“What’s the safest possible thing that I can do with my money?” wonders Afroblanco over at Ask Metafilter:
I take bearishness to an extreme. Having witnessed the 2000 tech crash, I have no faith in the stock market or the US economy. I keep all of my money (USD) in a savings account. However, with the recent financial turmoil, I have a few questions:
Is it conceivable for the FDIC to fail?
If so, is there a place where I can put my money that will be safer than a savings account?
What’s the safest, most risk-free way for me to save money and not get killed by inflation and the tanking US dollar?
If there is a safe way for me to save money and not be punished by inflation and the depreciating dollar, is there a way that I can do this without having to stress out and micromanage my finances? I don’t want to be checking the finance page and making adjustments every day.
Even though I follow finance news, I’ve never done any investing or money management other than socking money away in my savings account. I’m a n00b, I admit it.
Afroblanco is willing to forego potential market gains so long as he does not lose money. He is risk-averse. He’s not alone. A rocky economy makes many people nervous. You can assess your risk tolerance with one of several online tools:
If your risk tolerance is low, then the stock market may not be right for you. You should consider less volatile investments until you’ve researched the market’s historical performance. In response to Afroblanco’s question, AskMetafilter member Pastabagel wrote:
The best thing you can do with your money is invest it in yourself of your children, if you have any. Go to school, get new training, start a business, etc. After that, the next best thing to do with it is to eliminate your debt (excluding mortgage). Typically people have formulae for determining how much savings you should spend to pay down debt, but I think you’d be a happier person if you just eliminated all credit card debt, car payments, etc. you have outstanding.
Barring those things, here’s the basic story:
Your money in a savings account is insured up to $100,000, but earns little interest and may actually result in your losing money to inflation. Certificates of Deposit pay more, but you can’t touch your money for the duration of the CD.
Bonds are safe, but you have to know which ones to buy, what to watch for, etc. And bonds fluctuate in price.
The rule-of-thumb is that the more interest, or yield, something offers, the more risk is involved. Interest is essentially what is exchanged for you risking your money. Also, low-risk equals low-reward. But you sound like you want something extremely safe, so I’m not going to preach to you about the S&P 500’s long-term performance.
Gold and commodities are not so good, because while a two-year chart looks great now, a two-year chart two years from now might look like a nightmare. Gold lost $100/ounce since Monday — about 10%. Did anybody call that? So not exactly a rock solid investment.
You want safe, here is safe:
What you really want is some kind of short-term bond mutual fund (the “short-term” refers to the kind of bonds it holds). Mutual funds are great because you can put in and take out your money whenever you want, unlike bonds and CDs. I would recommend VFSTX from Vanguard. It has a decent yield (which is sort of like interest) and also can appreciate in value. This particular fund has had one down year in the last 24 years, and that year it was only down 0.08%.
In the alternative, you can get a fund that invests in inflation-protected treasuries (TIPS), like VIPSX from Vanguard.
These two funds are very much buy-and-forget. You talk about the economic turmoil, VFSTX fluctuated less than 1% from October to January (when the shit really hit the fan) and VIPSX fluctuated by no more than about 4%. They are very very safe, but won’t appreciate much, but it sounds like that would be okay for you. Keep in mind that these funds also pay you interest along the way, which is typically reinvested, so the charts you see on Yahoo!, which track price only, don’t show you the full story.
When you pick a mutual fund, however, you need to be very careful because different fund companies fund often charge expenses, loads and fees, which are basically ways for the fund company to take your money out of your investment. Vanguard has built its entire company and every one of the hundreds of funds they manage on the principle of no-load, and rock-bottom expense ratios. All of the money I cannot afford to lose for the rest of my life I keep there. This is not a slick Wall Street operation — Vanguard will collapse when the world ends, not a moment sooner.
The people who started and who ran that company are very old-school personalities — they personally live frugally, invest very conservatively, and their business model is based on lifetime relationships with their investors, not on clever financial wizardry. You don’t see Vanguard people on TV as much as Warren Buffet because these people aren’t the type to have publicists. This is the place where your crusty great-grandfather who grew up in the Depression would keep his money. Slow and temperate. They also offer very low-cost financial advisory services, which you might need if/when you ever get married, have kids, etc and don’t feel like trying to figure out how to buy life insurance.
On a psychological note, though, I would encourage you to read The Millionaire Next Door. The book is not really about personal finance, though it does discuss it a little. What the book will do is reset your social attitudes about money and wealth, and how wealth is accumulated.
These recommendations are appropriate for somebody who is very conservative and risk-averse. If you’re more worried about losing money than eager to gain it, then consider these tips. Via e-mail, Pastabagel suggested that those with slightly more risk tolerance should consider a total-market index fund (such as VTSMX) as part of an IRA.
Pastabagel also notes — correctly — that it’s difficult to answer a question like, “How should I invest?” The answer depends more on psychology than finance. “The only answer,” he writes, “is to take as much risk as you can stand before you start losing sleep over it.”
A 401(k) loan allows you to borrow money from your retirement savings and pay it back to yourself over time, with interest. While this type of loan can provide quick access to cash at a relatively low cost, it comes with some downsides. Read on to learn how 401(k) loans work, when it may be appropriate to borrow from your 401(k), and when you might want to consider an alternative source of funding.
What Is a 401(k) Loan & How Does It Work?
A 401(k) loan is a provision that allows participants in a 401(k) plan to borrow money from their own retirement savings. Here are some key points to understand about 401(k) loans.
Limits on How Much You Can Borrow
The Internal Revenue Service (IRS) sets limits on the maximum amount that can be borrowed from a 401(k) plan. Typically, you can borrow up to 50% of your account balance or $50,000, whichever is less, within a 12-month period.
Spousal Permission
Some plans require borrowers to get the signed consent of their spouse before a 401(k) loan can be approved.
You Repay the Loan With Interest
Unlike a withdrawal, a 401(k) loan requires repayment. Typically, you repay the loan (plus interest) via regular payroll deductions, over a specified period, usually five years. These payments go into your own 401(k) account.
Should You Borrow from Your 401(k)?
It depends. In some cases, getting a 401(k) can make sense, while in others, it may not. Here’s a closer look.
When to Consider a 401(k) Loan
• In an emergency If you’re facing a genuine financial emergency, such as medical expenses or imminent foreclosure, a 401(k) loan may provide a timely solution. It can help you address immediate needs without relying on more expensive forms of borrowing.
• You have expensive debt If you have high-interest credit card debt, borrowing from your 401(k) at a lower interest rate can potentially save you money and help you pay off your debt more efficiently.
When to Avoid a 401(k) Loan
• You want to preserve your long-term financial health Depending on the plan, you may not be able to contribute to your 401(k) for the duration of your loan. This can take away from your future financial security (you may also miss out on employee matches). In addition, money removed from your 401(k) will not be able to grow and will not benefit from the effects of compound interest.
• You may change jobs in the next several years If you anticipate leaving your current employer in the near future, taking a 401(k) loan can have adverse consequences. Unpaid loan balances may become due upon separation, leading to potential tax implications and penalties.
How Is a 401(k) Loan Different From an Early Withdrawal?
When you withdraw money from your 401(k), these distributions typically count as taxable income. And, if you’re under the age of 59½, you typically also have to pay a 10% penalty on the amount withdrawn.
