A discussion about personal finances can be a polite, congenial affair. Few people come to blows over insurance or budgeting. But some topics inflame financial passions, and one of them is investing. Fellow GRS e-scribe William Cowie encountered this a couple weeks ago when he advocated for investing in individual stocks in certain situations. I thought I would pass along a few thoughts of my own, given that 1) William cited the success he’s had with a newsletter from The Motley Fool (my employer for the past 15-plus years), and 2) my own portfolio has big holdings in index funds but also some actively managed funds and individual stocks.
This is a huge topic, with enough books written about the subject to create an entire wall of books. But for today’s post, I’ll question one of the main arguments against individual stocks, then conclude with a few parting thoughts. And as my posts have traditionally been sprinkled with cat pictures, I’m including this cool “peace” cat as inspiration.
People Aren’t Actively Managed Funds
The evidence is clear: Most actively managed funds underperform similarly invested index funds. The Standard & Poor’s Index vs. Active (SPIVA) mid-2014 report says that more than 70 percent of actively managed funds lost to their respective benchmarks over the previous five years. The cheerleaders of index funds have plenty of hard evidence to power their pom-poms.
This leads some to argue that if fancy-pants Wall Street fund managers can’t beat an index fund, then the average Josephine doesn’t have a chance. However, fund managers have to overcome hurdles that individual investors don’t.
First off, fund companies take money from your account to pay for running the business and buying fancy pants. The fees charged by index funds are much lower than those charged by actively managed funds, which gives the former group a head start, so to speak. According to the SPIVA report, the S&P 1500 index (a more comprehensive measure of the U.S. stock market than the S&P 500) earned an annualized 19.18 percent over the five years ending June 30, 2014; the average actively managed fund made 17.95 percent — a difference of 1.23 percent. Not coincidentally, that is just about the average fund’s expense ratio — i.e., the percentage of your account value a fund company extracts. In other words, higher costs are one of the reasons active funds lag index funds.
Investors in individual stocks, on the other hand, just pay commissions, which generally are $10 a trade or less. If those shareholders are true buy-and-hold investors — which is the right way to do it — that is the only expense they will pay to own a stock for years to come. To be fair, investors who subscribe to research services should also factor in those costs. But annual expenses for investors in individual stocks shouldn’t be anywhere near 1 percent.
Also, fund managers must deal with the flow of money in and out of the fund, which might force them to invest in ways they would rather not. For example, when the market tanks, fund investors collectively take out more money than they put in. This can force managers to sell stocks after prices have already plummeted, even though they would prefer to be buying when stocks are down. On the flip side, when the market or a particular fund does well, money pours in, and the manager is compelled to invest the cash after prices have already gone up. As a fund gets bigger, its menu of potential purchases shrinks; it can no longer invest in smaller companies because buying a meaningful stake could drive up the price.
Individual investors don’t have these concerns. They can invest in small and big companies alike as well as buy, sell, or hold based on their own circumstances and choices. They are not forced into selling because others are panicking.
Do these advantages that individuals have over fund managers lead to market-beating returns? The research is not as extensive as the “index vs. active funds” literature — and much of it is outdated, involves only a few years’ worth of investing, and/or is based on data from foreign exchanges. But I know of enough people who have pulled off benchmark-beating returns to know that it is possible.
Indexing and Picking Stocks, Living in Harmony
There is so much more to say on this; but for now, let me pass along these three thoughts.
1. Index funds are the right choice for most investors’ money. Even Warren Buffett, one of the greatest investors of all time, agrees. In the 2013 annual letter to Berkshire Hathaway shareholders, he revealed the instructions in his will for the money his wife will inherit. “My advice to the trustee,” he wrote, “could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)”
2. This isn’t an either/or decision. Even some of the most ardent supporters of index investing are OK with people having 5 percent to 10 percent of their portfolios in individual stocks. One of those people is Bill Schultheis, author of “The Coffeehouse Investor” (one of my all-time favorites). He wrote: “Somewhere among the millions and millions of stock pickers you might be the next Warren Buffett. But I am not sure it is worth risking your entire portfolio to find out you aren’t.”
Many people who are known for their indexing advocacy own some individual stocks on the side. Heck, even Vanguard — the company most known for advancing the cause of index funds — has been offering actively managed funds for decades. Last year they published “The Case for Vanguard Active Management” and launched their non-indexy Global Minimum Volatility Fund. If Vanguard can be cool with an investor having both active and indexing strategies in a portfolio, then it’s probably fine.
3. Keep score. However you invest, evaluate your choices annually. Are your actively managed funds keeping up? Do you have the best index funds? If you have a financial adviser, how is she doing? If you are picking stocks, how are you doing? If you’re not sure how to do all that, have no fear. It will be the topic of one of my first posts of 2015. But beating an index fund is not an easy thing to do, so it is important to know sooner rather than later if your forays into active management are paying off.
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.
Bank banks don’t want your deposits. At least, that’s the conclusion I’ve drawn over the last year as savings account yields at Citibank, Wells Fargo, Bank of America, and other big banks have scarcely budged despite the most aggressive Federal Reserve rate-hiking cycle in memory.
Good thing big banks aren’t the only game in town for savers. You can earn a far better return — like 125 times better, based on average savings account yields tracked by the FDIC — with Compound Real Estate Bonds, a financial technology company that offers high-yield bonds backed by real estate assets and loans.
Compound Real Estate Bonds is a potentially powerful source of passive income for everyday savers and an easy way to diversify your investment portfolio away from highly correlated stocks and ETFs. Find out what to expect from it and decide whether it’s right for you.
What Is Compound Real Estate Bonds?
Compound Real Estate Bonds is a financial technology company offering fixed-income real estate savings bonds.
Known as Compound Bonds, these bonds are available for purchase by accredited and non-accredited investors in $10 increments. They pay fixed interest (currently 7.00% APY) that’s credited and compounded daily. They’re highly liquid and have no fixed maturity date, meaning you can withdraw your funds at any time or remain invested indefinitely and keep compounding your money.
Compound Bonds are backed by real assets — mostly direct real estate investments and real estate debt investments, with some cash and cash equivalents in the mix. The real estate portfolio spans multifamily (55%), commercial (30%), and industrial (15%), broken down regionally as follows:
U.S. South
40%
Canada
40%
U.S. West
10%
U.S. Northeast
10%
What Sets Compound Real Estate Bonds Apart?
If you’re familiar with banking and investing at all, you can probably tell already that Compound Real Estate Bonds is different. We’ll dive deeper into its features and selling points in a moment, but these distinctions are worth calling out right away:
Daily Interest Crediting and Compounding. Unlike most bond issuers, fund managers, and banks, Compound Real Estate Bonds credits and compounds interest daily. It sounds like a technicality, but it’s not — it gives your money more opportunities to grow and can make a significant difference over time.
Withdraw Principal at Any Time. Most bonds have fixed maturity dates, meaning you have to wait years to get back what you put in. (Sure, you can sell some types of bonds on the secondary market, but that may involve loss of principal.) Compound Real Estate Bonds allows you to cash out of your Compound Bond investments at any time, though you’ll of course earn more the longer you stay invested.
Low Correlation With Market-Traded Investments. Compound Bonds are backed by real estate assets and debt investments, not market-traded securities (or vaporware like NFTs and crypto). So when the stock market takes a dive, your Compound Bonds won’t necessarily follow — though the real estate market does have its own ups and downs.
Open to Non-Accredited Investors. The Compound Bond is the sort of investment that until quite recently would only be open to accredited investors: individuals who consistently earn more than $200,000 per year and/or have at least $1 million in total net worth. Needless to say, that’s not most people. Good thing non-accredited investors — ordinary folks — can buy Compound Bonds too.
Is Compound Real Estate Bonds Legit?
Yes, Compound Real Estate Bonds is legit.
Compound Real Estate Bonds is a financial technology company that offers SEC-qualified bonds backed by real estate investments and real estate debt investments.
That said, Compound Real Estate Bonds is not a bank, and Compound Bonds are not FDIC-insured bank accounts. They’re alternative investments that, like all other investment instruments, carry some risks and aren’t suitable for all investors.
Compound Real Estate Bonds is not a licensed financial advisor or investment advisor. So before you make a decision to invest, read Compound Real Estate Bonds’s offering circular in full, and consult your financial advisor if you’re not sure how to evaluate the information you find there.
Key Features
Let’s take a closer look at how Compound Bonds work and what else you can expect from Compound Real Estate Bonds.
Investment Approach
Compound Real Estate Bonds’s website and real estate bonds fact sheet do a great job of describing its investment philosophy and approach in detail. I’m not going to repeat everything here — definitely check them out before you sign up — but I do want to call out some highlights here:
Focus on high-quality, income-producing real estate with growth potential
Value investing strategy (acquiring assets for less than what Compound Real Estate Bonds believes they’re worth)
Comprehensive asset diversification across geographic regions, real estate sectors, risk level, and time horizon
Applying proprietary technology and data insights to spot opportunities and manage risk effectively
Minimum Investment
Individual Compound Bonds have a face value of $10. That’s also the minimum investment amount. In other words, you can buy just one Compound Bond at a time if you wish.
Automatic Investments
Compound Real Estate Bonds makes it easy to set up automatic investments — as often as daily and as little as one bond at a time — from your linked bank account. You can also opt into round-up investments to round up each purchase in your linked external bank account to the nearest dollar, set aside the difference, and purchase a new Compound Bond when your saved balance hits $10.
Withdrawal Timing and Process
You can withdraw your bonds’ principal and accrued interest (which is added to the principal daily) at any time with no fees or restrictions. Simply initiate a withdrawal in the app and Compound Real Estate Bonds sends it to your linked external bank account.
