If your income falls under a certain amount, you could be eligible for a special credit by putting money into qualified retirement accounts. It’s called the saver’s credit, and it started in 2018. Wondering if you qualify? We’ve got all the information you need about the saver’s credit for 2022 tax returns and the 2023 tax year so you can maximize potential tax savings.
But before we dive in, a quick note: if you have specific questions about your taxes, you might want to consult with a tax adviser. We’re not tax professionals, so you should always check with a tax expert before you make any big decisions.
In This Piece
What Is the Saver’s Credit?
The saver’s credit is a tax credit that can reduce how much you might owe the IRS come tax return time. Depending on how much you make, you may be able to get a nonrefundable credit for 10%, 20% or 50% of qualified contributions you made to retirement funds within the tax year.
The purpose of the saver’s credit is to provide an incentive for people with lower incomes to save for retirement. The credit only applies up to $2,000 worth of contributions. At the maximum credit percentage of 50%, that’s a $1,000 credit.
How Does the Saver’s Credit Work?
The saver’s credit is nonrefundable. That means it reduces how much you might owe the IRS. If you owe the IRS less than the credit amount, your tax bill is $0. Check out the details below to understand who’s eligible for the credit and how to tell how much your saver’s credit might be.
Who Qualifies for the Saver’s Credit Income Limits
The saver’s credit income limits determine who’s eligible for the credit and at what percent. Some other qualification details apply too. You must be at least 18 years old, not claimed as a dependent on anyone else’s return and not a full-time student.
To qualify for the 2022 saver’s credit, you must make less than $68,000 as a married couple filing jointly, less than $51,000 as head of household or less than $34,000 if you’re filing as any other type. The thresholds go up a bit for the 2023 calendar year. You must make less than $73,000 as a married couple filing jointly, less than $54,750 as head of household or less than $36,500 as a filer of any other type.
These income limits are for receiving any type of saver’s credit at all. The amount of your credit is further defined by income. Saver’s credit amounts are based on adjusted gross income, which is the taxable income reported on your return.
How Much Is the Saver’s Credit?
The saver’s credit is 10%, 20%, or 50% of your contribution to a qualified retirement account up to a certain amount. Check out the tables below to understand what your credit percentage might be for 2022. Find your filing status and adjusted gross income, then look at the bottom row of the column to see the percentage of contributions you can claim.
2022 Tax Year
Married Filing Jointly
$41,000 or less
$41,001-$44,000
$44,001-$68,000
More than $68,000
Head of Household
$30,750 or less
$30,751-$33,000
$33,001-$51,000
More than $51,000
Other Filing Types
$20,500 or less
$20,501-$22,000
$22,011-$34,000
More than $34,000
50%
$20%
10%
0%
Source: IRS.gov
To understand how saver’s credit amounts work, consider an example. Sue makes $32,000 per year as a single person. She put $3,000 in her qualified retirement fund. Saver’s credits only take the first $2,000 of contributions into account, so Sue would get a credit of 10% of the $2,000. That’s $200.
In another example, Joe is married. He makes $40,000 and his spouse doesn’t have an income. Joe puts $2,000 in a retirement fund. He would get a credit of 50% of $2,000, which is $1,000.
What Types of Retirement Accounts Qualify?
Only your own contributions are factored into the credit calculation. Match contributions from your employer don’t count. Contributions must also be made to the following account types to qualify:
Traditional or Roth IRA
401(k)
403(b)
Governmental 457(b)
SARSEP
SIMPLE plan
Federal Thrift Savings Plan
501(c)(18)(D) plan
An ABLE account for which you are the designated beneficiary
Does the Saver’s Tax Credit Increase Your Refund?
The saver’s tax credit doesn’t increase your refund, as it’s a nonrefundable credit. It only reduces the amount you owe in taxes, so it’s not a tool for getting a maximum tax refund. However, if you’re looking for tips on how to maximize your 401(k) benefits, reducing how much you have to pay in taxes is certainly one advantage of those contributions.
For example, if you owe $1,200 and have a saver’s credit of $1,000, you’d only need to pay $200. If you owe $500 and have a saver’s credit of $1,000, you pay nothing, but you don’t get the extra $500 back.
It’s also important to know that the saver’s credit isn’t a tax deduction. It doesn’t reduce the income you’re taxed on.
Manage Finances Well All Year
One of the best ways to minimize your taxes is to manage your finances wisely all year. This is a great way to minimize costs associated with things like interest and help you save money.
And while you’re taking charge of your finances this year, consider signing up for ExtraCredit®. You can get access to 28 of your FICO® scores and all three of your credit reports. Your subscription also includes features such as Reward It, which lets you earn cashback for completing offers or signing up with partners.
Relative Strength Index, or RSI, is a momentum indicator used to measure a stock’s price relative to itself and its past performance. Developed by technical analyst J. Welles Wilder, the Relative Strength Index focuses purely on individual stock price movements to identify trading trends for a specific security, based on the speed and direction of those price changes.
RSI allows swing investors to compare the price of something to itself, without factoring in the performance of other stocks or the market as a whole. Investors use RSI to pinpoint positive or negative divergences in price for a security or to determine whether a stock is overbought or oversold.
The RSI indicator is useful in technical analysis, which revolves around finding trends in stock movements to determine optimal entry and exit points. Understanding what the Relative Strength Index measures and how it works is central to a technical trading strategy.
What Is RSI in Stocks?
The Relative Strength Index is a rate of change or momentum oscillator that tracks stock price movements. You can visualize it as a line graph that moves up or down, based on a stock’s price at any given time. The Relative Strength Index operates on a scale from 0-100. Where the RSI indicator is within this range can suggest whether a stock has reached an overbought level or if it’s oversold.
RSI is not the same thing as Relative Strength analysis. When using a Relative Strength Comparison (RSC), you’re comparing two securities or market indexes to one another to measure their relative performance. 💡 Quick Tip: Investment fees are assessed in different ways, including trading costs, account management fees, and possibly broker commissions. When you set up an investment account, be sure to get the exact breakdown of your “all-in costs” so you know what you’re paying.
How Does the RSI Indicator Work?
The Relative Strength Index operates on a range from 0-100. As stock prices fluctuate over time, the index can move up or down accordingly. Traders typically use the RSI to track price movements over 14 periods (i.e. trading days), though some may use shorter or longer windows of time.
When the RSI indicator reaches 70 or above, it could mean the underlying asset being measured is overbought. An RSI reading of 30 or below, on the other hand, suggests that the asset is oversold. The length of time a stock remains in overbought or oversold territory depends largely on the strength of the underlying trend that’s driving price movements.
The Relative Strength Index can throw off different patterns, depending on whether stocks are in a bull market or bear market. Investors compare the movements of the RSI indicator with actual price movements to determine whether a defined pricing trend actually exists and, if so, in which direction it might be heading. Analyzing moving averages for the stock can help determine the presence of a clear pricing trend.
Recommended: 5 Bullish Indicators for a Stock
RSI Formula
Here’s what the Relative Strength Index formula looks like:
RSI = 100 – (100 / (1 + RS))
In this formula, RS represents the ratio of the moving average of the tracking period’s gains divided by the absolute value of the moving average of the tracking period’s losses.
Here’s another way you might see the Relative Strength Index formula displayed:
RSI = 100 – [100 / ( 1 + (Average of Upward Price Change / Average of Downward Price Change ) ) ]
The RSI formula assumes that you’re able to follow a stock’s pricing changes over your desired tracking period. More importantly than that, however, is knowing how to make sense of Relative Strength Index calculations, which investors often display via a stock oscillator.
Interpreting RSI Results
Reading the Relative Strength Index isn’t that difficult when you understand how the different ranges work. Depending on where the RSI indicator is for a particular stock or market index, it can tell you whether the market is bullish or bearish. You can also use the RSI, along with other technical analysis indicators, to determine the best time to buy or sell.
Above 70
An RSI reading of 70 or higher could indicate that a stock is overbought and that its price might move back down. This could happen through a reversal of the current price movement trend or as part of a broader correction. It’s not unusual for stocks to have an RSI in this range during bull market environments when prices are rising. If you believe that the stock’s price has reached or is approaching an unsustainable level, an RSI of 70 or higher could suggest it’s time to exit.
Below 30
When a stock’s RSI reading is 30 or below, it typically means that it’s oversold or undervalued by the broader market. This could signal a buying opportunity for value investors but it could also indicate the market is turning bearish. It’s more common to see RSI readings of 30 or below during downtrends when stock prices may be in decline across the board.
40 to 90 Range
During bull markets, it’s not uncommon to see the Relative Strength Index for a stock linger somewhere in the 40 to 90 range. It’s less common to see the RSI dip to 30 or below when prices are steadily moving up. An RSI reading of 40 to 50, roughly the middle of the 0-100 scale can indicate support for an upward trend.
10 to 60 Range
In bear markets, or those filled with fear, uncertainty, and doubt, it’s more common to see the Relative Strength Index hover somewhere in the 10 to 60 range. It’s not unusual for stocks to reach 30 or below when the market is already in a downward trend. The middle point of the RSI can act as a support point, though the range shifts slightly to between 50 and 60.
Common RSI Indicators
Relative Strength Index indicators can help investors spot pricing trends. That includes identifying up and down trends, as well as sideways trends when pricing levels consolidate. The reliability of these indicators often hinges on the current phase of a stock or the market as a whole. When reading RSI indicators, it’s important to understand divergence and swing rejections.
Divergence
A divergence represents a variation or disagreement between the movement of the RSI indicator and the price movements on a stock chart. For example, a bullish divergence means the indicator is making higher lows while the price movement is establishing lower lows. This type of divergence can hint at increasing bullish momentum with a particular stock or the greater market.
