How Do I Get the Best Interest Rate on a Loan?

Whether trying to consolidate debt with a personal loan or thinking about a loan to pay for a major life event, taking on debt is a financial move that warrants some consideration. It’s important to understand the financial commitment that taking on a personal loan — or any other debt — entails. This includes understanding interest rates you might qualify for, how a loan term affects the total interest charged, fees that might be charged by different lenders, and, finally, comparing offers you might receive.

Shopping around and comparing loans can increase your confidence that you’re getting the best interest rate on a loan.

What’s a Good Interest Rate on a Loan?

You may see advertisements for loan interest rates, but when you get around to checking your personal loan interest rate, what you’re offered may be different than rates you’ve seen. Why is that? A loan company may have interest rate ranges, but the lowest, most competitive rates may only be available to people who have excellent credit, as well as other factors.

When shopping around for a loan, it’s typical that when checking your rate, even with online personal loan companies, you can check your rate without affecting your credit score. This pre-qualification rate is just an estimate of the interest rate you would likely be offered if you were to apply for a loan, but it can give you a good estimate of what sort of rate you might be offered. You can compare rates to begin to filter potential companies to use to apply for a loan.

Recommended: Personal Loan Calculator

Getting a Favorable Interest Rate on a Loan

The potential interest rate on a loan depends on a few factors. These may include:

•   The amount of money borrowed.

•   The length of the loan.

•   The type of interest on your loan. Some loans may have variable interest (interest rates can fluctuate throughout the life of the loan) or a fixed interest rate. Typically, starting interest rates may be lower on a variable-rate loan.

•   Your credit score, which consists of several components.

•   Being a current customer of the company.

For example, your credit history, reflected in your credit score, can give a lender an idea of how much a risk you may be. Late payments, a high balance, or recently opened lines of credit or existing loans may make it seem like you could be a risky potential borrower.

If your credit score is not where you’d like it to be, it may make sense to take some time to focus on increasing your credit score. Some ways to do this are:

•   Analyzing your credit report and correcting any errors. If you haven’t checked your credit report, doing so before you apply for a loan is a good first step to making sure your credit information is correct. Then you’ll have a chance to correct any errors that may be bringing down your credit score.

•   Work on improving your credit score, if necessary. Making sure you pay bills on time and keeping your credit utilization ratio at a healthy level can help improve your credit score.

•   Minimize opening new accounts. Opening new accounts may temporarily decrease your credit score. If you’re planning to apply for a loan, it may be good to hold off on opening any new accounts for a few months leading up to your application.

•   Consider a cosigner or co-applicant for a loan. If you have someone close to you — a parent or a partner — with excellent credit, having a cosigner may make a loan application stronger. Keep in mind, though, that a cosigner will be responsible for the loan if the main borrower does not make payments.

Recommended: What is a Good APR?

Comparing Interest Rates on Personal Loans

When you compare loan options, it can be easy to focus exclusively on interest rates, choosing the company that may potentially offer you the lowest rate. But it can also be important to look at some other factors, including:

•   What are the fees? Some companies may charge fees such as origination fees or prepayment penalties. Before you commit to a loan, know what fees may be applicable so you won’t be surprised.

•   What sort of hardship terms do they have? Life happens, and it’s helpful to know if there are any alternative payment options if you were not able to make a payment during a month. It can be helpful to know in advance the steps one would take if they were experiencing financial hardship.

•   What is customer service like? If you have questions, how do you access the company?

•   Does your current bank offer “bundled” options? Current customers with active accounts may be offered lower personal loan interest rates than brand-new customers.

Recommended: Avoiding Loan Origination Fees

Choosing a Personal Loan For Your Financial Situation

Interest rates and terms aside, before you apply for a loan, it’s a good idea to understand how the loan will fit into your life and how you’ll budget for loan payments in the future. The best personal loan is one that feels like it can comfortably fit in your budget.

But it also may be a good idea to assess whether you need a personal loan, or whether there may be another financial option that fits your goals. For example:

•   Using a buy now, pay later service to cover the cost of a purchase. These services may offer 0% interest for a set amount of time.

•   Transferring high-interest credit card debt to a 0% or low-interest credit card, and making a plan to pay the balance before the end of the promotional rate.

•   Taking on a side hustle or decreasing monthly expenses to be able to cover the cost of a major purchase or renovation.

•   Researching other loan options, such as a home equity loan, depending on your needs.