You may be able to avoid a withdrawal penalty, if you have a heavy and immediate financial need, such as:
• Medical care expenses for you, your spouse, or children
• Costs directly related to the purchase of your principal residence (excluding mortgage payments).
• College tuition and related educational fees for the next 12 months for you, your spouse, or children.
• Payments necessary to prevent eviction from your home or foreclosure
• Funeral expenses
• Certain expenses to repair damage to your principal residence
While the above scenarios can help you avoid a penalty, income taxes will still be due on the withdrawal. Also keep in mind that an early withdrawal involves permanently taking funds out of your retirement account, depleting your nest egg.
With a 401(k) loan, on the other hand, you borrow money from your retirement account and are obligated to repay it over a specified period. The loan, plus interest, is returned to your 401(k) account. During the term of the loan, however, the money you borrow won’t enjoy any growth.
Recommended: Can I Use My 401(k) to Buy a House?
Pros and Cons of Borrowing From Your 401(k)
Given the potential long-term cost of borrowing money from a bank — or taking out a high-interest payday loan or credit card advance — borrowing from your 401(k) can offer some real advantages. Just be sure to weigh the pros against the cons.
Pros
• Efficiency You can often obtain the funds you need more quickly when you borrow from your 401(k) versus other types of loans.
• No credit check There is no credit check or other underwriting process to qualify you as a borrower because you’re withdrawing your own money. Also, the loan is not listed on your credit report, so your credit won’t take a hit if you default.
• Low fees Typically, the cost to borrow money from your 401(k) is limited to a small loan origination fee. There are no early repayment penalties if you pay off the loan early.
• You pay interest to yourself With a 401(k) loan, you repay yourself, so interest is not lost to a lender.
Cons
• Borrowing limits Typically, you are only able to borrow up to 50% of your vested account balance or $50,000 — whichever is less.
• Loss of growth When you borrow from your 401(k), you specify the investment account(s) from which you want to borrow money, and those investments are liquidated for the duration of the loan. Therefore, you lose any positive earnings that would have been produced by those investments for the duration of the loan.
• Default penalties If you don’t or can’t repay the money you borrowed on time, the remaining balance would be treated as a 401(k) disbursement under IRS rules. This means you’ll owe taxes on the balance and, if you’re younger than 59 1 ⁄ 2, you will likely also have to pay a 10% penalty.
• Leaving your job If you leave your current job, you may have to repay your loan in full in a very short time frame. If you’re unable to do that, you will face the default penalties outlined above.
Alternatives to Borrowing From Your 401(k)
Because withdrawing or borrowing from your 401(k) comes with some drawbacks, here’s a look at some other ways to access cash for a large or emergency expense.
Emergency fund Establishing and maintaining an emergency fund (ideally, with at least three to six months’ worth of living expenses) can provide a financial safety net for unexpected expenses. Having a dedicated fund can reduce the need to tap into your retirement savings.
Home equity loans or lines of credit If you own a home, leveraging the equity through a home equity loan or line of credit can provide a cost-effective method of accessing extra cash. Just keep in mind that these loans are secured by your home — should you run into trouble repaying the loan, you could potentially lose your home.
Negotiating with creditors In cases of financial hardship, it can be worth reaching out to your creditors and explaining your situation. They might be willing to reduce your interest rates, offer a payment plan, or find another way to make your debt more manageable.
Personal Loans Personal loans are available from online lenders, local banks and credit unions and can be used for virtually any purpose. These loans are typically unsecured (meaning no collateral is required) and come with fixed interest rates and set terms. Depending on your lender, you may be able to get funding within a day or so.
The Takeaway
Borrowing from your 401(k) can provide short-term financial relief but there are some downsides to consider, such as borrowing limits, loss of growth, and penalties for defaulting. It’s a good idea to carefully weigh the pros and cons before you take out a 401(k) loan. You may also want to consider alternatives, such as using non-retirement savings, taking out a home equity loan or line of credit, or getting a personal loan.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
There’s more to banking than low monthly fees, high yield savings, and a large ATM network. More Americans today seek banks and credit unions that align with their values when it comes to sustainability and social responsibility.
The U.S. banking system tends to disregard lower income and rural communities, with traditional banks establishing multiple branches in the country’s largest and wealthiest cities. The most socially responsible banks, on the other hand, provide online banking, low monthly fees, and no minimum deposit requirements, making them accessible to lower income individuals and families. They may also support efforts to help lower income individuals qualify for personal loans, auto loans or mortgages at fair interest rates.
But that’s not all that comes with socially responsible banking. Socially responsible banks emphasize financial literacy for those in their local community. They might also consider their organization a green bank, committed to fighting climate change and avoiding projects that support fossil fuels.
10 Best Socially Responsible Banks and Credit Unions
The best socially responsible banking institutions combine sustainability, accessibility, transparency and ethics to help make the world a better place. Yet, you won’t sacrifice top-notch personal checking and savings or even high-quality business banking when you choose one of the financial institutions on our list. You can have the best of all worlds – and do what’s best for the world – by choosing a socially responsible bank or credit union.
1. Aspiration: Best for Online and Mobile Banking Services
Aspiration is not a bank. But it’s one of the best cash management accounts offered anywhere online, with no monthly fee and a host of money management features. The Aspiration Plus Spend Save account that offers 3% interest on savings.
Aspiration is a certified B-Corp that shows its commitment to socially responsible banking with a variety of programs. Aspiration will plant a tree each time you round up a debit card purchase to deposit the difference in your Save account. It pays 3% to 5% cash back on debit card purchases with companies that are members of the Conscience Coalition, a group of small businesses devoted to social responsibility and sustainability.
Aspiration offers two accounts: One asks members to “Pay-What-Is-Fair,” which means you can use the account for free if you choose. Aspiration Plus costs $7.99 monthly or $71.88 annually (save $24 when you pay upfront.) Save accounts in the Pay What Is Fair model earn 1% APY, while Aspiration Plus savings accounts earn 3% APY.
2. Amalgamated Bank: Best for Investment Planning
Amalgamated Bank has branch locations in the nation’s largest cities: Boston, New York, San Francisco and Washington D.C. The bank offers personal checking and savings accounts with no monthly fees.
Amalgamated Bank offers four checking account tiers, including three interest bearing accounts. Two of the accounts have no minimum opening deposit. If you choose the interest earning Give-Back Checking account, you’ll earn a high APY of 0.90% – 0.95%, with an additional contribution of one-half of your interest earnings going to the charitable organization of your choice.
In addition to its choices in checking and savings accounts, Amalgamated Bank stands out when it comes to helping new retail investors choose ESG companies to invest in and plan for their future.
3. Spring Bank: Best for New Yorkers
Hailed as New York’s first B Corp bank, Spring Bank offers personal and business banking online and at branches in Harlem and the Bronx. The Green Checking account offers no monthly fee with direct deposit, paperless statements and no overdraft fees. If you need an account to write checks, you’ll want to choose the Basic Checking account.
Spring Bank deposits are insured by the Federal Deposit Insurance Corporation, up to $250,000 per depositor, per account. But the bank works with the IntraFi Network to also insure multi-million dollar deposits across multiple reputable U.S. banks.