A bearish divergence, on the other hand, happens when the indicator is making lower highs while prices are establishing higher highs. This could indicate that investor sentiment is becoming less bullish.
Swing Rejections
A swing rejection is a specific trading technique that involves analyzing RSI movements when pushing above 30 or below 70. Swing rejections can be bullish in nature or bearish.
For example, a bullish swing rejection has four parts or steps:
• RSI is at an oversold level
• RSI moves above 30
• A dip is recorded without rating as oversold
• RSI passes its recent high
Meanwhile, a bearish swing rejection also has four parts or steps:
• RSI reaches an overbought level
• RSI drops below 70
• RSI hits new highs without dropping back to overbought levels
• RSI passes recent lows
Swing rejections make it possible to utilize divergence indicators to spot bullish or bearish trends in their earliest stages. 💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
Is RSI a Good Indicator to Use?
Yes, in certain circumstances. Relative Strength Index can be a good indicator to use in technical analysis, as it can make it easier to detect when a stock or the broader market is overbought or oversold. Understanding how to interpret RSI and its correlation to price movements could help you spot buy or sell signals and detect bull market or bear market trends.
That said, RSI also has some limitations. For example, the RSI can produce false positives or false negatives when bullish or bearish trends don’t align with the way a stock’s price is moving. Like other technical analysis indicators, it’s not an exact way to gauge the market’s momentum. So if stocks are hovering somewhere in the 40 to 60 range, it may be difficult to decipher whether the mood is bearish or bullish.
When using RSI, it’s helpful to incorporate other technical analysis indicators to create a comprehensive picture of the market. Exponential moving average (EMA), for example, is a type of moving average that uses the weighted average of recent pricing data to draw conclusions about the market.
Traders often use RSI in conjunction with other trend indicators, such as the Moving Average Convergence Divergence, the Stochastic Oscillator, or the Volume-Weighted Average Price.
RSI vs MACD
Moving Average Convergence Divergence (MACD) is a technical analysis indicator that investors may use alongside RSI. This indicator can help them determine when to buy or sell, based on the correlation between two moving averages for the same security.
Specifically, it requires looking at a 12-period moving average and a 26-period moving average. To find the MACD line, you’d subtract the 26-period from the 12-period, resulting in a main line. The next step is creating a trigger line, which is the nine-period exponential moving average of the main line. The interactions between these two lines can generate trading signals.
For example, when prices are strongly trending in a similar direction the main line and trigger line tend to move further apart. When prices are consolidating, the lines move closer together. If the main line crosses the trigger line from below, that can produce a buy signal. If the main line crosses the trigger line from above, that can be construed as a signal to sell.
While RSI and MACD are both trend indicators, there are some differences. Relative Strength Index measures the distance between pricing highs and lows. So you’re looking at the average gain or loss for a security over time, which again usually means 14 periods. The MACD, on the other hand, focuses on the relationship between moving averages for a security. It’s a trend-following signal that, like RSI, can indicate momentum.
RSI vs Stochastic Oscillator
The stochastic oscillator is a momentum indicator for technical analysis that shows where a stock’s closing price is relative to its high/low pricing range over a set period of time. The stochastic oscillator can also be used to track pricing for a market index.
Central to the use of the stochastic oscillator is the idea that as a stock’s price increases, the closing price inches closer to the highest point over time. When the stock’s price decreases, the closing price lands closer to the lowest low. Investors use this indicator to determine entry and exit points when making trades.
However, investors interpret RSI and stochastic oscillator readings differently. For example, with a stochastic oscillator, a reading of 20 or below generally means a stock is oversold, versus the 30 or below range for RSI readings. When used together, Relative Strength Index and stochastic oscillators can help with timing trades to maximize profit potential while minimizing the risk of losses.
Can You Use RSI to Time the Crypto Market?
Stocks are not the only asset class for which investors use the RSI. Investors also use the Relative Strength Index to assess conditions in the crypto markets and whether it’s time to sell or continue to HODL.
Cryptocurrency traders may use RSI to gauge momentum for individual currencies. Again, they’re looking at the highs and lows to get a sense of which way prices are moving at any given time. The RSI indicator can help with choosing when to buy or sell, based on previous price movements.
The same rules apply to crypto that apply to stocks: An RSI reading of 70 or above means overbought while a reading of 30 or below means oversold. Likewise, a reading above 50 signals a bullish trend while a reading below 50 can signal a bearish trend. Investors can also use a bearish divergence or bullish divergence to spot a pullback or an upward push.
As with stocks, however, it’s important to remember that RSI is not 100% accurate.
Recommended: Crypto Technical Analysis: What It Is & How to Do One
The Takeaway
RSI can be used to pinpoint positive or negative divergences in price for a stock or to determine whether it’s overbought or oversold. If you’re interested in technical analysis and trending trading, RSI can be a useful metric for making investment decisions.
The RSI is just one tool that you can use to devise a strategy for your portfolio. There are other less technical tools you can use as well when you’re starting to build a portfolio.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Invest with as little as $5 with a SoFi Active Investing account.
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If you have financial goals, you need a financial plan. Here’s how to make one.
August 16, 2023
Having a financial plan could play a key role in achieving major life goals. Why wait any longer? Start assessing your current situation, setting financial planning goals, and thinking about how the right Discover® savings account could help you focus more closely on your financial future today.
The Best Laid Plans
Before you make a financial, you need a clear picture of where you stand today. Tracking your income and expenses on a regular basis and assessing your net worth — total assets minus total debts — helps you see how much money you can commit to individual financial goals.
Your First Home
Home ownership is at the heart of the American dream. The biggest obstacle facing homebuyers is funding a down payment – now often at least 20% of a home’s purchase price. The good news is there are many down-payment options for first-time buyers. Check with banks in your area to see what special programs may be available to you.
If you intend to buy a house within five years, it might be a good idea to include saving for a down payment when creating your financial plan. A good way to save for a down payment may be through short-term saving vehicles, such as those available through a Discover Money Market Account or Certificate of Deposit (CD) to help pay for your first home.
Your Child’s Education
Ideally you should start saving for your child’s education as soon as — or even before — he or she is born. According to Bankrate, tuition and fees at four-year public colleges have increased by 179% over the last 20 years. Depending on your child’s age, you may want to consider investing your education dollars in stocks or stock mutual funds. While stocks can be riskier than other investments over short time periods, over the long-term they have historically produced the highest returns.
There are many other education savings options, and some, such as state-sponsored 529 college savings plans and the Coverdell Education Savings Account, offer tax advantages as well.
Your Retirement
When making a financial plan, a secure retirement is probably your most important long-term financial goal. According to Bankrate, the common guideline is to replace 80% of your final working year’s salary for each year you spend in retirement.
That’s why it’s important to start saving for retirement early in life and keep saving as much as you can throughout your working years. Opening a Discover IRA CD is one of the easiest — and most effective — ways to save for this important goal.
Get the Help You Need
Knowing the right financial moves to make and when to make them is a complicated job that most of us don’t have the resources to handle alone. Consider consulting a qualified financial professional who can help you keep your financial plan on track with your ever-changing needs. And be sure to familiarize yourself with all the different ways that Discover’s savings accounts can be at the center of your strategy. Their great rates and convenient account management options may be just what you’re looking for.
Discover®
Regardless of your time horizon, risk tolerance, or savings goal, you can always find the right savings vehicle for your needs at Discover®. Discover® offers an Online Savings Account to help you with your short-term savings goals, a full range of CDs and IRA CDs with terms from 3 months to 10 years as well Money Market Accounts that may be ideal for rounding out your overall savings strategy. Open a Discover® account online or call our 24-hour U.S-based Customer Service at 1-800-347-7000.
The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.
Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
* The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.
Earning hotel elite status provides valuable benefits that enhance your stay while allowing you to earn bonus points and save money. While top-tier World of Hyatt status offers the best perks, most people don’t travel enough to earn it.
Mid-level elite status, like Hyatt Explorist, is more attainable for the average traveler. Here’s everything you need to know about Hyatt Explorist status, including how to earn it, the included benefits and if it’s worth it.
Hyatt Explorist benefits
The World of Hyatt hotel loyalty program has four levels of elite status — Member, Discoverist, Explorist and Globalist. Additionally, members can earn Lifetime Globalist status based on their cumulative spending at Hyatt properties.
When you reach this elite status level, numerous benefits improve your stay. The best Hyatt Explorist benefits are:
20% bonus points: All World of Hyatt members earn five base points per dollar spent at Hyatt properties. With this 20% bonus, you’ll earn six points per dollar.
Complimentary upgrades: Explorist members are eligible for a free upgrade to the best available room when checking into their hotel and resort. However, suites and rooms with Club lounge access are excluded.
Late checkout: Enjoy your room longer with a 2 p.m. late checkout at no extra charge. This benefit is based on availability and may not be an option at some locations.
Guaranteed room availability: Explorist members receive guaranteed room availability when booking a paid reservation at least 72 hours in advance. This benefit ensures availability at a sold-out property when making advanced reservations.
Waived resort fees: Resort fees are hidden charges that many travelers don’t know about until finalizing their reservation or when checking into a hotel. These fees are waived for all members booking award reservations at Hyatt properties. Eligible reservations include rooms booked with points, credit card free nights and other free night certificates. Points and cash or paid stays do not include this benefit.
American Airlines bonus miles: Earn one World of Hyatt point for every dollar spent on qualifying American Airlines flights when you link your loyalty accounts. These miles are in addition to the miles earned from your flight.
How to earn Hyatt Explorist elite status
There are three primary ways that you can earn Hyatt Explorist status. The first two are based on the number of nights you stay or how many points you earn per year. A third option involves hosting meetings or events at Hyatt properties. Here’s how to get Hyatt Explorist status.