Tax-Advantaged Investing Options
Compound Real Estate Bonds offers tax-advantaged investment options (Individual Retirement Accounts). You can open a fresh IRA with Compound Real Estate Bonds or roll over your balance from an existing IRA, depending on where you’re at in your retirement investing journey.
Advantages
Compound Real Estate Bonds and its core product, the Compound Bond, have some impressive advantages. These are definitely worth calling out.
No Fees, Period. Compound Real Estate Bonds has no user fees. You don’t have to worry about hidden charges eating into your returns or eroding your principal over time.
Yields Far Better Than Traditional Savings Accounts. Compound Bonds’ 7% annual yield is much better than traditional big-bank savings accounts, whose yields have been stuck near zero for years. It’s better than higher-yield online savings accounts too and should remain so for the foreseeable future.
Interest Credited and Compounded Daily. Compound Bonds credit and compound interest every day, giving your money more chances to grow. This is a big advantage over other passive investments, which typically pay interest or dividends annually, quarterly, or at most monthly.
Highly Liquid (Withdraw Funds at Any Time). Compound Real Estate Bonds offers real estate exposure without its Achilles heels: low liquidity and high selling costs. If you need your money back, no problem. You can cash out your Compound Bonds at any time.
Not Correlated With the Stock Market. Compound Bonds are backed by real estate, not stocks or government bonds. They’re not guaranteed never to lose value, of course, but they won’t decline just because the stock market has a bad day.
Backed by Real Assets (No NFTs or Crypto). Compound Bonds are backed by real assets — literally, real estate assets — rather than sketchy NFTs or cryptocurrencies. This is a big advantage over other financial technology companies promising better returns than banks. Real estate isn’t risk-free, but it’s a lot more legit than digital assets.
Open to Non-Accredited Investors. Compound Real Estate Bonds allows non-accredited investors to purchase Compound Bonds, subject to income- or net worth-based restrictions.
Disadvantages
Compound Bonds do have some downsides worth noting. Consider them before you sign up.
Not FDIC-Insured. Compound Bonds are not bank accounts, so they don’t come with FDIC deposit insurance. This means that if Compound Real Estate Bonds goes out of business — which seems unlikely right now, but you never know — you could lose your entire investment.
Purchase Limits for Non-Accredited Investors. It’s great that Compound Real Estate Bonds allows non-accredited investors to buy Compound Bonds, but there’s a limit that could put enthusiastic investors at a disadvantage: no more than 10% of your annual income or net worth if you don’t qualify as an accredited investor.
Tied to North American Real Estate. Compound Bonds are backed by U.S. and Canadian real estate assets and debt investments. This has some upsides, like low correlation with stocks and inflation resistance (based on historical performance), but we know that real estate investments can lose as well as gain value.
Final Word
Compound Real Estate Bonds’s Compound Bond is one of the most exciting alternative investments I’ve come across since 2020.
Perhaps it’s a low bar after years of crypto hype, but it’s refreshing to find a high-yield instrument backed by real assets — literally, real estate.
And with such low barriers to entry, it’s no stretch to say that Compound Bonds are within financial reach for ordinary savers and investors, from folks just starting out down the road to financial independence to people who’ve been doing this for decades.
Our rating
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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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.
We all like to think of ourselves as good people, right? Or at least, we try to be. But this looks different for everybody. Some protest and march, some volunteer, some change their shopping habits, and some spread the word. Others take a little more time to choose where their investment dollars go.
If doing your part to make the world a better place might look like investing in companies making a positive impact, here’s what you should know about socially responsible investing.
What’s Ahead:
What is socially responsible investing (SRI)?: Definition
Socially responsible investing or SRI is an investment strategy that involves choosing investments according to your personal beliefs and values as well as financial factors.
This strategy is also called ethical investing, sustainable investing, or values-based investing.
Socially responsible investing is about putting your personal values before or alongside financial gain. You’re thinking about causes you care about and your goal is to drive positive change by supporting the “good” companies and not supporting the “bad” ones. Yes, you want to make money. But you also want to make a difference.
The term “socially responsible investing” is commonly used as an umbrella term for many different strategies. You might see ESG investing — or environmental, social, and governance investing — and impact investing simply called socially responsible investing. All of these refer to the practice of investing with your beliefs.
What are socially responsible investments?
There are so many different types of ethical investments. And since it’s personal, there are really no “wrong answers.”
Here are just a few examples of causes and issues you can support with socially responsible investments.
Environmental sustainability
Human rights
Community growth
Animal welfare
Fair wages and workplace equality
Gender empowerment
Affordable housing
Healthcare access
International aid
Socially responsible investments can be almost anything. If there’s a social issue you care about, chances are you can find companies to invest in that also care about that issue and others.
Types of socially responsible investments
Socially responsible assets come in many different shapes and sizes. But here are two main types:
Individual investments: Stocks or even fractional shares of socially responsible companies.
SRI funds: Socially responsible mutual funds and exchange-traded funds (or ETFs) made up of companies from a variety of different industries.
Choose individual investments if you want to handpick your assets and research each company. This option is better for investors who want to actively trade and maximize their profits by looking for growth opportunities.
Choose a fund if you want to invest in many different companies at once. This is an ideal option for investors with less capital and a good long-term strategy overall. But while SRI funds can be easier for diversifying and much more passive, you’re not in control. It’s up to fund managers to decide what socially responsible means, and you might not always agree with their picks.
Socially responsible investing vs. ESG investing
Socially responsible investing (SRI) and ESG investing are two different strategies. But they’re often confused, so we’ll set the record straight.
While ESG uses scores and metrics to grade investments objectively, SRI is personal and ethically driven. It requires investors to consider their values when choosing investments, which is possible with ESG investing but not necessarily the point.
ESG is a system for measuring a company’s sustainability and impact using environmental, social, and corporate governance factors. ESG investing considers how these factors affect a company’s performance and overall responsibility. It uses both financial and non-financial considerations to choose investments with the goal of reducing risk and increasing returns.
Socially responsible investing is about values. You choose investments that align with causes you support and you specifically don’t invest in ones that have a negative impact.
Read more: ESG vs. sin stock investing: Which option will give you the best returns?
How they’re used together
As you might imagine, there is often an overlap between ESG investing and SRI. For example, many SRI investors take ESG factors into account when comparing investments. Here’s how it works.
With ESG investing, all investments are scored and the highest scores are considered to be the best opportunities. With SRI, investments are weighed against criteria and may be disqualified if they conflict with values. Even investments that could be profitable might not be included as an option if they aren’t seen as socially responsible.
It is very common for investors to use SRI strategies to narrow down their options and then ESG metrics to choose the most promising investments. And it works the other way too.
How SRI screening works
A lot of us don’t realize that the companies we support and invest in are not only not acting in socially responsible ways, but sometimes having a significant negative impact on society.
This is what SRI screening aims to address. It’s about boosting the companies doing the right things and not letting companies doing the wrong things get away with it.
SRI usually uses a combination of negative screening and positive screening to narrow down investment opportunities. With negative screening, you weed out companies with business practices that are actively harmful. Then, with positive screening, you put a spotlight on companies doing good. From there, you have a pool of SRI investments to select from.
This isn’t the only way to do it, but it is one of the most common. You can also use a positive investing strategy to skip right to the companies with a positive impact, but this can take longer.
How to build an SRI portfolio
The process of finding responsible investments varies from investor to investor since it’s all about personal values.
For example, one investor might automatically rule out any companies known to take part in animal testing while another might rule out companies with massive carbon footprints. This would probably leave them with some of the same choices and at least a handful of different ones (since a company can do some things “right” and other things “wrong”).
Most investors start by excluding investments because this makes the process of identifying opportunities less overwhelming. But this can still be time-consuming as it requires a lot of research into a business’s practices, policies, ethics, and more.
Here are some options for building an SRI investment portfolio more easily:
These options can at least give you a good place to start. Then, you can select for the investments you want after doing your own research to determine which ones best align with your values.
Read more: An easier way to get into socially responsible investing
How to get started with socially responsible investing
There isn’t just one way to get started with SRI. There are many ways to incorporate this investment strategy into your life and an infinite number of causes to invest in.
Here are some steps you would take to get going with socially responsible investing.
Choose your causes
The first step is to decide what you care about. Not all socially responsible investors invest in the same causes, and thinking about this ahead of time can help make every other decision easier.
Remember, a socially responsible investment is anything you want it to be. You just invest in what you’re passionate about. If that’s gender equality, focus on companies without gender pay gaps. If it’s being green, invest in carbon-neutral or carbon-negative companies. Etc., etc., etc.
You’re trying to make a positive social impact by supporting the right companies and not supporting the wrong ones. So you should also think about the things you stand against.
You can choose as many causes to invest in as you like and change your mind about your priorities as you go. Thinking about what you stand for before sitting down to choose your investments can also remind you why you’re doing this.
Plan your portfolio
Consider how socially responsible investments will fit into your portfolio and routine.
There is no golden percentage or perfect rule for everyone. It all depends on your risk tolerance and other strategies. You could replace a stock or two with sustainable alternatives or create a completely separate SRI portfolio, but refrain from changing your entire investment portfolio at once.
If you have questions about your asset allocation, talk to a financial advisor.
Decide how involved you want to be
Will you choose every investment yourself, or would you rather invest in a fund or with a robo-advisor? Both of these options are perfectly fine, but one is a lot simpler for you.
Only create an SRI portfolio yourself if you have some experience with investing and you’re confident in your ability to compare assets. There are unique risks with SRI, and your investment decisions will take time.
If you’re newer to investing or you want a more hands-off approach to SRI, consider a robo-advisor. These screen for you and help you find the right assets and allocation.
