BlackRock, one of the world’s largest financial firms, says three key moves can sharply boost retirement income. Most people focus on building up their savings when they make retirement plans. However, by also focusing on the drawdown phase, the duration of the nest egg that you have accumulated can be significantly extended, BlackRock says in a recent report.
Consider working with a financial advisor as you develop a long-term retirement plan for yourself.
Add Guaranteed Lifetime Income via an Annuity
Annuities have become a hot topic in recent years, as financial professionals have increasingly debated their pros and cons. On the upside, they hedge against longevity risk. A lifetime annuity can guarantee, aside from catastrophic failure on the part of the insurance company, that you will receive a minimum income for life. On the downside, annuities can sometimes post weaker growth than even the standard S&P 500 index fund.
BlackRock argues that the benefit of hedging against longevity risk, though, is quite powerful. By putting up to 30% of your portfolio savings into a retirement annuity, you can create a strong base for the future of your retirement income. Alongside Social Security, this gives you an income that never draws down and will not fade.
Shift to an Aggressive Asset Allocation
There’s a catch to an annuity plan, though. Perhaps the biggest risk with annuities, as noted, is their low rate of return. In fact, Fidelity says that in recent years annuities often return one-eighth the amount of a simple S&P 500 index fund. That’s a recipe for low, slow growth.
So, BlackRock suggests balancing your annuity investments with a more aggressive market portfolio. In other words, leverage the security that you have with your annuity to rebalance your portfolio toward higher-return assets like stocks, if even just a stock market index fund, like the S&P.
By doing this, you’re more protected against loss by the guaranteed income of the annuity, while also boosting your overall spending power in retirement with the projected growth of the equities. This lets you retain a strong equity portfolio later in life, when many investors would otherwise start shifting their investments in favor of more stable, fixed-income assets, like bonds or CDs.
“Adding guaranteed lifetime income combined with a more aggressive asset allocation generates 29% more annual spending ability from one’s retirement savings (excluding Social Security) and reduces downside risk by 33%,” BlackRock states in the report.
Retire (and Take Benefits) Later in Life
Finally, BlackRock recommends delaying retirement by two years. The firm suggests delaying retirement, along with Social Security benefits and annuity payouts, from age 65 until age 67. This is not, however, a delayed retirement. For anyone born after the year 1960, the goalposts have been moved back and full retirement age is set at 67.
The firm’s basic analysis still stands though. As the firm writes, “[a]mong all retirement decisions, the choice of when to retire and claim Social Security often has the single greatest impact on one’s financial security.”
Putting this off even by just two years can significantly boost your Social Security benefits. It will also give your annuities time to continue growing, making their lifetime benefits stronger, while allowing your portfolio to accumulate extra years of high-value growth as well.
BlackRock finds that pushing back retirement by two years can boost a retiree’s lifetime spending power by 16% and reduce downside risk by an additional 15%. In combination with the 29% retirement increase gained by getting an annuity and having an aggressive, stock market-based asset allocation, retirees can sharply extend the duration of their retirement income.
Bottom Line
For many investors, the good news here is that BlackRock probably recommends a version of what you are already pursuing: diversification. This approach suggests that you should balance high-security assets, in the form of lifetime annuities, against high-return assets, such as stocks. It recommends delaying retirement as a way of boosting your lifetime Social Security benefits and maximizing your late-in-life portfolio returns. For the average investor and saver, this is all very doable.
Retirement Savings Tips
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Longevity risk is the possibility that you will live too long, and that’s a perverse way of looking at life. So start making plans right now to celebrate your hundredth birthday in style.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
As sustainable technologies develop alongside people’s desires to live more sustainably, people have begun turning to their homes to reduce their carbon footprints, But have you ever wondered if you could build a home that wasn’t just ‘less bad’, but instead actually restored the environment around it? You can. Enter the Living Building Challenge.
The Living Building Challenge represents the pinnacle of sustainable development and promotes equity, regeneration, and self-sufficiency. But what is it? How do you certify your home? Is it even possible?
Whether you live in a house in Bend, OR, or a home in Seattle, WA, read on to learn everything you need to know about Living Building Certification.
What is the Living Building Challenge?
The Living Building Challenge (LBC) is a green building certification program administered by the International Living Future Institute (ILFI), and was launched in 2006 in Seattle, WA. The program continues to evolve as new research and technology releases, and is currently on its fourth iteration (4.0).
The goal of the LBC is to encourage designers and homeowners to build structures and projects that contribute positively to their local environment. Structures achieve this by mimicking the ecosystem around them from when before the site was developed, creating a regenerative and sustainable built environment.
Living Building Challenge Petals
The Living Building Challenge organizes its requirements into seven performance areas called Petals. Each Petal is further divided into Imperatives (20 total), which address specific topics related to that Petal. Here’s a brief summary of the seven Petals.
1. Place
This Petal focuses on the location of the project and its relationship to the surrounding community and ecosystem. It includes imperatives such as habitat exchange, urban agriculture, and appropriate siting.
2. Water
The Water Petal emphasizes achieving a water balance within the building’s site. This means that a home or building should meet all its water needs through captured precipitation or recycled water, and manage its wastewater onsite.
3. Energy
100% of the project’s energy must come from on-site renewable energy on a net annual basis, promoting self-sufficiency and reducing the building’s environmental impact. This often includes installing solar panels, small wind turbines, and other renewable energy sources.
There aren’t specific requirements for energy per square foot, but the LBC insists that a building generate 105% of its energy needs.
4. Health and happiness
This Petal recognizes the importance of creating environments that optimize physical and psychological health and well-being. It includes imperatives related to indoor air quality, biophilic environments, and promoting physical activity.
5. Materials
It’s essential to encourage using materials that are non-toxic, transparent, and socially equitable. The Materials Petal requires projects to use safe and sustainable materials, and bans the use of materials that have negative environmental impacts or contain hazardous substances. The LBC has a “Red List” that contains a catalog of their banned materials and a “Watch List” of possibly problematic materials.
6. Equity
The Equity Petal encourages social equity and human rights within the building’s sphere of influence. This includes aspects such as human scale and humane places, universal access to nature and community services, and equitable investment.
7. Beauty
This Petal is about the aesthetic aspect of buildings and sites, recognizing that buildings should delight and inspire. The Beauty Petal insists that buildings incorporate design features intended solely for human delight, helping to connect people to the environment in a meaningful way.
Living Building Challenge for homeowners
While typically for commercial and public buildings, the LBC certifies homes as well. However, the LBC is extremely strict, so it can be time-consuming to design and build a certifiable home. As a result, only four residences in the US have received full certification (fulfilled all seven petals).
Unlike other green building standards that can be based on projections and simulations at the design stage, LBC certification is based on actual, proven performance after the building has been in operation for at least 12 consecutive months. There are four steps to receiving certification:
As sustainable technology and techniques advance, cost and building time should fall. The goal of the LBC is to promote sustainable and regenerative building practices, making them more accessible and affordable for all.
How do you certify your home?
The Living Building Challenge certification process is the same for all types of buildings, including houses. However, because homes are generally smaller and don’t have the same budgets as large commercial buildings, it can be harder for homeowners to fulfill every requirement.
Here’s a breakdown of how to certify your home through the LBC:
Registration: Start by registering your project with the International Living Future Institute. You need a premium membership to register, which costs between $50-$250
Design: Next, if you’re aiming for full certification, plan and design your home according to the LBC’s seven Petals and twenty Imperatives. This will likely require working with architects, engineers, and contractors who are experienced with sustainable construction and familiar with the LBC. Remember, the LBC requires that all aspects of the project, from the site choice to the energy systems to the building materials, comply with their standards.
Construction: Construct your home according to the design’s plans. Document your progress and gather evidence of compliance with each of the LBC’s requirements. This might include photos, receipts, contracts, and other documents that can verify your claims.
Performance monitoring: After construction is complete and you’re all moved in, you need to go through a 12-month performance period. During this time, you collect data and demonstrate that your home operates as designed and promised to the ILFI.
Audit and certification: Once your 12-month performance period is over, submit your documentation and data to the ILFI. An LBC Ready auditor will then review it to verify compliance with all the challenge’s requirements. If your home meets all of the requirements, you will be awarded LBC certification. If it only receives three out of seven Petals or just achieves net-zero energy use, it will receive separate certifications.
Certification levels
Full certification is incredibly difficult, so the LBC has three levels that a home or building can achieve.
