives. As a fully online operation, BankPurely has formal PayItGreen approval for reducing its paper waste and carbon footprint.

They’re currently partnering with Plant-It 2020 to plant indigenous trees in New York State. Ando is one of many socially progressive banks that works with a tree-planting organization, taking a small but important step to counteract climate change.

A few great features include:

Checking, savings, and money market accounts available, with up to 0.25% APY on savings accounts and 0.5% on money market accounts.
CDs are available with 0.55% APY, and Ando will plant a tree for every CD you open.

Learn more about BankPurely.

Aspiration

Aspiration is one of the best-known socially responsible online banks, with multiple account options for the conscious customer. Their “pay what’s fair” fee model for a basic checking account is a rare offering even for the most flexible banks (and yes, paying $0 in fees is an option).

Both the free and fee-based “Aspiration Plus” checking accounts give you a personal impact score to see how your spending stacks up against your values. Accountholders get 3%-10% cash back when they buy anything from Aspiration’s Conscience Coalition partner vendors — an incentive to shop for the greater good.

The bank is currently rolling out a credit card that will reward shoppers who make carbon-friendly financial choices.

Here are a few key features:

Certified B Corp and member of global environmental organization 1% for the Planet.
Aspiration Plus savings accounts ($5.99/month) offer up to 5.00% APY.
Investment accounts available with fossil fuel-free portfolios.
IRA retirement accounts.
As a donor, Aspiration prioritizes funding microloans for low-income recipients.

Learn more about Aspiration or read our full review.

Best regional banks and credit unions for socially responsible banking

Some regional banks offer online accounts to residents elsewhere in the U.S., while others are only open to residents of a certain state or region. Here’s a cross-section of ethical standouts across the country.

Clearwater Credit Union – Montana residents

15 Banks and Credit Unions Putting Social Responsibility First - Clearwater Credit Union As Montana’s largest CDFI and a member of Inclusiv, an organization serving residents in low-income communities, Clearwater Credit Union is making its mark nationally but keeping a local focus.

They loan primarily to local businesses and offer a solid selection of financial services to customers.

Here are a couple of great features they offer:

Checking and savings accounts are available.
Health savings accounts (HSAs), traditional IRAs, and Roth IRAs.
Personal, student, and car loans for borrowers.

Learn more about Clearwater Credit Union.

Verity Credit Union – Washington state residents

Verity is active in the local microloan business — one project they’ve funded is the Business Impact Northwest loan program, which gives a financial boost to entrepreneurs in underserved communities.

As an environmentally conscious credit union, they’ve hopped on board the solar installation funding train as well, providing loans to homeowners installing solar panels.

Some especially helpful features include:

Open an account online or through their branch locations.
Accounts can be managed online.
IRAs and 401(k) rollovers are available.

Learn more about Verity Credit Union.

Virginia Community Capital (VCC) – Virginia residents

VCC is the community development arm of VCC Bank, a state bank that’s also a certified B Corp. Food access is a VCC funding priority, and they work with businesses providing healthy, local groceries across the state.

As a real estate funder, VCC has a Clean Energy Financing loan program for entrepreneurs taking on environmentally friendly construction projects.

Some helpful features include:

The Revolving Loan Fund fills financial gaps for investors who can’t afford commercial financing.
Personal savings accounts have low $25 opening deposit minimums.
Checking accounts, CDs, and Roth IRAs are available.

Learn more about VCC.

Central Bank of Kansas City – Missouri residents; online banking for all U.S. residents

15 Banks and Credit Unions Putting Social Responsibility First - Central Bank of Kansas City Based in Kansas City, Missouri, Central Bank of Kansas City focuses most of its efforts on the local economy. Their lending programs include New Market Tax Credits — incentives to invest in economically disadvantaged areas — and tax credits for developers building low-income housing.

Some exciting features are:

Checking, savings, and money market accounts have fully online options for non-local customers.
Personal accounts earn between 0.05% – 0.15% APY.
Brick-and-mortar banks for Missouri locals.

Learn more about the Central Bank of Kansas City.

Carver Federal Savings Bank – NYC, New England, and Mid-Atlantic residents

Carver Federal Savings Bank was founded in Harlem, NYC, and designed to strengthen Black communities, and the bank’s stayed true to this mission since 1948.

As a CDFI, they focus their donations on local initiatives, and they don’t invest in fossil fuels. Residents of eight states — CT, DE, MA, MD, NY, NJ, RI, and VA, as well as Washington, D.C., and Philadelphia, PA — can open accounts with Carver.

Their key features are:

Interest-bearing checking and savings accounts.
A mobile banking app makes Carver accounts easy to access online.
Account fees are waived with minimum monthly balances.

Learn more about Carver Federal Savings Bank.

First Green Bank – Florida residents

First Green Bank is a local leader in “green” investments. They fund commercial and residential projects that meet environmental standards, and community initiatives that support sustainable development in areas like water and agriculture. They have a loan plan specifically for homeowners who want to install solar panels.