There are advantages and disadvantages to each of these options. Choosing individual investments lets you build your perfect SRI portfolio but requires more effort. Going instead with a robo-advisor offers the advantage of convenience and easy diversification but might mean you get an asset or two you’re not jazzed about. Consider these trade-offs.
Choose a platform
After you decide how involved you want to be, you can choose a platform. A stock brokerage or trading platform is best for those who want to handpick their investments. For something more passive, a robo-advisor is a good choice.
Best robo-advisors for SRI
Wealthfront and M1 are two great platforms that simplify SRI. Wealthfront is a robo-advisor offering pre-built SRI portfolios you can tweak and customize, and M1 is a hybrid robo-advisor and brokerage with SRI “pies” created by the platform and even pies shared by the community.
Read more: M1 vs. Wealthfront: Which robo-advisor is right for your investing style?
Best stock brokerages for SRI
Public is one of our top recommendations for SRI-friendly platforms. This social investing app makes it easier than most to research company profiles, and the social aspect also lets you see what other investors are saying about any given investment. And because it allows fractional investing, it’s good for diversifying with less money.
Another great option is TD Ameritrade. This brokerage has long been one of the best for affordable trading, with no fees for stock and ETF trades and no minimum investment requirement. It offers a wide selection of funds including many no-transaction-fee mutual funds, making it a solid choice for active investors who need options.
Do your research
This is less of a one-and-done step and more of an ongoing task. A socially responsible investing strategy requires a little more due diligence than a traditional strategy that’s all about numbers and performance. You have to know what a company is actually up to.
Sometimes socially responsible companies are easy to spot and other times not so much. You’ll need to find out more about business practices by digging into reports, mission statements, news articles, forums, and more.
Many investing platforms offer free resources, including market research and company profiles, so you can do all your digging in one place. Always take advantage of these.
Pros and cons of socially responsible investing
SRI comes with many potential benefits, but it also comes with risks. Here are some of the possible advantages and disadvantages of choosing this particular strategy.
👍 Pros
With socially responsible investing, you get to feel good about where your money is going and invest in the futures of companies and brands worth supporting. You can claim a small role in any progress that happens as a result of these businesses prospering and fulfill some of your sense of social responsibility.
If more people were to financially support businesses working to make the world a better place, these businesses would grow in prominence and likely have a ripple effect on the market as a whole.
SRI can also offer financial benefits. There is evidence to suggest that SRI is a safer alternative to traditional investing because socially responsible companies are more competitive since they’re open about their practices and responsible. Usually, consumers recognize when businesses care about more than just profits and choose these over others.
👎 Cons
With SRI, you have to be comfortable with a certain level of risk and involvement.
Although SRI is personal, performance depends on other people too. If you invest in a cause not a lot of investors care about, support a business that some find controversial, or your chosen niches ebb and flow in popularity, your portfolio could be negatively impacted.
Financial returns also vary considerably based on which causes you support. For example, if you invest in eco-friendly companies, you might earn a profit fairly quickly as sustainability is becoming more important to consumers as a whole. But if you invest in a company doing something more outside the box, the public could take a while to catch up.
Another potential disadvantage of SRI is effort. If you choose investments for yourself, you’ll be spending a lot of time researching. And even if you pick mutual funds and robo-advisors to save time, it can still be pretty hands-on.
Is socially responsible investing right for you?
You might be a good candidate for socially responsible investing if you like the idea of investing in positive change. This strategy offers a lot of benefits and may even give you better financial returns than what you’re doing now if you’re smart and you take your time. It can also make you feel like you’re making a difference.
But going against the flow can also be bad news. It can mean that your portfolio takes a hit if people disagree with you, that growth is slow or nonexistent, or that companies that are making a positive impact but not much profit don’t succeed (and that the “bad ones” win). SRI can also be more work for you as an investor.
If you do decide that SRI is right for you, it’s important to find the right asset allocation and the right approach. Consult a professional such as a financial advisor to talk through this if you want help.
Alternatives to SRI
If you’re on the fence about sustainable investing but you still want to do good with your dollars, there are many alternatives to SRI that accomplish the same end goal in different ways.
Investing by purchasing shares and stock isn’t the only way to financially support businesses you believe in and support causes you care about. You can also:
Shop intentionally: Conscious consumerism is the practice of being mindful of the impact your spending has and buying from companies that are making a positive difference. Being loyal to brands doing good things can help them thrive, and even just one passionate consumer can go a long way in promoting these businesses.
Pick ethical banks: Choose ethical banks for your money and other financial needs. Financial institutions have a huge impact on the market and economy, influencing policy and change. Where you bank matters.
Make community investments: Community investing, also called impact investing, involves supporting groups directly helping people. For example, investing in a bank providing lending to borrowers who couldn’t get it otherwise or a loan fund for affordable housing. This is like charitable donating but can lead to profit.
Read more: 12 easy ways to make your money green and protect our planet
Summary
Socially responsible investing (SRI) is an increasingly popular strategy with investors who want their investment dollars to have a positive societal impact. If that sounds like something you could be into, consider adding socially responsible investments to your portfolio. SRI is more accessible than ever, with a variety of platforms creating resources and options for passionate investors to try it out.
Just make sure you understand the inherent risks of SRI, the best ways to choose investments, and how to tell if a company or fund is really socially responsible or not.
Public Disclosures: This does not constitute investment advice. Investing involves the risk of loss, including the potential loss of principal. Brokerage services for US-listed, registered securities available on Public are offered by Open to the Public Investing, Inc. (OTTP), a member of FINRA & SIPC, and a wholly-owned subsidiary of Public Holdings, Inc. Brokerage services for alternative investments are offered by the Dalmore Group, LLC, a member of FINRA & SIPC. Alternative investments are over-the-counter equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933. Cryptocurrency trading is provided by Apex Crypto LLC (NMLS ID 1828849). Apex Crypto is licensed to engage in the virtual currency business by the New York State Department of Financial Services. New customers of OTTP receive free stock valued between $3 – $1,000 (0.3% receive the maximum value).
Inside: Do you have a passion for something, but don’t know what to do with it? This guide will help you find a career that is perfect for you and match your interests and values.
This is something all of us wonder, right?
What should I do for a living?
Am I doing what I should do as a career?
Did I make the right decision with my career?
Or is it time to switch gears and find something that I love to do and make money at the same time?
I have been asking this question so many times, I finally decided to make a list of answers.
This is not just for those who want to know what they should do with their lives; it’s also for anybody looking for some new ideas on how they can fit into a career that will bring them satisfaction and happiness.
Recently, my middle schooler was asked, what do you want to do beyond high school? And he looked at me shell shocked.
Remarkably, this question of what should I do for a living is a doozy to answer. So, don’t feel alone if you cannot answer it… yet.
How do I find out what I should do for a living?
The first step to finding out what you should do for a living is to identify your skills and interests.
What are you good at?
What do you enjoy doing?
Once you have a better idea of your strengths and passions, you can start researching your options.
The bottom line…you must be happy to spend the next decades doing what you picked.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Tips for finding a career you love
When you’re looking for work, it’s important to remember that there are many different ways of making a living. You can be an artist or designer in your own home studio, or run your own business. The key is to figure out what your interests are, and then find a way to use those skills in the work you love doing.
The goal of this article is not just to help you find a job that pays the bills, but to help you find work that is satisfying, meaningful, and fun.
Here are some tips to keep in mind as you go through the process of figuring out what you want to do with your life.
#1 – Focus on You
Don’t listen to people who tell you that you should do one thing. If your parents want to see you be a doctor, or if your friends think it’s important for you to have a “real” job, you might be tempted to listen to them.
Don’t let anyone else tell you what your passion is, or how you should spend your life.
Determine what’s important for YOU!
As you go through the process of figuring out what to do with your life, keep in mind that there are many different ways to live a happy and fulfilling life. You don’t have to be a doctor to help other people. You don’t have to work in an office all day, every day.
Do what you love and the money will follow.
If you do something that you love, you will never have to work a day in your life. If you do what you love, and are good at it, people will pay for that service or product.
Do what makes YOU happy. If you’re not happy, no one else will be either.
Don’t let anyone tell you what to do with your life. You should never have to justify your decisions or choices to anyone. You are the only one who has to live with your decisions and choices.
Do what you want, not what other people want for you or think that you should do. Period.
#2 – Identify What Interests You & Makes You Tick
There are a variety of ways you can go about finding out what interests you. You can read books and articles on different topics, talk to people with various careers, or take online quizzes and assessments – like this what should I do for a living quiz.
The first step to finding the right career for you is to identify what interests you intellectually.
What fascinates you?
What makes you feel like you are not working?
How do you want to spend your free time?
Once you know what fascinates you, the next step is to figure out how you can turn this into a career. Then, pursue your career interests relentlessly so you can reach your full potential.
#3 – Uncover your Strengths
Identifying your strengths is the key to finding opportunities that will be a good fit for you and enable you to reach your full potential.
Here are some things to take note of:
Pay attention to what you enjoy doing.
Notice when you feel most energized and engaged.
Consider what you do well naturally.
Reflect on feedback you’ve received from others.
Ask yourself how you can use your strengths more often in your current role or situation.
Once you know what they are, make sure to pursue opportunities that are based on them. This will help you stay focused and motivated in your work and life.
#4 – Match Your Values With Your Interests
Your values are the things that are most important to you in life. They guide your decisions and actions. They direct you to live a life that is meaningful to you.
There are many ways to identify your values. One way is to think about what is most important to you in different areas of your life, such as your relationships, work, leisure activities, and so on. Another way is to think about what you would like people to say about you when you are no longer here. What do you want them to remember about you?