Full certification: Full certification is awarded to homes and buildings that meet the requirements of all seven Petals.
Petal certification: Given to projects that satisfy the requirements of three Petals, including at least one of either Water, Energy, or Materials.
Net-zero energy building certification: Given to projects that achieve net zero energy but don’t meet all the requirements for Full or Petal certification.
The ILFI also offers additional certifications for houses, products, and entire communities.
Tips for homeowners striving for LBC certification
Even if you don’t receive full certification, using LBC’s guidelines can dramatically reduce your carbon footprint and create a sustainable, self-sufficient, beautiful home. Additionally, the ILFI offers other certifications such as the Living Home Challenge, which might be a more feasible option for some people.
Also, one of the most difficult Petals to fulfill is energy use. A good tip is to reduce the overall amount of electricity your home requires and limit your usage, instead of simply installing more renewable technology.
Pros and cons of the Living Building Challenge for homeowners
While there are many advantages to pursuing LBC certification for your home, there are a number of challenges and potential drawbacks. Here’s a summary of the main pros and cons:
Pros
Sustainability: LBC-certified homes are incredibly sustainable. They produce all of their own energy with renewable resources, treat all water on site, and are built using non-toxic, locally-sourced materials. This reduces their environmental footprint and contributes positively to their local ecosystems.
Health and well-being: LBC homes are designed with occupants’ health and well-being in mind. They use non-toxic materials, include biophilic elements that connect occupants to nature, and promote active, healthy lifestyles.
Utility savings: By producing their own energy and managing their own water, LBC homes can reduce or even eliminate utility bills. This can lead to significant long-term savings.
Resilience: LBC homes are designed to be resilient, with features such as on-site energy and water systems that allow them to operate independently of municipal utilities. This can be a major advantage in the face of power outages, water shortages, or other disruptions. LBC homes also usually last far longer than non-certified homes.
Cons
Cost: Pursuing LBC certification can be expensive. The cost of implementing renewable energy systems, advanced water treatment systems, and non-toxic materials can be higher than traditional building methods. Additionally, paying for specialized design and landscaping, and resource monitoring can be costly and time-consuming. However, while the cost can be higher upfront, sustainable materials are only marginally more expensive, and you will likely save a huge amount on utilities over the years
Regulatory barriers: In many areas, local building codes and regulations don’t allow some systems that LBC certification requires. This can make it difficult or even impossible to implement certain features of an LBC home, such as composting toilets or on-site water treatment systems.
Technical challenges: Some parts of the LBC, such as achieving net-zero energy or managing all water on site, can be technically challenging, particularly in certain climates or locations. You will likely have to work with specialists to find a solution, or choose another location entirely.
Availability of materials: Sourcing non-toxic, locally sourced materials can be difficult depending on the location and material. Make sure to do your research before committing to certification.
Final thoughts
There are many green certification programs that you can use to help build a sustainable home, all of which aim to reduce your carbon footprint. The Living Building Challenge is one of the strictest in the world and promotes lasting, beneficial building design.
For homeowners willing to undertake its rigorous certification process, it offers the opportunity to create a regenerative home, contributing positively to its local ecosystem and promoting the health and well-being of their family. However, pursuing certification also comes with its share of challenges, including time, money, materials, and technical difficulties.
Ultimately, whether the Living Building Challenge is right for you depends on your personal goals, resources, and commitment to sustainability. Even if you decide not to pursue full certification, the principles and practices of the LBC can provide tips and tricks for creating a sustainable, healthy, and resilient home.
My husband and I are in the early stages of building a house. As we modify our floor plans, the amount we’ll need to borrow to build is on our minds. It’s probably going to be the most expensive thing we’ll ever purchase, and we need to decide what we want to borrow and what loan term we’ll want.
The main differences between 15- and 30-year loans are straightforward. Fifteen-year loans have higher monthly payments, but you pay less interest, while 30-year terms have lower monthly payments, but you pay significantly more for the house in the long run. As with most areas of personal finance, however, this decision is about more than just the math. There are other important considerations, such as retirement savings, risk tolerance, and discipline.
First, let’s take a look at the hard figures.
Crunching the Numbers
Let’s say that a 30-year-old borrower is buying a house for $160,000, and her marginal tax rate is 25 percent. At the time this article was written, 30-year loans were at 5 percent and 15-year loans were at 4.5 percent.
Using a mortgage calculator, we’ll compare the two mortgage terms by plugging in the mortgage amount and the 15- and 30-year interest rate.
A 30-year term would give a monthly payment of $859 (payment does not include taxes and insurance, which vary by locale). The borrower would pay $149,211 in interest, and $309,211 over the life of the loan.
A 15-year term would give a monthly payment of $1224. She’d pay $60,318 in interest, and $220,318 over the life of the loan.
The 30-year term lowers the monthly payment by $365 and will save the borrower $238 per year in taxes, but will cost $88,893 more in interest over the life of the loan, and she will own her home when she is 60 years old. The benefits of the 15-year term are the substantial savings in interest and the fact that she will own her home by the time she’s 45. The drawback is that her monthly payment will be higher.
The Wiggle-Room Option
But what about the option of taking a 30-year term and paying it off in 15 years? A 30-year term paid in 15 years would yield a monthly payment of $1265. The borrower would pay $67,749 in interest, and $227,749 over the life of the loan. She’ll own her home at age 45, assuming she makes the extra payment each month. But if she fell on hard times, she wouldn’t be locked into the higher payment.
Here’s a Comparison of Each Option:
It’s easy to see that the borrower will pay less for her home with the 15-year loan. But mortgages aren’t one-size-fits-all. There are other factors to consider when deciding what is right for you.
What Can You Afford?
In our example, the 30-year term works out to a monthly payment of $365 less than the 15-year term. If you couldn’t comfortably make the payment on the 15-year term, the 30-year term is the better option. You can always make extra payments when possible.
What is the State of Your Emergency Fund?
Once you sign the loan, you’ll be expected to make the same payment each month. If you take a 15-year term with a higher payment, you should have a substantial savings account in place to mitigate the risk from major unexpected expenses or job loss.
If you don’t have much of an emergency fund, you’re better off with a 30-year term, using the extra money to build your savings.
Will You be Able to Meet Your Retirement and Other Savings Goals?
If you’re leaning toward a 15-year term, be sure that you can still max out your retirement accounts and meet your other savings goals. If you can’t, stick with the 30-year term.
On the other hand, if retirement is still decades away, you are in a position to invest more aggressively. You should be able to ride out the volatility of relatively aggressive investments.
If retirement is less than 15 years away, it might be better to pay off the mortgage early for security and peace of mind.
How Do You Feel About Debt? What is Your Tolerance for Risk?
Many people are strongly averse to debt of any kind — and with good reason. Dave Ramsey is firmly in this camp, saying:
Don’t borrow money. Period. If I can’t get you to postpone the purchase that long, I strongly suggest you save a down payment of 20 percent or more, choose a 15-year (or less) fixed-rate mortgage, and limit your monthly payment to 25 percent or less of your monthly take-home pay.
Managing debt isn’t easy, and for many people, Ramsey’s hardcore anti-debt stance is the way to go.
But others are in a different place in the financial journey and are comfortable carrying mortgage debt if the borrowed funds can earn a higher rate of return somewhere else. Risk-adjusted returns need to be factored, but essentially, if you opted for the 30-year term at 5 percent, it’s reasonable to think you can earn a higher return with a portfolio of index funds. Account for the tax deductions and the 5 percent is even lower.
While it’s certainly possible to earn a higher return elsewhere, it comes down to your appetite for risk. You might get a better return by going with the 30-year term, but putting the money toward the mortgage is risk-free. Also, you have to decide if the extra money you might gain by investing elsewhere is more important to you that the peace of mind that comes with owning your home outright.
Personal Discipline
If you can afford the payments on a 15-year loan, but you’re concerned about the possibility of job loss or other major financial hits, you might be hesitant to commit to the higher payments. Another option is to take a 30-year term and pay it off in 15 years. You’ll pay slightly more in interest than with the 15-year interest rate, but still significantly less than with the 30-year loan.
The drawback is that most people lack the discipline. According to the Federal Deposit Insurance Corporation (FDIC), 97.3 percent of people do not consistently pay extra on their mortgages. Many people lack the discipline to send in the extra money every month when it’s not mandated by the bank. What this statistic doesn’t mention is how many of the 97 percent would have fallen behind on their mortgages if they were locked into a 15-year mortgage.