Staying at Hyatt properties
World of Hyatt members earn Explorist elite status by earning 30 qualifying nights per year. Qualifying nights include paid nights, award nights, and points and cash nights.
Limited-time promotions, such as staying four nights and getting a fifth night free would only count as four qualifying nights.
Holding a Hyatt credit card
Spending on your Hyatt card
Both Hyatt credit cards earn qualifying night credits based on your annual spending. You’ll receive two additional qualifying night credits for every $5,000 spent on the World of Hyatt Credit Card.
The World of Hyatt Business Credit Card earns five qualifying night credits for every $10,000 spent each year. Cardholders can combine nights earned from spending with their hotel stays to earn elite status.
Earning base points
Base points earned from hotel stays, on-site restaurants and other activities count toward the 50,000 points needed for Hyatt Explorist status. Members earn five base points per dollar on all eligible purchases at Hyatt hotels, Small Luxury Hotels of the World and other activities.
Bonus points earned from promotions, welcome bonuses and credit card purchases do not count as base points. They are “bonus points,” which can be used to book hotel rooms but don’t earn elite status.
Host meetings or events
Members who host ten or more meetings or events at an eligible Hyatt property earn Explorist elite status. To qualify, at least 10 paid guest rooms must be booked for the same night as the event. In some cases, there may be additional requirements for the events.
How much is Hyatt Explorist status worth?
Value of benefits
Cost to earn
Elite earning rate
Discoverist
With a cost to earn of $4,380, Explorist elite status provides members a 15% return in value. These benefits include complimentary upgrades, guaranteed room availability and waived resort fees on award reservations.
What else you need to know about Hyatt Explorist
Take advantage of Hyatt promotions
Throughout the year, Hyatt offers promotions that may accelerate your path to elite status. These promotions may include extra qualifying night credits or base points that count toward earning status. Even if you don’t have any hotel stays planned, register for every promotion in case your plans change. This will help you maximize every trip you take.
Status matches are available
Travelers that have elite status with other hotel or airline loyalty programs may qualify for a World of Hyatt status match correlating to your current status. Status matches provide elite status for a limited time. You’ll retain your elite status for the rest of the year if you meet the qualifying nights or points requirement during the promo.
How long does Hyatt Explorist status last?
The Hyatt program year runs through the end of February each year. You earn Hyatt elite status based on your activity during the calendar year. When you earn elite status, you’ll enjoy Hyatt Explorist benefits through the end of the following program year.
For example, if you achieved Hyatt Explorist status in September 2023, your elite status is good through February 28, 2025.
World of Hyatt lifetime elite status
Hyatt doesn’t offer lifetime Hyatt Explorist status, but you can earn Lifetime Globalist status based on your cumulative points earned. Ironically, you can qualify for Lifetime Globalist even if you’ve never earned Globalist status in any single year.
To qualify for Lifetime status, you need to earn 1,000,000 lifetime base points. At five base points per dollar spent at Hyatt properties, this equates to $200,000 in total spending.
Is Hyatt Explorist status worth it?
Hyatt Explorist status offers numerous benefits that make focusing your hotel reservations with one brand worthwhile. Benefits like complimentary upgrades, late checkout and waived resort fees on award nights improve your trip and save you money.
It takes 30 nights per year to earn Explorist elite status, which is an average of 2.5 nights per month. The World of Hyatt Credit Card makes it easier to earn status through additional night credits based on your annual spending.
(Top photo courtesy of Hyatt)
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
As any long-term investor in the market can attest, stocks rise and fall — influenced by a mix of economic trends and supply and demand.
Given the inherent volatility of stock values, there are periods when the market is down, and times when it’s gaining steam. So, how low can a stock go? Well, in some cases, stock prices can fall all the way to zero.
What happens when a stock goes to zero? Watching a stock in free fall can induce fear and panic in investors, causing some to sell their holdings. While most every investor aims to buy low and sell high, timing the stock market is very challenging and doesn’t guarantee that investors will see gains.
Sometimes when a stock goes down in value it can present an investment opportunity, but in other cases the stock could fall to zero and never recover. In the latter case, it may benefit investors to sell before the stock price falls all the way down to zero.
What Causes a Stock to Fall to Zero?
When a stock falls to zero, it doesn’t mean that the company is worth nothing. Some companies with very low stock values are still earning money or possess assets. And, some investors buy penny stocks that have extremely low prices.
What happens to a company when stock prices fall to zero? If a company continuously spends more money than it earns, and investors sell off the stock, ultimately, that can lead to the company going bankrupt. Most companies file for either Chapter 7 or Chapter 11 bankruptcy before their stock reaches $0.00.
Chapter 7 Bankruptcy
With a Chapter 7 bankruptcy filing, the company must sell off its assets until it can repay lenders and creditors. The order that stakeholders get paid is: creditors, bondholders, preferred stockholders, common stockholders.
This means that if the asset sale doesn’t bring in enough money to pay everyone, it’s likely that common shareholders won’t receive a dime. In this case, stockholders lose all the money they had invested in that stock.
Under Chapter 7, stock trading and all business activities must be put on hold.
Chapter 11 Bankruptcy
Under a Chapter 11 bankruptcy, the company negotiates loan terms with its creditors in order to avoid selling off assets. With Chapter 11, companies can still conduct business and their stock can be traded.
Once a company files for Chapter 11, it is likely that the stock will continue to fall, since many investors won’t have much faith in the business. Sometimes shares are canceled with a Chapter 11 filing. In that case, investors lose all the money they had put into the stock.
Even if a company files for bankruptcy before its stock falls to zero, their attempts to salvage the business may ultimately fail and the stock could become worthless. However, it can take a strong team and business model to go public and get listed on stock exchanges in the first place, so some bankrupt companies may have the potential to make a comeback.
Some companies with very low stock prices get acquired by larger companies before their stock falls to zero. Even a company with a low stock might have a promising product or service that a larger company is able to sell successfully. One example of this is when Alphabet acquired FitBit in 2021. 💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.
What Happens to a Company When Stock Prices Fall to Zero?
Some stock exchanges delist stocks if they fall below a certain level. For example, the New York Stock Exchange will remove a stock if its share price falls below $1 for 30 days in a row.
And, as mentioned above, if a company files for Chapter 7 bankruptcy, its stock will be delisted temporarily.
Can a stock go negative? Fortunately, it is not possible for a stock’s price to go into the negative territory — under zero dollars in value, that is.
Still, if an investor short sells or uses margin trading, they may lose more than they invested. For this reason, margin trading and short selling are risky investment strategies.
Short selling is when an investor predicts that a stock is going to decrease in value. So, rather than buying the stock, they ‘bet’ that it will go down. If the stock does in fact go down, they make money.
But, if the stock ends up increasing in value, they lose money. Potentially, an investor in this scenario could lose more money than they put into the initial short sell.
Margin trading is when an investor borrows money from the brokerage firm to trade stocks. If the investor makes a trade that doesn’t go in their favor, they can end up owing the brokerage firm money.
How Low Can a Stock Go?
Stock prices can fall all the way down to zero. That means the stock loses all of its value and a shareholder’s earnings are typically worthless. In this case, the investor loses what they invested in the stock.
Reasons for a Stock Losing Value Down to Zero
What makes a stock fall to zero? The are a number of reasons that may come into play, including:
• Losses in the company’s revenue or earnings, especially if the losses are persistent
• A perception in the market that the stock is overvalued
• Management issues, shake-ups in the company’s leadership positions, scandal, fraud — in short, anything that can make investor sentiment turn negative
For investors, these are all signs a stock is underperforming and red flags to watch out for.
Types of Stocks Likely to Fall to Zero
What is a stock that falls to zero? Every stock comes with risks, but some are more risky than others. Besides companies on the brink of bankruptcy, there are certain types of businesses that have a higher chance of becoming worthless.
Knowing what to look for and researching and evaluating stocks before buying is key to building a resilient portfolio. Some of these higher risk stocks might include:
Companies With Weak Business Models
Even if a stock is currently performing well, it may fall in the future if the business model is fundamentally flawed. For this reason, many investors prefer to research a company’s practices, team composition, and business model before investing in its stock.
Penny Stocks
Stocks that trade below $5 are known as penny stocks. These low price stocks tend to be very volatile, as the companies that issue them have low or no profit.
Sometimes penny stocks can even turn out to be scams.
Buying the Dip
Rather than selling stocks when the market declines, some investors believe it can be a good idea to buy while the market is low. By buying the dip, as it’s known, investors pay less for stocks.
And, since these stocks still have the potential to go up in value as the market recovers after the decline, they can be preferred by long-term investors who may have more time to let their portfolio go back up in value.
However, if a company is going bankrupt or otherwise likely to fall to zero, it’s unlikely to offer a strong return on investment.
It’s also very difficult to time the market, so a trader might buy in when they think the market has hit bottom, only to watch it continue to go down.
Generally, building a diversified portfolio can offer higher returns on average over time than trying to time the market based on shorter-term trends or dips.
Examples of Stocks That Fell to Zero
There are two particularly infamous examples of stocks that fell to zero:
Enron
In the 1990s, Enron, an energy company, hid massive losses by using accounting tricks. At one point, its stock price was over $90. In 2001, analysts and investors became suspicious and began asking questions. That same year, the company reported huge losses, and its stock plummeted to $0.26 right before it declared bankruptcy.
World Com
This telecom company falsely inflated its cash flow and net income by listing expenses as investments to hide losses. Its stock price fell from more than $60 a share to less than $1 before the company declared bankruptcy in 2002. 💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
How to Prevent Holding a Stock that’s Falling Lower
While it’s true that the market is impossible to predict, there are some measures that investors can take to protect themselves from losses — especially in the case of a stock spiraling towards zero. Below are some common preventative investment measures.