Here are some exciting features:

Florida residents have checking and savings account options, including interest-bearing sustainable savings.
HSAs, IRAs, and youth savings accounts are available.

Learn more about First Green Bank.

Mascoma Bank – New Hampshire, Vermont, and Maine residents

Mascoma finances projects designed to revitalize low-income communities in Northern New England.

Local residents can take advantage of their suite of financial services, from the basic checking and savings accounts to mortgages and homeowner loans for solar or energy-efficient renovations.

Some key features include:

Three tiers of checking accounts are offered, and two earn interest.
Home equity loans and lines of credit, as well as traditional mortgages.
Emergency flood loans are available to cover storm-related damages.

Learn more about Mascoma Bank.

City First Bank – Washington, D.C. area residents

15 Banks and Credit Unions Putting Social Responsibility First - City First Bank For individuals, nonprofits, and other businesses in or near Washington, D.C., City First Bank is a CDFI worth checking out. They give 80% of their loan funds to projects in low-income communities, and they’ve financed thousands of affordable housing units in a city where the cost of living is rising quickly. City First has even branched out to finance nonprofits across the Mid-Atlantic.

Some top-of-the-line features include:

Personal checking and savings accounts have competitive interest rates.
Customers can make larger, FDIC-insured deposits through CDARS (Certificate of Deposit Registry Service) and money market accounts.

Learn more about City First Bank.

Beneficial State Bank – Oregon, Washington, and California residents

Beneficial State Bank funds renewable energy, affordable housing, and other community projects across the Pacific Northwest. Their nonprofit Beneficial State Foundation is a vocal public policy advocate for progressive change in the banking system.

As a lender, Beneficial uses a nontraditional underwriting model that considers factors other than credit scores. They’re also a trustworthy stop for auto loans if you’re a Pacific Northwest resident with subpar credit.

Here are some of their features:

Checking and savings accounts are fully mobile.
Money market accounts and IRAs are available.
California residents can finance an electric or hybrid vehicle at affordable rates through Beneficial’s Clean Vehicle Assistance program.

Learn more about Beneficial State Bank.

Why choose a socially responsible bank?

A bank or credit union account might seem like a convenience-based choice, not a values-based one. But when you entrust a bank with your money, you’re implicitly supporting the projects the bank funds.

You can make a difference

As a consumer, you have the power to make choices that sway banks’ overall priorities. Banks want your business, and if more customers opt for banks that support community development or environmental causes (or avoid fossil fuel funding that contributes to climate change), the industry will take note that people want socially responsible banking.

It is safer in their hands

Your money’s also in safe hands — just because these banks have a “people over profit” focus doesn’t mean they don’t make a profit.

Along with the standard FDIC insurance protection guarantees, socially responsible banks are just as profitable (if not more so) than their competition, according to research by the GABV.

What makes a bank socially responsible?

The primary barometers of social responsibility for banks are their lending and investment choices.

Read more: Ethical Banking: What You Should Know About Socially Responsible Banks

Charitable donations and community service

Many, if not most, banks advertise their charitable donations and community services, but they may still fund projects that contribute to climate change or displace low-income residents. If you go beyond a bank’s self-promotion materials to their lending practices, you’ll get a sense of the bank’s true priorities.

Transparency about their investment donation

Another indicator of responsibility is the bank’s transparency about their investment and donation choices — ethical banks take their accountability to the public seriously. And many socially responsible institutions are working for economic equity, with programs designed to help low-income residents or borrowers from underserved communities.

Public commitment to social good

Some large national and regional banks have received accolades for public commitments to the social good. The Ethisphere Institute, a think tank that examines corporate responsibility, has rewarded U.S. Bank on their list of the World’s Most Ethical Companies for seven straight years. Though awards from an outside organization don’t necessarily indicate a bank is truly making impactful, ethical choices, they can be a sign the institution is on the right track.

If you’re holding banks to the highest standard, however, you’ll look for certifications that indicate a deeper commitment. Every bank or credit union on this list is either a certified B Corp, a certified CDFI, or a member of the GABV.

Certified B Corporations

B Corporations have a legal obligation to meet certain requirements, including a diverse staff, a well-paid workforce, environmentally sustainable in-house practices, and more.

The B Corp certification needs to be renewed every two years and can be lost if the company changes its practices to focus more on profit than customers.

Global Alliance for Banking on Values (GABV)

The GABV is a small but impactful network of about 50 worldwide banks. Each bank has pledged to invest in its community, be transparent about its practices, and establish long-term client relationships.

Like B Corps, GABV members have to score well on a regular, detailed assessment of their ethical practices.