If you are already saving regularly and have only tapped your emergency fund for major unexpected expenses, however, you might have the discipline to pay your mortgage off in 15 years. But consumers who spend any monthly savings are better off with the shorter term if they can afford it.
What About the Tax Break?
While it’s true that you do get more of a tax break from a 30-year loan, it shouldn’t be the main consideration when deciding on a term. The 30-year borrower will pay less in yearly taxes than the 15-year borrower, but that’s because the 30-year borrower is paying significantly more interest.
In our example, the borrower would save an average of $238 per year in taxes with the 30-year loan, but will pay $88,893 more in interest over the life of the loan than she would with the 15-year term.
Which is Right For You?
In the end, your financial situation will determine the right mortgage term. If you can make the higher payment, have a substantial emergency fund, and can meet retirement and other savings goals, a 15-year mortgage is a good way to own the home in half the time and pay substantially less interest.
If just one of those conditions is not met, or if you are somewhat comfortable with debt and risk and wish to get a higher rate of return with other investments, the money saved each month with the 30-year mortgage payment may be better used elsewhere. You can always send in extra payments.
I’m still not sure which option is for us. What about you? Do you have a 15-year mortgage or 30-year mortgage? Do you prepay? What are your thoughts on risk versus higher returns?
Wind energy generates almost 10% of U.S. electricity and in a land of endless plains that appears likely to increase. Unlike some emerging technologies, wind energy is also a relatively mature market, so there are several options for public stocks, equity-related investments, materials, bonds and even real estate. Here are a few things to know about investing in the future of wind. To know if it’s right for you, consider working with a financial advisor.
Why Wind Could Be a Good Investment
The economy of the United States and much of the western world is gradually decarbonizing. Since the industrial revolution, every major economy has come to depend on fossil fuels because of one key feature: portability. However, concerns about climate change has led some governments to subsidize alternatives to fossil fuels, and wind is one such alternative.
Power generation is one part of the economy that has been adapted to wind energy, thanks to advances in many fields, from conducting materials to capacitor batteries. It is now possible to build a power grid that can easily and efficiently transfer electricity from where it was generated to where it’s needed. The portability advantage of hydrocarbon-based fuels remains a bottleneck in some industries, most notably in aerospace and vehicles where it is still easier to put gas in a tank than electrons in a battery. However, where the electric grid is concerned fossil fuels increasingly look like the dinosaurs they once were.
How to Invest in Wind
There are multiple ways you can consider investing in wind. Here are a few different options.
1. Stocks
Of the emerging energy sources, wind is currently the largest. If you want to invest in this sector, one of the first places to go is through stocks, funds and related investments. There are several ways to invest in wind energy through stocks. Most notably, you can invest in companies that build turbines and other essential equipment for building wind farms. You can invest in companies that generate and sell wind energy. Or you can invest in an exchange-traded fund (ETF) or mutual fund built around this industry as a whole.
For investing in the companies that build equipment, you can consider looking for major manufacturers like TPI Composites (TPIC), Vestas Wind Systems (VWDRY) or General Electric (GE). All of these firms and many more, build the turbines, engines and other major components necessary to make the large generators that provide wind energy. Note that neither these nor any other assets listed in this article should be taken as specific investment recommendations. These are simply representative companies working in the space.
By contrast, you can look for companies like NextEra Energy (NEE) that actually generate electricity through wind farms. For companies like this, the business model is to produce wind energy and sell this electricity back to public utilities.
Finally, you can invest through equity-based funds and indices. This means either ETFs or mutual funds that focus their investments in and around the wind energy space. While these are rare, ETFs like the Global X Wind Energy ETF (WNDY) are good examples. Or you can look into the ISE Clean Energy Global Wind Energy Index (GWE), which tracks the wind energy market at large, giving you essentially an S&P 500 for the wind.
2. Real Estate
You can also invest in wind energy by investing in the underlying land. Like solar power, a wind farm requires a very large footprint. Some communities will build turbines, even entire farms, and that land has to come from somewhere.
At the same time, the transition to renewable energy sources will require a new and upgraded power grid. This will involve building large transmission towers, substations and other infrastructure across the country, all on land that someone will have to purchase or lease. All of this creates an opportunity for real estate investment and speculation.
While this requires more legwork, occasionally real estate investment firms will coalesce around this investment area through REITS. By researching emerging trends in the real estate market, you can look for real estate investment opportunities that buy mortgages and real estate related to wind farms.
3. Bonds
You can invest in wind projects by investing in the underlying debt. Bonds in this field tend to come in two categories. First, you can invest in the bonds sold by wind energy companies as they grow and expand. As with all corporate debt, this will tend to pay a higher rate of interest than Treasury or municipal bonds.
In addition to the creditworthiness of the company itself, your investment will also be secured by the fact that this is an asset-intensive industry. Even if the company fails, it will still hold large property and real estate assets with which to make debtors hold.
Second, you can invest in government bonds for projects to build wind farms. These will typically be municipal bonds for local governments looking to expand their alternative energy footprint. As a result, they will tend to pay less interest but have significant tax advantages. Bond investments in this space should be pursued on an individual basis.
4. Side Investments
Finally, as with all emerging technologies, you can side-invest in this industry. Side investing refers to investing in the materials and products that technology needs to succeed. As the industry grows, those related fields will profit as well. In the case of wind energy, there are several fields to consider, but perhaps the most important two areas are next-generation power lines and next-generation batteries/capacitors. Like most non-fossil fuel energy sources, to succeed wind energy must solve two problems.
First, it must efficiently transmit energy from the (generally remote) farms where wind energy is produced to the communities where it is needed. This will require companies to build and maintain new high-capacity power lines and it will require next-generation conduction materials to efficiently carry that much electricity without significant loss.
Second, the wind grid must store energy for when the wind isn’t blowing. This means creating large batteries that can store excess energy during times of high generation and consume that energy during low periods.
This is an area that requires research, in part because it is vast. New companies are emerging to develop carbon materials and semi-superconductors for building power lines. Batteries are sometimes built out of cobalt and rare earth capacitors and sometimes they are built out of caves in a mountain. Investors looking to get into this space will need to research exactly what the right investment is at the right time before trying to jump in.
But, for investors looking to make a higher-risk/higher-reward investment, the right choices have the potential to score huge. Alternative energy conversion will require a near-total rebuild of the power grid, making some people very rich.
The Bottom Line
Wind energy is a relatively mature technology, but one that is growing quickly. Investors can get into this field through traditional stocks or funds or by investing in many of the assets and materials that this industry will rely on to succeed.
Alternative Energy Investment Tips
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Don’t just think about what to buy, think about where to buy. Let’s start by reviewing which states are leading the charge when it comes to renewable energy.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
Inheriting a house with a mortgage requires making some decisions about what to do with the property. One option is to sell the home and pay off the loan with the sale proceeds. If you keep the home, you can assume the existing mortgage or refinance the loan. If you keep the home, you can live in it or rent it out. Your choices may be limited by the laws where you live. If the ownership of the house is split between one or more other heirs, you’ll have to consider their wishes. A financial advisor can help develop a plan to reach your personal financial goals.
Home Inheritance Basics
After someone passes away, a will can be used to bequeath property such as a private residence to a loved one. In the absence of a will, state laws may dictate where the property goes.
Often property or other assets inherited in this way goes through probate. When that happens, any debts owed by the estate must be paid off before assets are distributed to heirs. This means the mortgage has to be dealt with in some manner before the estate can be settled. State inheritance laws vary, so local requirements may limit your options.
Mortgage Inheritance Options
When you inherit a home with a mortgage, you’ll have two basic choices: sell it or keep it. Here are the pros and cons of each.
If you sell the home, you can use the proceeds to pay off the loan. If there is any money left after satisfying the lender, you can keep the cash as part of your inheritance.
Selling and paying off the loan relieves of you any responsibility to make future mortgage payments and keep up the property. And selling may be the only option if you share ownership of it with another beneficiary who wants cash. Taxes represent a potential complication. You may owe capital gains taxes on the money you receive after paying off the mortgage.
If you keep the home, you can assume the mortgage and start making payments. A federal law called the Garn-St. Germain Act generally requires lenders to let someone who has inherited a house assume an existing mortgage without getting credit approval or paying closing costs on a new loan. This can let you move into a place more desirable than you could buy on your own, in addition to possibly having pleasant memories associated with it.