Spring Bank offers CDs with terms from 90 days up to five years with a minimum deposit of just $250 and interest rates ranging from1.50% APY up to 3.25% APY. The bank also has a high-yield Vacation/Club savings account for short-term savings.
Spring Bank ranks in the top 5% of all 3,000 B Corps across the world and earned awards for its Governance and Customer Service in 2022. The company strives to provide affordable financial products, enabling its customers to avoid what it calls “fringe” financial products like check-cashing services and payday loans.
The bank also supports small businesses in New York and beyond with business checking accounts, money market accounts, and business loans.
4. Beneficial State Bank: Best for West Coast Residents
With seven locations across California, Oregon, and Washington, Beneficial State Bank is the B Corp bank of choice for those on the West Coast. The bank’s majority owner is Beneficial State Foundation, a nonprofit organization serving the public interest.
Beneficial State Bank offers three checking accounts, all with a $50 minimum opening balance and a low monthly service charge. eChecking waives the monthly fee if you sign up for eStatements. Checking and Interest Checking products have low monthly service charges that are easy to waive if you meet certain criteria. The bank also has savings, money market, CD, and IRA accounts to help you meet your long-term and short-term savings goals.
With an emphasis on ethical, equitable banking, Beneficial State Bank is a green bank that does not support or lend fossil fuel companies. The bank shows where every percentage of your deposit goes and says that 75% of its lending occurs within its mission categories. The other 25% supports other categories, but never to projects or organizations that cause harm to the planet or the people on it.
Some of the bank’s top lending categories for businesses and consumers include environmental sustainability, affordable housing, auto loans with fair interest rates, and health and well-being. The bank is also a preferred lender for clean vehicle programs in the state of California.
5. City First Bank, A Subsidiary of Broadway Federal Bank: Best for Commercial and Nonprofit Banking
City First Bank is part of a family of companies devoted to socially responsible lending and personal and business banking in low to moderate income communities. City First Bank, based in Washington, D.C., is a black-led, minority depository institute (MDI), as well as a B Corp and a member of Global Alliance for Banking on Values.
City First Bank offers a variety of personal and business banking products, as well as accounts for nonprofit organizations. The personal checking account has no monthly fee if you meet any of four criteria:
One monthly direct deposit
10 debit card transactions
eStatement enrollment
Minimum monthly balance of $100
The bank also offers a personal savings account, CDs, money market accounts and savings accounts for minors.
6. Sunrise Banks: Best for Mortgages
Sunrise Banks offers a full range of personal banking products, including personal checking, savings accounts, credit cards, and a pre-paid Mastercard. But it is best known for its Pathway2Home affordable mortgage product, as well as other mortgages with down payments as low as 3%. The bank also writes VA loans with no down payment required.
By supporting affordable housing and helping Minnesota residents get into homes of their own and begin building generational wealth, Sunrise Banks shows its commitment to socially responsible banking. Like many of the socially responsible banks on this list, Sunrise Banks is a member of GBAV, a Community Development Financial Institution, and a B corporation.
7. Clean Energy Credit Union: Best for Clean Energy Loans
Most of the banks on our list support efforts to reduce climate change, do not help fund or support fossil fuel companies, and run their organization sustainably. Clean Energy Credit Union works to fund renewable energy through personal loans for electric bicycles, solar electric systems, geothermal heat pump systems, and green home improvements. Clean Energy Credit Union also offers auto loans for electric vehicles.
While the credit union specializes in funding renewable energy and other loans, it also offers options for personal checking and savings accounts. Checking accounts offer dividends from .01% APY to 3.56% APY with a minimum opening balance of just $25 and no monthly fees if you meet certain requirements, including having a Clean Energy loan.
Savings accounts include a bank account with a 0.15% APY and a minimum opening deposit of $100, certificates, and a money market account with dividends ranging from 0.95% up to 1.61% APY, with a minimum deposit of $2,500.
As part of its commitment to green living, the credit union offers bio-based, compostable debit cards that are eco-friendly. It is also one of the few banks or credit unions on our list that offers a Carbon Zero Teen Account online, which shows your teen the carbon offsets their deposits can fund.
8. National Cooperative Bank
National Cooperative Bank offers high yield CDs, and money market accounts, as well as checking and savings accounts and business products. The bank offers an interest earning checking account with a 0.90% APY and no minimum opening deposit. There is a $15 monthly fee if the balance falls below $500.
The money market account has a high 2.28% APY, with a minimum balance of $5,000 to avoid the $25 monthly fee. You will need just $100 to open the account. You can earn a 4.34% APY on with a 12-month CD with a $2,500 minimum opening deposit.
While the bank is committed to helping its customers earn money through high interest rates, it is equally committed to its duties as a socially responsible bank. The bank has donated $8 billion to support underserved communities nationwide, and provided loans and investments of $475 million to low and moderate income families, including mortgage loans.
9. Clearwater Credit Union: Best for Previously Unbanked Consumers
Clearwater Credit Union is a certified Community Development Financial Institution and a member GBAV. While most credit unions are devoted to serving their local communities, Clearwater takes it a step further by donating $1.6 million to 290 non-profit organizations in 2022. Employees donated more than 1,340 volunteer hours within their local communities, and the credit union awarded $20,000 in scholarships to students in the credit union’s home state of Montana.
Clearwater CU offers multiple choices in bank accounts, including a basic checking with no monthly fee, a premium checking that pays dividends, and a SmartSpend checking account with a low, $5 monthly fee for previously unbanked consumers.
The SmartSpend account can help lower income individuals and families avoid the fees that come with check cashing services or prepaid debit cards. It also gives them the opportunity to avoid overdraft fees while gaining the convenience of a deposit account, debit card, and access to mobile banking.
10. Carver Federal Savings Bank: Best for Small Business Banking
Many of the banks on our list devote time and money to sustainability, equality, and other social causes. But they don’t necessarily offer the highest interest rates available in online banking today. Carver Federal Savings Bank, however, is a Black-operated, socially responsible bank that also delivers high-yield savings of 4.00% APY.
But there is a catch. You’ll need a $5,000 minimum opening deposit. This might make the Carver savings account inaccessible to many in underserved communities seeking personal checking and savings accounts. However, for those on firm financial footing who want to support a socially responsible bank, Carver’s high yield savings is a solid choice.
Beyond the high yield savings, Carver is known for an array of checking and savings products for small business owners, including a money market account with 2.00% APY and a business interest checking account.
Start-up businesses or those with low-to-moderate balances might prefer the Carver Community Business Free Checking with no minimum balance, no monthly fee, and 200 free transactions per month. The bank focuses on Black- and Minority-owned businesses as well as women-owned businesses across New York City.
Carver is a designated CDFI and has reinvested 80% of every dollar deposited into NYC communities. It also donated $149 million in New Market Tax credit and more than $259 million in leveraged loans across the New York metro area.
How to Choose Socially Responsible or Sustainable Banks and Credit Unions
When you’re shopping around for a socially responsible bank, first consider what aspects of ethical banking are most important to you. Are you looking for a bank committed to serving low income communities, or one that puts a focus on renewable energy? Maybe sustainability is the most significant aspect to finding a socially responsible bank that aligns with your values.
Of course, you also want to think about all the other elements that you would consider for your personal banking needs. These include low fees, online banking capabilities and an intuitive mobile app, early availability of your direct deposits, and a high yield savings account.