Stop Losses
Knowing when to sell a stock is important. Investors can set up a trade to automatically sell shares if a stock reaches a specific price. This type of trade is called a stop loss. It’s a strategy that could help prevent losses in the case of an individual stock or overall market drop.
There are multiple types of stop losses, including trailing stops and hard stops. Trailing stops move the stop level up as the stock rises in value, but stay in place if the stock falls. Hard stops are fixed at a specific price and will execute if the stock falls to that price.
Limit Orders
Limit orders allow investors to set the price at which they want to buy a stock. An investor selects the price and the number of shares they wish to buy. In practice, the order only executes if the stock then hits that price.
This is one way for traders to step away without worrying that they’ll be buying in at a price they didn’t want.
Put Options
A put option is a type of order that gives traders the option to sell or short-sell a specific amount of stock at a specific price, within a certain time frame. If a stock decreases in value in this case, the trader can still sell it at a higher price than it previously held.
Diversifying Asset Holdings
In an effort to prevent losses, investors may want to diversify their portfolios into a mix of non-correlated assets — dividing their holdings between assets at a higher and lower risk of fluctuating in value.
In a diversified portfolio, if one asset class decreases in value, the other types may not. Over time, the ups and downs of each asset could possibly balance the losses in each.
Setting Up a Stock Portfolio
By researching companies and setting up a portfolio according to one’s personal risk tolerance, and then keeping tabs on the assets in that portfolio to monitor their performance, it may be possible to help hedge against a stock sinking down to zero.
FAQ
At what point does a stock become worthless?
A stock becomes worthless when it falls to zero and has no value. In this case, an investor loses the money they invested in the stock.
How low can a stock go before being removed?
Some stock exchanges delist stocks if they fall below a certain level. The New York Stock Exchange will remove a stock if its share price falls below $1 for 30 days in a row, for instance.
Do you owe money if a stock goes negative?
No. A stock price can’t go negative, or, that is, fall below zero. So an investor does not owe anyone money. They will, however, lose whatever money they invested in the stock if the stock falls to zero.
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When it comes to your money, safety first. Understand what bank accounts are FDIC-insured to ensure your deposits are protected.*
August 16, 2023
Bank failures aren’t common—but they can happen, typically when a bank is no longer able to cover its liabilities. If depositors get nervous about the viability of their bank, they might withdraw money en masse, known as a bank run. Bank runs can accelerate a bank’s failure, and ultimately the Federal Deposit Insurance Corporation (FDIC) will take control of the bank.
But depositors can rest easy if their bank is FDIC-insured. FDIC insurance is a program managed by an independent agency of the United States government designed to protect customers in the event of bank failure. The standard FDIC insurance amount is $250,000 per depositor, per insured bank, per account ownership category. That maximum amount of $250,000 applies for each bank you have a qualified account with, as long as the bank is an FDIC member. (Discover Bank is an FDIC member.)
So, what bank accounts are FDIC-insured? If you’re opening a bank account, it’s important to understand what FDIC insurance is and what it covers.
What is the history of FDIC insurance?
The Banking Act of 1933 was passed in response to the bank failures of the Great Depression. In addition to other reforms, the act created the Federal Deposit Insurance Corporation. In 1935, the government made the FDIC permanent and tightened its standards.
Banks must be able to prove that they meet certain eligibility requirements to qualify for FDIC insurance, which is funded by payments from covered banks. In the rare event of a bank failure, those funds are used to reimburse the insured accounts of customers at that bank, with certain limits and restrictions.
What are FDIC insurance limits?
Today, FDIC deposit insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category. Coverage wasn’t always that high, however.
When the FDIC was established, accounts were only insured up to $2,500. Over the course of the century, the covered amount was gradually raised in an attempt to keep pace with inflation. According to the FDIC, the most recent coverage increase occurred in response to the 2008 financial crisis, when the covered amount went from $100,000 to the current $250,000.
How do account ownership categories affect FDIC insurance limits?
You can increase your FDIC coverage by opening multiple account ownership categories at the same bank. For example, if you open a business account and a personal checking account at the same bank, each would be covered up to the maximum per law.
A joint bank account, meanwhile, will also be insured separately from a single-ownership account and for each owner of the account. That means if you open an individual checking account and a joint checking with your partner, those two accounts would qualify for $750,000 of total insurance.
Note, however, that this applies to different ownership categories but not to all different types of accounts. That means an individual savings account and an individual checking account belonging to the same owner at the same bank will qualify for a total of $250,000 in FDIC insurance.
Are checking accounts FDIC-insured?
Checking accounts at FDIC-insured institutions are among the deposit products covered by FDIC deposit insurance, according to the FDIC. For your checking account to be eligible, there’s nothing you need to do. The funds you deposit into a checking account at an FDIC-insured bank are automatically protected up to the maximum per law.
Is an online savings account FDIC-insured?
All savings accounts offered by FDIC-insured institutions, including online savings accounts, are covered up to the maximum per law. For all FDIC-covered accounts, both the original deposit amount and the accrued interest within the limit will be protected.
When opening an online account, it’s especially important to double-check that the type of account you’re opening is FDIC-insured. For example, according to the FDIC, crypto savings accounts are not protected by FDIC insurance, even if offered by an institution that is otherwise FDIC-eligible.
Legitimate financial institutions should make clear which accounts are FDIC-insured on their websites. To be certain, always contact the financial institution directly.
Are high-yield savings accounts FDIC-insured?
High-yield savings accounts at FDIC-insured institutions are protected up to the maximum per law, according to the FDIC. If the interest on a savings account causes it to grow beyond $250,000, only the funds up to the limit will be guaranteed protection.
As with checking accounts, if you want to protect more than $250,000 in savings, you’ll need to open accounts under different ownership categories or have accounts at multiple banks.
Is a money market account FDIC-insured?
According to the FDIC, funds deposited into money market accounts offered by FDIC-insured institutions are protected up to the maximum per law, just like FDIC-insured savings accounts.
Money market mutual funds, however, are not protected by the FDIC. Why not? Money market accounts are a type of savings account, while money market mutual funds are a type of investment account. Investments are generally not eligible for FDIC protection.
Is a certificate of deposit (CD) FDIC-insured?
Certificates of deposit at insured institutions are covered by the FDIC up to the maximum per law.
A CD can offer better rates than a high-yield savings account, but CDs work a little differently than savings accounts. With a CD, your money is earning interest at a fixed, guaranteed rate, but if you withdraw the money before the end of its term, you may pay a penalty.
Are Individual Retirement Accounts (IRAs) FDIC-insured?
IRAs, or Individual Retirement Accounts, are also covered up to the maximum per law at FDIC-insured institutions.
For an account to be covered, it generally needs to be “self-directed,” meaning the account holder chooses how their contributions are applied. This could include 401(k)s offered through a job or IRA saving accounts that you choose to open on your own.
IRAs can also include CDs and money market accounts. Retirement CDs, money market accounts, and similar financial products are eligible for coverage.
While stock and bond investments are a common feature of many retirement plans, they are not eligible for FDIC coverage. That means it’s possible that only a portion of your 401(k) or IRA will be covered.
If you’re uncertain if a retirement account or asset is covered, check with the institution providing it.
Can you increase your coverage by adding beneficiaries?
It’s possible to increase your coverage by creating a revocable trust account with multiple beneficiaries.
Trusts are accounts that pay out to a designated beneficiary or beneficiaries after the account holder passes. FDIC coverage applies to each beneficiary for up to five beneficiaries. In other words, a trust account with one owner and five beneficiaries could be covered up to $1,250,000.
If the trust is jointly held between two owners, the FDIC will provide up to $250,000 in coverage per beneficiary per account holder. That means if you want to maximize your coverage to the absolute limit, it would be possible to create a jointly held trust with five beneficiaries insured up to $2,500,000 in total.
It’s important to note that this information is all according to FDIC rules taking effect on April 1, 2024. Under current rules, irrevocable trusts, which cannot be altered after they’re created, can only be insured up to $250,000 regardless of the number of beneficiaries. The new rules treat both types of trusts identically and add the five beneficiary cap for calculating coverage.
Because we’re talking about potentially millions of dollars, it’s all the more essential to consult a financial planning professional about your personal situation.
Will the FDIC insurance limits ever change?
While FDIC insurance limits have been set at $250,000 since 2008, it’s always possible that the insurance limit could be increased in 2023 or down the road, according to Bankrate.
Whether or not that happens in the near future will likely depend on how the current economic and political situation unfolds. If the past decades are any indication, Congress will probably need to raise the limit eventually to account for inflation and other factors. But it’s unclear when that might happen, and savers shouldn’t assume it will be any time soon.
You can contact the FDIC if you have any questions or use their coverage calculator to determine how much of your funds are insured.
What else can you do to protect your money?
Opening an account with an FDIC-insured institution is a wise decision. But bank failures are just one risk to manage. You might also worry about scammers and fraudsters who want access to your hard-earned cash. Learn how to protect your bank account from fraud in 6 steps.
Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
* The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your financial advisor with respect to information contained in this article and how it relates to you.
In the world of interior design, where colors orchestrate emotions and ambiance, one hue stands out as a timeless symbol of sophistication and allure: black. For some, diving into the trenches of bold colors such as black can be daunting. But we’re here to tell you that designing in black doesn’t have to be intimidating. In this Redfin article, we asked design experts to share tips to help you create the ultimate aesthetic using black paint. So whether you’re designing a luxury home in Beverly Hills, CA, or a colonial-style house in Savannah, GA, join us as we unlock the secrets to harnessing the elegance and versatility of designing with black.