Keeping the home gives you more options. You can live in the home if its location and other features meet your needs. Alternatively, you can rent it to tenants and, if the rent is more than the mortgage, collect passive income plus potential gains from price appreciation.
A major downside of keeping the property is that you have to make the mortgage payments, in addition to covering the taxes, insurance and other expenses. If you want to and can get approved for a new loan, however, you may be able to refinance the loan. Refinancing can let you take advantage of lower interest rates and possibly reduce the payments or, if you prefer, take cash out of the equity.
Potential Pitfalls
A lot of things can go right if you inherit a house with a mortgage. Some potential pitfalls to be aware of include these:
Negative Equity: If the house is underwater, meaning the outstanding balance of the mortgage is more than the property’s value, you won’t be able to sell it for enough to pay off the loan. Unless you can get the lender to agree to a short sale, you’ll still be responsible for the remaining balance.
Tax liability: Selling an inherited property and realizing a gain on it after settling the mortgage could create a tax obligation. The gain could even push you into a higher tax bracket so you’ll owe more on the other income you generate from work or investments.
Ownership costs: Repairs, maintenance, property taxes and homeowner association fees are some of the costs that can go with owning a home you inherit. Account for these costs before you decide what to do with the property.
Selling costs: Even if you sell the property, you’ll still have to pay a number of costs. These often include real estate agent commissions, closing costs and possibly repairs, among others. These costs will reduce the amount left after the transaction and can make the sale less appealing and worthwhile.
Picking the Right Approach
Deciding what to do when you’ve inherited a house with a mortgage involves balancing several considerations, including:
Your finances: Ask yourself whether you have the resources to keep making mortgage payments and maintaining the property.
Living situation: If you need a place to live and the inherited property suits your needs, it might make sense to assume the mortgage and move in.
Market factors: The real estate market in your area may suggest that it’s better to sell or rent than to keep the property and live in it.
Nostalgia: A family home could have pleasant memories or, for a variety of reasons, be someplace you’d prefer not to live.
Legal issues: If multiple heirs are involved, they might disagree about what to do with the property.
The Bottom Line
Inheriting a house with a mortgage presents options that need careful consideration. Selling the home and paying off the loan can relieve you of mortgage responsibilities. Alternatively, you can keep the home, assume the mortgage and either live in it or rent it out for passive income. State laws and the wishes of other heirs may limit your choices. Your finances, living situation, market conditions, emotions and legal issues will be part of the final decision.
Tips for Investing
Consider talking to a financial advisor before making any decisions about what to do with a home you have inherited. Finding a financial advisor doesn’t need to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you decide to sell an inherited home and pocket the cash, you may wonder what would happen if you invested the funds. SmartAsset’s Investment Return & Growth Calculator can give you an answer. Input the amount you’ll invest, how much and how often you’ll make additional contributions to your initial capital, the anticipated rate of return and your investment time horizon in years. The calculator will tell you what your portfolio will likely be worth at the end of that period.
Mark Henricks
Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
If you live in State 48, there’s a pretty good chance you’ve heard of “VIP Mortgage,” either because you’ve been a customer or you’ve seen one of their ads.
Regardless, they are a major mortgage force in Arizona, having closed billions in home loans there just last year alone.
In fact, they were a top-10 mortgage lender in Arizona based on total volume, only falling behind the biggest mortgage lenders out there.
Those names include Chase, loanDepot, Quicken Loans, and Wells Fargo, along with fellow Arizona lender NOVA Home Loans.
So it’s clear they’ll be a consideration for you if buying a home or refinancing a mortgage in Arizona. Let’s learn more about the company.
VIP Mortgage Fast Facts
Direct-to-consumer retail mortgage lender located in Scottsdale, Arizona
Founded by Marine veteran Jay Barbour in 2006
20+ brick and mortar branches and hundreds of licensed loan officers nationwide
Funded more than $2 billion in home loans last year
More than 80% of total loan volume came from their home state of Arizona
Currently licensed in 24 states including Hawaii
VIP Mortgage funded more than $2 billion in home loans last year, with a whopping $1.76 billion coming from the state of Arizona.
They did another $130 million or so in the state of Colorado, with the remainder coming from a variety of states, mostly located on the West Coast.
At the moment, they appear to be licensed to do business in 24 states, including:
The company has physical branches in Arizona, California, Colorado, Hawaii, Indiana, Texas, Washington, and Wisconsin.
How to Apply with VIP Mortgage
You can apply for a home loan directly from their website
Or schedule a consultation first with one of their loan officers
They offer a digital mortgage loan experience powered by Floify
It allows you to complete most tasks remotely via smartphone or computer
While they seem to prefer that you speak to a loan officer first to go over your goals and available options (a loan officer directory is on their website), you can freely apply on your own as well.
If you visit their website, you can simply click on “apply,” at which point you’ll be asked if you’re already working with a loan officer.
Assuming the answer is yes, simply enter their name and it will populate. If no, you’ll be piped over to their digital loan application.
It appears they use Floify’s digital mortgage product, which lets borrowers fill out the app from anywhere on any device.
Additionally, borrowers can review and eSign disclosures from a web-based portal, link financial accounts, and scan/upload supporting documentation.
Once your loan is submitted, you can access the borrower portal at any time to see your to-do list, check loan status, or get in contact with your lending team.
They make it easy to apply and monitor your loan status from start to finish.
Loan Types Offered by VIP Mortgage
Home purchase loans and refinance loans
Home renovation and construction loans
Conventional conforming loans backed by Fannie Mae and Freddie Mac
Government loans: FHA/USDA/VA
Jumbo loans
Reverse mortgages
HUD-184 loans (for Native Americans)
Down payment assistance programs
“Inclusive Loan”
Various fixed-rate and adjustable-rate mortgage options available
VIP Mortgage offers tons of different home loan programs, including home purchase loans, refinance loans, renovation loans, and construction loans.
Additionally, you can get a reverse mortgage if 62 and older, or a HUD-184 loan if a Native American.
They’ve also got a proprietary loan program called the “Inclusive Loan” that is geared toward home buyers who experienced a recent foreclosure, short sale, or bankruptcy.
In terms of loan programs, you can get a conventional loan, including conforming loans and jumbo loans, or a government-backed loan such as an FHA loan, USDA loan, or VA loan.
VIP offers both fixed-rate and adjustable-rate mortgages with various loan terms, including a 30-year fixed, 15-year fixed, 5/1 ARM, 7/1 ARM, and so on.
So you shouldn’t be at all limited when it comes to loan choice if you choose to go with VIP Mortgage.
VIP Mortgage Rates
Like many other mortgage lenders, VIP Mortgage chooses not to advertise their mortgage rates on their website.
While there are many reasons not to advertise rates, such as the extra work it takes and the fact that such rates are just ballpark estimations, they can be helpful to get a feel for pricing.
Nonetheless, you can still easily get loan rates if you contact a loan officer directly. And it should be a more accurate quote since you’ll need to provide them with specific loan details first.
It’s also unclear what they charge in the way of lender fees, such as a loan origination fee, underwriting, processing, and so on.
You’ll need to inquire with them directly to determine that. Once you obtain that key information, be sure to shop around with other lenders to see how competitive they are.
VIP Mortgage Reviews
On SocialSurvey, VIP Mortgage has a 4.90-star rating based on nearly 16,000 reviews from its past customers.
The company also landed in SocialSurvey’s Top 10 list for customer satisfaction in the medium lender division back in 2018
They have a 4.96-star rating out of 5 on Zillow, based on roughly 1,100 customer reviews. That’s clearly beyond excellent and a testament to their exceptional customer service.
A good proportion of the reviews on Zillow indicated that the interest rate received was lower than expected, if you’re curious about pricing.
VIP Mortgage is an accredited business with the Better Business Bureau (BBB) and currently enjoys an A+ rating. They also have a 4.33-star rating on the BBB website, which is quite high.
VIP Mortgage Pros and Cons
The Good
You can apply for a home loan directly from their website without human assistance
They offer a digital mortgage loan process
Tons of different loan programs to choose from
Excellent customer reviews
A+ BBB rating, accredited since 2008
Lots of free mortgage calculators on site
The Maybe Not Good
Not licensed in all states
Do not disclose mortgage rates or lender fees on their website
The Federal Open Market Committee on Wednesday raised the federal funds rate for the first time in four years, marking an end to the easy money that gave rise to the hottest mortgage market in U.S. history.