Community Development Financial Institutions (CDFIs)

CDFIs may be banks or credit unions, but they earn their U.S. Treasury CDFI certification by financing projects in low- or moderate-income or traditionally underserved communities. This may mean lending to nonprofits, supporting affordable housing, or offering mortgages to aspiring homeowners denied by other lenders.

How to find a socially responsible bank

This list is a start, but there are many, many more banks and credit unions on the local level that have socially responsible goals.

Mighty Deposits is a great site for finding out how banks are spending their money — just type in your bank(s) and/or credit union(s) and find out what percentage of the bank’s funds get invested in community projects.

Mighty Deposits includes detailed spending breakdowns in categories for each bank. You can also search for a bank that doesn’t fund fossil fuels, a CDFI, or a bank owned by Black Americans.

The independent site Better Banking Options is another way to find community-focused banks.

If you want to know more about a bank’s political donations, including any national and local candidates the bank supports, Open Secrets has data on most large banks (and several of the smaller ones, too).

Summary

If you’re thinking about a bank switch, consider a bank that’s dedicated to socially responsible causes. With the variety of checking, savings, and investment features these banks offer, you’re likely to find a spot that meets your needs.

Apache is functioning normally

May 23, 2023 by Brett Tams

A bank run is one of those rare financial terms that’s exactly what it sounds like.

Source: Giphy.com, Paramount Pictures

It literally starts with a crowd of people sprinting to the bank.

And while that may sound like a mere nuisance to bank tellers trying to go home at 5:30, even the smallest bank runs can have devastating consequences.

Bank runs have precipitated the Great Depression, collapsed modern banks, and even played a major role in modern warfare.

So what are bank runs? What should every young American investor know about them? Why are they so devastating, and should you ever join a bank run?

What’s Ahead:

What is a bank run?

A bank run occurs when a large group of people all try to withdraw their cash from the bank at once. Since banks don’t carry that much cash, they must sell assets to meet demand, risking default. When they risk default, people panic even more and cause a bigger bank run.

Bank runs are nasty business, so let’s start with the basics.

Why would everyone rush to withdraw cash all at once?

People may rush to the bank to withdraw their cash for a variety of reasons:

They’re afraid the bank will default.
They’re afraid the economy is going to collapse.
They’re trying to convert cash into goods or foreign currency to avoid inflation.
They need cash to cross the border during wartime.
They fear that a bank run will happen, and ironically cause the bank run.

OK, so there are a lot of reasons why folks might want their cash. But if you have $2,000 in a Chase checking account, why should Chase be scared or surprised if you actually go and take it?

Why bank runs are a big issue for banks

Let’s say that you have a net worth of $25,000:

$5,000 in checking and savings.
$10,000 in your 401(k) and other investments.
$10,000 of equity in your car.

Suddenly, you get a surprise medical bill for $25,000.

Could you pay that bill?

Technically speaking, yes.

But net worth doesn’t mean cash on-hand. You have $5,000 in cash (effectively) and $20,000 in places that are much less accessible.

So to pay the bill, you’d have to empty your accounts, sell your car, and exit all of your investing positions in a short window of time.

Even if you pulled it off and paid the bill in full, you’d be insolvent, which is basically the formal economic term for broke AF — no assets, savings, nada.
When you’re unable to pay your next bill, you go into default.
When you’re in default and falling behind on bills, you might declare bankruptcy to solicit legal help managing your debt.

That’s essentially what’s happening to a bank during a bank run; they’re forced to convert assets into cash, leaving them high and dry.

Let’s say a bank has $100 million total assets but only $5 million in cash.

If clients try to withdraw just $10 million in cash in one day, that would force the bank to sell off some assets prematurely, reducing their solvency.
Reduced solvency may lead clients and investors to worry that the bank will go into default.
The fear of the bank defaulting makes more people want to withdraw their cash.
The bank is now forced to sell off so many assets to meet cash demands that they now actually might go into default.

Are you starting to see why bank runs are widely considered a self-fulfilling prophecy?

It’s no wonder, then, that FDR opened his 1933 inauguration speech with the following choice words: “The only thing we have to fear is fear itself.”

Bank runs vs. silent bank runs vs. bank panics

In addition to bank runs, anyone considering themself fiscally savvy should know about silent runs and panics, too.

Bank runs occur when people quite literally run to the bank to withdraw cash in-person.
Silent bank runs occur when folks withdraw funds electronically, still effectively moving money out of the bank.
Bank panics occur when multiple banks face bank runs at once, risking the collapse of an entire domestic economy.

That covers the basics of the term, so let’s layer in some context. Have we ever experienced a bank run?

Has the U.S. ever experienced a bank run?

We sure have, and I bet you’re a smart enough cookie to guess when.

When the stock market crashed in 1929, Americans started pulling their cash out of banks and literally stuffing it under their mattress to protect it.

And who could blame them? Back then, if your bank collapsed with your money inside, it was simply gone.