1. Contrast with lighter tones
One of the most impactful techniques in designing with black is to juxtapose it against lighter tones. This can also be done in varying design styles (not just ultra-modern). The interplay between deep black and airy, light shades creates a visual contrast that draws attention to both elements. Whether it’s a sleek ebony sofa in a white-walled living room or matte black hardware against a pale kitchen palette, this approach elevates the overall aesthetic while ensuring that the darkness of black doesn’t overpower the space.
In a recent remodel by Dotan Trabulsi, owner of Optimal Remodeling, his team incorporated lower black cabinetry. They supported the dark elements with natural wood upper cabinets, open shelving, and a lighter quartz countertop.
Founder and Principal Designer for Jubilee Interiors, Judi Lee-Carr, shares that, “achieving harmony through contrast is key when balancing black with other colors in minimalist interior design. Black, being a bold and dominant color, can enhance the overall aesthetic while maintaining the simplicity and elegance that defines minimalism.” She continues, “To strike the right balance, try a neutral color palette such as white and beige.”
Shelby, with The Home Styles Group, shares how layering “materials like rope, rugs, burlap fabrics, linen window treatments,” can also balance black features. She mentions that the team at The Home Styles Group enjoys mixing in bold colors like green, blue, or orange.
2. Consider room size and lighting
When designing with black, it’s crucial to take into account the size of the room and the available lighting. In smaller spaces, a heavy use of black can create a cozy, intimate atmosphere, but excessive use might make the room feel cramped. Conversely, in larger rooms, black elements can anchor the space and provide a sense of definition.
Interior designer Sabrina Antony with Kitchen Design NYC shares, “If you’ve got a spacious and light-filled kitchen, go all out.” Antony advises embracing black cabinets with copper metal accents or warm wood blends such as walnut or oak. If unsure, she recommends introducing black in smaller doses-“think chic black shelves, handles, or a snazzy black faucet.”
Shelby, with The Home Styles Group, adds, “due to black being a natural absorbent of light, avoid using too much where there is insufficient lighting in a space.” Think small narrow bedrooms, dimly-lit offices, or powder bathrooms.
This isn’t to say these rooms won’t work with black. Black can add to the space when paired with ambient lighting if you’re seeking to achieve an ultra-modern, moody aesthetic.
3. You don’t have to use paint
Designing with black isn’t limited to painting cabinets, accent walls, or wallpaper. Designing with black can also be introduced by integrating furniture pieces within a space.
Offer Steuer, President of OTM Designs and Remodeling Inc., shares that “in rooms that are desired to be light and airy, it would be better to limit the use of black or opt for a softer, muted shade instead. Consider using black furniture pieces to add black features to the home, such as a sleek black leather sofa or black accent chairs. You can also bring in black through statement accessories like black wheels, lamps, and decorations to create a bold focal point in the room.”
Denise Wenacur, with DW Design and Decor, shares how in one of her bathroom renovations, rather than using paint, they introduced black through floor tile, trim, and accessories.
Moana Dixon, designer for Hunted Fox, skillfully weaves black and white tones throughout her projects, utilizing them to artfully capture the nuances of culture. She pairs the black and white tones with hand-selected decor and accents, hand-pours cement sinks, and bespoke leather headboards, pillows, and drapery.
Final thoughts on designing with black
No matter your home’s design style, integrating black elements has the power to elevate your space into a sophisticated and timeless sanctuary. Whether you’re seeking a minimalist living room or an ultra-modern bathroom, armed with these insights, you can boldly infuse black into your space, crafting a home that authentically embodies your style.
Plumbing is an essential aspect of any modern household, ensuring the smooth flow of water and the efficient removal of waste. However, plumbing systems can be complex whether you live in a house in Columbus or a condo in Sacramento, and homeowners often have questions about their maintenance, repair, and functionality. In this article, Redfin addresses ten common plumbing questions to help you better understand your plumbing system and how to keep it in good working condition.
1. How can I prevent clogged drains?
Clogged drains are a common plumbing issue. To prevent them, avoid pouring grease, coffee grounds, hair, and other debris down the drain. Use drain screens to catch solids and run hot water periodically to clear away the buildup.
2. What should I do in case of a leak?
In case of a leak, it’s crucial to act promptly. Start by turning off the water supply to the affected area or your entire house if needed. This will help prevent further water damage. Next, use towels, buckets, or other absorbent materials to contain the leak. If the leak is from a fixture like a faucet or toilet, you might be able to temporarily stop it by closing the shut-off valve for that fixture. However, it’s recommended to call a professional plumber to assess the situation and perform necessary repairs to ensure the leak is fixed correctly and doesn’t lead to more significant issues.
3. How can I prevent frozen pipes in the winter?
To prevent frozen pipes, insulate exposed pipes in unheated areas, keep cabinets under sinks open to allow warm air circulation, and let faucets drip during freezing temperatures to relieve pressure and prevent freezing.
4. Why does my toilet keep running after flushing?
“Rubber parts and mechanical parts in the tank fail after some time,” says Sean from Economy Plumbing Services. The flapper may have deteriorated (this is the seal that actuates when the toilet handle is operated), allowing the water to pass from the tank to the bowl, or the fill valve (the part that fills the tank) has not shut off. There are various types of toilets with different kinds of seals/parts, so a plumber would need to assess to know what’s wrong.”
5. What’s the difference between hard water and soft water?
Hard water contains high levels of minerals like calcium and magnesium, which can lead to limescale buildup in pipes and appliances. Soft water, on the other hand, has fewer minerals due to a water softener, reducing the risk of scale accumulation.
6. How often should I flush my water heater?
Flushing your water heater annually is recommended to remove sediment buildup that can affect its efficiency and lifespan. This process helps maintain consistent water temperature and prolongs the heater’s longevity.
7. Can I fix a dripping faucet myself?
Yes, you can often fix a dripping faucet yourself. A dripping faucet is usually caused by a worn-out washer or O-ring inside the faucet. Turn off the water supply to the faucet, disassemble the handle, and replace the worn part with a new one from a hardware store. Reassemble the spout, turn on the water supply, and the dripping should stop. However, if you’re uncomfortable with plumbing repairs, it’s a good idea to consult a professional plumber.
8. What’s the purpose of a P-trap under sinks?
A P-trap under the sinks prevents sewer gasses from entering your living space and traps a small amount of water, which acts as a barrier between your home and the sewage system. The curved shape of the P-trap allows water to collect, creating a seal that blocks foul odors from traveling back into your home. Additionally, the P-trap captures debris that could clog your plumbing system, helping maintain proper drainage and preventing potential issues.
9. Are chemical drain cleaners safe to use?
“No, chemical drain cleaners are not safe,” says Liriano Plumbing. “They can be harmful to your plumbing system, as well as to the environment and your health. These harsh chemicals can corrode pipes, potentially causing leaks or more extensive damage. Additionally, the fumes and residue from these cleaners can be hazardous if inhaled or touched. It’s better to use alternative methods or contact a professional plumber to clear clogs safely.”
10. When is it time to call a professional plumber?
It’s advisable to call a professional plumber if you’re dealing with major leaks, sewer line issues, water heater problems, or if you’re unsure about a plumbing task. Attempting complex repairs without proper knowledge can lead to further damage.
In conclusion, understanding basic plumbing concepts can help you address common issues and maintain your plumbing system more effectively. If you’re ever unsure about a plumbing problem, consulting a licensed plumber is the best way to ensure proper repairs and prevent further complications.
Inside: Dreaming of ways to make money fast as a woman? Stop dreaming and take action. These are genius ways of making money online and at home.
Making money fast is crucial for maintaining a comfortable lifestyle, especially in the face of rising living costs. It can be the key to financial stability, providing additional funds to support and enjoy your lifestyle.
As a woman, you need to know how to make money fast.
This isn’t just about getting rich quickly. It’s about women gaining the freedom to live independently without financial constraints.
The feeling of financial security lessens stress; not having to worry over unexpected expenses plays a big role in your overall well-being.
This is what you want to do – make money fast!
Good news! You are in the right spot and I’ll show you my favorite ways to make money online.
Get into the right mindset, ladies! Making money fast isn’t just possible, but also liberating.
How can I make easy money ASAP?
Making easy money quickly can be achieved in various ways that utilize your skills and knowledge.
First and foremost, consider your own skills and expertise, and determine whether they could apply to jobs like cake baking, childcare, bookkeeping, house cleaning, or freelance writing.
This will tell you the easiest way for you to make money quickly. For me, I prefer to trade options in the stock market. Whereas someone else may choose babysitting or dog walking.
You need to find how to make money fast and we will help you with that decision.
Why Making Money Fast is Important
1. Makes it possible to live comfortably 2. Enables you to afford the best quality of life 3. Gives you the freedom to pursue your dreams 4. Gives you the freedom to live without financial constraints 5. Provides you with security and safety 6. Freedom to give back to your community 7. Freedom to choose how you spend your time 8. Opportunity to take risks and start a business 9. Provides you with a sense of power and control 10. Live without financial worry
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.
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.
How can I make a lot of money in hours?
Making income in a matter of hours for a woman is entirely feasible with a blend of freelancing, leveraging gig economy platforms, and capitalizing on your skills or assets. Here’s a quick guide for you:
Consider freelancing: Establish your writing, graphic design, or programming services on platforms like Fiverr or Upwork.
Dive into the gig economy: Sign up for TaskRabbit, Airbnb, or Turo to start earning.
Try online tutoring or content selling: Proficient in any subject or have strong graphic design skills? Go for tutoring or sell your content.
Indulge in buying & selling: If you’re good at purchasing low and selling high, then swap clothes or furniture, or even stocks.
