DRIP is an acronym for Dividend Reinvestment Plan, and in this guide, we are going to break down and take a look at what it means, why you should consider it, and what some of the pros and cons of DRIP investing are.
If you’re already familiar with investing, you’ll know that dividends are paid out on the shares you own in a publicly-traded company. This is your slice of the pie or your share of the profits in the company you hold stock in.
While some people take their dividends every quarter and spend them, reinvesting them can be extremely profitable over the long run.
According to the DRIP model of investing you will reinvest those quarterly dividend payments into the company, provided it offers a share purchase plan (SPP), rather than taking them. These are usually automatic in nature, meaning once you set them up they run themselves.
There are pros and cons to DRIP Investing, of course. Let’s take a look at some of those now.
Note: There are two kinds of DRIPs, synthetic and traditional. A synthetic plan is set up and run by your broker, while a traditional plan is run by the company itself. Naturally, synthetic plans will almost always be more expensive in terms of fees and charges.
Pros of DRIP Investing
You Can Start Small & Invest Long Term – DRIPs are definitely better for long-term investment plans like college savings funds or retirement funds. They utilize the power compounding and allow you to acquire more shares of a company through small investment amounts over time. You won’t need much to get started, either. One share will usually be enough.
It’s Automatic – Once a DRIP is set up it will be run by either the company or your broker, depending on what you have chosen. This means you don’t have to think about it, and even if you are an undisciplined investor, a DRIP will take care of itself and grow automatically.
Low/Zero Fees – DRIPs are usually either fee-free or very low-cost. This can only be a good thing since fees are enemy number one of an investor’s profits. There will usually be a one-time setup fee with most DRIPs, which could be as low as $10 or as high as $400.
Discounts – It isn’t the case with every plan, but loyalty to a company can be rewarded in the form of buying discounts. This gives you a chance to score extra value below market price.
Cons of DRIP Investing
Lots of Mail – Once you buy shares in a company, you will get monthly, quarterly, and annual earnings reports, as well as alerts and news from the company, as well as annual reports, etc. If you have more than one DRIP on the go, this can be a lot to keep up with.
Complex Setup – Buying a single share in a company is enough to get started on a DRIP plan, but usually when you buy through a broker that share will be held in their name. You will need to get a share certificate in your name to be able to get started on a DRIP.
Not Diversified – We’ve all heard the old phrase ‘Don’t put all your eggs in one basket’. With a DRIP, you are increasingly exposed to the fortunes of the company you hold the stock in. You could, of course, have more than one DRIP set up to help counter this.
Temporarily Reduces Income – If you look forward to and enjoy your quarterly dividend payments then you will have to accept that a DRIP will reduce those until the plan has reached its conclusion and you’re ready to take profits.
Summary
DRIPs aren’t for everyone, but if you have time and patience, and are willing to let compound interest work its magic, you can make DRIPs work for you and they can lead to substantial returns long-term.
So, now you know what they are, and what some of the advantages and disadvantages are. The only question left to answer is – are DRIPs right for you?
Brian is a Dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013. Who, with his family, has successfully paid off over $100K worth of consumer debt. Now that Brian is debt-free, his mission is to help his three children prepare for their financial lives and educate others to achieved financial success. Brian is involved in his local community. As a Financial Committee Chair with the Board of Education of his local school district, he has helped successfully launch a K-12 financial literacy program in a six thousand student district.
Working at 36,000 feet may not feel like living the dream, but if you’re traveling for work (or fun), every minute counts. Some U.S. airlines are making it easier than ever to stay connected whether you have your head in the clouds or on the ground.
For the past decade, it was standard to require passengers to pay either by the minute or by the hour to access the airline’s Wi-Fi network on most domestic flights. And for those who were winging it by working through the flight, those Wi-Fi costs added up fast.
Don’t toggle your phone into airplane mode just yet because many national and international air carriers are bringing Wi-Fi service to their fleets. While you can’t take phone calls mid-flight, here are the airlines where flying the connected skies comes standard with your ticket.
Domestic and International Airlines That Offer Free In-Flight Wi-Fi
Want to use those hours in the air to clear your inbox or level up in that guilty pleasure mobile game? Check it off your to-do list because these airlines offer complimentary Wi-Fi as part of your in-flight experience.
Domestic Flights With Free Wi-Fi
Delta Air Lines
The latest airline outfitting its entire fleet with Wi-Fi is Delta. Delta — in partnership with T-Mobile — made free in-flight Wi-Fi available to all passengers on domestic flights in February. By the end of 2024, Delta CEO Ed Bastian promises to have its entire fleet on board with free unlimited Wi-Fi, including regional and international flights.
There’s just one tiny hitch. To access the Wi-Fi, Delta Airlines requires passengers to sign up for a free Delta SkyMiles account. If you don’t want to join the Delta SkyMiles members club, you can still purchase Wi-Fi for a $10 fee per device.
Considering getting an airline credit card? We’ve got the scoop on which ones give you more miles and extra travel perks.
JetBlue
For JetBlue, free Wi-Fi is so 2017 that they coined a word for it: Fly-Fi. For a while, they were the only U.S. airline where unlimited access to the plane’s high-speed Wi-Fi came with your JetBlue ticket.
JetBlue also partners with Amazon, so you’ll earn extra TrueBlue points — JetBlue’s loyalty program — for shopping in-flight. Plus, you’ll get access to Amazon Prime’s library so you can stream Amazon video, music, audiobooks and more.
Other Domestic Airlines With Free Wi-Fi
While JetBlue and Delta are the only national carriers that offer free in-flight Wi-Fi to all passengers, most other airlines are piloting similar programs and perks on select domestic flights.
American Airlines offers some flights where passengers watch a sponsored video to receive 30 minutes of in-flight Wi-Fi. On United Airlines flights, Mileage Plus loyalty members use miles instead of paying a fee to access in-flight Wi-Fi. And Alaska Airlines and SouthWest provide free texting and messaging through iMessage and Whatsapp.
International Carriers With Free Wi-Fi
Domestic airlines aren’t the only game in town for scoring free Wi-Fi. Check out the select international aircraft that help you stay connected for cheap.
Air New Zealand
Air New Zealand not only provides free Wi-Fi on all domestic flights, but it comes complimentary on all international Wi-Fi-enabled flights.
Nok Air
Nok Air is a budget carrier out of Thailand, but there’s nothing cheap about their in-flight benefits. They provide complimentary Wi-Fi access on all Boeing 737 flights.
Qantas
Grab free high-speed Wi-Fi on board B737-800 and A330-200 Qantas flights, courtesy of a partnership with Viasat.
Japan Airlines
Japan Airlines passengers get free Wi-Fi on domestic flights with the exception of a few aircraft that are not yet equipped to provide the service.
Other International Airlines With Free Wi-FI
There are a few other international air carriers that provide in-flight Wi-Fi, but don’t return your tray tables to their upright position just yet because it comes with strings attached.
On Qatar Airways, you can only get 15 minutes or 10 MB of free Wi-Fi via a sponsor. Norwegian Airlines provides 15 minutes of free in-flight WiFI on select flights, and Philippine Airlines offers a complimentary 3 MB chat plan.
At China Eastern Airlines and Shanghai Airlines, in-flight Wi-Fi is first come, first serve. The first 100 lucky passengers on the flight who register 30 days in advance connect to the Wi-Fi free.
Other Ways to Get Free In-Flight Wi-Fi
If you’re stuck schlepping it on a carrier that doesn’t offer free Wi-Fi, you might still be able to snag a cheap (or free) connection. Here’s how.
Leverage Credit Card Perks
Some airline credit cards let you redeem points or miles to reimburse you for in-flight Wi-Fi costs. These include airline credit cards and reward programs from Southwest Airlines, American Airlines, United Airlines and Alaska Airlines.