Source: MemeCreator.org, Paramount Global

The mattress-stuffing strategy spread like wildfire, and when rumor spread that banks were barring folks from withdrawing money, it led to a full-on panic.

Bank run in New York, circa 1932 | Source: Wikipedia Creative Commons

Throughout the early 1930s, folks sucked all the money out of the banks. The banks, in turn, had no money to loan, so the entire global economy ground to a halt.

By 1933, Congress desperately needed a way to get Americans to put their money back into the banks, so they came up with the Federal Deposit Insurance Corporation, or FDIC, which basically told them, “If your bank collapses, we got you.”

Today, the FDIC insures each of your bank accounts for up to $250,000.

Additional measures used to prevent bank runs include borrowing from other banks, limiting cash withdrawals, or even shutting down the bank entirely for a “holiday” until the panic subsides.

These measures weren’t quite enough to save Wachovia or Washington Mutual during the Recession, but they’ve still saved a lot of banks globally since 1933.

So that’s a bank run in a nutshell: people pull their cash out for a variety of reasons, the bank starts hurting, and news of the bank hurting causes more people to pull their cash out.

Now, if you’ve been monitoring current events lately, your fresh knowledge of bank runs might be raising another question:

Why did Russia experience a bank run — but not Ukraine?

A nuclear superpower invaded its neighbor, literally blowing up the banks, and yet the invader suffers a bank run.

Huh? How?

Well, simply put, Ukraine was prepared and Russia wasn’t.

With the buildup of Russian troops on the border, Ukraine’s government knew they were facing the risk of a bank run. Therefore, they preemptively set up deals with Poland and the International Monetary Fund (IMF) to secure loans and stabilize the Ukrainian hryvnia.

On the night of the invasion, Zelensky also froze electronic transfers and only allowed each Ukrainian to withdraw roughly $3,400 USD in cash.

This amount of cash still required drivers to deliver cash under heavy fire, but the plan worked; Ukrainians were able to withdraw just enough cash to flee and relocate, and the economy survived.

Russians, on the other hand, are facing more dire economic circumstances.

The country’s central bank took some precautions to protect the ruble, but Western sanctions steamrolled over their economic defenses. Russia has been frozen out of their massive $643 billion foreign currency reserve, booted from SWIFT, and the ruble has fallen 40%.

As a result, Russians are (understandably) making bank runs nationwide, desperate to convert their rubles into something, anything that will hold its value: Victoria’s Secret bras, Bitcoin, even Big Macs.

The situation in Ukraine and Russia shows another side of bank runs: how in times of war, a foreign power can help you avoid a bank run — or, alternatively, trigger one as a weapon of war.

Take it from Sergey Aleksashenko, a former Russian central banker himself: “This is a kind of financial nuclear bomb that is falling on Russia.”

Granted, the ruble bounced back in early April thanks in part to oil and gas sales — but Russians are still quite wary that their situation remains bleak. Interest rates are 20%, inflation hit 200%, and the population is bracing for mass shortages of goods both foreign and domestic.

All this in a matter of weeks, which begs the question:

What should you do during a bank run?

Seeing long lines of normal Russians trying to preserve their livelihoods may make you wonder: Are they doing the right thing? And is there ever a time when I should sprint to the bank?

The short answer is no; you shouldn’t ever have to sprint to a U.S. bank, for a few reasons:

Unlike the ruble, the dollar has been the world’s primary reserve currency since 1944, meaning it’s more stable and upheld by the global marketplace.
With so many regs and safeguards in place, the probability of a modern American bank collapsing is significantly low.
Even if your bank does collapse, your checking and savings accounts are insured for $250,000 each – and the FDIC has a history of paying out as promised (see: Wachovia, Washington Mutual).

Furthermore, should there ever be a bank run-worthy crisis in America, the Fed will react just like Zelensky: limit the amount of cash we can withdraw to a few thousand bucks so the economy keeps churning.

Even then, unless you’re traveling and/or have no access to electronic payments, it’s better to keep your money where it is.

Should I stash my money in crypto during a crisis?

During the next recession, would it be safer to store your money in crypto than the bank?

Source: Tenor.com, Fox

If you move your money from the bank into crypto, you’re moving it from a place where it is FDIC insured to a place where it isn’t.

Furthermore, crypto values are likely to drop during a recession since institutional investors tend to pull out of high-risk, speculative investments during economic turmoil — and pour capital into index funds and bonds instead.

But what about crypto as a hedge against inflation? After all, FDIC will only replace my lost dollars, not protect their value.

For a solid hedge against inflation —one that’s essentially guaranteed to protect your money, not unlike FDIC insurance — check out I Bonds.

The bottom line

Bank runs may sound innocuous — and even look a little ridiculous from the photos — but even the smallest bank runs can send banks and entire economies spiraling out of control.

Luckily, we don’t have to worry much about them in the U.S. anymore; but since they’re affecting other countries and playing a critical role in modern warfare, every young investor should know about them.