Our list of the best socially responsible banks takes all these factors into consideration and showcases banks that back up their values with investments – in their communities and in the environment.
Organizations That Support Sustainability and Social Responsibility
The best socially responsible banks often showcase their commitment to ethical banking through certifications or membership in organizations that support and reflect their values. If a bank is a member of the Global Alliance for Banking on Values, recognized as a community development financial institution (CDFI) or a Certified B corp, you know the bank has demonstrated its commitment to ethical banking.
Global Alliance for Banking on Values (GABV)
The Global Alliance for Banking on Values (GABV) is a worldwide network of socially responsible banks committed to ESG values. GABV banks focus on three pillars:
Finance change
Do no harm
Sustainable products and services
To join the Global Alliance for Banking on Values (GABV), banks must show their commitment to sustainability, and have a balance sheet of at least $50 million. They must be a full service bank and show financial stability and stable governance. Many of the best socially responsible banks are members of the Global Alliance for Banking on Values (GABV).
Community Development Financial Institutions (CDFIs)
A Community Development Financial Institution is a bank, cash management account, or credit union that is certified by the U.S. government. It’s a bank that has shown a commitment to providing banking services in low income communities and underserved communities across the U.S.
Unlike many other financial institutions, Community Development Financial Institutions focus on areas such as economic development, affordable housing and supporting small businesses in their local community.
Certified B Corp
A Certified B Corp is any organization or socially responsible financial institution that successfully balances purpose and profit. Organizations can apply for B Corp certification if they demonstrate transparency, social responsibility, and show high social and environmental sustainability standards. Banks and credit unions must pass rigorous certification standards to become recognized as a B Corp.
FAQs
Still have questions about the best socially responsible banks? Check out some commonly asked questions below.
Which banks are eco-friendly?
Many U.S. banks meet eco-friendly requirements in a variety of ways. Some, like Clean Energy Credit Union, refuse to support fossil fuel companies. Aspiration plants a tree whenever customers round up their debit card purchases to deposit into a savings account.
To find eco-friendly banks, you can look up their ESG (Environmental, Social & Governance) ratings on their websites, in their financial statements, or on a website like Sustainalytics.
Remember, ESG ratings are derived from many factors, including a company’s diversity & inclusion practices, sustainability, charitable donations, and more. You may have to dig deeper to see which banks employ sustainable practices to reduce their carbon footprint.
How Can You Determine Which Banks Are Committed to Ethical Banking?
A search on a company website should help you find the best socially responsible banks committed to ethical banking. Check online to see if the bank helps underserved communities or the unbanked or underbanked population. Ethical banks may be recognized as a community development financial institution.
What is responsible banking?
Responsible banking or ethical banking typically focuses on three key areas:
Banking access and community development
Environmental impact and climate change
Holistic social responsibility
What is an ESG bank?
An ESG bank focuses on environmental sustainability, social responsibility and ethical governance.
During my family’s Christmas celebration, I learned a little more about my oldest nephews. I don’t see them often, so it’s hard to know what interests them. This year, I learned that six-year-old Alex likes art. You can bet I’ll be encouraging this productive hobby — the only other two things I know he likes are dinosaurs and video games. I was also pleased to learn that his older brother, Michael, likes money.
“I have $86 saved,” Michael told me. “It’s for my trip to Florida.” The two boys were taking a trip over Christmas break to visit their grandmother.
“That’s great,” I said.
“And grandma is going to give us each $100 to spend at Disney World,” Michael added, “but I might save some of it.”
Michael turns nine tomorrow. To encourage smart money behavior, I sent him a book for his birthday. While compiling my guide to personal finance books as gifts, I was intrigued by Growing Money: A Complete Investing Guide for Kids. This book by Gail Karlitz received rave reviews. Kris and I both read it recently, and we think it’s perfect for Michael.
The first thing the book covers is inflation. Many adult books never mention the subject, so it’s refreshing to see a book aimed at grade-schoolers put it front-and-center. “In 1960,” Karlitz writes, “a kid with a quarter cold buy a pizza and a slice of pizza for 15¢ and a soda for 10¢. Today, you’d probably need at least $2 to buy the same meal!” (Or $4 if you live in my neighborhood.)
Growing Money has good chapters on banks and bonds, but most of the book is devoted to the stock market. Karlitz has written a brilliant chapter on how stocks work, using a hypothetical pizza parlor as an example. By keeping the scope small and understandable, she’s better able to convey concepts like equity, dividends, and IPOs. (She doesn’t always use those terms, however.)
The book also contains chapters on the history of the stock market, how investors make money, and how to buy and sell stocks.
The final chapter introduces the “Growing Money investment game”. Using $10,000 of imaginary money, participants buy and sell investments following the rules of real-life investing. The goal is to see how much money each person has at the end of six months. Yes, this is just like any other stock market portfolio game, but it’s aimed at kids. I think it’s an excellent way to introduce children to the stock market. When my Michael finishes the book, I think I’ll challenge him to a duel!
Growing Money offers a solid introduction to saving and investing, but it does have some weak spots. Only one page out of 120 is devoted to mutual funds. Because the book is aimed at children, taxes are barely considered. Still, its strengths outweigh its weaknesses.
Though this book is designed for children, I think most adults could profit from reading it, too. Actually, it’s a great book for parents to read with their kids. Growing Money provides clear, concise explanations of important financial concepts. It’s the sort of book to buy for your nephew, but read yourself before you pass it on.
Mortgage rates today are far from the historic lows that new homebuyers were able to score through 2020 and 2021. You can find competitive mortgage rates around 6% to 7% APR on average today, depending on the loan term.
But that doesn’t mean you’re out of luck if you’re shopping for a home in 2023. Even small differences in your mortgage interest rate can save you money over the lifetime of your loan. By taking the following steps to prepare a solid loan application and score the best possible rate you can, you’ll reap the benefits for years to come.
Like federal interest rates, there’s a chance mortgage rates could continue rising this year. Don’t wait to start comparing the best mortgage rates you can qualify for now.
3 ways to get the best mortgage rates
Here are three things you can do now to make sure you get a great mortgage rate.
Boost your credit score
The information you include on your loan application can make a huge difference in the loan terms you qualify for.
“Your credit score is still going to be the biggest factor in determining if you will get the best rate,” says Colin Zizzi, CFP, founder of Zizzi Investments.
Before you apply for a mortgage, check both your credit score (which you can often find online from your bank or credit card company) and your credit report. You can access your full credit report for free from each of the three major credit bureaus.
Comb through the reports for any errors that could be hurting your credit score. If it’s still not where you’d like it to be, start taking steps now to improve it — like reducing your overall debt balance and paying all your bills in full and on time. Also, remember to avoid applying for any new credit or loans before taking out a mortgage. The hard credit check could temporarily bring down your credit score and keep you from getting a top rate.
Explore the best mortgage rates available today that you may be eligible for now.
Consider different loan details
If you’re flexible on the details of your mortgage loan, you may be rewarded with the potential to get a lower interest rate.
For one, your loan term is a big factor to consider. Many lenders offer slightly lower rates on shorter 15-year mortgages than on 30-year mortgages. In fact, the average mortgage rate for a 15-year mortgage as of July 10 is more than half a percentage point lower than what’s offered for a 30-year mortgage, according to data from Bankrate. While a 15-year mortgage may carry higher monthly payments, you could pay less over the lifetime of the loan.