Once you have identified your values, it can be helpful to write them down or share them with someone who will support and encourage you in living according to them.
When you link your values and interests together, it creates a powerful combination that can help you to live a more fulfilling and meaningful life.
When you know what is important to you (values) and what makes you happy and excited (interests), it becomes much easier to make decisions about how to spend your time and energy.
For example, let’s say one of your values is “family” and one of your interests is “cooking”. You could combine these by cooking meals for your family members or friends. Not only would this be enjoyable for you (because it aligns with your interest in cooking), but it would also be meaningful because it would be an act of love and care for those closest to you (which aligns with the value of family).
#5 – Consider your Lifestyle
Are you okay living below your means? Or do you prefer to flash your cash?
If you tend to spend money frivolously or struggle with saving money, then you need to be a high-worth earner. If you are okay living stingy, then a modest salary will probably work for you.
Keep in mind your lifestyle and what would be the best fit for you.
Consider if the hours are flexible, if you’d have time for hobbies and other interests, and how the commute looks. Sometimes rethinking your opportunities can give you a better perspective on what’s truly important to you.
Other Questions to Ponder:
Do you want a job that will consume most of your time?
Do you want a job where you can have a good work-life balance?
Are you okay with being tied to one location or have the flexibility to move around?
Are you willing to travel for work? If so, how often and how far?
What are your salary expectations? Are you looking for health benefits, paid vacation, or other perks?
Ultimately, there are many factors going into your decision. When considering a new potential career opportunity, it’s important to think about more than just the paper qualifications and the salary.
#6 – Spend Time Doing your Research
The best way to find a career you love is to first figure out what it is that you’re passionate about. What are the things that make you excited to get out of bed in the morning? Once you know what your passions are, research careers that align with those interests.
This just doesn’t happen overnight.
In fact, I recently went back to something of interest to me years ago because it would provide the time freedom I desired.
Spend time doing your research and following all the steps we cover in this post.
#7 – Find a career that matches your skills and interests
It can be difficult to identify what you want to do with your life, especially if you’re feeling lost or uncertain.
However, once you’ve identified what areas of interest might suit your skillset, try to link these interests with some type of career options.
Consider how your interests would fit into potential careers before choosing one.
It’s important to consider how your unique passions would fit into certain occupations or fields of work before choosing one. This will help you find a career that is satisfying and fulfilling. Consider the skills and interests you have and search for job openings that match them.
Start by researching the field you’re interested in.
# 8 – Talk to people in the field
There are a few ways to find people to talk to about your career interests. You can start by talking to friends and family members who might know someone in the field you’re interested in. You can also look for professional organizations related to your field of interest, or search for networking events in your area.
When you’re talking to someone about their career, it’s important to ask questions that will help you learn more about the field and whether it’s a good fit for you. Some questions you might want to ask include:
What does a typical day look like?
What is the most challenging part of the job?
What are the biggest rewards of the job?
These people will have better insights than what you can find searching the internet.
#9 – Get experience in the field
Oh, I cannot tell you how important this step is!
You have heard a similar story… my son dreamed of being an engineer and we planned to send him to engineering school. After his internship, the thought of being an engineer sucked the life out of him. Glad we learned this lesson before we spend money on his college education.
That is why I believe schools like this are so important to get real-life experience doing what you think you want to do for a living.
Consider internships or volunteer work to get your foot in the door.
Gaining experience can help you learn more about a particular field or company, and whether or not it’s the right fit for you.
#10 – Be open to change
Here are some things to keep in mind with change.
1. Change can lead to new opportunities: When you’re open to change, you’re also open to new opportunities. Embracing change can help you find a new job, start a business, or even move to a new city.
2. Change can help you grow: Personal growth is important for a fulfilling life. Change can challenge you and push you out of your comfort zone, leading to personal growth.
3. Change can be exciting: If you’re bored with your current situation, change can be exciting. It’s a chance to start fresh and experience something new.
4. Change can be positive: Even if it’s difficult, change can ultimately be positive. It can lead to improved relationships, increased happiness, and a better life overall.”
15 Most Popular Working for a Living Jobs
Many people want to know what they should do for a living.
For some, it’s not as easy as just “doing what you love.” There are definitely jobs out there that allow you to do what you love and make a living.
But first, we need to talk about the types of work available.
All salary estimates from Salary.com.
Registered Nurses
Registered nurses are in high demand and make a good living. They work with patients to assess their health, provide treatments, and help them recover.
Average Pay: $65k-70k per year
Education Needed: You need to have a nursing degree from an accredited school. You will also need to pass the National Council Licensure Examination for Registered Nurses (NCLEX-RN)
Police Officers
Police officers are responsible for upholding the law and maintaining public safety. A successful career in law enforcement requires strong communication skills and the ability to stay calm under pressure.
Average Pay: $54k-72k per year
Education Needed: Requires a college degree
Security Officer
More people are looking for security officer jobs as the world becomes increasingly dangerous. Security officers are in high demand and are usually the first responders in an emergency situation. It’s a challenging and rewarding career that can make a difference in people’s lives.
Average Pay: $32k-53k per year
Education Needed: Depends on their background and previous experience.
Real Estate Agents
If you’re looking for a job that’s in high demand, consider becoming a real estate agent. With the right education and licensing, you could be helping people buy and sell homes in no time. You must be comfortable marketing yourself and closing sales.
Average Pay: $38k-140k per year
Education Needed: Real estate agents need to be licensed in order to work. The real estate agent licensure test has a written and practical exam that must both be passed. In order to pass, you will need to know about contracts, financing, legal issues, and more.
Nursing Assistant
One of the most popular jobs in America is nursing assistant. It requires little training and pays relatively well. The work can be demanding, but it is also rewarding, and many nursing assistants feel a sense of satisfaction from their work.
Average Pay: $29k-41k per year
Education Needed: The Nursing Assistant job requires a high school diploma or equivalent, on-the-job training, and certification.
Delivery Driver
One of the most popular jobs in America is being a delivery driver. There are many positions for delivery drivers with different companies. Popular companies to work for include UPS, FedEx, and Amazon.
Average Pay: $39k-54k per year
Education Needed: Minimal. To become a delivery driver, you need to have a valid driver’s license and be able to lift heavy objects.
Firefighter
The most popular jobs in the United States vary from year to year, but there are always a few constants. Among these are firefighters, who protect lives and property from fires and other emergencies. They undergo rigorous training and must be physically fit to do the job.
Average Pay: $54k-94k per year
Education Needed: To become a firefighter, you need to have completed high school and be at least 18 years old. You will also need to pass a physical test and complete a training program.
Customer Service Representative
A customer service representative is the front line of a company and often the first interaction a customer has with the brand. The customer service representative’s job is to handle customer complaints, provide product information, and handle other inquiries. In order to be a successful customer service representative, one must have excellent communication skills and be able to stay calm under pressure.
Average Pay: $28k-44k per year
Education Needed: Minimal. Most require on-the-job training.
Dental Assistants
Dental Assistants are needed in every dental office. They help the dentist chair-side and perform a variety of tasks such as: take X-rays, prepare patients for treatment, sterilize instruments, and more. The Bureau of Labor Statistics projects that the number of jobs for Dental Assistants will grow by 18% from 2016 to 2026.
Average Pay: $32k-50k per year
Education Needed: To become a dental assistant, you will need to complete an accredited program and pass certification exams.
Nanny
One of the most popular jobs, and one that is likely to continue being in high demand, is nannying. To become a nanny, it is important to have experience with children and to be comfortable caring for them.
Average Pay: $37k-51k per year
Education Needed: You should also be CPR certified and have a clean background check.
Medical Assistants
A medical assistant is responsible for a variety of tasks in a doctor’s office, such as handling insurance claims, scheduling appointments, and helping the doctor with examinations.
Average Pay: $33k-44k per year
Education Needed: The job requires certification from an accredited program and on-the-job training.
Home Health Aides
Being a home health aide can be a rewarding career. Home health aides assist people who are unable to care for themselves in their own homes. They may provide basic needs such as bathing and dressing, or they may provide more specialized help, such as caring for someone who has Alzheimer’s disease.
Average Pay: $23k-33k per year
Education Needed: In order to be a home health aide, you need to have a high school diploma or equivalent, be at least 18 years old and have a driver’s license.
Personal Assistants
Being a personal assistant is a profession that helps people with various tasks. These tasks can include things like preparing meals, cleaning, and running errands. There are many different types of personal assistants, but all of them must have good communication skills and be able to multi-task.
Average Pay: $50k-83k per year
Education Needed: None
Graphic Designer
A graphic designer creates visual concepts, using computer software or by hand, to communicate ideas that inspire, inform, and captivate consumers. They develop the overall layout and production design for advertisements, brochures, magazines, and corporate reports.
Average Pay: $39k-65k per year
Education Needed: Many hold a bachelor’s degree in graphic design or related fine arts field.
Marketing Manager
A marketing manager is responsible for planning and executing marketing campaigns that promote a company’s products or services. They must have a strong understanding of marketing principles and be able to develop creative strategies that will engage consumers
Average Pay: $47k-94k per year
Education Needed: Usually need a least a bachelor’s degree, but the experience is more important.
High Paying Career Opportunities that Pay Over $100k a Year
There are many popular career choices that people will argue about. For example, which is the best job? This section covers jobs that pay over $100000 a year.
These jobs typically have six-figure salaries and require years of schooling and training.
Software Engineer
A software engineer is someone who designs, creates, tests, and maintains the software that makes computers work. They design, develop, test, and maintain the software that makes our lives easier. As technology advances, the job of a software engineer becomes more and more important. Writes code, tests, and debugs programs and perform a variety of complicated tasks.