The FOMC, as was predicted, raised the federal funds rate by 25 basis points to 0.25-0.50 percent, the first time the FOMC has changed the federal funds rate in two years, and the first rate hike since March 2018.
The move, designed to slow the pace of inflation, which reached 7.9% for the year that ended in February, is sure to increase the cost of mortgage borrowing. Whether it slows the frenetic pace of a housing market with historically low supply is yet unclear.
“The Fed worked to ensure today’s announcement would not be a surprise, with the rate hike following a series of foretelling decisions, including its acceleration of asset tapering in December through the end of its asset purchase program earlier this month,” Realtor.com‘s chief economist Danielle Hale said in a statement following the announcement.
“The Fed’s language in its public statements has also prepared markets for rate increases by consistently focusing on above-target inflation and progress against labor market goals. This also meant that mortgage rates have largely adjusted for the first hike, and I don’t expect a spike following the latest announcement.”
Beyond the initial 25 bps rate hike, the Fed also said it planned to raise rates six additional times in 2022 and three times in 2023, giving more certainty to investors in the secondary market, which should help ease overall volatility somewhat.
How should the current market impact lenders’ tech adoption?
HousingWire recently sat down with Polly CEO Adam Carmel to discuss how lenders can break old habits and redefine the mortgage process through innovation and modern, advanced technology.
Presented by: Polly
“With the unemployment rate below 4%, inflation nearing 8% and the war in Ukraine likely to put even more upward pressure on prices, this is what the Fed needs to do to bring inflation under control,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “The FOMC economic projections indicate slower growth and higher inflation than had been the expectation at their December meeting. Note that they do not expect to be back at 2% inflation until after 2024.”
Big questions remain, however. It’s still not entirely clear how quickly the Fed will unwind its $9 trillion balance sheet. The Federal Reserve said it would “begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting,” but did not get more specific.
“Although we anticipate that shrinking the balance sheet will begin this summer, we will be looking for details regarding the pace of the runoff and whether they would consider active MBS sales at some point to return to an all-Treasury portfolio,” said Fratantoni.
The purchases of Treasuries and MBS, which ended this month and were designed to support the economy during the Covid-19 pandemic, helped the housing and mortgage markets reach never-before-seen heights.
Fueled by a sharp drop in mortgage rates during the pandemic, the U.S. mortgage industry funded $4.1 trillion in new loans in 2020 (64% refis, 36% purchases), and $3.9 trillion in 2021 (57% refis, 43% purchases), according to the MBA.
But refi applications fell to about one-third of rate locks in February, and lenders have switched gears to serve a heavy purchase market. And that market is largely defined by a dearth of inventory.
On Friday, Zillow reported that overall housing inventory dropped to 729,000 home listings in February, a 25% drop year-over-year and a 48% fall since February 2020. It was the fifth consecutive drop in inventory.
Though the rise of mortgage rates – the MBA anticipates rates to hover around 4.5% for the next year – will force some would-be buyers out of the purchase market, other factors appear more important.
“Mortgage rates have already been increasing for many reasons — improving economy, higher inflation expectations and Fed tightening,” said Odeta Kushi, deputy chief economist of First American Financial. “As rates rise, some buyers on the margin will pull back from the market and sellers will adjust price expectations, resulting in a moderation in house price appreciation.”
But, Kushi added: “The other implication of a rising mortgage rate environment is the rate lock-in effect. Many homeowners have locked into historically low rates, and are less likely to move as rates move higher — this does not bode well for housing supply.”
The first Fed rate hike isn’t going to take us into a recession, it just raises the second of the six flags we would need to go into a recession. But looking forward, the Federal Reserve has now started to pull back from their accommodative stance because they believe the economy is too strong and the concern right now is to fight inflation with rate hikes.
From the Fed: The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.
I raised the first recession red flag when the unemployment rate got to 4% and the two-year yield got over 0.56%. Again, this red flag showed the progression of an economic expansion, and the recovery was so extreme that the unemployment rate fell very fast.
The low unemployment rate isn’t a recession factor, but all expansions end when the unemployment rate is at the lowest level. I am trying to show you the stages of an economic expansion into a recession, which is why I believe in the red-flag model.
The Russian Invasion of Ukraine is a brand new variable shock to the global economy that needs to be monitored daily. Unlike COVID-19, there is no fiscal disaster relief and no rate cuts coming. The Federal Reserve’s job is to cool down this hot economy, so the economy now has pressures on two fronts.
Recession red flag No. 3: The inverted yield curve
As I am writing this article, the 10-year yield is 2.17% and the two-year yield is 1.94% which means the inversion spread is now 0.23%. Historically speaking, when the 10-year yield and the two-year yield meet to say hello and shake hands (the inversion), the recession isn’t too far off. In the chart below, the grey shaded bars show when the economy is in a recession and the black in the middle is when the 10-year and 2-year yields shake hands.
How we get to higher yields
I am big fan of higher yields to create balance in the housing market. However, in 2021 I did not believe we had the capacity for the 10-year yield to break over 1.94%, which would get us to 4% plus mortgage rates. However, part of my 2022 forecast was that if global yields rise, especially in Japan and Germany, the 10-year can get up to 2.42% this year, which means 4% plus mortgage rates.
From the forecast: “We had a few times in the previous cycle where the 10-year yield was below 1.60% and above 3%. Regarding 4% plus mortgage rates, I can make a case for higher yields, but this would require the world economies functioning all together in a world with no pandemic. For this scenario, Japan and Germany yields need to rise, which would push our 10-year yield toward 2.42% and get mortgage rates over 4%. Current conditions don’t support this.”
The economy has been on fire for some time now, but only recently has the 10-year yield been able to breach over 1.94%. This is mainly due to global yields rising not so much of the U.S. We have the hottest economic and inflation data in decades and the 10-year yield is only at 2.17%. Now the tug of war begins: Can the U.S economic data can stay firm with all this inflation and higher rates, or will the weakening economy send yields lower again?
As someone who has been rooting for higher rates because the housing market is savagely unhealthy, I hope it can create some balance. If economic data gets weaker, I am concerned rates will go back down again. We lose our only variable that can create balance in the housing market.
I believe in economic models as they keep us in line. In this day and age of boom and bust 24/7 marketing for clicks, I understand that boring economic models might not be so sexy. However, economics isn’t supposed to be a hot summer flick. I always want to be the detective and not the troll. The main reason I continued writing after 2015 wasn’t because of the housing market work I have done — I wanted to be a source of information for the economic expansion and recession that wasn’t predicated on extreme ideological or stock trader takes. This is why I wrote the America Is Back Recovery Model on April 7, 2020.
So to wrap it all up, the second recession red flag is up, and I am keeping an eye out on the third one. Once that bridge is crossed, I will update the model accordingly. We will hold hands together as we continue this slow dance of information, and when something meaningful pops up, I will let you know about it. Buckle up for the rest of the year and root for more housing inventory; we need to get back to 1.52 – 1.93 million!
Inside: Are you looking for ways to make money quickly and easily? This guide has a variety of tips and tricks to help you make 1000 a day.
Making money is something that everyone is interested in. And why wouldn’t we be? Money gives us the ability to buy the things we want, travel, and live a lifestyle that most people can only dream of.
But what if I told you that it was possible to make $1000 a day? Would you believe me?
Well, in this blog post, I’m going to show you some of the best ways to make money really fast.
So if you’re looking to make some quick cash or consistent income, then this is the post for you!
In this post, I will share with your some of the best ways that I know of to make money $1k a day on a regular basis.
So if you’re ready to learn how to make 1000 a day, then let’s get started!
Is it possible to make $1000 a day?
Yes, it is possible to make $1000 a day.
In fact, this is something I regularly do (see picture to prove it).
However, achieving this goal requires commitment, hard work, and a solid plan. Factors that contribute to achieving this goal include finding a method that works for you, sticking with it, and putting in the necessary effort.
Additionally, having a unique skill set and interest in a particular method can increase the chances of success.
How to make $1000 a day?
Making $1000 a day is an appealing goal for many people, whether it’s a one-time need or a consistent source of income. Fortunately, there are several ways to achieve this goal.
Here are the top ways to make $1000 a day:
Start a high-paying job: Some jobs pay over $300k a year, and while they may require advanced degrees and education, there are also a few that don’t require a college degree.