Another type to consider is an adjustable-rate mortgage or ARM. This type of mortgage generally starts with a lower rate that adjusts (up to a cap) over time. Certain types of homebuyers may also qualify for government-backed loans, which tend to offer among the lowest possible rates. However, these loans may have strict specifications that you’ll need to meet before you can qualify.
Shop around and compare
If you’re quoted an unfavorable loan rate from one lender, there’s no reason to settle for it — at least not without comparing what else you may qualify for. Plus, the earlier you get started, the better off you may be.
“As always, shop around with different banks and brokers, and do this well before starting to look at houses,” says Quinn Arnold, CFP, co-founder of Arnold and Mote Wealth Management.
Once you’ve settled on the best type of mortgage loan for you, start getting preapprovals and loan estimates from different lenders. It helps to do this after you’ve settled on your preferred term and loan type, so you can make a consistent comparison across different lenders. When you shop around for your mortgage within a 45-day window all the different credit checks that lenders make are also recorded as a single inquiry on your credit report, according to the Consumer Financial Protection Bureau.
Compare the top mortgage rates you may be eligible for today here.
The bottom line
Today’s mortgage rates are higher across the board than they once were. But taking steps to make sure you apply with the best possible credit score, researching the type of mortgage that best fits your needs and comparing multiple lenders can help you get a solid mortgage even in today’s higher rate environment.
With mortgage interest rates consistently rising, timing is also important. Locking in a great mortgage rate sooner rather than later can help you ensure you get the rates you’re pre-approved for before they increase again. Start your search by exploring today’s best rates here!
Historically low mortgage rates had their moment in the sun in 2020. They rested far below 3% for months before America’s economic rebound pushed them back up in the winter of 2021. But data released on Thursday from Freddie Mac showed that mortgage rates idled below 3% again for an entire month, even with solid first-quarter GDP figures and encouraging consumer spending numbers.
Mortgage rates may look fickle, but the Treasury market rules them. If the 10-year yield rises it’s most likely the result of inflation expectations picking up, and with them, mortgage rates. When the 10-year-yield drops, inflation expectations are falling. That’s the simple answer.
While America continues to emerge from the COVID-19 crisis, other parts of the world are very much in the thick of it. A COVID-19 variant first identified in India has even threatened the U.K.’s plans to end lockdowns, Prime Minister Boris Johnson said.
Because the market is still so uneasy globally, U.S. investors relaxed momentum on the bond market, leaving mortgage rates with a better outlook than expected. Most industry experts predicted that rates would have settled far above 3% by now.
“This may be the most complicated 10-year-treasury yield data the market has ever seen, but no matter how good the economic data is, COVID is still here,” said Logan Mohtashami, lead analyst at HousingWire.
“When you look at two other massive economies, Germany and Japan, Germany’s 10-year-yield is in the negative. Our bond yields look much better than theirs so we can’t in a sense be at a 3% mortgage rate when the gap between ours and Germany’s yields are too far apart. There has to be balance.”
Beyond the 10-year-yield, two other yields exist in the market: retail and wholesale that fluctuate in the primary and secondary market, respectively, and which both have tightened recently.
“The reasons for why those spreads might have tightened is simply less frenzied retail market profit margins have come down a little bit in the retail market, and investors are a little bit more willing to bear the optionality of mortgages on the Treasury,” said Bill Emmons, economist for the Federal Reserve of St. Louis.
In wholesale, buyers of federally guaranteed mortgage-backed securities (MBSs) factor two financial components into the price they are willing to pay for MBSs — compensation for the pure time value of the money being invested and compensation for the interest-rate risk associated with mortgage investments, Emmons explained.
While time value is typically approximated by the yield on a Treasury security of equivalent duration i.e. the 10-year Treasury, risk compensation is more effected by mortgage borrowers prepaying their mortgage principal at face value at any time without penalty.
“People that had been looking to invest in treasuries or MBSs last year when yields were so low they were struggling to generate the kind of income they need to fund their liabilities in some cases,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. “When our yields look much more attractive than those of the rest of the world, mortgage rates get to a level on the investor side that generate a lot more interest, but we are going to go through periods where they plateau or dip back down as we watch the market.”
Keeping an eye on inflation
While investors study the bond numbers in other countries, the Federal Reserve’s adjustments on inflationary policies are keeping them just as busy.
In April, the Federal Open Market Committee left future economic policies virtually unchanged at its monthly meeting, indicating it has not made any near-term plans to taper its asset purchases of Treasury– and mortgage-backed securities while it awaited data on vaccine distribution, employment and inflation numbers.
The Fed mentioned that inflation had in fact “risen” but attributed the higher readings to “transitory factors.”
Overall, while March posted hopeful signs of a recovering economy, Fed Chairman Jerome Powell said it will take a string of good months before the Fed chooses to roll back any monetary policies.
“There is growing concern about what’s happening with inflation,” Fratantoni said. “Consumer inflation expectations are starting to increase as well so or the next couple of months bond investors are going to start to worry a bit more about both the impact of faster growth and faster inflation.”
Despite the lackluster unemployment report in April, the consumer price index still estimated inflation hitting 4.2% on a year over year basis. Typically, mortgage rates respond to this kind of data, and in theory, should have, given the historic number for core inflation as well.
When mortgage rates failed to pick up in the last month, savvy homebuyers jumped back on them. But even with rates slipping to previous lows, borrowers are still battling it out in the bidding trenches on overheated prices. April economic data for home sales showed year over year numbers are still above those in 2020, but beginning to dip sequentially.
“The inflation data should moderate as production levels catch up with the COVID-19 backlog,” Mohtashami said. “So, we have hotter-than-normal inflation data, and rates are still low, even with the rise of the 10-year yield. COVID-19 has kept global bond yields low in 2021, but for 2022, this no longer works as a legitimate reason.”
In the past year, streaming service Netflix has released two financially focused offerings: the film “Get Smart With Money” and the series “How to Get Rich.”Both feature powerhouse financial influencers who help people reevaluate their approaches to money to educate and empower them. Here are four takeaways that you can apply to your own life, no matter your financial situation.
Takeaways From ‘Get Smart With Money’
The “Get Smart With Money”documentary features well-known financial writers, bloggers and podcasters who share their expertise on how to become better at managing money. Here are a couple of lessons they imparted.
1. Emotion management is key to money management
In “Get Smart With Money,” some of the featured participants were dealing with significant debt or with the challenges of living paycheck to paycheck. The stress, fear and frustration that come with money can significantly impact how you manage it.
Tiffany Aliche, a financial educator also known as The Budgetnista, talks through this fear and encourages people to face their money head-on to see what they owe and where they need to save more. If you’re afraid of your money, that’s going to affect how you manage your money, she says in the film.
2. Money is a tool to help you create the life you desire
Aliche tells one of the show participants to create a “dream fund,” a special savings account for goals outside of regular bills and emergency fund budgeting. This takeaway is a great reminder that money is meant to be used for things that will make you happy in addition to paying for daily expenses.