Earn Premium or Elite Status
Several international and national air carriers allow premium or elite members to earn free Wi-Fi. This includes national carriers like Southwest and international airlines like Emirates, Finnair, Icelandair, Singapore Airlines and Turkish Airlines.
Upgrade to Business or First Class
The perks of business class and first class are more than just extra legroom and bottomless mimosas. These airlines extend complimentary in-flight Wi-Fi on personal devices to those who pay extra not to get stuck hugging their knees in economy class.
Aer Lingus
Emirates Airlines (Emirates Skywards members only)
Icelandair
Philippine Air (100 MB limit)
SAS (Scandinavian Airlines)
Singapore Airlines (First class free, Business class 100 MB limit)
Turkish Airlines (1 GB limit)
Alitalia (Magnifica members only, 50 MB voucher)
Finnair (one-hour, intercontinental flights only)
Swiss Airlines (50 MB voucher)
Pay close attention to the Wi-Fi terms, however, because most airlines listed here have some limitations to internet access.
Trying to find a way to afford first class? Here’s how (and when) to book cheap flights to 8 popular destinations during the shoulder season.
Connect With T-Mobile and Sprint
T-Mobile customers can buckle up and get connected because they’ve already have in-flight Wi-Fi on Alaska, American and Delta flights through their wireless provider. T-Mobile and Sprint Unlimited, Sprint ONE and Sprint Max passengers get free messaging through iMessage, Google Hangouts and Whatsapp, as well as an hour of free data.
Other Airline Perks Worth Checking Out
If you’d rather kick back and not spend your flight streaming, there are a few other airline perks to check out, from free cocktails to complimentary checked bags.
Free In-Flight Beer and Cocktails
Have a flight of beer or wine on your way to Canada, courtesy of Porter Airlines, serving up local brews and vintages. Air Canada has similar alcoholic offerings when you book a flight between Toronto and Montreal. Even WestJet, a low-cost carrier based out of Canada, offers a free glass of beer or wine on regional flights.
Horizon Air will quench your thirst with Northwestern wines and microbrews — and your wine flies free. That is, you can check a case of wine for free from 32 West Coast cities on Alaska, Horizon and SkyWest flights. And of course, a complimentary glass of bubbly or wine comes with the ticket on all long-haul AirFrance flights.
Free Layover From Icelandair
Having a layover doesn’t sound like a perk, but hear us out. What if it’s in Iceland? Icelandair invites all passengers who book their flights to arrange a free stopover for one to seven days — coming and going, if you want — in Iceland to get a taste of what the country has to offer.
Kid Travel Perks
Baby on board? These airlines are on standby to ease your suffering. British Airways feeds kids first on all flights, so you can rest easy when it’s your turn to eat. Some international airlines offer other perks, like Gulf Air’s sky nannies who make the rounds to entertain kids in-flight.
South Korea’s Asiana Airlines literally puts moms first with front-row seats to the bathroom for all expectant mothers and free baby slings and nursing blankets for infants.
Free Checked Bags
If you’re traveling with a lot of baggage (and really, who isn’t), many airlines provide ways to waive the fees and check your luggage for free on most flights. Delta SkyMiles, United Explorer and Alaska Airline Visa members all earn free checked baggage for cardholders and, in some cases, for traveling companions. You always get two free checked bags on Southwest though.
Pro Tip
Looking to duck the baggage fee? Before you try cramming your oversized duffle into a bin, here’s how you can pay less for luggage and avoid other traveling costs.
Priority Boarding
If all you really want is to be first in line to snag a window seat or a coveted overhead bin, you’re in luck. Elite flyers, premium members and some airline credit cardholders earn priority boarding with major airline carriers, including American, United Airlines and Southwest.
Next time you need to fire up the Wi-Fi at 36,000 feet, and you’re not on a JetBlue or Delta flight, consider keeping these tips and tricks in your back pocket to avoid in-flight connection charges. In this case, time really is money, so spend (and stream) wisely.
Looking to snag a flight for cheap? Consider these low-cost air carriers where a heavily discounted ticket price is the best perk of all.
Kaz Weida is a senior staff writer at The Penny Hoarder covering saving money and budgeting. As a journalist, she has written about a wide array of topics including finance, health, politics, education and technology for the last decade.
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Retiring at 40 may sound like a pipe dream. But it’s entirely within reach if you save $1 million while working. The key elements for achieving this feat are sticking to a budget and implementing a comprehensive retirement strategy. But with rising expenses, is $1 million enough? To answer this question, you must identify your expenses, including taxes and monthly debt obligations and compare them to your sources of income. Here’s how investing and budgeting can set you on the path to early retirement.
A financial advisor can also work with you to get a realistic estimate of when you may be prepared to retire.
Can I Retire at 40 With $1 Million?
Retiring a quarter-century before the standard retirement age requires careful planning. However, one rule persists for retirement no matter what age it begins: Your savings must generate enough income to cover your living expenses for the rest of your life.
With this principle in mind, retiring at 40 means you can’t rely on traditional retirement vehicles such as individual retirement accounts (IRAs) or 401(k) accounts.
These accounts are not accessible until you reach the age of 59.5. Therefore, you must research alternative retirement savings instruments to create the income you can use once you stop working.
Smartasset’s retirement calculator helps you assess how your financial situation matches your retirement objectives. You’ll enter information such as your rate of return, Social Security benefit and location to evaluate your ability to retire at 40.
How to Determine How Much You Need to Retire
Retirement always requires evaluating how taxes, expenses and income work together for you. Retiring young means having all your ducks in a row to avoid surprises or financial hardships later on. Here’s how to assess how much you need to retire:
Calculate Your Costs in Retirement
Your expenses are an essential piece of information in a retirement plan. In other words, your cost of living provides the necessary context for how you’ll retire. For example, a yacht club membership can significantly alter your budget.
Likewise, your state of residence impacts how far your dollars go each year. For example, a recent study from the U.S. Department of Commerce shows that in Nevada, a popular retirement state, the overall cost of living is 95.5% of the national average.
As a result, retirees will get a discount on living expenses (plus zero state income taxes!) for living in the state. On the other hand, Hawaii’s costs are 113.2% of the national average, meaning that retirement there will cost more.
Determine Your Income
Your tax rate decides how much income stays in your pocket. Retirees often prefer living in a tax-friendly state like Georgia or Florida because of the absence of state income taxes.
That said, your forms of income will also influence your tax status. For example, rental income from real estate incurs regular income taxes, while selling stocks for a profit incurs capital gains taxes.
In addition, healthcare expenses are a growing cost for retirees. Specifically, HealthView Services data reporting shows that a couple retiring at 65 in good health will spend about $662,00 on healthcare throughout their lives.
As a result, it’s best to plan for several hundred thousand dollars of medical expenses during retirement. Furthermore, retiring at 40 means addressing an additional 25 years of medical costs.
To do so, experts advise designating 15% of your annual income for healthcare costs. However, this amount may be higher if you have a chronic health condition.
And having children at home is expensive, whether you’re retired or not. For instance, The Washington Post states the average annual cost of child-rearing is about $17,000 per child. Therefore, it’s crucial to add this item to your budget for an accurate idea of your finances.
Identify Retirement Income Streams
With expenses accurately laid out, you can turn to your income streams. For retirement to be feasible, the $1 million nest egg must return enough income to cover your expenses. So, if you invest $1 million for a 5% return, your annual income is $50,000.
Remember, stocks are riskier than other assets, such as certificates of deposits (CDs), so diversifying your investments is critical. Otherwise, a stock portfolio that is successful this year might tank the next year, leaving you without income. In addition, you have little margin for error with $1 million; every dollar needs to provide a return.
Next, Social Security is a form of income that you’ll encounter a few decades into retirement. Because you won’t collect Social Security benefits until 62 or older, retiring at 40 means waiting 22 years to receive your first check.