Offer high-value services: You can offer services such as pet-sitting, tutoring, design work, or writing to make money.
Start a business: You can start a business that generates $1000 a day, such as a digital marketing agency, freelancing, or a service-based business.
Sell items you no longer need: You can sell items on eBay, Craigslist, or other online marketplaces to make quick cash.
Let your money work for you: You can invest in stocks and shares, real estate, or property to earn upwards of $1000 a day.
While each method has its own advantages and disadvantages, with the right strategy and dedication, making $1000 a day is achievable.
So, get started today and see how much money you can make.
Are you passionate about words and reading?
If so, proofreading could be a perfect fit for you, just like it’s been for countless of readers! Learn how you can create a freelance business as a proofreader.
Check out this free workshop!
Bookkeeping is the most stable, reliable & simple business to own. This is how to make a realistic income -either part-time or full-time.
Find out TODAY if this is THE business you’ve been looking for.
Best ways to make 1000 a day
We’ve compiled a list of our favorite ways to make money really fast – specifically $1k a day!
Many times, you will have to invest 100 to make 1000 a day.
If you’re looking for ways to make some extra cash, or even earn a full-time income, this post is for you.
1. Freelance Writing
Freelance writing is a great way to make extra money or even replace your full-time job. There are various types of content that freelance writers can specialize in, such as long-form content or shorter direct-response copywriting.
With freelance writing, you can earn over $.50 or even $1 per word, which means that a 1,000-word article could net you $1,000 quickly.
To start, you need to establish a portfolio of your work to pitch to new clients. This portfolio should include links to any relevant articles or copy you’ve written that’s related to the client you’re pitching. If you don’t have a portfolio yet, you might need to do some work at lower rates to get your foot in the door.
Even if you don’t consider yourself a writer, don’t strike it off the list just yet. With the right approach and mindset, anyone can become a successful freelance writer.
2. Crafting
Crafting offers many benefits beyond just making extra cash. It allows for flexibility in your schedule, creativity in your work, and the ability to turn a hobby into a lucrative business.
If you are creative and have a talent for creating handmade items, then starting a crafting business is the perfect way to monetize that skill by doing something you enjoy. There are plenty of crafts to choose from and you may even become an instructor!
The most difficult side is you are trading your time for money and it may be difficult to scale.
3. Day Trading Stocks
Day trading stocks is a high-risk, high-reward investment strategy that involves buying and selling stocks within a single trading day. It requires a great deal of knowledge, discipline, and risk management to be successful.
However, there is a large group of us who have made the $1000 in a day club.
Successful day traders use a combination of technical analysis, risk management, and discipline to make profitable trades.
This choice requires discipline, a proper trading education, knowledge, and risk management.
Trade and Travel with Teri Ijeoma is a popular course that investors can take to learn about trading stocks and options and begin their journey to making $1,000 a day.
4. Trading Options
Trading options can be a lucrative way for seasoned investors to make money.
With options, investors can speculate on different stocks with only a fraction of the investment capital needed to buy the stocks outright.
Investors who are familiar with investing in individual stocks can take the next step in the process by trading options. While options may seem exotic on the surface, they are a common tool used by seasoned investors and are especially valuable during volatile activity in the stock market.
To trade options successfully, investors need research skills, investing knowledge, discipline, and patience.
Trading options can be a high-risk option, especially for those who lack expertise in the area. However, it can be extremely lucrative for those who have experience and knowledge in the stock market.
Investors should consider taking courses to learn more about trading options.
5. Youtube
YouTube can be a great source of income for those who are willing to put in the effort to create quality content. It offers multiple ways to generate revenue, including sponsorships, affiliate marketing, and Google Adsense.
With the right approach, it’s possible to make $1000 or more per day on YouTube.
Remember, success on YouTube takes time and hard work, but the potential rewards are significant.
6. Selling on Amazon
Selling products on Amazon can be a highly profitable business opportunity.
Amazon FBA, or Fulfilled by Amazon, is a business model where you send your inventory to Amazon warehouses and they handle the rest, including storage, shipping, customer service, and returns.
This makes it a great option for digital nomads and those looking to scale their business quickly.
With an average profit margin of $20 per sale, it’s possible to make $1,000 per day by selling just 5 units per day of 10 different products.
7. Sell Printables Online
Selling printables online has become a popular way to make passive income.
With the rise of digital products, creators can sell anything from coloring pages to budget spreadsheets on platforms like Etsy. Thousands of creators make a living selling digital products, and it’s easy to see why.
Learn how these sellers got started.
The key is to pick a topic you’re knowledgeable in and passionate about, so you can create high-quality products that people will want to buy.
8. Dropshipping
Dropshipping is one of the best ways to make $1000 a day, especially for those looking to start a business with minimal initial investment.
This business model allows entrepreneurs to sell products to customers without ever holding a single piece of stock.
Dropshipping is a viable and profitable business model that can generate high profits without the hassle of managing inventory. With the right niche, platform, supplier, and marketing strategy, entrepreneurs can make $1000 a day or more with dropshipping.
9. Consulting
Consulting is one of the best ways to make $1000 a day!
It’s a lucrative career option that allows you to provide expert advice to clients and help them solve problems.
The first step to becoming a consultant is to determine your area of expertise. This could be anything from personal finance to marketing to human resources. Your expertise should be something that you have significant knowledge and experience in.
One of the most important aspects of becoming a consultant is building your network. This includes reaching out to potential clients, attending networking events, and connecting with other professionals in your field.
10. Become a Virtual Assistant
Being a virtual assistant can be a great way to make money while setting your own hours.
As a virtual assistant with no experience, you can work from home and typically on your own schedule. You can choose to work part-time or full-time based on your availability and the workload of your clients.
The tasks that you are asked to perform as a virtual assistant can vary widely, but commonly needed skills include administration, accounting and bookkeeping, marketing, communications, customer service, and many other capacities.
You don’t need special skills or training for this job, as most clients will bring you up to speed on what they need to do. However, having organizational, communication, and time-management skills can be helpful.
Check out the checklist to get started as a virtual assistant.
11. Side Hustles
Side hustles are a great way to earn extra income and supplement your regular income. With a little effort and some creativity, you can make up to $1000 a day with certain side hustles.
Here are some of the best side hustles that can help you achieve this goal:
Deliver food: You can make good money by delivering food with these apps. You can choose your own hours and work as much or as little as you want. DoorDash is a great option.
Drive with ridesharing apps like Uber and Lyft: If you have a car and some free time, you can earn money by driving people around. You can make up to $1000 a day, depending on how much you work.
Pet sit or walk dogs: If you love animals, you can make money by pet sitting or dog walking through Rover.com. You can earn up to $50 per day, depending on the services you offer.
Babysit or tutor: If you have experience with children or are good at a particular subject, you can offer your services as a babysitter or tutor through Care.com. You can make up to $50 per hour, depending on your qualifications.
Side hustles are a great way to make extra money and reach your financial goals.
12. Start a Business
Starting a business is one of the most effective ways to make 1000 dollars a day on a regular basis. However, it requires careful planning and execution to succeed.
The first step is to research the market and identify a profitable business idea and build it to profitability.
Challenges may arise, such as competition, financial setbacks, and marketing difficulties, but with persistence and determination, you can overcome them and achieve financial success.
The potential for significant financial gain from starting a successful business is immense, making it a worthwhile endeavor for anyone willing to put in the effort.
13. Yard Work
Yard work is an excellent way to make $1000 a day, especially if you have some extra time and don’t mind getting dirty.
If you want to get up and running quickly, there is nothing better than a local side hustle to earn extra money such as mowing lawns in your neighborhood.
Mowing lawns is not only a great side hustle for adults but also for teens. For an average size lot, you could expect to make at least $35. If you could line up a few lawns each weekend, you could easily make an extra $1000 each month.
Landscaping, leave pickup, and bush trimming are all simple tasks that you can complete quickly if you have the right equipment. You can choose to set an hourly rate or get paid for the entire job, depending on the task.
You may have to start hiring crews in order to hit $1k a day.
14. AirBnb or VRBO Rentals
Airbnb or VRBO are popular platforms for renting out your property to travelers.
Many successful hosts have earned $1000 or more per day because they have accumulated more than one property.
One tip for success is to garner excellent reviews that people want to come back time and time again.