Take online surveys or join market research groups on sites like Swagbucks for a rapid source of income.
Remember, time management is crucial for balancing multiple streams at once. Don’t forget to schedule wisely!
How to Make Money Fast as a Woman
No matter who you are, making money can be tough. But if you’re a woman, it can feel impossible.
From getting paid less than men for the same job to having a harder time getting promoted, the deck is often stacked against us.
Just so you know that making quick money in one day won’t happen overnight.
So, I’m going to tell you the best ways to make money fast as a woman.
1. Sell Services
Selling your skills or expertise is a fast, viable way to earn money. It’s all about utilizing what you already know to provide value to others.
Identify your marketable skills, such as cake baking, freelance writing, bookkeeping or even organizing spaces.
Brainstorm which of these services people could pay for.
Remember, you can tap into both physical tasks, like house cleaning or pet-sitting, and digital ones, like creating digital printables or offering consulting in your field of expertise.
Expert Tip: Launch your service with a few testimonials, helping to build trust with potential customers from the get-go.
2. Freelance
Freelancing is a savvy way for women to stack up earnings fast, offering flexibility and complete control over the workload. It’s a ticket to dodge conventional office politics and punch above your earning potential.
Start by identifying your freelance niche. You can be a writer, graphic designer, or anything you’re skilled at. Many people use their transferable 9-5 skills to side hustle.
Then, create your profile on platforms like Fiverr, Upwork or Guru – be sure to showcase your accolades.
Set your rates, then start connecting with clients looking for your talent.
Remember, success in freelancing is driven by quality and consistency. So, sharpen your skills and always exceed your client’s expectations.
Freelancing may start as a side gig, but with dedication, it can grow into a full-time job.
3. Become a Product Reviewer
Being a product reviewer is an intriguing job opportunity for those who enjoy sharing candid feedback about their experiences with various products.
As a product reviewer, you are required to assess products often sent to you from diverse companies.
Your role involves providing a comprehensive review that could range from making an unboxing video to writing a detailed article about the product’s features and performance.
This kind of job requires an unbiased perspective and the capacity to articulate your thoughts and experience in a detailed, user-friendly manner.
Companies value this form of direct feedback as it provides them with significant data about their product’s strengths and weaknesses as perceived by an end-user.
4. Virtual Assistants
As a woman, becoming a virtual assistant could be your fast lane to earning a substantial income.
This is especially a great option if you’re excellent in organization and time management along with the need for flexibility.
For many becoming a virtual assistant with no experience is possible. And very lucrative.
Finally, for your best shot at success in this field, taking a course to improve your learning curve is extremely helpful.
Potential to earn up to $43,000 per year.
5. Sell Your Crafts
Ladies, have you thought of turning your love for crafts into a profitable venture?
Find out what crafts are in demand. The higher the demand, the more profitable it would be to make and sell these crafts.
Remember, profitability hinges on what you sell and how much you sell. Happy crafting!
While you are limited on what you can earn by what you can make, it is possible to make money doing something you absolutely enjoy.
6. Stock Trading
Stock trading may seem daunting but it can be a quick route to financial independence, especially for women.
With the right tools, information, and mindset, you can swiftly navigate the market and amplify your earnings. In fact, this is something Teri Ijeoma did herself.
Educate yourself on the basics before you invest. This is exactly what I did and my investment has paid off.
Always be aware of the risks involved in stock trading and proceed cautiously. However, building up an investing education is a wise decision.
Learn how fast can you make money in stocks.
7. Babysit
Babysitting is a versatile side hustle offering flexible hours and good earning potential.
It’s an ideal opportunity if you’re seeking quick, extra income and enjoy children.
Obtain optional certifications like CPR and first aid to enhance your appeal. Visit platforms like Care.com, Sittercity, or Urbansitter to create your profile and connect with clients.
8. Transcriber
One field that remains highly overlooked is transcription.
A transcriptionist listens to audio files and converts them into written documents.
Gain a thorough understanding of the industry. Check out this free webinar to get the basics right.
Consider specializing in legal or medical transcription. These niches often fetch higher wages.
You could easily make $3000-$4000 monthly, working on your own schedule.
Remember, practice and precision can help you achieve a lucrative transcription rate.
9. House Cleaning
Cleaning can be a rewarding gig, especially if you like tidying spaces.
Despite recognizing the need for a clean home, many people often struggle to find the time or energy to routinely clean their homes. This is where the prospect of a housecleaning business arises.
Busy homeowners, parents juggling work and childcare, elderly individuals needing assistance, and even businesses needing regular cleaning services are all potential clients for a housecleaning business. This demand provides a consistent income flow for those offering cleaning services.
In fact, individuals transitioning into this field of work can negotiate their wages with clients, potentially earning more than $15 an hour based on the complexity and demands of the job.
10. Sell Printables on Etsy
Selling printables is an effective and lucrative method to generate passive income.
Once printables such as planners, calendars, and journals are designed, created, and listed for sale on platforms like Shopify or Etsy, they can consistently produce income without requiring continual input or maintenance.
According to several experts, one of the keys to making substantial profits from printables is to differentiate your products.
Building upon this idea of making money from printables, the free Printables Workshop by Gold City Ventures offers comprehensive insights into the process of creating and selling aesthetically pleasing printable products online. This accessible course can be an excellent starting point for beginners looking to navigate the printables market.
Selling printables on Etsy might be the perfect venture for you!
11. Dog Walking
Looking for a fun-filled way to make some quick bucks?
Dog walking could be the right side hustle for you, especially if you’re an animal lover.
Easy to find jobs for dog walking.
Suitable for people with flexible schedules.
Offers an active way to earn money.
Option to select your rates with platforms like Rover.
High demand especially due to increasing pet adoptions and busy pet owners.
You can work when you need to and not take clients when you don’t want too.
12. Make Money Blogging
Blogging is a popular and prevalent way to earn money. Many blog owners are women who want the flexibility to earn significant money at their own pace and schedule.
Earning money through blogging allows you to focus on something you’re passionate about. Any topic that can provide value to an audience can be blogged about. Targeting a niche that has been overlooked by existing blogs can increase your blog’s potential earnings.
Starting a blog doesn’t require formal training, but it does require a willingness and ability to write effectively for an audience.
By employing monetizing avenues, like affiliate marketing and advertising, a blogger can boost their earning significantly.
Despite the vast number of existing blogs, the industry is very accommodating toward new voices, especially female voices. Thus, knowing how to monetize a blog can offer women many opportunities.
Remember, blogging is not just about earning fast bucks, it also needs consistent efforts. It’s rewarding but can start slow.
13. Ride-Sharing
Ridesharing is an excellent opportunity for women looking to make fast money. With apps like Uber and Lyft, you can earn an income simply by offering transportation services.
Here are a few tips to increase your earnings:
Consider driving during peak hours, weekends, or during special events to cash in on higher demand.
Choose busy locations such as city centers and nightlife spots to increase your chances of getting rides.
Maintain good customer service and ensure safe driving to uphold your rating and receive more ride requests.
14. Office Cleaning
Considering the hustle and bustle of the daily grind, office cleaning can be an untapped treasure trove for women seeking quick cash. Given the high demand and flexible hours, it’s an ideal source of extra income.
You must identify office premises needing cleaning services. Reach out to the owners or management, and propose your services.
Think about offering your services to offices in your local area. It’s a fast way to make extra money while managing your other commitments.
15. eBay Arbitrage
Looking to earn some quick money? eBay Arbitrage could be the game-changer you need.
Aimed mostly at women who love shopping, it’s about buying products cheaply and selling them on eBay for a profit.
First, hunt for bargains in thrift stores, sales, or online markets.
Go with high-demand items; electronics, collectibles, or brand sneakers are a good start.
Then, create your eBay store and list your finds at a competitive but profitable price.
Track each item’s demand through keyword research and buyers’ reviews.
Remember to calculate potential profits inclusive of shipping costs and eBay fees.
Armed with the right strategies, you can start earning with eBay in no time!
16. Freelance Writing
Did you know your writing passion can become a quick buck-making engine? That’s right, freelance writing is a gold mine you ought to tap.
First, identify a writing niche you love. It’s easier to excel when you’re passionate about your work.
Continually hone your writing skills. The more you practice, the better you become and the more valuable your skills. Finally, don’t be shy to market your skills. Reach out to small businesses and startups—they often need freelance writers.
Remember, quality over quantity will earn you a solid reputation in the long run. Now, go turn those wordy wonders into wealth!
17. Online Surveys
Curious about making a quick buck? Engaging in online surveys can be a fast money-making method just for you!
You don’t earn a huge amount per survey but when taking multiple surveys, it will add up fast.
Here are the top legit survey platforms:
Use your free time wisely. Take surveys during work breaks or leisure hours.
Redeem points for PayPal cash or gift cards.
18. YouTube Channel Building
Building a YouTube channel can be an interesting and rewarding venture.
It provides an incredible platform to share your content, express your creativity, and engage with a global audience. Whether you want to showcase your talents, teach something unique or simply entertain, having a YouTube channel opens up many opportunities.
Effective engagement with your audience is vital.
Last but not least, patience is something you will need in abundance. Building a successful YouTube channel takes time, so don’t lose hope if you’re not seeing immediate results.
Remember, there’s no limit to what you can achieve with your YouTube channel. It all comes down to how creatively you can use this platform to engage with your audience and grow your presence.
19. Bookkeeper
In our increasingly digital age, online bookkeepers are in high demand, with more businesses choosing to move their financial operations to the online platform. This shift in business operations has created a robust opportunity for those trained in bookkeeping to tap into the market and earn income while working from the comfort of their homes.