So, while Social Security will be a boon in the second half of your retirement, you’ll have to get yourself there with the income you create independently.
Look at the Numbers
So, let’s look at an example combining costs and income streams. Let’s say you want to retire at 40 with one child in the house. Your life expectancy is 80, so you plan a 40-year retirement. In addition, you’ll retire in Nevada, which has no state income taxes. Here are your annual expenses:
$22,000 for housing
$15,000 for healthcare
$5,000 for utilities and property taxes
$7,000 for food
$6,000 for entertainment, phone and internet
$3,000 for auto upkeep and insurance
Your total annual expenses are $58,000, or $4,833 monthly.
To meet these expenses, you collect income from multiple sources: First, you purchase two rental properties for $500,000 total, which generate $4,000 of monthly income ($48,000 per year).
You also have a $250,000 savings account with a 4% interest rate ($10,000 per year) and a $500,000 brokerage account with an average return of 5% ($25,000 per year). So, your investments provide $83,000 of annual income.
Next, your income and single filing status place you in the 12% tax bracket, leaving you with about $51,040 of your real estate and savings account income after taxes. In addition, you’ll pay 15% for long-term capital gains taxes on your brokerage account.
So, your total monthly income after taxes is $72,290 annually. Fortunately, this figure is about $14,300 above your expenses, leaving a margin for when investments underperform or surprise expenses crop up.
That said, your income and expenses won’t remain static throughout retirement. Instead, inflation will drive up your cost of living each year at an average rate of 3%.
The expenses of $58,000 this year will grow by thousands of dollars after five years because of economic trends. Overall, it’s best to sock away surplus income to prepare for higher expenses in the future.
Remember, you’ll age into Social Security at 62 and receive an income bump at that time. For example, the Social Security Administration’s 2022 Statistical Supplement estimates the average 62-year-old’s monthly check to be $2,364.
Depending on your circumstances, you can decide when you reach 62 whether to start collecting this benefit or delay it for higher future income.
How to Boost Your Retirement Income
The example above demonstrates a path for retirement at 40 with $1 million. However, you must adhere to a tight budget to do so. On the other hand, you can give yourself more financial flexibility by increasing your income with these tactics:
Delay Social Security Benefits
Social Security isn’t automatic. Instead, you apply for it when you want to start collecting it. As a result, you can choose any age starting at 62 to begin collecting this benefit.
Increase Your Interest Rate
The interest rates of savings accounts and certificates of deposit (CDs) are constantly shifting to attract customers. For example, the typical high-yield savings account has an interest rate of between 0.5% to 4.15%.
So, moving money out of a conventional savings or checking account can provide more annual income. Plus, your deposits have FDIC insurance up to $250,000, meaning they have shelter from market downturns.
Understand Your Income Tax Implications
Your tax situation is unique to you, and failing to grasp the details can incur additional fees. For instance, say you want to sell some stock through your brokerage account after holding it for 364 days.
Doing so will incur short-term capital gains taxes, which are identical to regular income taxes. On the other hand, waiting a few days will put you in the long-term capital gains timeframe, increasing your taxes by 3%. So, staying on top of these transactions can help lower your tax burden.
How to Make Your Savings Go Further in Retirement
Likewise, you can maximize your savings potential to make early retirement easier. Here’s how to make your savings work for you:
Use a Budget
Although the word ‘budget’ might make your stomach churn, it’s one of your most powerful financial tools. Budgeting helps you gain control of your finances by providing a clear overview of your income and expenses.
Budgeting lets you track where your money is coming from and where it is going, enabling you to make informed decisions about your spending and saving habits.
Additionally, a budget also helps you set financial goals and work towards them. In this case, it’s your roadmap to retiring at 40. So, you can allocate resources wisely and prioritize what matters most.
Choose Low-Fee Investments
Management fees can be the death of otherwise successful portfolios. This characteristic applies to brokerage accounts, which can invest in mutual funds, exchange-traded funds, real estate investment trusts (REITs) and other funds that can have exorbitant administrative fees.
Evaluating an account’s fee structure before investing money is crucial to keeping more of your money.
Care for Your Health
Healthcare is paramount for retirement planning. It’s undeniable that every retiree will require healthcare services at some point in their journey. However, by taking proactive measures, you can determine the timing and way you receive such care.
In particular, regular check-ups and engaging in physical exercise serve as preventive measures that can substantially diminish the frequency of hospital visits, fostering physical well-being and financial stability.
Work Part-Time
Additionally, embracing part-time employment can bolster your finances upon early retirement. Pursuing this option can augment your income and counteract rising inflation. Moreover, this approach possesses the added advantage of enabling a prolonged deferral of Social Security, which ultimately translates into higher benefits later on.
Pay Off Debt
Lastly, it’s critical to recognize the dangerous grip that debt can exert upon your financial liberty. For instance, the burdensome nature of credit card balances and personal loans comes from their exponential interest rates. This predicament imposes sizable obstacles on the path toward retiring at 40.
Remember, the gains from investments seldom surpass the annual percentage yield (APY) that debts impose. Therefore, prioritizing the repayment of high-interest debts promotes financial health, whether during the prime of your career or your golden years.
Bottom Line
Retiring at 40 with $1 million requires a strategic investment approach. Specifically, you must create a well-thought-out plan that includes various types of assets, such as brokerage accounts, savings accounts and real estate.
In addition, calculating your expenses meticulously and ensuring that your income covers them effectively is crucial. In this scenario, $1 million must last for several decades until you become eligible for Social Security. So, thinking creatively about generating income during that time is essential.
Tips for Retiring at 40 with $1 Million
Investing $1 million for retirement means maximizing the return of every dollar during your career. Working for two decades or less means you can’t afford a mistake when investing. Fortunately, a financial advisor can help you find assets with low fees and substantial returns. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Ideally, retiring at 40 means starting off your golden years while you’re relatively young and healthy. However, your future health is unknown, especially after you become a senior citizen. So, you can prepare for this possibility by budgeting for the cost of independent living.
Ashley Kilroy
Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
One day you’ll likely want to close the book on your career and start a new chapter of your life, but do you know how to plan for retirement?
The majority of working Americans say they are behind on their retirement savings goals, according to a Bankrate survey. If you don’t know how to plan for retirement, you could find yourself in the same position.
A financially secure retirement might feel like a lofty goal, but it’s totally within reach if you educate yourself on a few fundamental retirement savings concepts.
It’s time to take the first step toward confident retirement planning. Ryan Inman, a financial planner for physicians at Financial Residency, and Andy Wang, managing partner at Runnymede Capital Management, are here to help. Below, they share the concepts that you need to master if you’re wondering how to learn about retirement planning.
But first: Test your knowledge with our retirement quiz. When you’re done, the experts’ guidance on how to plan for retirement can help you fill in any gaps to ace the quiz—and your retirement.
Retirement quiz: What do you know about retirement?
Harnessing the power of compound interest
Compound interest has been called the eighth wonder of the world. Its surprising ability to grow wealth can feel like a miracle, but it’s actually just good old-fashioned math.
“Compounding is the key to most great investors’ success,” Wang says. That’s because as you earn interest on your money, your money grows. He points out that over time, you earn interest not just on your initial deposit but also on the interest that accumulates.
This same principle applies to stock investing where constant reinvestment of capital gains produces a compounding effect so you earn gains on your gains, he adds.
Because the interest you earn is based on an ever-growing amount of money, your rate of wealth accumulation accelerates as the years go by.
How compound interest works: An example
An example can help when you’re learning about retirement planning, especially when math is involved.
Let’s say you put $10,000 into a diversified 60/40 mix of equities and fixed income that has an average annual return of 6% within your IRA. This is how compound interest would fuel your money’s growth over the years:
Year 1: You would make 6% on the $10,000, which is $600.