15. Affiliate Marketing
Affiliate marketing is a lucrative way to make money online and has the potential to earn you $1000 a day.
This works well for influencers who have a reach of thousands of people. Another way is creating a niche website that focuses on a specific product or market segment.
It’s essential to promote products effectively to generate revenue. Successful affiliate marketers have earned six figures or more per year.
16. Flip Products or Retail Arbitrage
Retail arbitrage is a popular business model that can help you make $1,000 per day or more. The premise is simple – buy or find things cheap and resell them for a higher price.
This is a great example of how to flip money.
To be successful, you’ll need to have an eye for the right product and do product research to choose products that will sell.
Here is a list of the most popular items to flip.
17. Pickup Services
Pickup services refer to businesses that provide transportation and delivery services for goods, furniture, or other items. These services are in high demand, especially in urban areas where people are always on the move and need help with moving heavy or bulky items.
Starting a pickup service business requires some equipment, such as a truck or van, and marketing strategies to attract customers.
So, if you are looking for a new side hustle or business opportunity, consider pickup services as a viable option.
18. Casino Gambling
While casino gambling is not a recommended way to make $1000 a day, it is still worth mentioning as a potential option.
However, it is important to note that gambling should always be done responsibly and within one’s means.
If you are considering casino gambling as a way to make quick money, it is essential to understand the most profitable games and their strategies. Here is an ordered list of the best casino games to play to make money:
Blackjack: This game has one of the lowest house edges, making it a popular choice for professional gamblers. The objective of the game is to beat the dealer’s hand without going over 21. The key to winning at blackjack is to use basic strategy, which involves making the mathematically correct decisions based on the dealer’s upcard and your own hand.
Craps: This game has a low house edge and offers a variety of betting options. The objective of the game is to predict the outcome of a roll or series of rolls of the dice. To win at craps, it is essential to understand the different bets and their odds and to follow a betting strategy that suits your playing style.
Baccarat: This game is easy to learn and has a low house edge. The objective of the game is to bet on the hand that will have a total of 9 or closer to 9. The key to winning at baccarat is to understand the different bets and their odds and to follow a betting strategy that suits your playing style.
When playing these games, it is important to practice good bankroll management by setting a budget for yourself and sticking to it. It is also crucial to know when to quit to avoid losing money.
A winning streak can lead to making $1000 a day, but it is important to be cautious and not get carried away.
19. Freelance Graphic Design
Graphic designers create visual concepts using computer software or by hand to communicate ideas that inspire, inform, and captivate consumers. They work on various projects such as branding, marketing materials, website design, and more.
Freelance graphic design is a lucrative option because there is always a demand for graphic design services, and businesses are willing to pay top dollar for high-quality designs.
By building a strong portfolio, staying up-to-date with the latest design trends, and providing excellent service to your clients, you can earn a substantial income as a freelance graphic designer.
20. Make Money Flipping Items
Flea market flipping is a great way to make some extra cash on the side or even turn it into a full-time business. It involves buying items for a low price and reselling them for a profit.
One couple, Rob and Melissa Stephenson, have become full-time flea market flippers and even host their own website, Flea Market Flipper, to help others find success in the venture. They offer several courses to help individuals turn this into a serious side hustle or even a full-time business earning six figures.
Learning from successful flea market flippers like Stephenson’s can be a great way to get started. They have the skills and knowledge to help individuals find valuable items, network, and use social media and photography to their advantage.
21. Photography
Photography is a lucrative career option that has the potential to generate high income or as a side hustle.
There are different types of photography that one can explore to make money, including wedding photography, family photography, real estate photography, and stock photography.
By building a strong portfolio, networking, finding clients, investing in high-quality equipment, and constantly improving your skills, you can become a successful photographer and make a great income. Don’t underestimate your potential in this field.
22. Rental Income
Passive income through rental properties is a great way to generate consistent long-term income. Here are the steps to follow in order to make $1000 a day through rent income:
Find a suitable property: Look for properties that are priced reasonably, require minimal renovations, and are located in areas with high rental demand. You are likely to start making $1000 a month.
However, the earning potential is dependent on the ability to scale multiple properties, keep them occupied, and increase monthly income streams.
Investing in rental properties can be a lucrative and rewarding experience for those willing to put in the effort.
23. Amazon Merch
Amazon Merch is a platform that allows you to create and sell your own merchandise on Amazon. It’s an excellent way to make money because Amazon handles all of the heavy lifting, such as printing, shipping, and customer service.
Using Amazon Merch, you can sell a variety of products from t-shirts to phone cases, and best of all, you don’t need to invest in inventory or equipment.
All you need to do is create the designs.
Successful Amazon Merch sellers include graphic designers, artists, and entrepreneurs who have created unique and appealing designs that resonate with their target audience.
24. Creative Skills like Video Editing
Creative skills can be a valuable asset when it comes to generating income. Video editing is another skill that can be monetized.
With the rise of video content, businesses, and individuals are always in need of skilled video editors. One can offer video editing services for YouTube creators, and businesses, or even edit personal videos for clients.
Freelance platforms like Upwork and Fiverr are great places to find video editing jobs.
25. Fashion Design
Fashion design is one of the most lucrative ways to make money, and it’s an industry that’s always in demand.
Whether you’re interested in starting your own fashion label, working for a fashion house, or becoming a freelance designer, there are plenty of opportunities to make a living in this field.
Marketing yourself is also key to success in fashion design. Use social media platforms like Instagram and Pinterest to showcase your work and build a following.
Networking is also an important part of building a successful career in fashion design. You must stay up-to-date on industry trends, make valuable connections, and potentially land new clients or job opportunities.
Create a website or blog where you can share your designs, offer fashion tips, and connect with potential clients.
Pay attention to industry trends, stay creative and original, and focus on developing your skills and building your brand. Then, there are plenty of opportunities to make a living in this exciting and dynamic industry.
26. Start a Blog
Many people say blogging is dead. But, it’s not.
Starting a blog can be a great way to share your interests, skills, and experiences with others while also creating a new income stream for yourself. The flexibility of blogging allows you to turn your current job or passion into a successful blog.
However, starting a blog can be challenging, and it requires technical knowledge, writing ability, social media skills, and topical expertise.
Once you have started your blog, it’s essential to treat it like a business and monetize your content.
27. Self-Storage Business
Self-storage business is a lucrative venture that involves renting out storage units to customers who need extra space for their belongings. These businesses are in high demand, especially in urban areas where living spaces are often small and cramped.
In fact, the self-storage business is expected to bloom to $64.17 billion by 2026.
Starting a self-storage business can be a profitable venture if done correctly.
28. Invest in Cryptocurrencies
Cryptocurrencies have gained popularity as a potential source of significant income. Bitcoin, Ethereum, and Litecoin are some of the best cryptocurrencies to invest in.
To invest in cryptocurrencies, one must first set up a digital wallet and choose a reputable exchange such as Coinbase or Bitstamp.
It is important to research the market and understand the volatility of cryptocurrency before investing. While the potential for high returns exists, it is important to approach cryptocurrency investing with caution.
29. Invest in Real Estate
Investing in real estate can be a lucrative way of making money.
To make $1000 a day through real estate investing, there are several steps you can take.
First, set aside a few hundred dollars each month to invest in real estate over time.
Second, consider the different types of real estate investments available, such as rental properties, commercial properties, and fix-and-flip properties. Each investment type has its own advantages and disadvantages, so it’s important to research and choose the one that fits your financial goals.
Third, consider investing in real estate investment trusts (REITs) or crowdfunding platforms like Fundrise, which allow you to invest in real estate without purchasing a property.
Remember that investing in real estate carries a degree of risk, so it’s important to do your research and seek advice from successful real estate investors.
30. Make Money on the Internet
Making money online has become a popular option for those looking to earn a substantial income. The internet provides a wealth of opportunities for anyone with an internet connection and a bit of creativity.
You need to learn how to make money online for beginners.
There are so many options today and you never have to leave your house!
When it comes to making $1000 a day online, it’s important to acknowledge that it’s not a quick or easy process. It takes time and effort to build a successful online business or generate significant income through freelance work or other online opportunities.
However, with dedication and hard work, it is possible to achieve your financial goals.
How to make $1,000 really fast?
If you’re in a financial bind and need to make $1,000 quickly, there are several options available to you.