To be successful as web-based bookkeeper, you need to be well-organized and have previous experience dealing with numbers. However, even without a formal accounting education, individuals can take advantage of online learning platforms like Bookkeepers.com to learn and sharpen their bookkeeping skills for free.
Becoming a virtual bookkeeper is not just a fantastic full-time job opportunity; it’s also an excellent side hustle for women and mothers proficient with numbers. It provides flexible hours and allows the freedom to work from anywhere, making it ideal for those juggling multiple responsibilities.
The financial compensation for an online virtual bookkeeper is quite significant. On average, bookkeepers can earn at least $50000 a year helping business owners manage their finance and bookkeeping online.
20. Start a Dropshipping Store
Dropshipping is a viable option with low startup costs that lets you run an online store without handling any physical products.
There is still plenty of time to get into the dropshipping business.
Start by deciding what products to sell. Find a niche you’re passionate about for a higher chance of success.
Remember, a successful dropshipping venture involves effective marketing as well. So invest time and effort into perfecting your advertising tactics.
21. Do Clerical Work
Clerical work offers flexible, remote opportunities for women to make quick money.
With adequate admin experience and internet access, you can explore roles like Virtual Assistant, Online Data Entry Professional, or Court Transcriptionist.
This is one of the best non phone work from home jobs.
Experts tip: Perfection and punctuality are key. Attention to detail and meeting deadlines can make you stand out.
22. Resell Clothes
Reselling clothes online is a savvy way to turn your clutter into cash, especially if you love digging for hidden gems.
It’s a popular method for fast cash flow, with Poshmark and Facebook Marketplace being perfect platforms. One of my friends is very successful with this!
Begin with your own closet, and sell kids clothes they have outgrown too.
Reinvest your earnings, by buying second-hand clothing to resell can boost your profits.
Don’t forget quality. Run a quick check for authenticity and brand labels.
Visuals sell. Stage items and capture high-res photographs.
Providing a great customer experience is key, ensuring prompt shipping and maintaining politeness.
Play your cards right, you could earn anywhere between $100 to $1,000 a month or even reach a six-figure yearly income.
23. Do Home-Based Child Care
Home-based child care is a viable option to earn money, leveraging the natural maternal instincts and caregiving skills of many women. It can be a lucrative side hustle and a means to financial independence.
This is especially a great avenue to pursue when you are already at home raising your own children.
Make sure to follow any state regulations about running a daycare out of your home.
Begin by determining the number of children you can handle at a time, taking care not to overbook.
24. Podcasting
Podcasting is a wonderful opportunity for delivering narratives. It enables you to weave compelling stories while inspiring, instructing, or simply entertaining your listeners.
The unique format of podcasting lets you connect with your audience on a personal level. They listen to your voice, engage with your thoughts, and feel a stronger connection to you.
By starting a podcast, you are joining an increasingly popular trend, with the global number of podcast listeners has grown to 464.7 million listeners in 2022 (source).
Podcasting also opens up doors for networking and collaboration. You can invite experts, artists, or like-minded individuals as guests on your show, thus expanding your network.
There’s a potential to earn from podcasting. With affiliate marketing, sponsorships, and advertising, the commercial possibilities of podcasting are extensive.
25. Merch by Amazon
“Merch by Amazon” is a print-on-demand service that allows you to design and sell your merchandise.
It’s a great money-making alternative as it offers massive exposure and doesn’t require any upfront costs.
One of the significant advantages of using Merch by Amazon for passive income is that you are not required to maintain inventory or deal with shipping. Amazon handles these aspects, allowing you to focus on the creation process and customer satisfaction.
Amazon’s royalty system ensures that you get paid instantly whenever your merchandise is purchased. This allows you to earn money passively with every sale.
When your designs meet the current market trends and the preferences of your customers, they are more likely to be popular, leading to an increase in sales, hence, higher passive income.
26. Become an Influencer
Becoming an influencer is a smart, quick way for women to make money. While most people just stumble upon becoming an influencer, you can decide to pursue this avenue.
With earning potential that is unlimited, this opportunity is flourishing, requiring no specific degree or job experience.
Remember, platforms like TikTok, Instagram and YouTube reward new, engaging creators.
Dedication and consistency could lead you to major earnings where you make thousands for each post.
27. Work as a Translator
Having mastery in more than one language opens up a world of opportunities, particularly in the realm of translation services. The ability to translate language effectively and accurately is a skill that’s in high demand in the current globalized world.
A top benefit of being a freelance online translator is the flexible work environment. You have the freedom to choose when, where, and how much you want to work. This flexibility for work-life balance is more appealing now than ever, especially in the unsteady job market.
Freelance translators also have access to a wider client base. Unlike full-time translators who work for specific organizations or agencies, freelance translators can work with various clients from all over the world, widening their potential income streams.
The need for translators is projected to grow substantially. In the United States alone, the U.S. Bureau of Labor Statistics reports that employment for interpreters and translators will increase by 20% from 2021 through 2031, which is much faster than the average for all occupations.
Among other freelance professions, translation can often provide a more stable income.
As most sectors including education, legal, business, medical, and technological firms continue to globalize, they regularly need translators to bridge the language gap, making freelance translation services a steady income source.
31. Become a Flipper
Becoming a flipper is a high-return, low-investment way to make money fast. It involves buying low and selling high, perfect for those wanting a profitable side hustle.
Here are actionable steps to kickstart your flipping journey:
Identify items to flip: Popular options include toys, clothes, electronics, books, and furniture. Pro-tip: Sell things you have around your house to start risk free.
Choose a selling platform: Sell locally via Facebook groups or Craigslist, use reselling apps like Decluttr, or open an online store on eBay.
Price it right: Pricing items competitively garners buyer interest and maximizes profit.
Learn more: Free webinars, like Flipper University and the Flea Market Flipper, offer insights for a successful flipping business.
Remember, flipping can be more than just a side hustle; it’s a potential full-time career.
32. Micro-Tasking
Micro-tasking offers a quick way for you to earn money by completing short and simple tasks.
As its popularity grows, so does the list of platforms where you can find micro-jobs. Here are the popular platforms.
This allows your the flexibility to work whenever you want. Plus no special skills or degrees are needed.
Just note… This is not a stable income source
Tips for Finding the Best Way for You to Make Money
As you can see, there are many different ways to make money fast as a woman.
You can find the best way for you by considering your skills, interests, and the amount of time you have available.
Here are some helpful tips to make sure you are earning money quickly.
1. Identify Your Skills and Offerings
You’re already gifted, let’s transform those skills into fast cash.
Make a list of your skills, passions, and expertise; you can tap into anything from programming to knitting.
That is where you want to start.
From personal experience, I can tell you it is way easier to work on a side hustle or business when you are passionate about the topic.
Remember, the digital world is your playground, so play, innovate and cash-in.
2. Research the Best Ways to Make Money
Now, that you know the skills and experience, look at the list above and determine which ones match up.
You will need to spend time watching a free webinar to learn more.
Compare different money-making ideas. From part-time jobs to freelancing, there’s a plethora of options. You need to pick what works best for you.
Remember, generating a consistent income requires effective strategies and the right mindset. So choose wisely!
3. Try Different Ways to Make Money – Not Just 9-5 Jobs
It’s vital to explore different money-making strategies as a woman for financial stability and independence.
Just because one avenue didn’t work out doesn’t mean you should throw in the towel.
Remember, the key to success is perseverance, so pick something you’re passionate about and stick to it. Try not to jump from one idea to another out of impatience; success takes time.
Also, as your revenue increases, start building a lifestyle business for passive income.
4. Focus on the Things You Are Good at
Unlock your financial potential by recognizing and utilizing things you’re excellent at.
To cash in fast:
Identify your standout skills. These could range from writing, fine arts, math, e-commerce to digital marketing or even passions such as sports and hobbies.
Assess the viability of earning via your skills. Research shows that the digital economy is filled with opportunities.
Exploit platforms that cater to your expertise. For freelance gigs, you can try platforms like Upwork, Fiverr, or Guru.
There are so many ways to make money online as a beginner. So, indulge in the digital playground, embrace exploration and innovation, and let your skills earn for you.
5. Find Opportunities That Allow You to Work Flexibly
You can choose when to work and when not to, rather than being constrained by a 9 to 5 workday. The flexibility to create your schedule means you can operate at your most productive times, whether that’s early in the morning or late at night.
Working from home or any location across the globe enables a better work-life balance, reducing stress and improving productivity. This is particularly beneficial for those who have families or are committed to other obligations.
When working for yourself, you may have the potential to earn more than traditional salaried roles.
Lastly, making a living from your passion is huge!
You are being paid to do what you love anywhere, anytime which is rare and precious.
6. Consider Specializing in a Niche Subject
Specializing in a niche subject can elevate your earning potential quickly, owing to smaller competition and a personalized audience.
Being a subject matter expert in a specific area can provide you with an edge over your competitors.
Specializing in a niche can help you stand out and garner a dedicated audience, ultimately leading to faster earnings.
Remember, the key to making money faster in your specialized area is persistence and patience. It may take time to build a strong following, but once you do, the financial rewards can be substantial.
Stick to your chosen area, continuously learn and improve, and consistently deliver high-quality content to make your mark in your chosen niche.
7. Take Advantage of Trending Opportunities
Jumping on trending opportunities can be a gold mine, especially for women who want to make money fast from home. These ever-evolving trends tap into various skill sets, interests, and experiences, potentially translating into a lucrative gig.
For many, it may have been TikTok when the company first started.
Remember, the digital world holds limitless potential. Just needing to innovate and execute your ideas!
8. Invest in the Right Tools and Equipment
The key to making money, either online or offline, is making an informed investment of your time into the right tools, equipment, and learning resources.