Year 2: You would make 6% on your money again, but this time it would be on a balance of $10,600. As a result, you’d add $636 to your account.
Year 3: You would make 6% on $11,236, or $674.16.
Year 10: You would have $17,908.48 in your account thanks to the power of compounding.
You can play with the numbers in a compound interest calculator to see the phenomenon yourself.
Compound interest is fundamental to how you plan for retirement because it yields bigger results over longer periods of time—and saving for retirement is all about the long term.
“The longer your money is invested, the more compound interest grows,” Inman says.
As a result, he says one of the biggest retirement savings mistakes you can make is to put off saving for retirement—because it prevents you from harnessing the impressive power of compound interest.
Understanding your tax-advantaged retirement options
When saving for retirement, Inman and Wang recommend that you make use of any available tax-advantaged accounts (in other words, accounts that save you money on taxes).
Some savers have access to a 401(k) or other employer-sponsored retirement accounts through their jobs. Every American who earns income can contribute to an individual retirement account, or IRA.
Let’s take a closer look at each of these tax-advantaged retirement options to help you understand how to plan for retirement.
The 401(k) retirement plan
The most common employer-sponsored plan is the 401(k), which allows employees to put a certain amount of each paycheck toward retirement. “The 401(k) is one of the best options you have to save for retirement,” Wang says.
One of the reasons it’s such a great option, he says, is that contributing to a 401(k) can ease your tax bill each year.
“The money you contribute doesn’t count toward your gross income for the year, and that lowers your taxable income as a result,” he explains. “For example, let’s say you make $25,000 per year and you contribute $2,000 into your 401(k). As far as the IRS is concerned, you made $23,000 and you’ll be taxed on the $23,000.”
In addition to lowering your tax bill, your 401(k) is growing your retirement savings thanks to the power of compound interest.
401(k) match
Sometimes, employers will also offer what’s known as a 401(k) match, which means they’ll match whatever you contribute to your retirement savings up to a certain amount.
For example, Inman says that if your employer offers a 3% match and you’re contributing at least 3% of your salary to your 401(k), then your employer will contribute an additional amount equal to 3% of your salary.
If your employer offers a 401(k) match and you’re not enrolled, “You’re not only missing out on the tax benefits of a 401(k), but you’re leaving free money on the table,” Inman says.
Vesting periods
How to learn about retirement planning means understanding your vesting period. Inman notes that some companies have vesting periods, which means you won’t receive the full 401(k) match until you satisfy a particular length of employment.
Maximum contributions
The maximum contribution is the total amount you’re allowed to contribute to your 401(k) each year. This limit can change year to year according to the latest tax laws. In the 2023 tax year, for example, you can contribute a maximum of $22,500 to your 401(k) account, the IRS says. If you’re over 50, you can take advantage of catch-up contributions—up to an additional $7,500 per year.
The individual retirement account (IRA)
Another popular retirement account is the IRA. According to Inman, there are two main types of IRAs, each with a different tax advantage.
Traditional IRA
Generally speaking, Inman says, a Traditional IRA allows you to deduct your contributions from your taxes now, but you’ll need to pay taxes on the money you withdraw in retirement. You can withdraw your contributions and earnings without IRS penalty at age 59½.
Roth IRA
The other type of IRA is the Roth IRA. Inman notes that contributions to a Roth IRA can’t be deducted from your taxes now, but when you withdraw your earnings in retirement (at age 59½ or later, to avoid a penalty), you do so tax-free. Because you pay taxes on your contributions, you can withdraw those from your Roth IRA anytime.
“Some earners’ income is too high to qualify for a Roth IRA,” Inman says. (In 2023, the income limit is $153,000 for individuals and $228,000 for married couples filing jointly, according to the IRS.)
Unsure of which type of IRA to choose? Dive into all the differences between a Roth IRA and a Traditional IRA. Check the latest IRS guidance on income and contribution limits before selecting the best option for you.
Automating your retirement savings
If you find yourself thinking about how to plan for retirement but not actually doing the regular saving that you need to, then automating your retirement savings might be for you.
Inman and Wang note that most 401(k) plans have automation features: Once you opt in and configure your preferences, your plan will deduct a certain dollar amount or percentage out of every paycheck and invest it in the funds you pre-selected.
There are even mobile apps that have emerged to make it easier for people to automate their retirement savings than ever before. They allow savers to set up automatic deposits from their checking or savings accounts into a retirement savings fund according to their risk tolerance and goals.
“Technology’s come a long way in helping us automate our retirement savings,” Inman says.
When considering how to plan for retirement, automating your retirement savings has two key benefits:
1. Automation removes emotion from investing
The fact is, it’s not always a pleasant experience to move money from your checking account into your retirement savings. Wang notes that when you’re automating your savings, “you won’t even miss that money, but it can grow to a significant amount over time.”
Because of this out-of-sight-out-of-mind phenomenon, Inman suggests increasing your 401(k) contribution amounts whenever you get a raise at work.
2. Automation helps you take advantage of dollar-cost averaging
You might have noticed that the stock market can be up one day and down the next. These unpredictable swings pose the risk that you could “buy high” right before the prices swing lower.
Inman points out that when you’re automating your savings, you’re investing the same amount of money at regular intervals. So if the market is up, your retirement savings go up, but you’re buying at higher prices. If the market goes down, your savings go down, but you’re also buying at lower prices.
Over time, your costs average out, and this is what is known as dollar-cost averaging. “Automation is allowing us to dollar-cost average without us even knowing that we’re doing it,” Inman says.
Estimating how much money you’ll need in retirement
You could use every savvy retirement strategy in the book, but how do you know how much you should save before you can retire?
“Conventional wisdom says that you should expect to need 70% to 90% of your annual pre-retirement income in retirement,” Wang says. For example, he says that a person who earns an average of $100,000 per year before retirement should expect to need $70,000 to $90,000 per year in retirement.
The 4% rule
Another frequently used rule of thumb when learning about retirement planning is known as the 4% rule, Wang says. The idea is that if you can withdraw no more than 4% each year from your savings in retirement (adjusting for inflation and taxes along the way), then “you should have a very high probability of not outliving your money during a 30-year retirement,” he says.
If our eventual retiree will need to withdraw $80,000 a year, that annual pre-tax income needs to represent no more than 4% of their retirement savings. Because 4% is the same as 1/25, they would need to multiply $80,000 by 25 to arrive at a target retirement savings goal of $2,000,000.
Put your knowledge to work toward your retirement
By taking this retirement quiz and studying new retirement concepts, you’ve taken the first steps toward how to learn about retirement planning.
Now, it’s time to make the moves that your future self will thank you for. See how Discover can empower you to confidently follow your retirement plan.
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.
Faith-based investing! What does it mean? Is it a worthy investing route to follow?
In this article, we’ll take an in-depth look at this type of investing and explore how you can make it work for you. Read on to learn about how this way of investing strategy allows you to reinforce your values.
Nowadays, investors are not putting their money just anywhere. Investors have realized the benefit of investing in things that matter. These include things like caring for the environment, wildlife, society, and minority groups. They want to make a difference with their investments.
Investors are now looking for investment options, which offer good returns and align with their beliefs and values. This way, even as they make more money, they do it with a clean conscience.
Faith-based investing is an investment philosophy that many investors are now embracing. And, like impact investing or socially responsible investing, it promises to do more than multiply your money.
So, what exactly is faith-based investing, and how does it work? Is it worth your money and time? And, how do you get started with faith-based investing?
Let’s dive in and find out.
What is Faith-Based Investing?
When we see the term faith-based, most of us instantly think of “religious investments.” Well, while it’s connected to religion, it’s definitely not in the way most of us might think.
Firstly, faith-based investing has nothing to do with religious organizations’ stocks. In fact, as you might already know, religious organizations are non-profits, thus, don’t issue public shares.