And while you shouldn’t need to sprint full tilt to a Chase ATM anytime soon, it wouldn’t hurt to have a little liquidity put aside. Here’s everything you need to know about emergency funds.

Featured image: 1000 Words/Shutterstock.com

Apache is functioning normally

May 23, 2023 by Brett Tams

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A cash management account (CMA) combines many of the best aspects of checking and savings accounts. It lets you earn strong interest rates while keeping it easy to access and spend your cash. While CMAs can’t do everything a dedicated checking or savings account can do, many people find CMAs sufficient for their financial needs.

Financial companies target CMAs at consumers who have large cash balances they need to insure. People who want the easy access a checking account provides – without sacrificing the interest rate savings accounts offer – also use them.

But so many companies offer CMAs it can be hard to choose the best one. Which one is right for you depends on how much money you plan to deposit and whether your primary goal is earning interest or easy access to your money.

Best Cash Management Accounts

There are plenty of top options for CMAs to choose from, no matter your financial goals. Many are associated with investment brokerages or robo-advisor platforms, which automatically allocate and manage your funds based on your personal risk tolerance and objectives.

Betterment

Our Rating

Earn up to 4.35% APY and pay no monthly fees on your cash. Plus, get access to Betterment’s low-cost robo-advisor platform with instant transfers between accounts.

Monthly Fee

$0, but Betterment may charge investing fees

Deposit Insurance

Up to $4 million

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Betterment is an automated investing platform with a built-in cash management account (Cash Reserve) that has one of the best yields and highest deposit insurance limits in the space.

Betterment’s yield is comparable to the top high-yield savings accounts, and its FDIC insurance limit is at least eight times the industry standard. Open a joint account with your spouse or domestic partner to double your FDIC insurance coverage.

And if you’re looking for a day-to-day spending account, open a Betterment Checking account. It has a debit card, no monthly maintenance fees or minimum balance requirements, and a direct link to your other Betterment accounts.

Annual percentage yield (variable) is as of 05/08/2023. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities.

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Wealthfront

Our Rating

Earn 4.55% APY on all balances with no minimums or fees. Plus, enjoy category-leading FDIC deposit insurance coverage up to $5 million.

Monthly Fee

$0, but Wealthfront may charge investment fees

Deposit Insurance

Up to $5 million

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Wealthfront is an automated investing platform that charges a low asset-based fee on all balances (0.25% AUM). Its cash management account, the aptly named Wealthfront Cash Account, charges no fees at all.

The Wealthfront Cash Account has more in common with a checking account than a savings account. Notable features include unlimited withdrawals, a debit card that works at nearly 20,000 ATMs, direct deposit, and integrations with popular peer-to-peer transfer apps like Venmo and PayPal.

The Wealthfront Cash Account’s Self-Driving Money™, feature is even more useful than a standard checking account. It’s a money management automation tool that automatically allocates incoming deposits to cover near-term bills and expenses, add to your emergency savings, fund other savings goals as per your personalized savings plan, and divide the remainder between your investment accounts — all with minimal input from you.

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Empower

Our Rating

Earn 4.25% Interest; No Minimum Balance; No Monthly Fees; Up to $1.5 Million in FDIC Insurance

Monthly Fee

Deposit Insurance

Up to $2 million

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Formerly known as Personal Capital, Empower is a digital financial advisor and wealth manager geared toward affluent younger folks. You don’t need a ton of money to use its Empower Cash cash management solution though — it’s totally free and doesn’t require a separate minimum balance.

Empower Cash stands out for the same reasons many other great cash management accounts do: a high yield, generous FDIC coverage, and no minimums. It adds some more unique benefits too, including direct access to human wealth managers and a sophisticated budgeting tool that securely syncs with your external financial accounts and provides a comprehensive all-in-one view of your finances.

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Aspiration

Our Rating

Earn up to 3.00% APY on the first $10,000 in your Save account. Plus, your deposits never fund fossil fuels.

Up to 3.00% APY

Monthly Fee

$0 to $7.99

Deposit Insurance

Up to $2.25 million

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Aspiration is a socially conscious financial firm that offers retirement, investing, and charitable giving services. Aspiration doesn’t invest customer funds in businesses that pollute the environment. It has a growing lineup of Conscience Coalition partners where purchases earn up to 10% cash back. And it helps you gauge your own social responsibility, giving you a spending-habits report card showing how much you’ve supported green companies.

Aspiration’s cash management solution isn’t as generous as some others, with a lower yield that applies only to the first $10,000 in the account and requires a monthly fee to attain. But if you’re drawn to Aspiration’s mission, you can probably live with the financial drawbacks.

Fidelity

Our Rating

Earn 2.47% APY on all balances with no minimums, no fees, and variable deposit insurance up to multiples of the statutory limit.