Takeaways From ‘How to Get Rich’
Ramit Sethi, author of bestselling book “I Will Teach You to Be Rich,” hosts this Netflix series and helps participants define their goals and make moves to achieve them. Here are some of the lessons and tips from the show.
3. Think about what makes you happy
One of the pillars of Sethi’s advice is the concept of “a rich life,” meaning the financial ability to do things that bring joy. He emphasizes that a rich life comes in many forms, like being able to take time off from work when you want to, fly in business class for long trips or even help a parent retire, as was the goal of one of the show participants.
Mindy Jensen, a host of financial podcast “BiggerPockets Money,” had an aha moment with Sethi when she was a guest on his podcast. Sethi’s podcast is separate from his Netflix show, but he emphasizes a lot of similar money guidelines. As Sethi discussed the concept of a rich life with Jensen and her husband — who are both financially independent, meaning they have enough money to pay their living expenses for the rest of their lives — they realized that even with their large net worth, they weren’t spending enough money to make life more enjoyable. After the conversation, the couple decided that they wanted to spend more money on travel with their two teenage daughters.
“We don’t need or want more things, but we want more experiences,” Jensen told NerdWallet.
Looking back on her journey to financial independence, Jensen also realized that there was more she and her husband could have done to start their rich life earlier.
“You can continue to contribute to your retirement accounts and investments, but it doesn’t have to be this frantic mad dash to the finish line,” she says. “You can do it a little slower and enjoy your life.”
4. Homeownership doesn’t have to be a financial goal
It can be hard to break away from the idea of homeownership as a major financial achievement. In America, the mythos of the “white picket fence” is often part of the way people describe success. Sethi’s perspective on homeownership, however, differs from popular convention. In “How to Get Rich,” he advises participants to keep in mind all of the additional costs that come with homeownership compared with what’s covered by a landlord.
Homeownership means that everything falls to you, on top of whatever you pay for your mortgage, home insurance, homeowners association fees and property taxes. If you find a rental that leaves enough room in your budget to allow you to invest more, the math can sometimes work out better for your net worth in the long run, Sethi says.
For people who are getting started on their financial journey — as well as those who are well on their way — these shows can provide inspiration and information about how to make your money work better for you.
This article was written by NerdWallet and was originally published by The Associated Press.
Transamerica is considered to be one of the world’s leading insurance and financial services companies. The firm offers insurance and investments to more than 19 million customers worldwide.
As Transamerica’s slogan suggests, the company – and its customers – are “Tomorrow Makers.” This is because the company strives to make its customers’ tomorrows everything that they plan for.
Who is Transamerica?
Table of Contents
Transamerica is a financial services company that provides insurance, investment, and retirement products and services.
It was founded in 1904 and is headquartered in Baltimore, Maryland. Transamerica is a subsidiary of Aegon, a multinational life insurance, pensions, and asset management company based in The Hague, Netherlands.
The History of Transamerica
The company has been in the business of providing insurance and financial advice for more than 100 years and it began its operation in 1904 when Amadeo Giannini started the Bank of Italy in a converted saloon in San Francisco, California.
He strived to make financial services available to everyone of all financial classes, not just the wealthy. His business really ramped up following the 1906 San Francisco earthquake when he was able to provide loans to residents for rebuilding their properties.
Several years later, in 1928, the company merged with Bank of America, and two years after that, it acquired Occidental Life Insurance via Transamerica Corporation. In 1956, the banking and life insurance companies were separated, with the insurance component maintaining the Transamerica name. Today, customers of Transamerica have access to a wide variety of insurance and financial products and services.
The firm is licensed to provide insurance in all U.S. states, and the District of Columbia, and it has approximately $223 billion of premiums in force. Transamerica has a roughly $29.5 billion in assets under management.
Products Offered By Transamerica
Transamerica offers a variety of products to both consumers and businesses.
On the insurance side, the company provides numerous options, including the following types of coverage:
Term Life
Term life insurance offers pure death benefit protection for a specific period of time.
This is typically 10 years, 15 years, 20 years, or 30 years. Should the insured pass away during the time that a term life policy is in force, the named beneficiary will receive the stated amount of death benefit.
Because term policies do not offer any type of cash value or savings component, the premiums for this type of coverage are typically more affordable than other, “permanent,” forms of coverage.
For example, you can get a $1 million term policy for less than 20% of a permanent policy with the same face value. Term life is sometimes referred to as “temporary” life insurance coverage as it is often used for covering temporary needs such as the balance of a mortgage.
Whole Life
Whole life insurance offers death benefit protection as well as cash value build up.
The funds that are inside of the cash value grow on a tax-deferred basis, meaning that no tax is due until the time of withdrawal. The cash grows at a guaranteed rate over time.
Whole life is considered permanent coverage because as long as the premium is paid, coverage remains in force – oftentimes for the “whole” of a person’s life.
Universal Life
Universal offers a death benefit protection as well as a cash value build up. However, it provides more flexibility than whole life in that the policyholder can choose to pay higher or lower premium amounts as their financial needs change over time.
The policy value may simply increase or decrease accordingly. Like with whole policies, the cash value is allowed to grow on a tax-deferred basis.
Variable Universal Life
Variable life, provides death benefit protection and cash value.
With variable universal life, however, the cash value’s return is based on underlying investments in market-related “subaccounts.” These can allow the funds in the account to grow a great deal – provided that the market moves upward. These accounts can also be riskier in a downward moving market.
Accidental Death
This can help to ensure that their loved ones will be taken care of should the unthinkable occur. (It is important to note that this benefit will not typically pay out in the event of death that is caused by sickness or other natural causes).
Final Expense
Final expense coverage focuses on paying for a person’s funeral and related expenses.
Today, the cost of a funeral – including the burial plot, headstone, and other related expenses – can exceed $10,000. Unfortunately, many families are not able to pay these costs immediately upon the death of a loved one.
Having final expense insurance allows for a way to do that – eliminating stress on loved ones, in an already stressful and emotional time.
Key Man Life
What is key man life insurance you ask?
Key person insurance is a form of business insurance that people can overlook, but one that can make all the difference in keeping a business or firm successful in the face of losing an owner, or important team member.
In addition to life insurance, Transamerica also offers a number of other financial products, including long-term care insurance, annuities, and retirement/investment savings options for those who are planning for retirement, as well as those who are already there.
Financial Strength Ratings of Transamerica
Transamerica has been given very good ratings by the insurer rating agencies.
These ratings include the following:
A.M. Best
Moody’s Investor Services
Fitch
Standard & Poor’s
A+
A1
AA-
AA-
Is Transamerica a Legit Company?
Yes, Transamerica is a legitimate company. It is a subsidiary of Aegon, a multinational life insurance, pensions, and asset management company. Aegon is rated highly by financial rating agencies such as Standard & Poor’s, Moody’s, and Fitch Ratings.
Transamerica has been providing insurance, investment, and retirement products and services since 1904 and is regulated by state and federal government agencies.
Biggest Risks Choosing Transamerica for a Life Insurance Policy?
Choosing a life insurance policy, including one from Transamerica, comes with certain risks. Some of the biggest risks to consider include policy lapse, which occurs when you fail to pay the premium on time and could result in losing coverage.
Another risk is market risk, which refers to the performance of any investments within the policy, such as a cash value component, that can be subject to market fluctuations and result in losses.