For instance, you’ll never see churches, mosques, or temples, offering shares to the public.
So, if not investing in religious organizations, what does faith-based investing mean?
Your next guess might be correct.
Faith-based investing is not too different from other investment philosophies. All aim at maximizing investors’ returns.
But, investors here don’t choose just any investment. They focus on investments whose strategies align with their religious values.
This way, the investor’s faith, values, and beliefs determine where they invest their money. As you can notice, while this type of investing doesn’t mean investing in shares from places of worship, it’s still tied to religion and values. And that’s why faith-based investing can also be referred to as values-based investing.
Interestingly, every faith has its opinions and perspectives on how to invest money to support certain causes. Also, the same applies to causes that contradict the faith’s beliefs and values.
For this reason, we will dissect faith-based investing based on some of the main religions around the globe. This will help us understand the concept better.
Top Faith-Based Investing Options
If you want to start your faith-based investing journey, here are some of the main options you can choose from.
Christian Investors
Christianity is the world’s largest religion, with around 2.5 billion followers. And, all these people lead their lives based on certain beliefs and values – investing is part of this life.
If you are Christian or wish to invest based on Christianity values, there are two main investment styles you can opt for:
Catholic Faith-Based Investing
The Catholic faith has its own framework on how believers should lead their economic life. The framework outlines ten faith-based principles and guidelines. This outlines how Catholic Christians should engage in finances and the economy.
Generally, they emphasize investing in companies or funds that support various positive issues. For instance, environmental conservation, human rights, fair employment practices, etc.
Also, Catholic investors will avoid investments that support certain things. These include abortion, weapons, adult entertainment, embryonic stem-cells research, etc.
Their investing principles revolve around moral law and human dignity.
Currently, we have many companies, investment firms, and funds you can pick from. These are companies where such values form part of their investing philosophy.
This means that as a Catholic value investor, you can invest freely in these companies or entities. And, you won’t have to worry about contradicting your faith.
Some excellent examples of Catholic faith-based investment entities include:
Catholic Investment Services
This is a not-for-profit investment management firm designed to deliver high returns on investment. And, it keeps Catholic faith principles at heart. It aims at pursuing investment excellence based on Catholic faith values.
Currently, the firm manages assets worth over $1 billion and serves around 45 Catholic institutions. Also, its restricted companies’ list stands at 700.
Catholic Investment Strategies
This is another great way to invest in Catholic faith-based investments. Here, the platform allows you to invest your money in a way that aligns with your faith and church values.
And as they put it on their website, they will never invest your money in companies whose values contradict the Catholic faith.
Generally, the platform invests in institutions like hospitals, universities, etc.
Also, they offer a portfolio that fits your needs. The portfolio excludes investments that support abortion, contraception, racial and gender discrimination, etc.
The LKCM Aquinas Funds
With the LKCM Aquinas Funds, the main investment strategy is guided by social responsibility (SRI). This Equity Fund offers Catholic faith investors an investment option that promises high ROI.
Its choice of securities and companies to invest in depends on the principles and guidelines formulated by the US Conference of Catholic Bishops. The fund has been operational since 2005 and continues to grow with a 9.83% growth rate since it began.
Protestant Investing
Unlike the Catholic faith that shares common beliefs across the entire faith, Protestants are somewhat different. While some denominations are quite liberal in their beliefs, others are more conservative. But, their principles tend to be similar.
Generally, the Protestant faith encourages work ethics and hard work. It urges its followers to invest in entities that support general Christian values. This mainly involves social consciousness. This means that this type of faith-based investing might not be as strict and specific as its Catholic counterpart.
Also, even as they promote social consciousness, they exclude some investments. These include stocks that support:
Adult entertainment
Weaponry
Embryonic cloning
Addictive behavior (drugs, gambling, etc.)
High-interest loans (shylocks and payday loans)
Some excellent examples of companies and funds that support Protestant faith-based investing include:
GuideStone Funds
For over 20 years, GuideStone has faithfully served faith-based investors and advisors. The platform seeks to offer strong-performance investments guided by various Christian values.
GuideStone provides Protestant faith-based investors an excellent opportunity to invest in mutual funds. And, it offers a diversified portfolio across various asset classes. It does all this with Christian values in mind.
The platform seeks to offer socially screened investments that are well managed. These ones guarantee great returns for the investors.
In essence, they use biblical teachings and values to ensure that investors get good returns. Also, their money is also invested in investments that make the world a better place.
The fund’s main values revolve around family, health, stewardship, life, and safety. So, if this sounds like you, you certainly need to start your investing journey here.
New Covenant Funds
This is a faith-based investment fund by the Presbyterian Church. It seeks to offer Protestants the best investing style based on their values.
Basically, the fund’s investment strategies depend on socially responsible investing. Here, the slogan, “you can do well while doing good,” guides them. It gives diversity in investment options, as well as charitable giving.
The platform makes investment decisions based on social consciousness principles. It supports doing good to help nature and society.
Additionally, it avoids investments that promote negative issues. This includes things like gambling, alcohol and other addictive drugs, pornography, etc.
As a Christian, New Covenant Funds offers something for everyone. Whatever your investment mission is they have something for you.
Jewish Faith-Based Investing
Giving and diversification are the key principles that guide Jewish faith-based investing. Jews follow investment strategies that adhere to these two principles, among other values in their faith.
In the Jewish religion, there are many teachings about giving and diversification, as seen in the Talmud. These teachings subsequently act as guidelines when it comes to investing.
Jewish investing doctrines and beliefs resemble socially responsible investing. Here, society and the environment are major pillars in investment decisions.
Different faith-based investments embrace socially responsible investing. This is because it fits into the guidelines and principles of different religions.
Some of the main issues addressed in this type of investing option include:
Social justice
Climate change
Region’s specific issues
Various mutual funds offering Jewish faith-based investments focus on various crucial issues. Some of the best investment platforms here include:
Jewish Values Investment Funds
Investing in Jewish faith-based mutual funds has been made easier. JVIF, LLC, offers an excellent way for Jews to invest in companies and funds that align with the Jewish faith and beliefs.
This investment advisor recognizes the importance of tzedakah (charitable giving). It allows the Jewish community to invest in things that matter to them.
The Bend the Arc
This is another great fund, offering Jewish investors a chance to grow their money. An, it allows them to take part in charitable giving.
The fund aims to encourage community development by supporting initiatives as follows.
Small businesses,
Affordable housing, etc.
With as little as $20, anyone can invest and make a change. The fund’s Community Investment Note finances various organizations. These are organizations that bring positive change to various communities globally.
If you want to invest in something that makes the world a better place, this might be the way to go.
Islamic Investing
Just like Christianity and Jewish faiths, the Islamic religion has values and beliefs. These guide its followers on the way to lead their lives, including financial matters. This way, when it comes to investing, Muslims have specific guidelines or principles to follow.
Generally, Muslim investors will adhere to halal or permitted values while investing. This set of rules allows investors to undertake a disciplined type of investing. They make investments that are ethically, socially, and environmentally responsible.
Islamic investing principles discourage investing in areas such as:
Pork related businesses
Companies that invest in gambling, drugs, and adult entertainment
Short-term speculation (the faith considers this as gambling).
Companies with huge debts since they are paying interest for the loans.
Any investment that pays interest (money markets, savings account, etc.)
In other words, any company or fund that wants to qualify for Islamic investing must adhere to Sharia law. It must follow the teaching from the Quran, Qiyas, Ijma, and the Sunnah.
If you’ve been looking for a way to make Islamic faith-based investments, here are some excellent options for you.
Amana Mutual Funds
These are Islam faith-based mutual funds offered by Saturna Capital. The funds’ investment strategies are guided by the Islamic faith. And, they embrace social, ethical, and environmentally-friendly practices.