Monthly Fee

Deposit Insurance

Variable, but at least $250,000

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Fidelity is a full-service financial firm that offers banking, financial advising, and investment services. It’s fully capable of being your only financial institution, and the Fidelity Cash Management Account is a big reason why.

The Fidelity Cash Management Account is a checking-like platform (complete with a debit card and unlimited ATM fee reimbursements) that offers savings-like yields. It offers a nice blend of old and new too, with free paper checks alongside mobile check deposit and fast person-to-person transfers. And if you’re not ready to branch out into stocks and bonds and all the rest, you don’t have to use Fidelity’s investing platform just because you have a Fidelity Cash Management Account.

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Methodology: How We Select the Best Cash Management Accounts

Our most important considerations when evaluating cash management accounts are:

How much they earn (interest rate)
How much they protect (deposit insurance coverage)
How easy they make it to access your money (linked accounts, debit cards, and so on)
How much they cost (fees and expenses)
How they fit into a larger financial ecosystem (connection to other accounts offered by the same company)

Interest on Balances

“What’s the interest rate?” is the first question most people ask when shopping for cash management accounts. The best accounts pay interest on par with the top high-yield savings accounts, which as of mid-2023 typically yield between 4% and 5% APY.

Deposit Insurance Coverage & Limits

Generous deposit insurance coverage is a defining feature of cash management accounts. The best accounts protect multiples of the standard FDIC deposit insurance limit of $250,000, which is what you get with most ordinary checking, savings, and money market accounts.

Some go up to $5 million or even higher. The higher, the better.

Access to Balances

Cash management accounts are sort of like checking-savings hybrids, but in terms of access to your cash, many are more like savings accounts. They don’t have debit cards, peer-to-peer transfer capabilities, or instant transfers to external accounts.

Good cash management accounts tend to be more liberal on this front. Some even have debit cards that you can use at any merchants that accept Visa or Mastercard.

Fees

The best cash management accounts have no monthly maintenance fees and low (or no) fees otherwise. However, most are associated with investment accounts that do charge management or trading fees. We look for accounts with reasonable fee schedules in any case.

Connection to Investment & Other Account Types

Cash management accounts usually don’t exist by themselves. They’re often associated with investment or wealth management accounts that offer a much broader range of services than standard deposit accounts can. We prefer these types of accounts because they’re more suitable as one-stop shops for banking and investments.

Cash Management Account FAQs

If you understand how checking and savings accounts work, you have a basic understanding of cash management accounts too. But they have a few differences and oddities worth drilling down into.

What Is a Cash Management Account?

A cash management account is a deposit account that blends features of checking and savings accounts.

Like a checking account, a cash management account usually has no limit on withdrawals. Some come with debit cards and other checking-like features, such as instant person-to-person transfers.

Like a savings account, a cash management account typically has a high interest rate on balances. It often has a higher deposit insurance limit as well, a feature it shares with some certificates of deposit.

Is a Cash Management Account a Brokerage Account?

A cash management account is not a brokerage account, but many cash management accounts are associated with brokerage accounts. Either the account is housed within the brokerage account itself and receives proceeds from securities sales through a process known as cash sweeping, or it’s a separate account linked to the brokerage account for speedy transfers.

Are Cash Management Accounts Better Than Savings Accounts?

It depends on your financial situation and what you hope to get out of the account.

If your personal cash reserve is well under the standard FDIC deposit insurance limit, your best bet is to look for the highest possible yield, which you may or may not find in a cash management account. If you have more cash, it might be worth it to use a cash management account with a higher deposit insurance limit, even if its yield isn’t quite on par with the top savings accounts.

If you plan to use your cash (or some of it) to buy stocks or other securities, keeping it in a cash management account is more convenient than a standard savings account not associated with a brokerage account.

What’s the Difference Between a Cash Management Account and a Money Market Account?

Cash management accounts have a lot in common with money market accounts, which are also often described as checking-savings hybrids.

The biggest differences: a money market account is more likely to come with core checking features like a debit card and paper checks, and less likely to be directly associated with a brokerage account. Also, money market accounts often (but not always) have lower yields than savings accounts and cash management accounts.

Do You Have to Buy Stocks If You Have a Cash Management Account?

No, you can keep all your money as cash in a cash management account even if the cash management account is directly associated with a brokerage account. If you worry you’ll be tempted to purchase risky securities out of a brokerage-linked cash management account, consider holding your funds in a separate external bank account.

Final Word

Cash management accounts provide a useful mix of savings and checking accounts with the extra perk of huge FDIC insurance limits. If you’re in the market for a CMA, look for the account that offers the level of accessibility you need and the best interest rate possible.

If you don’t need debit card access to your money, you can choose an account with other features that benefit you, like high interest rates or additional FDIC insurance.