There is a high demand for software engineers in the airline industry. Pilots need software engineers to design, develop, and maintain the software that controls the aircraft. They also need software engineers to help with the maintenance and troubleshooting of the software.
Average Pay: $65k-130k per year
Education Needed: Requires a college degree. Many have master’s degrees as well. To become a software engineer, one must have a strong foundation in mathematics and computer science.
Database Administrator
A database administrator is responsible for designing, implementing, maintaining databases, and troubleshooting databases while ensuring their availability 24/7/365. They work with clients to understand their needs and create databases that meet those needs. Database administrators need strong technical skills, as well as good communication and problem-solving skills.
Average Pay: $97k-150k per year
Education Needed: May require a bachelor’s degree in area of specialty or require certification.
Investment Banker:
A career as an investment banker can be quite fulfilling, as you will be responsible for helping companies raise money by issuing and selling securities. You will need to have a good working knowledge of financial markets, as well as excellent communication and organizational skills. As well as provides analysis of opportunities and potential investments, assists clients with the formulation of investment proposals, and provides guidance on the structuring and negotiation of transactions.
Average Pay: $56k-110k per year
Education Needed: College degree is typical and may require an advanced degree.
Air Traffic Controller
Air Traffic Controllers work in airports to ensure safe and efficient air travel. They monitor aircraft and make sure they follow all the necessary safety procedures. They also direct the movement of flights and keep an eye on traffic congestion. An air traffic controller is key for the safety of the pilots and passengers.
Average Pay: $54k-120k per year
Education Needed: Requires certification from the Federal Aviation Administration (FAA).
Petroleum Engineer:
There is an increasing demand for Petroleum Engineers. They are responsible for the exploration and production of oil and gas and work in a variety of industries, including energy, mining, and transportation. They develop plans to extract oil and gas from deposits below the earth’s surface and new ways to extract oil and gas from old wells.
Average Pay: $82k-120k per year
Education Needed: Requires a bachelor’s degree in engineering. May specialize in reservoir engineering, drilling engineering, or production engineering.
Anesthesiologists
Anesthesiologists are responsible for the care of patients during and after surgery. They monitor patients to make sure they are safe, help them breathe, and make sure they are comfortable.
Average Pay: $310k-520k per year (most anesthesiology assistants make well over $100k)
Education Needed: Requires a bachelor’s degree. Then, medical schools are offering anesthesiology education.
Airline Pilots
Being an airplane pilot is a very demanding job. Pilots need to be able to stay focused for long periods of time while flying. They also need to be able to make quick decisions while flying. Pilots also need to be able to multitask while flying. With travel demand constantly growing, there will be a growing need for pilots.
The airline pilot profession is a very demanding one that requires a great deal of education and training. It takes many years of dedicated study to become a qualified airline pilot.
Average Pay: $125k-163k per year
Education Needed: In order to become a certified pilot, pilots must first complete an accredited undergraduate program. After that, they must complete a professional pilot training program that can last anywhere from 1 to 4 years. Finally, they must pass a certification.
Psychiatrists
There are many different types of psychiatrists and their job duties vary. Psychiatrists are typically employed as full-time employees in hospitals, clinics, or private practices. A psychiatrist’s job duties may include diagnosing mental disorders and providing treatment.
Average Pay: $190k-300k per year
Education Needed: Usually required to have a graduate degree in psychiatry and pass a psychiatric board examination.
Orthodontists
Orthodontists are a type of doctor who specializes in the treatment of teeth and jaws. They use orthodontic appliances (braces and retainer devices) and other treatments to correct problems with teeth and jaws. Orthodontists typically work in private clinics and hospitals.
Average Pay: $100k-210k per year
Education Needed: Required to have a four-year undergraduate degree in dental hygiene, dental medicine, or dental technology. After completing an orthodontic residency, they must pass the American Board of Orthodontics (ABO) license examination.
Day Trader
A day trader is someone who makes a living by trading stocks, commodities, or currencies. They do this by buying and selling stocks, commodities, or currencies at the right time, and making a profit. This means that they are constantly on the lookout for opportunities to make money. A day trader typically works from home and may use a computer, telephone, or other electronic devices to trade.
Average Pay: $65k-120k per year
Education Needed: Required None required. However, many have a background in finance or economics.
Hedge Fund Manager
A hedge fund manager is a person who manages hedge funds. Hedge funds are investment pools that are used to protect investors from losses. Hedge fund managers make money by investing money in different types of securities.
Being a hedge fund manager is a very demanding job. It requires a lot of skill, knowledge, and experience. A hedge fun manager must be able to analyze financial data and make decisions quickly. He or she must also be able to communicate with clients and other employees of the hedge fund.
Average Pay: $87k-131k per year
Education Needed: Hedge fund managers must have a strong educational background. Studying finance or economics is usually necessary.
Web Developer:
A web developer is responsible for creating and maintaining websites. They work with clients to understand their needs and create a website that meets those needs. Web developers need strong technical skills, as well as good communication and problem-solving skills.
Average Pay: $97k-140k per year
Education Needed: College degree required. Must have certifications as well.
Network Engineer
A network engineer is responsible for designing, implementing, and maintaining networks. They work with clients to understand their needs and create networks that meet those needs. Network engineers need strong technical skills, as well as good communication and problem-solving skills
Average Pay: $73k-120k per year
Education Needed: College degree required. Must have certifications as well.
Trade Jobs that Pay A lot More than Minimum Wage
Trade jobs often come with good pay. This is because they require specialized skills and training. Some of these jobs include welders, plumbers, and electricians. Many trade jobs also come with good benefits packages. This includes things like health insurance and retirement plans. Some even offer the choice to join a union.
For example, welders and power plant operators can make an average of $23 an hour. Plumbers and electricians can make an average of $30 an hour.
Power Plant Operator
Aircraft Technician
Welders
Plumber
Construction Manager
Electricians
Real Estate Appraiser
HVAC Technician
Elevator Mechanic
Radiation Therapists
Boilermakers
Most Needed Job Opportunities
There are a number of jobs that are on-demand and in high demand right now. These jobs may have different requirements or be in higher demand in certain areas, but they all offer the potential to make a good living doing something you love.
There are many trade jobs that are in high demand right now. This means that there are more job openings than there are people to fill them.
This list of the top five jobs in demand right now was formed with the help of Best Colleges.
Nurse Practitioner
A Nurse Practitioner is a type of doctor who helps patients with a wide range of health problems. They work in a team with other doctors and nurses to care for patients.
Nurse Practitioners are trained to diagnose and treat a wide range of health problems, which can include everything from common colds to more serious diseases.
Average Pay: $100k-140k per year
Education Needed: Medical training is beyond what a registered nurse needs. A Master’s in nursing is required as well as state licensure.
Genetic Counselor
A genetic counselor is a healthcare professional who helps individuals and families understand and adapt to the medical, psychological, and social implications of genetic disorders. They work with patients to provide risk assessment, education, and support for inherited conditions.
Genetic counselors are poised for rapid growth and long-lasting job security due to advancements in genomics and genetic testing.
Average Pay: $67k-99k per year
Education Needed: Master’s degree in genetics and board certification.
Occupational Therapy Assistant
An occupational therapy assistant (OTA) is a healthcare professional who helps people regain and improve the skills they need to live and work independently. They provide rehabilitative services to patients who have sustained an injury, have a disability, or are experiencing physical and/or cognitive changes.
This may include helping individuals improve their mobility, balance, and coordination through exercise programs; improving the social skills of children with developmental challenges; working with people who have mental health conditions to help them participate in daily activities; or providing support to elderly patients who want to remain independent.
Average Pay: $52k-76k per year
Education Needed: Associate’s degree and field experience.
Physical Therapist Aides
Physical therapists aides help patients who have physical problems such as bed sores, fractures, and paralysis. They work with the physical therapist to help the patient move and perform activities of daily living. Typically duties include helping patients with exercises, massages, and other treatments.
Average Pay: $30k-38k per year
Education Needed: Physical therapist aides must have a high school diploma or GED and pass a criminal background check.
Information Security Analyst
The information security analyst job market is projected to grow by 33% over the next three years, making it one of the fastest-growing job markets. Information security analysts are vital to the protection of data and are responsible for the protection of computer systems and networks from cyberattacks and data breaches. They work to protect an organization’s most valuable assets- its data.
Average Pay: $70k-103k per year
Education Needed: Most have a Bachelor’s degree in software engineering or computer science. Also, many have certifications.
Thinking to Follow Your Passion – Cool Jobs to Do
There are a variety of jobs that you may not have considered that can be a great fit for you.
If you’re looking for a career change or just want to try something new, here are a few jobs you may want to consider. These jobs offer great opportunities and allow you to do what you love every day.
Video Game Programmer or Designer
If you love playing video games and have some creativity, you may want to consider becoming a videogame designer. This job allows you to use your imagination and creativity to create new and innovative gaming experiences for players all over the world.
Average Pay: $53k-185k per year
Education Needed: A college degree in computer programming is preferred. However, you can program get a certification and start working sooner.
Virtual Assistants (VA)
Being a virtual assistant can be a great way to make some extra money. It can be a lot of work, but with the right skills and equipment, it can be a lot of fun. Virtual assistants work with people all over the world, so there is always something new to learn. A VA has very flexible hours and can set its own schedule.
Average Pay: $39k-52k per year (depending on how much you hustle). Very common to make more.
Education Needed: None. But, this virtual assistant training is highly recommended.
Video Producer
There are a variety of video production jobs that are in high demand. If you have the skills and are passionate about video, there are plenty of opportunities out there. You could work as a video producer for a news organization, create video content for a website, or work for a company that produces video content for marketing purposes.
Average Pay: $47k-100k per year
Education Needed: Most have a college degree in design and video production. But, experience is preferred.