Recommended: 39 Ways to Earn Passive Income Streams

The Takeaway

A loan is likely to play a big part in your financial life for months or years, so it’s important to take your time figuring out which loan option is right for you. And it’s also important to remember that interest rate is just one aspect of the loan. Paying attention to details like potential fees, hardship clauses, and other factors you may find in the small print may save you money and stress over time.

SoFi offers competitive unsecured personal loan options with fixed rates and no fees. Completing an easy online application will show what rate you qualify for — no commitment required and it won’t affect your credit score*.

Check your rate in just one minute.

Photo credit: iStock/Prostock-Studio


*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Source: sofi.com

12 Steps to Filling out the FAFSA Form 2021-2022

For many people, one of the first steps to applying for college is filling out the Free Application for Federal Student Aid, or FAFSA®. This form helps the government determine your eligibility for federal student aid, including subsidized and unsubsidized student loans, as well as grants and work-study opportunities.

Completing The 2021-2022 FAFSA Application

The FAFSA form 2021 may look a bit different if you’ve filled out the form in the past. That’s because of the FAFSA® Simplification Act, which was passed in December 2020 and designed to make the FAFSA more accessible for lower-income students and families. While most of these changes won’t go into effect for the upcoming FAFSA cycle, we’ll point in this article a few changes to FAFSA you will see this year.

Recommended: FAFSA 101: How to Complete the FAFSA

12 Steps to Fill Out the FAFSA

FAFSA opens Oct. 1, 2020, and closes June 30, 2022 for the 2021/2022 academic year. However, FAFSA deadlines may vary depending on the states and schools you’re applying to, so you may want to check with each school to confirm their FAFSA deadline. If you’re ready to fill out FAFSA, we’ve outlined steps required in the process.

Not ready to fill out the FAFSA? You can fill out an abridged Federal Student Aid Estimator to give you an idea of what filling out the actual FAFSA will be like and to estimate your expected student aid package.

1. Required Documents Ready

Before even loading the online FAFSA form, it may be useful to have all your required documents in order to make the application process even easier. The things you’ll need may include:

•   Social security or alien registration ID

•   Drivers license or state ID

•   Federal income tax returns, W-2s and other financial documents for both yourself and your parent(s) if you’re a dependent (more on that later)

•   Bank statements

•   Untaxed income

•   Title IV Institution Codes for schools you’re applying to (again, more on that later)

•   Download app, if you plan on applying on mobile (you can also apply on desktop)

Dependent students will also need to provide similar information for their parents.

2. FSA IDs

There’s one more thing you’ll need in order to apply for FAFSA, and that’s a federal student aid ID, or FSA ID . This is simply the username or password you’ll use to log into FAFSA. Note that if you need to enter parental financial information, whoever is providing that financial information will also need to create an FSA ID .

3. Basic Information

Now that you have a FSA ID, you’re ready to log in and get started. The first few steps of FAFSA will be filling out basic information. The site or app will first ask you if you are a student, parent, or preparer helping a student fill out the FAFSA. Select which one applies to you. You should then be prompted to provide the following:

•   Your full name

•   Date of birth

•   Social security number

4. Starting the Application

Once you fill in this information, you will be asked to accept or decline the disclaimer, which details how the site will use and monitor your data. You should then be prompted to either start a FAFSA for 2021-2022 or 2020-2021. If you’re filing FAFSA for the upcoming year and are not currently enrolled in college, you should choose “Start 2021-2022 FAFSA.”

You’ll also be asked to create a save key, which is simply a four-digit code you’ll use to save your application. If you don’t finish FAFSA in one sitting, then you’ll be asked to enter your save key to continue filling it out at a later date.

5. Section 1: Student Information

Next, you’ll need to enter some information about yourself, including (but not limited to):

•   Social security number

•   Full name

•   Date of birth

•   Email address

•   Phone number

•   Home address

•   State of residence

•   Citizenship status

•   High school completion status

•   College degree level

•   If you’d like to be considered for work-study

6. Section 2: College Search Section

To send your FAFSA information to schools you’re applying to, you’ll need to find the federal school code for each school you want your information sent to. Doing so allows colleges to receive your FAFSA information and use it to provide you a financial aid package. You can find this code either on the school’s website or by searching for it on the FAFSA form itself.