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

Apache is functioning normally

May 23, 2023 by Brett Tams

Can I Retire at 40 With $1 Million? – SmartAsset

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Retiring at 40 may sound like a pipe dream. But it’s entirely within reach if you save $1 million while working. The key elements for achieving this feat are sticking to a budget and implementing a comprehensive retirement strategy. But with rising expenses, is $1 million enough? To answer this question, you must identify your expenses, including taxes and monthly debt obligations and compare them to your sources of income. Here’s how investing and budgeting can set you on the path to early retirement.

A financial advisor can also work with you to get a realistic estimate of when you may be prepared to retire.

Can I Retire at 40 With $1 Million?

Retiring a quarter-century before the standard retirement age requires careful planning. However, one rule persists for retirement no matter what age it begins: Your savings must generate enough income to cover your living expenses for the rest of your life.

With this principle in mind, retiring at 40 means you can’t rely on traditional retirement vehicles such as individual retirement accounts (IRAs) or 401(k) accounts.

These accounts are not accessible until you reach the age of 59.5. Therefore, you must research alternative retirement savings instruments to create the income you can use once you stop working.

Smartasset’s retirement calculator helps you assess how your financial situation matches your retirement objectives. You’ll enter information such as your rate of return, Social Security benefit and location to evaluate your ability to retire at 40.

How to Determine How Much You Need to Retire

Retirement always requires evaluating how taxes, expenses and income work together for you. Retiring young means having all your ducks in a row to avoid surprises or financial hardships later on. Here’s how to assess how much you need to retire:

Calculate Your Costs in Retirement

Your expenses are an essential piece of information in a retirement plan. In other words, your cost of living provides the necessary context for how you’ll retire. For example, a yacht club membership can significantly alter your budget.

Likewise, your state of residence impacts how far your dollars go each year. For example, a recent study from the U.S. Department of Commerce shows that in Nevada, a popular retirement state, the overall cost of living is 95.5% of the national average.

As a result, retirees will get a discount on living expenses (plus zero state income taxes!) for living in the state. On the other hand, Hawaii’s costs are 113.2% of the national average, meaning that retirement there will cost more.

Determine Your Income

Your tax rate decides how much income stays in your pocket. Retirees often prefer living in a tax-friendly state like Georgia or Florida because of the absence of state income taxes.

That said, your forms of income will also influence your tax status. For example, rental income from real estate incurs regular income taxes, while selling stocks for a profit incurs capital gains taxes.

In addition, healthcare expenses are a growing cost for retirees. Specifically, HealthView Services data reporting shows that a couple retiring at 65 in good health will spend about $662,00 on healthcare throughout their lives.

As a result, it’s best to plan for several hundred thousand dollars of medical expenses during retirement. Furthermore, retiring at 40 means addressing an additional 25 years of medical costs.

To do so, experts advise designating 15% of your annual income for healthcare costs. However, this amount may be higher if you have a chronic health condition.

And having children at home is expensive, whether you’re retired or not. For instance, The Washington Post states the average annual cost of child-rearing is about $17,000 per child. Therefore, it’s crucial to add this item to your budget for an accurate idea of your finances.

Identify Retirement Income Streams

With expenses accurately laid out, you can turn to your income streams. For retirement to be feasible, the $1 million nest egg must return enough income to cover your expenses. So, if you invest $1 million for a 5% return, your annual income is $50,000.

Remember, stocks are riskier than other assets, such as certificates of deposits (CDs), so diversifying your investments is critical. Otherwise, a stock portfolio that is successful this year might tank the next year, leaving you without income. In addition, you have little margin for error with $1 million; every dollar needs to provide a return.

Next, Social Security is a form of income that you’ll encounter a few decades into retirement. Because you won’t collect Social Security benefits until 62 or older, retiring at 40 means waiting 22 years to receive your first check.

So, while Social Security will be a boon in the second half of your retirement, you’ll have to get yourself there with the income you create independently.

Look at the Numbers

So, let’s look at an example combining costs and income streams. Let’s say you want to retire at 40 with one child in the house. Your life expectancy is 80, so you plan a 40-year retirement. In addition, you’ll retire in Nevada, which has no state income taxes. Here are your annual expenses:

$22,000 for housing
$15,000 for healthcare
$5,000 for utilities and property taxes
$7,000 for food
$6,000 for entertainment, phone and internet
$3,000 for auto upkeep and insurance

Your total annual expenses are $58,000, or $4,833 monthly.

To meet these expenses, you collect income from multiple sources: First, you purchase two rental properties for $500,000 total, which generate $4,000 of monthly income ($48,000 per year).

You also have a $250,000 savings account with a 4% interest rate ($10,000 per year) and a $500,000 brokerage account with an average return of 5% ($25,000 per year). So, your investments provide $83,000 of annual income.

Next, your income and single filing status place you in the 12% tax bracket, leaving you with about $51,040 of your real estate and savings account income after taxes. In addition, you’ll pay 15% for long-term capital gains taxes on your brokerage account.