Tour Guide
If you are good at giving information tours, you may want to consider becoming a tour guide. Tour guides give visitors an overview of a particular place or attraction. They must be knowledgeable about the history and culture of the area they are touring, and be able to answer visitor questions.
Average Pay: $22k-44k per year
Education Needed: None.
Fashion Stylist
Detail-oriented people who have a passion for fashion and design can make a great living as a stylist. Stylists are in high demand, especially in the fashion industry. They typically work with clients to help them choose outfits or styles that will suit them, as well as style photo shoots and provide consultation on current trends.
Average Pay: $47k-64k per year
Education Needed: This is a job where you get popular by your experience and referrals.
Translators
Being a translator can be a very rewarding and challenging career. The most popular jobs for translators are in the legal, medical, business, and technical fields.
Translating is a very versatile job that can be done in many settings. Learning about the different types of translation and which language pairs are the most popular can help you get a better understanding of the field.
Average Pay: $43k-72k per year
Education Needed: Typically hold a bachelor’s degree. Must be proficient in at least two languages.
Social Media Manager
If you are able to communicate well, have strong writing and communication skills, and have some marketing experience, you may want to consider becoming a social media manager. A social media manager is responsible for developing and executing a social media strategy for their employer or client.
A social media manager is responsible for creating and managing a company’s social media presence. This includes creating content, monitoring activity, and engaging with followers.
Average Pay: $49k-75k per year
Education Needed: A college degree in marketing is preferred.
Event Planner
Event planners are in charge of organizing and managing events. They come up with ideas for events, coordinate with various departments to make them a reality, and keep things running smoothly. Event planners can work for businesses of all sizes, from small businesses to multinationals. There are many different types of event planners, so if you’re interested in a career in events, you should explore this avenue.
Average Pay: $47k-70k per year
Education Needed: Many have a college degree, but that is not mandatory. Strong organizational skills, attention to detail, and ability to work under pressure. Experience is best.
Florist
There are many cool jobs that you can consider if you are interested in the floral industry. A florist can work in a variety of settings, such as a grocery store, a restaurant, or a ballroom. A florist can also work as a freelance artist, creating floral arrangements for special events. This is a creative outlet for many and comes with flexible hours. However, work can be seasonal and require working on weekends and holidays.
Average Pay: $35k-76k per year
Education Needed: Nothing special. Just have an eye for creativity and a love of flowers.
Work Opportunities to Make Real Money
How do you want to make money? There are many ways. You could choose a career in medicine, law enforcement, or any other occupation that ultimately benefits society and helps people thrive.
Many people believe a business degree is worth it, but may not be the best choice for you.
Here are real jobs to make real money at work.
Teacher
One of the most popular jobs in America is teaching. Teachers are needed in every state, and the profession offers great stability and benefits. We need our teachers to teach the next generation.
Average Pay: $39k-80k per year
Education Needed: In order to become a teacher, you need to have at least a bachelor’s degree and be certified in your state. Many pursue a master’s degree in order to receive higher pay.
Veterinarian / Veterinary Tech
There are a lot of different jobs in the veterinary field, and if you love animals, chances are you would enjoy working with them. Veterinarians work with all types of animals, from pets to livestock. Veterinary technicians work with animals in veterinary hospitals, performing tasks such as recordkeeping and taking care of furry patients.
Average Pay: $60k-150k per year / $25k-55k per year
Education Needed: Becoming a veterinarian is much like going to college to become a doctor requiring specialty degrees. However, a vet tech only needs a high school diploma.
Construction Worker
Being a construction worker can be a challenging, but rewarding experience. It can be a great way to meet new people and build some amazing structures. The job requires a lot of physical labor, but it can also be very rewarding to see a project come to life. If you are interested in becoming a construction worker, be sure to research the profession and prepare yourself for the challenges that will come with the job.
Average Pay: $26k-47k per year
Education Needed: Starting out no experience is needed. To become a project manager, you will need a college degree.
Marketing Assistant
A marketing assistant helps with a variety of tasks in marketing. They may be responsible for monitoring and managing budgets, creating and distributing marketing materials, or working with customers to improve their experience with a company. If you have a strong interest in marketing and are comfortable working in a collaborative environment, a marketing assistant role may be a good fit for you.
Average Pay: $34k-57k per year
Education Needed: A college degree in marketing is preferred.
Truck Driver
One of the most popular jobs in America is a truck driver and a heavily needed position. The Bureau of Labor Statistics reports that there are 1,187,500 truck drivers employed in the United States.
Average Pay: $45k-58k per year
Education Needed: A high school diploma or equivalent is typically required to become a truck driver.
Administrative Assistant or Office Manager
The Administrative Assistant position is one of the most popular jobs in America. The role generally entails providing support to managers and employees, handling office operations, and managing schedules. In order to be successful in this career, you’ll need strong organizational skills and proficiency in Microsoft Office.
Average Pay: $35k-55k per year
Education Needed: None
What Should I Do for a Living FAQs
You enjoy going to work,
Your work makes you feel fulfilled.
Your skills are utilized and challenged.
You feel like you are making a difference.
This is why it is important to spend time making a decision on what to do for a living.
You’re not passionate about your work
You’re always stressed out
You dread going to work
You’re not challenged by your work
You don’t feel like you’re making a difference
It is better to make a decision to move out of the wrong career to maintain your happiness in life.
Research other careers that might be a better fit for you and consider making a switch.
Your interests can give you clues about the types of careers that might suit you. Your skills can help point you towards careers that will make use of your strengths.
Passions:
What are you passionate about?
What topics can you talk about for hours without getting bored?
Skills:
What natural talents do you have?
Are you good at working with your hands, or do you prefer working with your mind?
Do people often come to you for advice or help with problems?
Values:
What is important to you in a job?
Do you want to feel like your work makes a difference in the world, or do you just want a steady paycheck?
Do you prefer working independently or as part of a team?
Personality:
Are you an extrovert or an introvert?
Do people describe you as spontaneous or cautious?
Work environment:
Do you prefer working indoors or outdoors?
In an office or from home?
With animals or with people?
When it comes to choosing a career, it’s important to consider what kind of personality traits will make someone successful in their chosen field. Also, knowing your values can help narrow down your career options.
How can you create a career you love?
Your career is one of the most important aspects of your life. It’s what you spend the majority of your time doing, and it can have a huge impact on your overall happiness and satisfaction with life. That’s why it’s so important to find a career that you love.
When you have a career that you’re passionate about, it doesn’t feel like work. You’re more likely to be engaged and motivated, and you’ll be more likely to stick with it even when things get tough. Plus, pursuing a career that you love can lead to all sorts of other benefits, like increased success and earning potential.
There is no reason why you can’t create a career that brings joy into your life every single day!
How can you make a living doing what you love?
What are you good at? What do you enjoy doing? Which things are you naturally drawn to?
Those are the areas you need to focus on.
Once you have a plan, it’s time to start making money. There are a number of ways to do this, but the most important thing is to get started and keep moving forward.
Remember, it takes time and effort to build a successful business or find an enjoyable career.
What Should I Do Now?
There’s no single answer to the question “what should I do for a living?”
Everyone has a different idea of what they would like to pursue.
There is no right or wrong answer when answering this question, but if you are struggling with the decision-making process, take note of these most popular jobs and the skills you need to get them.
But by exploring your interests and values, you can find a career that is a perfect match for you.
No matter what your interests or skills may be, there is sure to be a cool job out there that is perfect for you.
You could also become an environmental scientist, web developer, or event planner. There are many exciting and rewarding careers out there – you just need to find the one that’s right for you.
Then, at the next social event, you can be proud to answer “what do you do for a living?”
So what are you waiting for? Start your search today!
More Ideas for You:
Know someone else that needs this, too? Then, please share!!
This is a guest post by Gary Dek from Gajizmo.com.
Everyone dreams of being rich, but the chances of winning the lottery or inheriting wealth from a distant relative are pretty slim.
Building wealth isn’t a result of idly daydreaming about success or money; high income earners have worked and sacrificed to achieve their dreams.
While some luck may be involved, most successful businessmen and women agree that luck is a small part of the secret to successful investing.
After all, capital is necessary if you plan to make money with investments and the only way to raise or build your own capital base is to make smart financial decisions and save money to devote to investments.
Here are six secrets you need to know to see success when investing to build wealth:
Living Below Your Means
Most people who have built real wealth started out by living below their income and saving or investing the extra money.
Today, Warren Buffet, one of the richest men in America, still lives in the house he purchased in 1958 for $31,500. In fact, most everyday millionaires aren’t Wall Street hedge fund managers or CEOs of Fortune 500 companies, but individuals with well-paid jobs who have learned to manage their budget, max out their contributions to retirement accounts, continuously invest in index funds, and just keep saving.
Saving money on non-essentials means having more money to invest. The ideal is to have your money working for you instead of you working for your money, and that simple philosophy eludes most families today. That helps explain why the average retirement savings by age is so low.
The perfect example for me is that I’ve postponed buying a new car for a couple years now. I love cars, and as a 20-something, it would be awesome for me to have a 300+ horsepower luxury sports car. The payments would affordable and I could buy one if I wanted to, so what’s stopping me?
A simple back-of-the-envelope calculation tells me that spending $50,000 plus interest payments over the course of 5 years could prevent me from earning tens of thousands in investment income.
So early in my life, I’d rather create a nest egg to buffer any future cash needs – something I learned from my parents, who used their savings to buy a business. I’d rather be investing in my 20s than spending.
Unfortunately, the average American spends virtually every penny they earn each year, leaving nothing for savings and investment. Instead of buying the most expensive house or car you can afford, save money on your mortgage and car loan payments by purchasing a less expensive home.