However, they prohibit investing in interest-bearing securities and bonds. They’ll usually try to guard their investments against inflation through long-term equity investments.
Saturna follows investment principles that avoid interest or companies engaging in prohibited issues. These include the sale of alcohol, pornography materials, gambling activities, etc.
Allied Asset Advisors, Inc.
Allied Asset Advisors operates like any other investment management company. It offers portfolio management, financial planning, mutual funds, and retirement plans for investors.
The company is Islam faith-based and offers investment opportunities supporting the Islamic faith.
It introduced the Iman Fund, which is tailored to fit the needs of Muslim investors. It adheres to Sharia law and principles.
Is Faith-Based Investing Worth It?
Absolutely yes! If you find the right investing platforms, you can easily make money. Also, you’ll feel proud of how your money is being invested.
But, you should note that faith-based investing faces the same risks as other investments. So, ensure that you’ve not settled for just any company or fund.
Choose companies that can prove strong financial standings, charge reasonable fees, and that show growth potential. This way, you don’t end up investing your money in companies that will never offer value for your investment.
Generally, faith-based mutual funds and ETFs offer better long-term returns.
This is according to research published by John C. Adams and Parvez Ahmed from the University of Texas and the University of North Florida.
So, if you feel that faith-based investing ought to be your next investment move, it can certainly be a good move. But as mentioned, do thorough research on the best faith-based investments depending on your values and beliefs.
Author Bio:Kyle is the founder of The Impact Investor, a website focused on helping others invest sustainably without sacrificing financial returns. We all want products sourced by sustainable and ethical means, why should investing be any different? Follow my investing journey on my Facebook, YouTube, or Twitter accounts.
Fed up with your makeshift workspace on the dining room table? Or maybe that corner desk isn’t sparking joy or productivity like it used to? Whether you’ve just bought a home in Sarasota, FL, and are designing your first home office from a clean slate, or you’ve been working in the same office since the early days of the pandemic after moving to Katy, TX, and never truly made it your own, now is the perfect time to make a change. If your home office is due for an upgrade, you’re in the right place.
We’ve gathered insider advice from experts to help you create a space that isn’t just about function—it’s about comfort and personal style too. Get ready to take notes on this Redfin article as we delve into color theory, ergonomics, strategic placement, and even the art of decluttering. These expert-approved tips and tricks will guide you in designing a home office that’s not just practical but also a space you’ll love to work in. So, let’s roll up our sleeves and start creating your dream workspace.
1. Revamp your home workspace by reflecting on past experiences
“Think back to workspaces you’ve either worked in or visited in person and use them as a planning tool,” recommends The Order Expert. “What did you find unappealing about the layout, surroundings, environment, lighting, or furniture? Once you’ve identified these characteristics, you can flip things around to your personal tastes and preferences. For instance, if you find cool lighting too harsh, you may want to choose warm lighting in your home office.”
2. Practical tips and accessories that will help you master the art of focus
“A visible sign to let your housemates know you are in the focus zone or doing deep work is crucial. Use a door hanger to indicate that you can’t be interrupted,” recommends Marcey Rader. “Remember, you can’t be in focus mode all day. Take down the sign when you’re doing lighter work.
Standing signifies ‘work,’ while sitting suggests ‘leisure.’ Invest in a standing desk and alternate between sitting and standing throughout the day to prevent glute amnesia and optimize your focus. An essential accessory for standing is an anti-fatigue mat.
Consider getting a whiteboard to list your top priorities for the day. Opt for a double-sided rolling whiteboard that you can easily move around and put away, or use whiteboard decals cut to size without leaving holes in your wall.”
3. Incorporate color to enhance mood and productivity
“When it comes to designing a home office to boost your productivity, use color as a tool to set the atmosphere for your ideal workday,” suggests Simplish. “Colors are coded with unconscious messages and have a proven impact on your mood, indirectly influencing your actions throughout the day.”
“Color theory and the strategic use of color play a crucial role in creating an environment that fosters focus and enhances productivity. For example, cool blues and greens can promote a sense of calmness and concentration, while pops of energizing colors like yellow or red can stimulate creativity and motivation,” says Sims & Co Interior Design. “By harnessing the power of color, we can customize a home office to provide personalized inspiration.”
4. Avoid built-in desks in your home office setup
“Avoid built-in desks as they are often difficult to modify and can be ergonomically unsound,” urges Dr. Scott Leaderman from Ergonomics Doc. “This is especially important when sharing a desk with someone, as even a slight difference in height can significantly impact ergonomics and comfort. Consulting an ergonomic specialist to help find the perfect desk is an excellent way to ensure your workstation is comfortable and efficient.”
5. Add in some personalized art and photos
“Enhance the ambiance with art and meaningful photos on the walls. Adding splashes of color throughout the room can create an inviting atmosphere. Opt for artwork that incorporates colors other than blue and white, as the goal is to surround yourself with hues that differ from the blue tones emitted by computer screens,” recommends Dr. Leaderman.
6. Make your home office set up in a strategic location
“Location matters. Choose a quiet area of your home with minimal distractions for your home office. Ideally, the space should have ample natural light, good ventilation, and most importantly, avoid placing your desk facing East or West. Direct sunlight while working can intensify eye fatigue,” says Dr. Leaderman.
7. Embrace minimalism in your desk setup
“Our desks often succumb to clutter, which studies reveal increases cortisol (the stress hormone) and hampers focus. Thus, a minimalist desk proves highly effective. A minimalist desk consists of essentials: computer, monitor, keyboard, mouse, notepad, writing utensils, and a beverage,” says Alexis Haselberger, a personal coach for time management, productivity and stress-reduction.
“While other desk items may be necessary, keeping them in drawers, cabinets, or boxes promotes better concentration, ultimately saving time in the long run. Moreover, when envisioning an ideal home workspace, incorporating multiple seating areas adds variety and boosts productivity. Assigning different tasks to different areas adds a refreshing change of scenery. While a desk serves well for most work, having a cozy couch or soft chair offers a pleasant alternative. For instance, I find my creativity flourishes on a couch, whereas I revert to my desk when I require multiple monitors.”
8. Strive for a balance between aesthetics appeal and functional efficiency
“In my dream workspace, I would have a clean-lined, spacious desk with impeccable wire management. Wires hanging off my desk would be the last thing I want to see in this serene setting. My office must feature two chairs positioned in the front and back of the desk to accommodate guests. A snappy leather swivel chair on casters becomes a necessity for easy mobility and quick access to my file drawers,” shares Sarasota Chic Interiors.
“In addition to the desk, a complementary credenza equipped with file drawers and storage for photo albums adds to the functionality and aesthetics of the space. To display accessories and showcase my collection of books, a free-floating tall bookcase with LED lighting becomes a focal point. A plush area rug with accent colors would grace the floor, providing a soft surface for my bare feet while ensuring it remains thin enough for effortless movement of my swivel caster chair.
To enhance the ambiance, I envision large-scale wall art on one side and a decent-sized TV on another, serving both as an entertainment source and a multipurpose monitor. Recognizing the importance of lighting, I recommend incorporating an LED desk light for focused illumination and a stylish chandelier that not only adds visual appeal but also provides extra brightness.
In terms of accessories, consider adding a leather pencil holder, a desk blotter, a paperweight, a magnifier with a letter opener, and lastly, Alexa to play your favorite tunes, adding a touch of convenience and personalization to your home office experience.”
9. Incorporate relaxing elements into your home office design
“The foremost consideration in designing your home workspace is to ensure it reflects your unique personality and exudes a sense of relaxation. Since you are the sole occupant of this space, it should be a comforting and inviting extension of yourself,” recommends Zachary Luke Designs.