So, your total monthly income after taxes is $72,290 annually. Fortunately, this figure is about $14,300 above your expenses, leaving a margin for when investments underperform or surprise expenses crop up.

That said, your income and expenses won’t remain static throughout retirement. Instead, inflation will drive up your cost of living each year at an average rate of 3%.

The expenses of $58,000 this year will grow by thousands of dollars after five years because of economic trends. Overall, it’s best to sock away surplus income to prepare for higher expenses in the future.

Remember, you’ll age into Social Security at 62 and receive an income bump at that time. For example, the Social Security Administration’s 2022 Statistical Supplement estimates the average 62-year-old’s monthly check to be $2,364.

Depending on your circumstances, you can decide when you reach 62 whether to start collecting this benefit or delay it for higher future income.

How to Boost Your Retirement Income

The example above demonstrates a path for retirement at 40 with $1 million. However, you must adhere to a tight budget to do so. On the other hand, you can give yourself more financial flexibility by increasing your income with these tactics:

Delay Social Security Benefits

Social Security isn’t automatic. Instead, you apply for it when you want to start collecting it. As a result, you can choose any age starting at 62 to begin collecting this benefit.

Increase Your Interest Rate

The interest rates of savings accounts and certificates of deposit (CDs) are constantly shifting to attract customers. For example, the typical high-yield savings account has an interest rate of between 0.5% to 4.15%.

So, moving money out of a conventional savings or checking account can provide more annual income. Plus, your deposits have FDIC insurance up to $250,000, meaning they have shelter from market downturns.

Understand Your Income Tax Implications

Your tax situation is unique to you, and failing to grasp the details can incur additional fees. For instance, say you want to sell some stock through your brokerage account after holding it for 364 days.

Doing so will incur short-term capital gains taxes, which are identical to regular income taxes. On the other hand, waiting a few days will put you in the long-term capital gains timeframe, increasing your taxes by 3%. So, staying on top of these transactions can help lower your tax burden.

How to Make Your Savings Go Further in Retirement

Likewise, you can maximize your savings potential to make early retirement easier. Here’s how to make your savings work for you:

Use a Budget

Although the word ‘budget’ might make your stomach churn, it’s one of your most powerful financial tools. Budgeting helps you gain control of your finances by providing a clear overview of your income and expenses.

Budgeting lets you track where your money is coming from and where it is going, enabling you to make informed decisions about your spending and saving habits.

Additionally, a budget also helps you set financial goals and work towards them. In this case, it’s your roadmap to retiring at 40. So, you can allocate resources wisely and prioritize what matters most.

Choose Low-Fee Investments

Management fees can be the death of otherwise successful portfolios. This characteristic applies to brokerage accounts, which can invest in mutual funds, exchange-traded funds, real estate investment trusts (REITs) and other funds that can have exorbitant administrative fees.

Evaluating an account’s fee structure before investing money is crucial to keeping more of your money.

Care for Your Health

Healthcare is paramount for retirement planning. It’s undeniable that every retiree will require healthcare services at some point in their journey. However, by taking proactive measures, you can determine the timing and way you receive such care.

In particular, regular check-ups and engaging in physical exercise serve as preventive measures that can substantially diminish the frequency of hospital visits, fostering physical well-being and financial stability.

Work Part-Time

Additionally, embracing part-time employment can bolster your finances upon early retirement. Pursuing this option can augment your income and counteract rising inflation. Moreover, this approach possesses the added advantage of enabling a prolonged deferral of Social Security, which ultimately translates into higher benefits later on.

Pay Off Debt

Lastly, it’s critical to recognize the dangerous grip that debt can exert upon your financial liberty. For instance, the burdensome nature of credit card balances and personal loans comes from their exponential interest rates. This predicament imposes sizable obstacles on the path toward retiring at 40.

Remember, the gains from investments seldom surpass the annual percentage yield (APY) that debts impose. Therefore, prioritizing the repayment of high-interest debts promotes financial health, whether during the prime of your career or your golden years.

Bottom Line

Retiring at 40 with $1 million requires a strategic investment approach. Specifically, you must create a well-thought-out plan that includes various types of assets, such as brokerage accounts, savings accounts and real estate.

In addition, calculating your expenses meticulously and ensuring that your income covers them effectively is crucial. In this scenario, $1 million must last for several decades until you become eligible for Social Security. So, thinking creatively about generating income during that time is essential.

Tips for Retiring at 40 with $1 Million

Investing $1 million for retirement means maximizing the return of every dollar during your career. Working for two decades or less means you can’t afford a mistake when investing. Fortunately, a financial advisor can help you find assets with low fees and substantial returns. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Ideally, retiring at 40 means starting off your golden years while you’re relatively young and healthy. However, your future health is unknown, especially after you become a senior citizen. So, you can prepare for this possibility by budgeting for the cost of independent living.

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

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Source: smartasset.com