Misrepresentation is another risk to consider, as providing incorrect information on your life insurance application could result in your policy being denied or not paying out as expected in the event of a claim.
Lastly, it’s important to make sure the life insurance policy you choose is appropriate for your needs and financial situation, as Transamerica offers a range of policies.
Advantages and Considerations
When seeking life insurance, it is important that the insurer is able to offer choice and flexibility – especially such that it meets with your specific needs. Many have the misconception that they cannot find a policy for them because of their lifestyle choices, such as one looking for life insurance for a smoker, there are options out there for you and I can help with finding the best for your needs.
Transamerica provides an extremely flexible and diverse product line up, including:
Term
Whole
Universal
Variable
Final Expense
Accidental Death
This, coupled with the company’s excellent customer support team can make for a nice mix – especially for customers who may need assistance in figuring out the details in terms of how much to purchase and what type of coverage may be best for their specific needs.
In addition, Transamerica’s policies also come with a nice assortment of riders – which can make their plans even more customizable. For example, the firm offers an estate protection rider that can help in protecting loved ones from estate tax obligations that may arise from the payment of the policy’s own death benefit.
The company’s website provides additional information on both policies and policy riders so that interested potential applicants can obtain more information on how these may work in their specific scenario.
Yet, even with all of the good, there are some considerations that should be taken into account when searching for coverage – especially when doing so through just one single insurer. This is especially the case if you have certain health issues, such as searching for best life insurance rates for smokers and/or you possess other factors that may deem you as being a higher risk applicant. This may lead you to need to look into a company that offers no medical exam life insurance policies.
In these cases – or in any case – it is always good to do some comparison shopping. Otherwise, you are essentially “locked in” to whatever price the insurer presents you with. This can be somewhat similar to only going to one car dealer or one computer dealer when shopping for these items, and never even checking prices elsewhere before moving forward with your ultimate purchase. With this in mind, regardless of how good the product, it always makes good sense to shop around first.
How and Where to Get the Best Life Insurance Coverage for Your Needs
When you’re in the process of searching for the best life insurance coverage – regardless of your current health condition or status – it is important that you compare the type of policies that are available to you, as well as the premium cost from different carriers.
This is because there could be a significant variation between one insurer and another – even for the very same type and amount of coverage.
Transamerica is a financial services company that provides insurance, investment, and retirement products and services. It has a long history, having been established in 1904, and is a subsidiary of Aegon, a multinational life insurance, pensions, and asset management company.
One of the strengths of Transamerica is its broad range of products and services, which includes life insurance, annuities, mutual funds, and retirement plans. This allows customers to choose from a variety of options to meet their financial goals and needs. The company has a strong online presence, offering convenient access to account information and resources, as well as easy policy management and premium payment options.
Cost and Fees
Customer Service
User Experience
Overall
3.8
Pros
Wide range of life insurance products: Transamerica offers a variety of life insurance products, including term life, whole life, and universal life insurance, which allows customers to choose the policy that best suits their financial goals and needs.
Strong financial stability: Transamerica is a subsidiary of Aegon, a multinational life insurance, pensions, and asset management company, which has a strong financial position as indicated by its highly rated financial standing from credit rating agencies.
Convenient online services: Transamerica provides a convenient online platform for policy management, which includes access to account information, policy details, and premium payment options.
Professional support: Transamerica has a team of trained professionals who can help you understand the policy options and select the one that best suits your needs.
Cons
Potential policy lapse risk: If you fail to pay the premium on time, your life insurance policy may lapse, which can result in the loss of coverage and any accumulated cash value.
Market risk: Depending on the type of policy, there may be investment components within the policy that are subject to market risk, meaning that the policy’s value can decrease in value.
Complexity: Some of Transamerica’s life insurance products, such as universal life, can be complex and may require a higher level of understanding and management to ensure that you are making the most of your coverage.
Premium costs: The premium costs of Transamerica’s life insurance policies may be higher compared to other insurance companies, and it’s important to consider your budget when choosing a policy.
For many entrepreneurs, real estate is the “how” when it comes to building an incredible life. But it’s important not to neglect the “why.” On today’s podcast with author Jim Sheils, we discuss what it takes to deepen relationships with those who matter most. Listen and learn about a simple strategy proven by thousands of parents worldwide. Jim also shares real estate predictions—including why he thinks 2030 could be the next big crash—and offers advice on where investors should buy property right now.
Listen to today’s show and learn:
Living a life by design [4:59]
Learning life’s hardest lessons [6:35]
Asking for help instead of hoping [9:14]
About The Family Board Meeting [11:30]
Rules for running a family meeting [14:50]
Separating the parts to strengthen the whole [17:33]
Jim’s plans for The Family Board Meeting and his brand [21:23]
The 18 summers concept [27:43]
The homeschooling hybrid and what school is really for [33:16]
Jim Sheils’ start in real estate and thoughts on new construction [36:50]
Jim’s real estate predictions and advice [42:02]
The pros to investing in Florida real estate [42:56]
Where to find Jim Sheils [46:10]
Jim Sheils
Jim is a partner at Southern Impression Homes, a company that specializes in building rental portfolios for individual investors and institutional buyers (American Homes for Rent, Haven Realty, Crescent APL, Mynd ) They provide new construction, low density properties (SFH, duplex and quads) in 14 high growth markets in Florida. Property management in place. Also, private fund offerings for accredited investors based around the highly lucrative Build-to-Rent niche. Average returns have been 12-16% Net IRR.
Jim formally owned the private real estate investment company, Jax Wealth Investments. This company focused on bulk foreclosures and then moved into new construction investments in 2017. After doing over $300 Million in joint venture projects with Southern Impression Homes, the two companies merged in 2022 to better serve the growing BTR niche and client base.
Currently have over $637Mil assets under management, $44 mil recurring revenue, over 1,000 active investors,$182 Mil in sales 2021. Jim Sheils is also known as the “Crazy Glue” for entrepreneur families. His popular “Board Meeting” strategy and other simple frameworks are helping thousands of business leaders worldwide reconnect where it counts the most: at home. Check out his Amazon best-selling book, “The Family Board Meeting.”
He is owner/ founder of the family education company, 18 Summers. They specialize in retreats, workshops and private consulting for family focused companies, entrepreneurs and professionals looking to strengthen their family lives while still succeeding in business.
Jim is an avid surfer and enjoys traveling with family and friends, especially his beautiful wife Jamie and their five children, Alden, Leland, Maggie, Sammy and Gloria. Jim’s greatest adventure to date: donating a kidney to the greatest guy on the planet, his father.
Related Links and Resources:
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
For many people, a financial advisor is a key ally in helping you reach your financial goals. While most savvy people under 30 should be able to handle their finances on their own, many opt to hire a financial advisor to get access to personalized advice from a financial expert.
If you live in San Francisco and want help from a local financial advisor, you’ve come to the right place. The best financial advisors in San Francisco are standing by to help you create a financial plan, choose the best investment portfolio, and put you on track to reach your most important financial priorities. Keep reading for a list of the best financial advisors in San Francisco.
What’s Ahead:
Overview of the best financial advisors in San Francisco
Typical fees: The fee is quoted as an annual percentage fee, and is billed quarterly by taking the value of your assets at the end of each calendar quarter and applying one-fourth of that annual percentage fee.