While this can initially seem like an expenditure rather than a money-making step, it is, in fact, a cornerstone of your financial growth strategy.
Investing time in learning and increasing your knowledge base is vital. This could mean spending your time reading about new insights in your area of work, attending webinars, or enrolling in online courses. The ROI of this proactive learning is immense.
Consider this an opportunity or a catalyst that speeds up your journey toward substantial income generation and financial freedom.
9. Commit to Consistent Efforts
Commitment to consistent efforts is the cornerstone of any successful endeavor, more so when running your own side hustle.
One of the fundamental principles for making money is the dedication to keep improving your craft, always learning, and always evolving.
This continual effort involves a long-term commitment to staying updated with the latest writing trends, styles, and industry standards.
With persistence and patience, the fruition of your investments will lead you toward the fulfillment of your financial dreams.
10. Utilize Social Media Platforms to Promote Your Business
Social media platforms are powerful tools for business promotion, and when used strategically, they can lead to fast monetary gains.
Understanding how to effectively utilize these platforms can drastically enhance your chances of making quick bucks.
Start by creating a robust online presence for your business on various social media platforms. Remember, consistency is key to building your brand.
Engage with your audience frequently and respond to their comments. This boosts engagement on your posts.
Post content that is engaging, relevant, and aligns with your business values.
Always monitor your performance using social media analytics to understand what works best for your audience.
Which side hustles for women have you tried?
Personally, here are the side hustles I have done or currently do:
Stock Trading as a swing trader
Online Content Creation
Social Media Influencer
Online Consulting
Pet Sitting or House Sitting
Teaching Dance Lessons
Personal Organizer
However, I know many people that have tried the ones listed above.
So ladies, which of these enticing hustles appeals to your skills and schedule the most?
FAQ
Stay-at-home moms have numerous opportunities to earn money from the comfort of their homes. Plus being able to bump up your household income while juggling parenthood is the perfect combination.
Find the best jobs for moms specifically!
Any of these opportunities requires dedication and consistent effort, but with time they can all yield substantial returns.
Thankfully, there are many ways for women to make money online.
Above we covered all of the interesting ways and many are online.
Remember, opt for an avenue that suits your skills, interests, and time availability.
Well. the answer to this will depend on who you speak with.
Personally, I find ways to build passive income with your side hustle as the best option. Then you aren’t trading your time for money.
As a woman, many opportunities are right at your fingertips. The most popular and profitable include:
Start a blog: With consistent readership, you can make thousands from ad revenue and sponsored content.
Virtual assistant: Services can fetch around $10-30/hour.
Social Media Management: Businesses are willing to pay up to $1000-2000 per month for proficient managers.
Bookkeeping: On average, freelance bookkeepers earn around $34/hour.
Selling products online: Sites like Etsy, Amazon FBA, or your own platform can earn you a substantial income with a successful shop.
Trading Stocks or Options: by improving your investing knowledge, you can quickly increase your net worth.
Remember – it all starts with a step. Your side hustle could turn into a full-time passion!
This is How to Make Money from Home as a Woman
In conclusion, as a woman, there are plenty of genius and fast ways for you to make money.
The article underlines the significance of grabbing the reins of your financial future.
Through the strategies shared – including investing in stocks, working from home, or using budgeting hacks, you can boost your income significantly.
One of the concepts, I’m big on is making sure you know how to make your money work for you.
With wise decisions and being open to possibilities, your financial independence is within reach.
Remember – the ball is in your court, so make sure to take that shot and score your financial goals. It’s high time to cash in on your potential!
Know someone else that needs this, too? Then, please share!!
This article originally appeared on The Financially Independent Millennial and was republished with permission.
The views and opinions expressed in this article are those of the author only and are not endorsed by Credit.com.
Investors nearing retirement have different needs than investors with many years remaining in the workforce. Retiring means losing the regular paycheck from work, and as a result, replacing that income is a key consideration. There are many investments that appeal to retirement investors, such as purchasing quality dividend stocks like the Dividend Aristocrats. But there are also many investments that retirement investors should stay away from. Retirement investors should avoid the following 16 investments.
#1: Cash
“Cash is king” is a well-known phrase, but when it comes to retirement investing, cash is hardly king. Cash should be avoided by retirement investors because it earns no return. In stark contrast to bonds which pay interest or stocks that pay dividends, cash earns no interest. As a result, cash loses value over time due to the steady erosion of inflation.
While retirees have a number of pressing challenges to pay for expenses without a paycheck from working, keeping a great deal of cash on the sidelines is not the best idea. Ideally, retirees can generate enough income from their investments, in combination with other sources of income such as Social Security so that they do not need to hold a large amount in cash.
Read more: How to Sell Covered Calls for Monthly Income
#2: High-Yield Bonds
Sometimes referred to as junk bonds, high yield bonds are fixed income securities issued by companies with sub-investment grade credit ratings.
With interest rates still near historic lows, fixed-income yields have plunged over the past several years. As an example, the 10-year Treasury yields just 1.3% right now. With inflation running significantly above this level, retirees will see their purchasing power erode with low-yielding bonds.
Because of this, high yield bonds are appealing due to their higher yields. But investors may be reaching for significantly elevated risk in their search for yield. Bonds with below-investment grade credit ratings have a higher likelihood of default.
Read more: Can You Retire at 62 With 300k?
#3: Cryptocurrencies
Cryptocurrencies like bitcoin are all the rage these days. The massive rise in the value of bitcoin and other cryptocurrencies over the past few years is enticing for any investor. And cryptocurrency gets a lot of coverage in the financial media.
But retirees need to remember that volatility is a two-way street. The price of bitcoin has declined by nearly 50% from its 52-week high, a reminder that any investment can lose value. Bitcoin also does not pay interest or dividends, meaning investors will not generate income from their investment. And another reason retirees should avoid Bitcoin is simply the higher level of risk involved in buying cryptocurrencies, not to mention the tax implications.
#4: Oil & Gas Royalty Trusts
Oil and gas royalty trusts are niche securities within the stock market. These are companies that own oil and gas-producing properties. Investors receive distributions depending on how much income the trusts generate from these properties. Some well-known oil and gas royalty trusts include BP Prudhoe Bay Royalty Trust (BPH) and Permian Basin Royalty Trust (PBT).
As with any group, not all royalty trusts are bad investments. But the risks are high across the board—royalty trusts are essentially a bet on underlying commodity prices. Investors also have to face the prospect that reserves will decline faster than the trust had originally anticipated.
If oil and gas prices fall, share prices of the royalty trusts collapse, and their distributions decline, often to zero as occurred in 2020 during the coronavirus pandemic.
#5: Mortgage REITs
Real Estate Investment Trusts, also referred to as REITs, are a great way for retirees to earn higher levels of investment income. Many REITs have strong yields of 4% or more. Retirees might be tempted to buy mortgage REITs, a subset of the asset class that typically offers even higher yields.
Indeed, many REITs have double-digit yields in excess of 10%. But in many cases, sky-high yields are an indication of elevated risks, and mortgage REITs are no different. Mortgage REITs are extremely complex, financially architected business models that are not easy to understand, making them relatively poor choices for most retirees. In addition, mortgage REIT share prices and their dividend payouts can swing wildly based on changes in the yield curve.
Read more: Diversify Your Portfolio With These Top 10 International ETFs
#6: Gold
Every few years or so, gold gets a lot of attention in the media, usually because the price of gold has risen over a certain period of time. But for retirees interested in generating sustainable income from their investments, gold should be avoided.
Gold pays no dividends or interest, which is why it is not attractive for many retirees. To quote legendary investor Warren Buffett on gold: “The idea of digging something up out of the ground, in South Africa or someplace and then transporting it to the United States and putting it into the ground, in the Federal Reserve of New York, does not strike me as a terrific asset.”
Some gold stocks like Barrick Gold (GOLD) do pay dividends, but their dividend track records are highly inconsistent. Many gold stocks have cut their dividends when precious metals prices decline.
#7: Momentum Stocks
Momentum stocks are those that have captured investors’ attention, most often due to a rapid rise in their share price. This causes other investors to jump in, perhaps because of a fear of missing out, which can push share prices even higher. But in many cases, momentum stocks fall back down to Earth, as their underlying fundamentals may not justify the rallying share price.
Momentum stocks that have gotten a lot of attention in the financial media in recent months include GameStop (GME), AMC (AMC), and more. In all cases, their share prices skyrocketed in a relatively short period of time. But retirees should resist the urge to buy momentum stocks, as they can be highly volatile and almost never pay dividends.
Read more: 15 Dividend Kings With 50+ Years Of Dividend Growth
#8: Microcap Stocks
Stocks can be classified according to their market capitalizations, which is simply the current share price multiplied by the number of shares outstanding. Large-cap stocks have market caps above $10 billion, while small-cap stocks have market caps below $2 billion, with midcaps in between these ranges.
The smallest group of stocks is known as microcaps. These are stocks with market caps below $100 million. Microcaps are very small businesses, their stocks generally have low liquidity, and many are in questionable financial condition. As a result, retirees should stick to midcaps and large caps.
#9: Stocks With Too Much Debt
Debt is a big concern for income investors such as retirees. Stocks with bloated balance sheets and too much debt are at high risk of cutting or suspending their dividends during recessions. Profits may decline substantially when the economy enters a downturn, but debt still needs to be repaid.
Stocks with excessive debt have high-interest expenses that may force them to cut their dividends. This is of particular concern when it comes to high-yield Master Limited Partnerships, many of which have leverage ratios above 5x.
Therefore, retirees could generate dividend income with other tech stocks like Apple (AAPL), Microsoft (MSFT) or Cisco (CSCO).