7. Section 3: Dependency Status

You can either apply to FAFSA as a dependent of your parents or as an independent. If you’re a first-time college student and will graduate from high school in 2022 and/or are under 24 years old, you’ll most likely need to file as a dependent, meaning you’ll need your parents’ financial information to apply.

Section 3 of the FAFSA will help you determine if you’re an independent or dependent student. You’ll need to provide some more information about yourself, such as your marital status, if you have children or other dependents, and if you’re at risk or are currently experiencing homelessness.

Once you’ve filled out this information, FAFSA should display a message that determines whether or not you’re considered a dependent and therefore need parental financial information to determine expected family contribution (which will soon be replaced with the student aid index).

(Note that the rest of these steps assume you’re filing as a dependent. While the process of filing as an independent will be similar, you won’t be asked to provide information about your parents.)

8. Section 4: Parental Information

If you need parental information for FAFSA, you’ll include that in this section. Information you’ll need includes (but is not limited to):

•   Parental marital status

•   Date of parent’s marriage

•   Parent social security number

•   Parent name

•   Parent date of birth

•   Parent email address

•   Parent’s spousal information for all of the above

•   Household size

9. Section 5: Parent Financials

Next, you’ll need to provide some financial information about your parents. You’ll be asked for information such as (but not limited to):

•   Last year taxes were filed

•   Tax return type

•   Filing status

•   IRS Data Retrieval Tool (otherwise, need to fill in tax information manually)

•   Combat pay

•   Grant and scholarship aid

•   Education credits

•   Untaxed IRA distributions

•   IRA deductions and payments

•   Tax exempt interest income

•   Child support payments

•   Need-based employment programs

•   Net worth

10. Section 6: Student financials

Now it’s time to provide some financial information about yourself. You’ll be asked for information such as (but not limited to):

•   Last year taxes were filed

•   Tax return type

•   Filing status

•   IRS Data Retrieval Tool (otherwise, need to fill in tax information manually)

•   Combat pay

•   Grant and scholarship aid

•   Education credits

•   Untaxed IRA distributions

•   IRA deductions and payments

•   Tax exempt interest income

•   Child support payments

•   Need-based employment programs

•   Net worth

11. Check for errors

Once you’ve reached the end of the application, you should receive a FAFSA summary. Before hitting submit, you may want to ensure that all the information you included is accurate. Reviewing this information closely may help avoid filing a FAFSA correction later.

12. Agreement of Terms

The FAFSA requires you to accept or reject its agreement of terms. If your parent(s) also provided information because you filed as a dependent, they will also need to accept these terms in order for you to submit the application. Both you and your parent(s) will e-sign using your FSA ID. Once you’ve accepted the terms, your FAFSA will be complete.

Sample FAFSA Form for 2021/2022

Do you need some extra help? FAFSA’s Financial Aid Tool Kit is rich with resources and information. Some documents include step-by-step instructions on how to complete the FAFSA on the website and mobile app, lists of tips for filling out the FAFSA, question-and-answer documents, and more. You can also view a sample FAFSA form or a presentation on how to fill out FAFSA using the mobile app.

This student aid report may also be useful if you need to see another FAFSA sample form.

Recommended: How much FAFSA Money Can I Expect?

What’s Different About the 2021/2022 FAFSA

As previously discussed, the FAFSA Simplification Act passed last December resulted in a few changes to FAFSA. However, most of these changes won’t go into effect for the 2021-2022 school year. For FAFSA 2021-2022, major changes include the following:

•   Automatic-Zero EFC: FAFSA will give all applicants with an income of $27,000 or less an EFC of zero, meaning FAFSA does not expect families to help pay for the applicant’s college. This amount increased $1,000 from last year, which set the cut-off at $26,000, so more students should be able to receive a EFC of zero.

•   Schedule 1 Questions: When populating tax information from the IRS Data Retrieval Tool, the tool will automatically answer whether or not the applicant filed for a Schedule 1.

Additional changes are already scheduled for the 2022/2023 FAFSA form, such as drug convictions no longer negatively affecting one’s ability to get financial aid. Additionally, registration status for Selective Service for eligible males will also no longer be considered for financial aid. You can review the latest changes to the FAFSA on the official FAFSA website.