Bingham Osborn & Scarborough Wealth Management, better known as BOS, is an investment and financial advising company for individuals with at least $3 million in investable assets.
The fee-only firm advises clients with a holistic approach that looks at all aspects of the client’s finances. BOS works to build long-term investment portfolios using a data-driven approach that incorporates taxes and other factors.
Burgess Financial Planning
Contact: 415-525-1041 or [email protected].
Services offered: Financial planning and investing advice.
Assets required: $3 million in investable assets.
Typical fees: $480 fee for an initial planning meeting.
A smaller shop, Burgess Financial Planning is a boutique firm with just one planner. Sean Burgess is a CFP and Registered Investment Advisor. He is a fiduciary (that means he always puts your best interests first) and doesn’t have any minimum required level of assets to get started.
Burgess charges a $480 fee for an initial planning meeting. If you decide to work with Burgess Financial Planning long-term, investment fees are charged based on assets under management. This firm earns an impressive 4.5-star rating with 35 reviews on Yelp.
Founded in 2014, Citrine Capital is a fee-only wealth management firm with a focus on the Bay Area’s high-tech community. Entrepreneurs, business owners, and startup employees will likely feel at home with this firm.
Citrine Capital works to organize client finances in a way that helps them reach financial goals, mitigate taxes, and manage wealth for long-term needs. Fees start at $7,000 per year for clients with a net worth below $1 million.
Typical fees: $290.00 per hour for financial planning.
Located across the Golden Gate Bridge in Corte Madera, Financial Connections offers financial management, investment management, and other services to Bay Area clients. The fee-only firm doesn’t take any commissions or compensation from large investment fund providers.
The firm’s team acts as fiduciaries project-based financial planning. For those with long-term and unique needs, you can sign up for a concierge service to plan for specific needs. Its investment management product comes with either customized portfolios or robo advisor-style modeled portfolios.
Typical fees: $300,000 to $400,000 annual minimum fee.
Founded by Kathryn Hall in 1994, Hall Capital Partners is a large financial planning firm with more than $30 billion in client assets under management. It exclusively works with high-net-worth clients, many of whom hold eight-figure and nine-figure portfolios.
If you have that kind of wealth, the $300,000 to $400,000 annual minimum fee isn’t a huge deal. But for most of us peons with merely tens or hundreds of thousands, or even assets in the low millions, Hall Capital Partners probably isn’t going to work for you. If you just made it big time from your company’s IPO, however, it could be worth giving Hall Capital Partners a call.
Morling Financial Advisors is an investment manager and financial planner founded in 1999. Suitable to high-tech Silicon Valley, Morling Financial Advisors has its own app for clients to log in and view their account details.
Financial planning services start at $300 per month. Investment management services start at 1% for those with under $1 million in assets and go down to 0.60% for those with $10 million and up.
Paragon Financial Planning
Contact: 510-227-5354 or [email protected] or [email protected].
If you are in Oakland or Alameda, the office of Paragon Financial Planning may be convenient for you. Paragon Financial Planning is a small office led by Samantha N. Dinh, a Certified Financial Planner.
She’s doing something right, as Paragon Financial Planning earns perfect five-star ratings after 34 reviews on Yelp. Dinh offers financial planning, investment management, and insurance services through her company.
Summary of the best financial advisors in San Francisco
Those looking for no minimums and an affordable advisor
How I came up with this list
This list of the best financial advisors in San Francisco is based on several sources.
They are fee-only planners
Financial advisors on this list don’t earn from shady commission deals. They are all fee-only planners where you know what you will pay upfront and can rest easy that there are no major financial conflicts of interest.
They are fiduciaries
Fiduciaries are legally required to put your interests first. It’s a good idea to only work with a financial or legal expert who acts in a fiduciary capacity.
They earn good customer reviews
Before adding a financial advisor, I checked out reviews on multiple sites including Google and Yelp, and public lists of awards given to San Francisco financial advisors.
They work with a wide range of clients
Top advisors from this list may be a good fit for people from all financial backgrounds, whether they have $1,000 to invest or $100,000,000. While every financial advisor on this list isn’t the right fit for every reader, there should be an advisor that meets the needs of most people looking to get started with a financial advisor.
Remember that not all people need a financial advisor. Resources like those available here at Money Under 30 could give you all you need to make good financial decisions without the added cost of a finance professional. Ultimately, it’s up to you and your comfort level with your finances to decide if you would benefit from the services of a San Francisco financial advisor.
What questions should you ask a financial advisor?
How can you help me with my finances?
A financial advisor is a licensed financial professional with the expertise to help you manage various parts of your finances. That can include creating a financial plan, managing your investments, or a fully hands-on advising experience where they handle most of your day-to-day finances. Some focus on taxes, some focus on specific types of business owners or employees, some work with anyone.
There are many types of financial advisors. The one thing they all have in common is a business built around helping you manage your money.
Why should I hire you instead of doing it myself?
A financial advisor is best for someone who isn’t confident that they are making the right financial decisions. Most people don’t get much financial education at school, if any. That means unless their parents taught them about money, they could be just making best guesses around major financial decisions like saving for retirement or buying a home.
If you want help creating a financial plan or having your plan double-checked by a professional, a financial advisor could be right for you.
Are you a fiduciary?
A fiduciary is a type of financial advisor that is obligated to put your interests first. That means they are not allowed to put your money into a fund that isn’t aligned with your long-term goals and needs.
Ideally, you should only ever work with a financial professional that acts in a fiduciary capacity.
What services do you offer?
Financial advisors can offer a range of services. Here are some of the most popular services you can find from a financial advisor.
Financial planning – Reviewing where your money is today and how it influences your future is important. With financial planning services, advisors help you chart out the right savings and investments to reach your goals.
Investments –If you don’t know the difference between a stock, bond, and ETF, this service could be very valuable to you. Some financial advisors help you set up your portfolio to manage yourself. Others will manage it for you long-term.
Taxes – Financial advisors may be able to help with tax planning and tax savings strategies. Not all advisors offer tax services, but it’s an extra perk and could allow you to manage all of your money needs in one place.
Consulting –As well-versed financial pros, some advisors also offer business consulting services with a focus on financial management.
What are the costs of hiring a financial advisor?
If you are hiring a financial advisor, it’s important to ask them how they get paid. That’s because financial advisors can charge fees in different ways. They could also make money in ways that give them an incentive to suggest investments that are not in your best interest.
Fee-only financial advisors are only paid by client fees. This is the best type of financial advisor to choose. I would argue that it’s the only financial advisor relationship that works toward the client’s best interests.
Fee-only advisors may charge monthly or annual fees, hourly fees, or fees based on the size of your portfolio. Rates and services can vary, so it could make sense to shop around before choosing a financial advisor.
Some financial advisors are paid commissions by insurance companies and investment firms for selling their products. This is a major conflict of interest. Under this scenario, advisors may be paid to funnel your money into mutual funds or other financial products that are not in your best interest.
Summary
San Francisco and the Bay Area are home to some of the most successful companies in the world. But it’s also one of the most expensive places to live. A financial advisor can help you make the most of your money and keep it working to help you reach your financial goals.
By choosing a fiduciary financial advisor that works as a fee-only advisor, you should be in good hands. This list of the best financial advisors in San Francisco is a great place to get started.