“Opting for light-colored walls, positioning your desk to face the window, and placing a cozy rug beneath your feet are excellent choices, in my opinion. Complete the ambiance by adorning the walls with art, as gazing at blank walls all day is hardly inspiring. Embrace the opportunity to personalize your space, making it a true reflection of your identity and an environment that encourages productivity and enjoyment.”
10. Eliminate distraction and clutter
“Good design starts with removing all that does not support it. Both productivity and comfort in your home office stem from the elimination of distractions and excess,” says SJ Sallinger Designs. “Begin by discarding unnecessary paperwork and disposing of old electronics. Let go of furniture and items that occupy valuable space without contributing to your success.”
Setpoint, a real estate funding platform, acquired Resolute Diligence Solutions to support proptech and single-family rental re-engagement in the market, the firm said.
Resolute Diligence Solutions is a due diligence provider that partners with banks, lenders and originators to ensure each deed, title or lease is verified and reported accurately against financial statements.
“We are seeing a lot of traction with single-family rental and proptech companies that are prioritizing capital and operational efficiency,” Ben Rubenstein, president and co-founder of Setpoint, said about the timing of the acquisition.
While transactions are down, Setpoint is more bullish than ever on the proptech and single-family rental categories because the models it supports – from PowerBuying to HomeEquity to single-family rentals – create consumer value in all markets, Rubenstein noted.
“Setpoint is helping these firms improve operational and capital efficiency. When the market returns to normal levels, these companies can scale with fewer resources and less capital,” he said.
Founded by Stuart Wall, Ben Rubenstein and Michael Lam in 2021, the company enables proptech companies to offer home buying and selling options, including contingent-free, all-cash offers to customers, which it says enables these businesses to accelerate funding and closing on properties.
Setpoint aims to build fast and accurate infrastructure that will make credit more widely available and the underlying assets more liquid, which in turn will drive down costs for lenders and borrowers.
Operating as a SaaS, Setpoint’s backend platform provides streamlined workflow tools including document collection and verification, automates manual closing processes and boosts transaction throughput.
In December, Setpoint raised $43 million in a Series A round led by Andreessen Horowitz (a16z). About six months prior to the funding, the tech firm closed a $5.5 million seed round and $150 million in securitization.
While cautiously optimistic about the housing market for the rest of 2023, Setpoint expects to scale more than five times this year, the firm said.
Despite the slowdown, Setpoint grew rapidly driven by client additions, focusing on countercyclical originators and adding products and services, Rubenstein added.
The winter weather is sure to have potential home buyers shivering before they even get to your open house, so it’s crucial to keep your home as warm and as welcoming as possible. Turning up the heat may help, but we have five other ways to create warmth without touching the thermostat.
1. Serve hot drinks Provide potential home buyers with a hot beverage when they arrive. Coffee, tea, or hot chocolate can warm their whole body and may make them forget about the harsh temperatures outside. The sweet surprise could make your spot a bit more memorable, too.
2. Add warm colored accents Reds, oranges, and yellows are all on the warm end of the color spectrum. We don’t recommend going out and painting the walls any of these colors, but adding a touch of them as accents instead. Think: throw pillows, candles, or decorative vases.
3. Open up the drapes Though it’s getting darker earlier, it’s best to soak up all the natural light you can. Keep the drapes open to let in outdoor light, supplementing with indoor lamps so your place doesn’t appear too dark.
4. Lay down throws Add some comfy, textured throws to your couch, such as knits or quilts. Though potential buyers might not actually cozy up on your couch with a good book, an enticing blanket hints at the idea.
5. Incorporate warm scents We all know that scent is the strongest sense tied to memory. Play on this by infusing fragrances such as vanilla, cinnamon, and maple into your home. Try lighting a candle near the entranceway… but always remember to use any open flames safely.
Keep your open house cozy with these tips and potential buyers may never want to leave!
Michelle’s quick note: Today, I have a great blog post on how to save money for a large deposit from Rachael, who is a long-time reader of Making Sense of Cents. Rachael purchased her first investment property at the age of 20 by saving for a deposit and found many great ways to save for the 20% deposit. Below is her blog post. Enjoy!
I bought my first investment property with a 20% deposit when I was 20 years old (admittedly I was 2 weeks shy of turning 21!). I accomplished saving for a deposit with my own money, my parents never gave me a cent. So how did I do it?
1. The first thing I did was start applying for jobs as soon as I turned old enough to get a job. I started working when I was 15 as a checkout chick at Woolworths. Not very glamorous, a bit boring and repetitive but I was earning money! I worked about 10 hours a week during my last 2 years of high school, and worked around 20 hours per week during the school holidays. I worked at Woolworths for 3 and a half years and saved a good chunk of the money I earned.
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2. When I worked during high school the only time I would ever say no to a shift is if I was sick or had an exam the next day. It didn’t matter if I didn’t want to go to work (does anyone ever actually want to go to work?) I hated that job but I wanted a property so I went to work.
Sometimes I’d get home from school, get changed into my work uniform then go straight to work until 9:30 then come home and study until midnight to get homework and assignments done, then go to school the next day. I know some people don’t agree with kids working while studying but it was really helpful for time management as it didn’t leave me with any time to procrastinate!
3. The main contributor to earning enough money for the deposit was opening an Etsy shopI’d been designing printables to help keep me organized for a while and decided to start an Etsy shop to save up some money for a trip to the USA (I live in Australia). I ended up making enough money to cover most of the cost of the holiday. The intention when I got back from vacation was to close up shop and focus on my university studies. But I came back to tons of messages from people asking when my shop would be reopening because they wanted to buy my printables. I thought I may as well leave the shop open and make some extra money to supplement the income I was earning as a checkout chick (which was not much!)
About 6 months later my sales kept growing even though I wasn’t creating many new printables – I was earning more than I was scanning groceries (and having a lot more fun!) so I decided to turn my Etsy shop into a business. It also made me realise that I’ll never earn an above-average or life changing money working for someone else.
When I started my 3rd year of my university course, I got a job in my field. For 3 months I worked 10 hours a week scanning groceries, 25 hours a week at my day job, juggled my 2 Etsy shops, a blog, and maintained a high GPA at my university studies. I say this not to brag, but to point out that the money wasn’t just handed to me on a silver platter – if you want something you have to work for it. Needless to say I was burnt out. I quit being a checkout chick (that was a wonderful day!) and sought other ways to save the money I was no longer making from working those 10 hours a week. If you’re looking for ways to make extra money, Michelle has dozens of posts with side hustle ideas.
My biggest advice when it comes to saving money is not to increase your standard of living when you start earning a higher wage.
Aside from starting an online business, I saved money in numerous other ways:
4. I don’t have a car. When I did the math it was cheaper for me to pay higher rent and live closer to the city and use public transport (plus it’s more convenient). I share an apartment with my sister which also helped me save money as bills are split in 2, and it’s cheaper to rent an apartment with someone than it is to live by yourself
5. I buy stuff when it’s on sale & stock up. Yep, I’m one of those crazy people that buys 30 rolls of toilet paper when they’re on sale. When a sale does come around, I’m organized and have a list of everything I need to buy – the key is that you only buy what you need not just stuff that you want.
6. I bring my own lunch. I see so many of my work colleagues wasting their money on donuts, coffee and buying lunch every day. Then they whinge and seem confused that they don’t have any money by the end of the month when they’re screaming out for payday. One of the reasons I work as much as I do is because I never want to live paycheck to paycheck
7. When I was saving up I put most of my money into a term deposit. Not only did this prevent me from spending it, it also earned a higher interest rate than an everyday savings account. When the term deposit expired and I still didn’t have enough for the deposit, I went to my bank every couple of months and opened a new savings account so I could get their 3 month introductory bonus interest rate (by the 3rd time of doing it the bank knew me by name and just reset the interest rate rather than making me open a new account!)