Historically, the long-run returns on your primary residence are less than 5%. Instead, the money you do save on your mortgage can be invested in higher-yielding opportunities, such as the stock market, a small business or investment property. Many of the wealthiest people in the world started out with very little and built their fortunes by making good decisions. There is no reason you can’t join their ranks.
Education and Knowledge
The English philosopher, Francis Bacon said “Knowledge is power”. Formal education is not central to knowledge, but studying and researching potential investments and investors builds experience. Examining the good and bad choices made by other investors can help you avoid at least some common mistakes, and by having a thorough understanding of all the options available in the market, you can pull information from different sources to determine which opportunity will inevitably be the highest performer.
When you have capital, there are many types of investments with varying degrees of risk. As a rule, the riskier the investment, the greater the rate of return. Learning how to mix different types of investments to maximize and diversify gains and minimize losses is one of the best ways to make money over time. This means combining safe investment options, like Treasuries and high yield money markets, with riskier ones, such as growth stocks, real estate, or a small business acquisition.
Determination and Risk Tolerance
Successful investors are prepared for setbacks and do not become discouraged when they take a loss or buy an investment with lower returns than they anticipated. Remember, no investment opportunity with the potential for a huge return is ever guaranteed. If it was, everyone would take advantage of it. Anyone who wants to become financially independent has to have the ability to tolerate risk. The key is to never make the same mistake twice and to incorporate the things you learned from that failure into your next venture.
About a month ago, I had the opportunity to buy a very authoritative website in the self-help/productivity niche. The site had received about 500,000 visits per month consistently for the last 3 years, and there was tremendous potential to increase revenues due to under-monetization. The price was reasonable and the seller trustworthy, so why did I pass on the deal?
Plain and simple: fear.
I’ve been burned before in transactions. After buying a website with thousands of visits per month and a solid revenue stream, Google’s algorithm penalized the site into oblivion and the total investment was lost. Despite that risk being highly unlikely in this case, I passed up on a great opportunity because I was scared. I won’t be making that mistake again.
The difference between those who become successful and those who do not often comes down to determination, persistence, and overcoming your fear of risk. The investor who continues to take chances and make informed decisions to buy investments he/she truly believes in ends up with far greater wealth than the individual who stashes all his cash in a savings account, too afraid to make the rational decision and diversify his money. When a disciplined investor is determined to prioritize his long-term retirement needs over consumption, he re-invests his returns instead of spending them.
You Have To Be In It To Win It
Many people postpone financial planning, believing they don’t have the means to start now. This is usually followed by the self-promise that they will start next week, next paycheck, or next year. Then life intervenes and they decide to postpone saving and investing again.
Families who earn their financial independence start by investing their money early and building their portfolio over time. Like you’ll read in every personal finance blog – don’t underestimate the power and importance of compounding interest. Failing to take action is the biggest barrier between the average person and wealth.
Investing Time
While every investor, like every gambler, occasionally has a streak of luck, few successful investors depend on luck over the long run. Most take the time to research different industries, business models and companies.
Consider investing your second job. The more information you absorb and the better you understand a field, the more likely you are to find the gems others overlook.
One of the best examples of this is real estate. I have my Real Estate Broker’s License, and as a habit, I check out MLS listings every Sunday night. The more properties I review, the more insight I have into what is available in each neighborhood or city, the cost per square foot, how the interior and exterior condition of the property affects the final price, etc. Over time, you start to get a feel for the market, and when you see an undervalued property, you have the confidence to jump in and grab it.
Believing in Success
Some wealthy investors, like Sam Walton (Walmart) and Bill Gates (Microsoft), choose to invest in their own businesses while others, like Warren Buffet, invested by buying stocks and bonds to fund other people’s businesses.
One thing that all successful businessmen have in common is an absolute belief in that they will meet or exceed the goals they have set for themselves. It is this complete faith in their own ability that makes these individuals keep striving, even after setbacks and disappointments. Consider making money from home – start a home-based business by turning a passion or hobby into a commercial venture.
There are no real secrets to building wealth and the opportunity is available to anyone who is willing to make the necessary sacrifices and put in the required effort. Just as there are no secrets, there are no shortcuts to financial success. Knowledge, time and hard work can make anyone the next American success story. Ordinary people can do extraordinary things, just ask the rich and the famous who were once ordinary too.
Gary Dek is a writer for Gajizmo.com who is always looking for ways to make and invest money. Check out his site to find more of Gary’s writing.
There are people in the world who are best known for being famous for being famous.
Think Kim Kardashian and Paris Hilton.
Warren Buffett is not in this crowd (thank goodness!).
He is widely considered to be the most successful investor of all time. He is one of the very wealthiest people in the world – often THE wealthiest, depending on stock market valuations.
He has gotten to where he is by being a brilliant and insightful investor.
Like me, he wasn’t born into money, and he didn’t sign a fat contract for a book, a movie, a TV show or a record deal. (Note: I did sign a contract for my book deal, but I assure it wasn’t fat. Far from it. Haha…)
He did it the old fashioned way, which in today’s world seems almost radical.
In fact, there is nothing fancy or unusual at all about Warren Buffett – other than his phenomenal success.
That, and his overwhelming common sense, are the reason why so many people study his life and follow his lessons. And that’s why you should to.
Though he came from humble beginnings, Buffett is today the chairman, chief executive officer, and the largest shareholder of the multinational conglomerate holding company, Berkshire Hathaway.
His advice and pronouncements have become legendary, earning him the nickname “The Oracle of Omaha.”
What are some of the lessons that we can learn from this “oracle“?
1. Never Lose Money
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.“ – Warren Buffet
What makes it impossible to say that you are never going to lose money, is that it would mean that you would never take the calculated risks that are necessary to make money in the first place. But that’s the whole point – taking calculated risks.
Buffett doesn’t take wild chances. He has specific criteria in regard to any business that he will invest in, and this method keeps him from entering blind speculations.
If you use the never lose money mantra as a foundational strategy, it will have a positive effect on everything you will do, whether it has to do with a business or with investing. Many of the lessons that will follow will outline exactly how Buffett avoids losing money in the first place.
2. Buy Businesses – Not Stocks
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.“ – Warren Buffet
Despite being perhaps the most successful investor in stock market history, Warren Buffett never actually bets on stocks, at least not the way that most investors and even fund managers do.
Buffett looks not at the performance of a given stock, but at the performance of the underlying business. This is critical, because a strong underlying business means that an investment will almost always payoff, at least sooner or later.
The reason why most investors fail to follow Buffett’s advice in this regard is because it requires a lot more work. You actually have to research the individual companies, and have a keen understanding of their business and how well they are faring against the competition. Market sentiment of the company’s stock has little to do with it.
3. Be in the Game For the Long Haul
“Someone is sitting in the shade today because someone planted a tree a long time ago.“ – Warren Buffet
When you look at the companies that Buffett either owns individually, or through Berkshire Hathaway, they’re all long-term investments. Buffett will buy stocks and hold onto them – not for years – but for decades. As long as the business is strong, the investment will payoff. Buffett’s track record, and the size of his portfolios, are testaments to the success of this strategy.
4. You Are Ultimately Responsible For Your Success or Failure
There are a lot more people in the financial markets then there is understanding of those markets. For this reason, people hold their investments through mutual funds, or pay for the services of investment advisers. Buffett holds that there is no substitute for getting involved in your investments.
Whether your investments succeed or fail will be completely on your shoulders, and not on those of your investment advisor. He maintains a policy of learning all about an investment and taking complete charge of how you go about managing it. In addition to being a solid strategy, this is also the only way that a novice investor learns to be an expert.
5. Keep Tight Control Over Your Living Expenses
If you look at the most successful people in almost any endeavor, you will typically see that they are people who live the life. That is, they live a lifestyle that is consistent with their level of success. This often leads to more than a little bit of lifestyle inflation, which helps explain how so many super successful people end up in a bankruptcy, and eventually, even the poor house.
Warren Buffett has done an outstanding job of keeping his ego in check when it comes to his lifestyle. It can even be said that he uses the same value principles for investments that he does in managing his own personal finances. For example, Buffett still lives in the same five-bedroom stucco house be purchased in Omaha Nebraska in 1957 for $31,500.
It’s certainly a nice enough house, but it doesn’t come close to the palaces that people who are nowhere near as wealthy as Buffett tend to live in. There is a strong message in that arrangement.
6. Invest in Quality
One of Buffett’s hallmark investment strategies is a investing in quality. This means that he invests in companies that have well-known, well-regarded products that add value to the consumer and the economy. The companies he inverts money in are usually household names, which is to say that they have both strong market penetration and brand recognition.
Many less successful investors are drawn to companies and industries that they know little or nothing about. They assume that the less they know, the more likely it is that the investment will be a success, as though it will succeed based on some unexplained mystery factor. Quality – not mystery – makes a company a long-term winning investment.
7. Buy Value
We can think of buying value as buying quality – when it goes on sale. This is part and parcel of Buffet’s never-lose-money strategy. Simply put, Buffett never pays full price for anything, including the investments that populate his portfolios.
He does this by buying companies that are selling at a discount to their real value. This strategy is more commonly referred to as value investing, which is the practice of buying stock in companies that are undervalued compared to other companies in their industry, as well as to the general market.
Buffet has this down to a science. He looks at the fundamentals of a company – it’s earnings, revenue, price-earnings ratio, return on equity and dividend yield, among other metrics – then he compares them to the same metrics in competing companies. If the company is generally strong compared to the competition, but the stock price is well below them, it becomes an investment candidate.
8. Avoid Fads
One thing that is immediately obvious about Buffett is that you’ll never see him running with the herd. That means no “Nifty Fifty” stocks, no hot stock of the year investments – and nothing that even hints at being trendy.