Here are the top ways to make $1,000 a day quickly:
Sell items on eBay or Craigslist: If you have items that you no longer need, consider selling them online. This could include clothes, furniture, or electronics. This is a quick and easy way to make money fast.
Offer freelance services: You can offer services such as tutoring, design work, or writing. If you have a specific skill or talent, you can find customers online who are willing to pay for your services.
Do odd jobs for people in your community: You can offer to mow lawns, rake leaves, or shovel snow for a fee. This is a great way to make money quickly, especially if you live in an area with a lot of homeowners.
Participate in paid focus groups or surveys: This is a great way to make money quickly without leaving your home. Companies are always looking for feedback on their products and services, and they are willing to pay for it.
Rent out a room in your home on Airbnb: If you have a spare room in your home, you can rent it out on Airbnb and make money quickly. This is a great option if you live in a popular tourist destination.
Manage social media accounts: Many businesses need help managing their social media accounts, and they are willing to pay for them. If you have experience with social media, this could be a great way to make money quickly.
Start a blog: If you have a passion for writing or a specific topic, you can start a blog and sell advertising space or products/services to your readers. This takes some time to build up, but it can be a lucrative way to make money in the long run.
Sell handmade crafts or goods online: If you’re crafty, you can make items and sell them online, such as on Etsy. This is a great way to turn your hobby into a money-making opportunity.
Borrow money from friends or family: This is not an ideal option, but if you’re in a bind and need money quickly, consider asking for a loan from someone you trust.
Pawn items for cash: This is a last resort option, but if you have items of value, you can pawn them for cash quickly.
Don’t be afraid to try different methods and see what works best for you.
This is the perfect side hustle if you don’t have much time, experience, or money.
Many earn over $10,000 in a year selling printables on Etsy. Learn how to get started by watching this free workshop.
If you’ve ever wanted to make a full-time income while working from home, you’re in the right place!
This intensive training combines thousands of hours of research, years of experience in growing a virtual assistant business, and the power of a coach who has helped thousands of students launch and grow their own business from scratch.
FAQ
Passive income is a form of earnings that is generated without active involvement.
It is a way to make money while you sleep and can provide financial stability and independence.
This is one of three types of income and the one you want to strive towards building.
Ultimately, the best side hustle for making $1000 a day is one that meets your needs and interests while providing a good return on investment.
Here are several factors to consider before choosing the best option.
Think about your skills, interests, and availability. If you have a full-time job, you may want to consider a side hustle that allows you to work flexible hours.
Next, consider the earning potential of the side hustle you are considering. Some side hustles pay more than others, and you want to choose one that will give you the highest return on investment.
Additionally, consider the start-up costs associated with the side hustle. Some require significant investment, such as buying a car for ride-sharing apps or purchasing an online course.
Most importantly, choose a side hustle that aligns with your passion and expertise. This will make the work more enjoyable and increase your chances of success.
There are many ways to make money from your expertise.
You can start a consulting business, offer services such as coaching or speaking, create and sell information products, or build a following and sell advertising or sponsorships. The possibilities are endless.
What’s important is that you start somewhere and then take action to turn your expertise into cash.
Ready to Make 1000 in a Day?
There are many ways to make money quickly and easily.
The best way to make money fast is to find a way that best suits your skills and interests.
Whether it’s graphic design, content creation, photography, or trading stocks, there are plenty of opportunities to turn your passions into profit. So, start honing your skills and explore the endless possibilities of the gig economy.
Learning how to make quick money in one day is possible. You just need to be determined and disciplined.
So, which method do you choose on how to make $1k a day?
Know someone else that needs this, too? Then, please share!!
Retiring at 40 may sound like a dream come true, but even with $4 million in your bank account, it’s important to have a plan for the future. You’ll need to plan out the next half of your life with a clear financial picture in order to truly retire at such a young age. Here are some of the most important questions to ask yourself before you clock out of work for good. If you’d like individualized help planning for retirement, consider working with a financial advisor.
Is $4 Million Enough to Retire at 40?
As of 2023, the life expectancy for the average American was 76.4 years—73.5 for men and 79.3 for women, according to the CDC. Let’s say that you live to the age of 80. Even if you don’t invest your millions to generate any returns, you can spend $100,000 a year for 40 years before your money runs out.
Of course, you don’t want to run out of money at 80 with years ahead of you. With a well-planned investment portfolio, you may very well be able to live quite comfortably off the returns generated by the principal. This means that your $4 million can sit untouched and you can live off the interest and earnings.
For instance, the stock market’s S&P 500 Index has returned an average of 6.5 to 7% per year after inflation for the past 200 years, according to McKinsey. If you invested your $4 million there, 6.5% returns would mean $260,000 per year—like a comfortable sum for most to live on in retirement.
Of course, stock market crashes, poor budgeting and other issues can decimate millions of dollars quicker than you might think. Here are some of the biggest factors you should consider if you’re planning to retire at 40 with $4 million.
1. Plan Wisely for the First Few Years
If you leave the workforce at 40, there are some things to be aware of in the first several years of retirement. First of all, people often spend more in early retirement, then spend less over time as they age, according to a Fidelity analysis of data from the Bureau of Labor Department.
This period of higher spending coincides with an age when government programs won’t be available to you. The earliest age at which you can begin to receive Social Security benefits is 62 and Medicare won’t kick in until age 65. You’ll need to plan to cover your insurance and medical costs without government assistance for 25 years and plan to live without Social Security income for at least 22 years.
Additionally, many of the most popular retirement savings vehicles will also not be available to you without penalty. Penalty-free withdrawals from 401(k) plans and IRAs are available after the age of 59 ½, meaning you should plan to pay 20 years of expenses without touching those accounts.
2. Prepare for the Unexpected
As mentioned above, stock market returns on average can generate a healthy retirement income, but you’ll want to be prepared for events outside of your control. In a market crash, a large portion of your portfolio may essentially disappear and take a long time to reconstitute itself.
According to Morningstar data, the average time it takes for an asset class to recover can vary widely, with many bouncing back after six months. However, others take much longer, with some taking as many as 13 years to fully recover their value.
This is just one of many market pressures that can create challenges for you in retirement. Inflation can also wreak havoc on your retirement savings. According to an inflation calculator, $50,000 in April 1993 had the same buying power as about $105,000 thirty years later. That means in 30 years, the value of your savings could essentially be halved. This is a good argument to be more conservative than you think might be warranted when planning your retirement.
3. Prioritize Diversification
One straightforward solution to the above challenges is a diversified portfolio. If you only invest your money in stocks, the good times may be very good, but the bad times will likely be very bad. If you invest your money in a wide variety of assets, you can mostly insulate yourself from the vagaries of the market.
Think about your ideal asset allocation. You can use a tool like SmartAsset’s asset allocation calculator to get an idea of what your investment breakdown should be based on your risk tolerance and other factors. You should consider different asset types, such as stocks, bonds and mutual funds and holding onto some cash.
You should also diversify within each type—instead of just one company’s stock, you should own multiple stocks in multiple sectors and regions. Instead of just owning 5-year bonds, you should own bonds of multiple durations. Also consider investing in assets that are more immune to inflation, such as real estate investment trusts or Treasury Inflation-Protected Securities.
The idea is that by spreading your money around, you can mitigate the risks of investing while still generating healthy returns. And when you have enough cash and conservative investments on hand, you will be better able to ride out the ups and downs of the market without having to sell assets at a loss.
4. Budget Well
Perhaps the easiest way you can run out of money far too soon is with flagrant spending. While a wisely-invested $4 million should provide you with a six-figure income for the rest of your life, lavish vacations, expensive hobbies or multiple homes can quickly deplete your savings.
You can use SmartAsset’s budget calculator to make sure you have a sound plan for your spending in retirement. There’s no reason you can’t enjoy the finer things in life, but you’ll need to make sure it fits into the big picture of your financial situation. Make a plan for how you’re going to spend your retirement income and stick to it to ensure the coffers don’t run dry.
The Bottom Line
Retiring early with $4 million is very possible, but requires some planning. Make sure you enter your retirement with a diversified investment portfolio, a smart budget and a plan for how to navigate the years before many traditional retirement benefits are available to you. Consider careful planning with a professional to make sure you’ve thought about everything before retiring early.
Retirement Savings Tips
A financial advisor can help you take care of your finances when you’re retired. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
How much do you need to save to fund your eventual retirement lifestyle? If you’re scratching your head at the question, consider using SmartAsset’s retirement calculator.