8. I track where all of my money is spent using my budget binder printables – no joke, every single dollar gets accounted for. I do the same with my business income and expenses using these spreadsheets.
9. I set a maximum amount I would pay per piece of clothing and stuck to it (still stick to it!) no matter what ($20 for shirts, $40 for a pair of shorts in case you were wondering – keeping in mind that clothes are more expensive here in Australia). If I find a piece of clothing that I like I also buy it in multiples when it’s on sale. I have an ‘around the house’ wardrobe which consists of cheap clothes I wouldn’t wear in public but are perfect for blogging!
10. I utilise credit cards. A lot of people have a misconception that credit cards are bad but they’re not if you use them to correctly i.e. not to buy stuff you couldn’t otherwise afford. Not only do I not have to carry cash but when I makes purchases on my credit card I accumulate points that can be converted to cash.
Plus most credit cards will give you a signup bonus (such as cash or frequent flyer points) – just make sure you check that the bonus is more than the annual fee. You can always cancel the card before the end of the year then sign up for a new card the next year to get a new signup bonus.
By purchasing on credit card, you can keep money in your savings account for longer meaning YOUearn interest on your money, not your bank. I use my budget plannerto keep track of when money needs to be transferred so I’m not hit with a late fee.
Related: How To Take A 10 Day Trip To Hawaii For $22.40
11. I’m on the lowest phone plan with the smallest amount of data and I still never reach the limit because I utilise free wifi. I always make sure my phone is set to wifi when at home, and if I need directions somewhere I’ll look it up and take screenshots before I go so it doesn’t use up data.
12. I try and travel during off-peak season. And if I do travel during peak season I travel with others so the cost of accommodation and airport transfers can be split.
13. Comparison shopping research. I always compare the cost of basically everything before purchasing. Each week I go through the grocery catalogues and see which shops have the same item for the cheapest price. If I’m buying electronics I make sure I take advantage of price matching.
14. Before I buy anything I ask myself: ‘do I really NEED this?’ We all have that one thing that we can’t resist. For me, it’s stationery. I’m a massive stationery addict and the number of times I’ve had to tell myself no when I see a cute notebook or another pen sucks, but if I don’t actually need it then I don’t need to buy it.
15. I use ATM’s that don’t charge me transaction fees. Make sure you check with your bank if there are any banks they partner with i.e. won’t charge you fees, or at least look at which ATM’s charge the lowest fees if you withdraw money and aren’t a customer with that bank.
16.I never buy stuff from convenience stores – they charge double the price for a chocolate bar, a bottle of water etc. as the supermarket. I was with a work collage at lunch and she spend 4x the cost on 2 items that she could’ve got for way cheap if she walked 100m up the road to the supermarket. She didn’t even bat an eyelid and all I could think was you just spend a third of your hourly wage on stuff that’s going to be consumed in 5 minutes!
17. I’ve never ordered dessert at a restaurant. Ever. Why pay $12 for a bowl of ice cream when I can buy 3 tubs for the same price?!
18.I never buy scatchies, lottery tickets or participate in sweepstakes at work. I believe you’ve got to make your own luck!
19.When I catch up with friends I do so over lunch or afternoon tea rather than dinner as meals are usually cheaper.
20. I walk around my neighbourhood rather than paying for an expensive gym membership.
Related: The Busy Person’s Guide On How To Be Healthy
The 20% deposit on my first investment property
All in all it took me about 5 years to save the deposit. I’m not going to sugar coat it. It was hard. Really hard. ‘Training’ myself to say no, to really ask myself if I actually need something as opposed to just wanting it was not fun.
And just because I have the property now, doesn’t mean I’m going to suddenly stop being ruthless about saving money. My mentality is now ‘I could buy this for $100, or I could put that towards an extra mortgage repayment.’ I tracked my savings and spending (no joke, I account for where every dollar goes) using my budget binder printables(which I still use to track my spending).
Related: Home Buying Tips You Need To Know Before You Buy
As for whether I’d buy a property at 20 again, I’ll admit there have been times when I’ve regretted my decision. I could’ve done a LOT of travelling with the money I’ve poured into my mortgage (as well as all the other ongoing costs such as property management fees, body corporate, maintenance etc.).
I’ll admit I do get jealous of my carefree 20-something friends’ holiday photos, and that they have no qualms about dropping a couple of hundred dollars on a concert ticket. I also wouldn’t have to awkwardly ask friends to pick me up if we go out since I can’t afford a car (I do pay them money for fuel!) If interest rates weren’t at historically low rates at the time, then I also probably wouldn’t have been able to purchase the property.
But whenever I feel ‘depressed’ looking at how much money I’ve poured into the mortgage and how much interest is added to the balance each month, I remind myself that I’m on track to paying off my mortgage by the time I turn 30 and I feel a whole lot better! ☺
What have you done so that you can save a large amount of money such as saving for a deposit?
Last Updated: February 11, 2019 BY Michelle Schroeder-Gardner – 48 Comments
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When I originally wrote this article, we had no offers on our home and we were feeling somewhat negative about it. However, last week we accepted an offer on our home and it’s scheduled to (hopefully) close in July.
It’s been nearly four months and our house hasn’t sold yet.
We’ve had exactly 30 showings and great reviews, yet no offers.
Not even a single lowball offer.
Our home is priced quite competitively and below comparables, so we are afraid to lower the price any further.
We are already going to lose money with what our home is priced at now so we are currently wondering about other possible options. I knew selling a home would be stressful, but I didn’t realize that it would be this stressful. Many ideas have been going through my mind but it’s hard to decide what the best decision is.
Below are some of the things we have been thinking about possibly doing since our house hasn’t sold yet.
Make a temporary decision.
There are many decisions we could make just for the time being.
We could take our home off the market temporarily to see if our neighborhood experiences a rebound. Temporarily doing this could be risky though as our neighborhood could lose value over time instead of gaining value.
However, there is a chance that our neighborhood could go up, which would mean that we might not lose as much money if we were to rent it out while we waiting for it to rebound.
Move back home.
Of course, one of our options is just to move back home since our house hasn’t sold yet. Right now we are just renting in Colorado, so we do have the option to move back home at the end of our lease.
This isn’t the ideal situation as we didn’t move ALL the way out here just to move back to St. Louis one year later. However, this is most likely our best choice as well as the most realistic one if it doesn’t sell.
Moving back home would also get rid of a lot of the worries that go along with the options below.
Rent our home to long-term renters.
We are debating renting out our home on a long-term basis. We could most likely find long-term renters somewhat easily and I definitely think we could charge more than our mortgage payment each month.
We wouldn’t get rich from renting it out to long-term renters, but it could be enough to cover our mortgage and possibly one day even pay it off and keep it as a rental forever. There also wouldn’t be a ton of work involved, at least not when compared to renting it out to short-term renters.
The major downsides of renting out our home on a long-term basis would be if we had bad renters and the fact that we would be long distance landlords. We might need a property management company and if we did that then the revenue from the monthly rent would be much lower.
Rent our home to short-term renters.
On the other hand, we could also think about renting out our home on a short-term basis on a website such as Airbnb, VRBO, or Homeaway. This would also allow us to have a place to come back to, which would be very nice.
The major downside to doing this is that we are so far away and it would be hard to manage something like this from states away. This is because someone would have to clean up after each stay, restock items such as toilet paper, and so on. I’ve also searched and there are no companies in our area that offer property management for vacation rentals either.
Drop the price significantly.
We originally priced the home below what we bought it for back in 2009, and we’ve dropped it since it’s been listed as well.
The last and least fun option would be to just drop the price until someone bites, but that would mean losing a significant amount of money.
However, the plus side would mean that the house would hopefully sell quicker. This is not an option I would ever want to take but it does exist…
Have you sold a house before? Did you ever feel panicky about whether it would sell or not? What would you do if there were no offers on a home you had for sale?