As an example, Buffett has publicly stated that he avoids buying stock in new social media, like Facebook and Google, citing the difficulty in determining their value and how they will fare in the future.
We can also bet that participating in fads would get in the way of investing in quality and value on a long-term basis. If it’s one thing Buffett is, it’s consistent.
9. Buy When “The Blood Is Running in the Streets”
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.“ – Warren Buffet
I just said that you will never see Warren Buffett running with the herd, and this one of the best examples. His investment philosophy is simple – buy when everyone else is selling (be greedy), and sell when everyone else is buying (be fearful). This is consistent with the Wall Street saying (that few investors ever follow), the crowd is usually wrong.
This strategy is very consistent with Buffets strategy of buying value. If you buy when everyone else is selling, you will be able to get positions in strong companies for a lot less than you would pay when the market is running strong and everyone is buying.
10. Sell Your Losing Positions in Strong Markets
By the same token, if you wait to sell your losing positions until the market is particularly strong, you will minimize your losses. In some cases, you might even recover a profit.
Most investors have great difficulty mastering this concept. Once the stock starts rising, they tend to hold on to it under the assumption that will continue to do so. But in Buffets world, a losing position is a losing position, regardless of where the stock price is at.
11. Risk is Part of the Game – Get Used to It
“Risk comes from not knowing what you’re doing “ – Warren Buffet
Buffets way to wealth is actually a very risky one by conventional standards. He doesn’t invest heavily in safe assets like bonds and treasury bills. He invests primarily in stocks. But stocks are not nearly as risky as people tend think – as long as you know what you’re doing. And Buffet clearly does.
Buffet is able to eliminate most of the risk associated with stocks, by buying them cheaply enough that the speculation – and high prices – are completely squeezed out. Most of the positions that Buffet takes have nowhere to go but up. That is the result of buying after everyone else has sold out their positions.
In Buffets world, you would be buying heavily after a market crash, and keeping your powder dry when a bull market has been around for a few years.
12. Pay Close Attention to Management
“When a management with a reputation of brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.“ – Warren Buffet
While many investment analysts tend to focus on a company’s numbers, market position, specific assets, and even public sentiment, Buffett looks more closely at management. Every one of those tangible metrics can change in the future, substantially weakening a company. But the caliber of management represents the future of the business. With the right people at the helm, the business will grow and prosper no matter what challenges it may face.
13. Stick With What You Know
Just as Buffett avoids fads, he also tends to stick with what he knows when it comes to making investment decisions. In Buffett’s world, you have no business putting money into companies and industries that you know nothing about. Buffett’s billions came from the fact that he invested in businesses that he knew well.
The businesses that he does buy into also tend to be more basic in concept. As we saw in an earlier specific example, Buffett avoids buying into social media companies, since they are virtually new business concepts and not readily measurable. He favors easy to understand concepts like Coca-Cola and insurance.
14. Keep It Simple
“Derivatives are financial weapons of mass destruction. “ – Warren Buffet
There are a small number of investors on Wall Street who are making a lot of money in exotic investments, such as derivatives. Buffett avoids all such investment schemes, preferring to keep his investments basic. It once again gets back to the concept of investing in what it is that you know and understand.
15. Keep a Low Profile
Just as Warren Buffett lifestyle is incredibly simple considering his stature in the world, he also does his best to avoid the spotlight.
Sure, he’s a regular in giving an opinion on economic and public policy, but he avoids the outrageous behavior that has become symptomatic of the ultra-successful. But the success that he has is determined by the success of his business, rather than on his participation in out-of-the-box activities, or inflammatory public comments, designed mostly to draw attention.
We can probably guess that this low-profile existence makes it easier to focus on Buffett’s business at hand. After all, if you’re running around acting wild and making divisive comments, you won’t need to be spending a lot of time on rear-guard strategies to cover your tracks.
Even if you are not into investing, you can take all of these lessons from Warren Buffett’s life and apply them to your life and business, and with positive results.
Save more, spend smarter, and make your money go further
MintLife is continuing their contribution to Financial Literacy Month by tacking another personal finance topic: mutual funds. You can catch up on this ongoing series, by reading the first installment, “What are Equities?”
What is a Mutual Fund?
Investing can be pretty scary stuff. Financial fraud, volatile markets, crooked brokers, macroeconomic headwinds – we are constantly bombarded with news of investors losing their shirts after dipping their toes in the nebulous investment universe. But investing doesn’t have to be such a daunting task. There are a number of ways the average investor can distribute risk across their portfolio so that they can sleep easy at night. One of the most popular ways to do that is to invest in a mutual fund.
The mutual fund is the quintessential collective investing scheme. It is basically a variety of securities (stocks, bonds, etc), which are owned collectively by a large number of investors. The securities make up a single fund and shares are sold to investors based on their collective value. It is managed by a group of financial professionals who make all the investment decisions on the fund’s behalf. If the securities in the fund increase in value, then the value of your shares also rise, equating to a positive return on your initial investment.
The aim of a mutual fund is to yield a greater return for their investors than they would have normally received by investing their money alongside an index of some sort, known as a benchmark. For example, if a mutual fund is invested primarily in equities, which are stocks (see last week’s piece), then the fund managers will try to beat the performance of the Standard and Poor’s 500 index, which is a stock index that tracks the rise and fall of 500 stocks that trade in the US.
Which Mutual Funds Should I Invest In?
There are over 10,000 mutual funds available in the US for you to invest in. There are massive, multi-billion dollar funds and there are small boutique funds. There are funds that invest in higher-risk securities and some that invest in securities that have a very low risk profile. But for the most part, mutual funds tend to be divided into three main types: equity funds, fixed income funds and money market funds. Equity funds invest in stocks; fixed income funds invest in debt, like bonds; and money market funds invest in super safe short-term debt securities, like bonds issued by the US government.
Money market funds yield the lowest return for investors out of the three because it is very low risk. The equity and fixed income funds have varying levels of risk and returns based on what they are holding. When you go to invest in a fund, you will be able to see the risk level of the portfolio and can invest accordingly. Funds that are labeled as “growth” funds tend to be riskier than those that are “value” funds. Your risk tolerance is based on your comfort level and on how close you are to retirement.
Why Invest in a Mutual Fund?
Mutual funds are a solid option for people who don’t want to get their hands dirty investing, but who also aren’t keen on seeing their cash locked away in some low to no yield checking or savings accounts, either. There was a time that you could park your cash in a bank savings account or a bank certificate of deposit and receive a relatively decent return on your money. But with the Federal Reserve keeping interest rates so low due to the sluggish economy, chances are you would be better off just stuffing your cash under your mattress than locking it away in a bank.
By pooling your money with others in a mutual fund, you not only get to spread out the risk, but you also are able to take a lot of the guesswork out of investing. You don’t have to spend hours researching a particular stock or a bond – that work has been done for you (hopefully) by the fund managers. And you don’t have to pay the high brokerage fees to buy and sell a security – the fund manager can do that at a much cheaper rate. All you have to do is hand over your cash and go on your daily business. You’ll receive a statement in the mail every few months or every year updating you on how the fund has performed.
The Disadvantages of Investing in a Mutual Fund
But while there are many advantages in investing in a mutual fund, there are also several disadvantages as well. The one that always miffs investors is the fees. Generally, investors have to pay a fee to buy and/or sell their shares in the mutual fund. This fee is known as a “load” and it covers the sales and marketing expenses to the broker who sold you the fund.
When you are invested in a fund you need to pay a few other fees to maintain it. First, there is the management fee, which covers the salaries and personal expenses of the managers running the fund. This fee is usually worth 1% to 2% of the assets you have invested in your portfolio. The fee is paid daily, but is calculated on an annual basis. Some funds also have a marketing fee, known as a 12b-1 fee, which can cost investors around 0.5% to 1% annually. These two fees make up the firm’s management expense ratio. The lower the fees as a percentage of its assets, the more efficient the fund is at managing your money. Separate from those fees is another fee to cover all the trading expenses associated with the portfolio. This fee fluctuates based on the strategy of the fund. For example, if the fund buys and sells securities often, the fee will be higher than if the fund tends to buy and sit on securities for a while.
Beyond fees there is performance. Mutual fund managers aim to beat an index, not make you money. This means that if the S&P 500 index was down 20% last year, a mutual fund manager would be considered successful if the fund was only down 19%. An absolute return, which is making your money grow regardless of how the broader market performs, is not in a mutual fund manager’s mandate. Sure, the fund manager would like to make you money if they can, but they feel like they have done you a service, and earned their fee, if they were able to mitigate your losses compared to that of the broader market.
There have been many studies conducted over the years that try to track the long-term performance of mutual funds. The results mostly show that, net of fees, the mutual fund industry as a whole has not returned a lot of money to investors. Some blame the high fees, while others say that fund managers aren’t doing a good job. But it is sort of unfair to lump the entire industry together. There are, after all, thousands of funds invested in vastly different securities.
The Bottom Line
The key is to put your money in funds where you think have the best chance of growing over a set time. While you can invest and forget for a while with a mutual fund, you still need to rebalance your portfolio – at least yearly. So if there is a recession, in say, Asia, forecasted for the coming year, you might want to pull your money out of the mutual fund that owns a lot of Asian stocks and put it in one that invests in something else safe, like US debt. So while mutual funds are a great alternative for people who don’t want to follow the day-to-day drama of the market, it still doesn’t mean you can check out completely.
Cyrus Sanati is a frelance financial journalist whose work has appeared in dozens of leading publications, including The New York Times, BreakingViews.com, and WSJ.com. Follow Cyrus on Twitter @csanati
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