A Few Extra Tips

Completing the FAFSA can be an overwhelming process. For those filing for the first time, you may want to check out this 2021-2022 FAFSA guide and some FAFSA tips to make the process even easier. If you need some more help on how to fill out FAFSA 2021/2022, some tips from StudentAid.Gov include:

1.    Completing the form: It can be tempting to skip the FAFSA altogether, especially if you’re from a middle- or upper-class family and you believe you won’t be eligible for aid. However, falling for this assumption could mean leaving aid on the table.

2.    Paying attention to deadlines: As stated earlier, FAFSA 2021/2022 opens Oct. 1 and closes June 30, 2022. However, the schools you’re applying to may require you to fill out the FAFSA before June 30, so it’s best to ask each school’s financial aid office about what their FAFSA deadlines are to avoid losing out on aid.

3.    Using the IRS Data Retrieval Tool: This tool auto-fills your latest tax information from the IRS database. When you fill out FAFSA, you’ll have the option to either fill out your tax data manually or use the tool. Using the tool could help you avoid making costly mistakes while also saving you time.

4.    Filling out every section: Not sure how to fill out a section? FAFSA offers helpful tips throughout each section of the FAFSA form to make filling out the FAFSA easier. Additionally, not filling out a section of FAFSA could result in your form not being submitted or you receiving less financial aid.

5.    Double-checking the form: Before you submit, you may want to go back and double-check your answers to make sure everything is filled out and is accurate.

Recommended: Navigating Your Financial Aid Package

The Takeaway

Filling out the FAFSA is a great first step to pay for your dream school. This is one of the best ways of getting scholarships and grants you won’t have to pay back or government-backed loans to help you pay for college-related costs. By learning how to properly fill out the FAFSA (and then actually doing so!), you can increase your odds of getting a bigger financial aid package.

However, if your financial aid package doesn’t cover all your college expenses, you may want to consider private student loans. It’s important to note that private student loans don’t offer the same protections as federal student loans, like income-driven repayment plans or deferment options. For this reason, private student loans are generally considered only after other sources of funding have been considered.

SoFi’s Private Student Loans are available for undergraduate and graduate students, as well as parents. In just a few minutes, you can apply online for student loans and be well on your way to financing your education.

Find out more about SoFi’s Private Student Loan options.

Header photo credit: iStock/Vladimir Sukhachev

FAFSA photos credit: FAFSA’s Financial Aid Tool Kit


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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

ESG Is Not ‘Ethical Investing.’ And That’s OK.

As enthusiasm about ESG investing has been on the rise, so too has controversy. ESG is an acronym that refers to the environmental, social and governance considerations relating to investing. It’s an approach that, by some estimates, may become integrated into half of all U.S. managed accounts by 2025.

Why should investors and companies care about ESG? The argument is that in the long run, those risks will impact the business — companies that consider these non-financial, yet material, metrics in their strategy are best poised to mitigate risk and succeed. The increasing frequency of extreme weather events, rising prices for oil and gas, and spiraling discontent among workers provide early evidence of how environmental and social concerns will impact investors.

Where ESG Draws Criticism

Criticism about ESG generally falls into two broad categories.  One view holds that ESG is systemic “greenwashing.” Companies publish glossy reports about their social and environmental engagement and hope that investors take interest or include them in sustainability indices. This view maintains that companies are rewarded for publishing a report that reveals some good practices, while ignoring the bad ones, and thus get a bump up in their third-party ESG ratings.

The second category of criticism is that if environmental and social challenges in business are so fundamental to long-term good management, and thus good financial performance, then the market will eventually price it into corporate valuations. This view believes that markets are efficient; it then follows that better social and environmental outcomes will prevail, if we keep the eye on the ball, which is financial performance.

A consistent assumption among the critics, however, is that ESG is designed to enable better ethical and social outcomes.  But that’s not necessarily the case — ESG is not the same as ethical, socially responsible or impact investing. And that’s OK, because we need all these strategies.

Impact investors seek measurable impacts on people, planet and profits with respect to how they allocate their money. A socially responsible or ethical investment strategy might seek to exclude from their funds companies that are deemed unethical. But an ESG strategy remains invested in the company, even if there are activities not aligned with their values, and will push for change.

For example, ESG investors might use their investment stewardship and proxy voting team to engage with the companies’ boards and CEOs about their plans to address climate risk, or even vote against the re-election of certain board members. The recent proxy battle victory by activist investor Engine No.1 at Exxon Mobil demonstrates this point (see my analysis here).

The Impact ESG Has on the Economy and Companies

Advocates for ESG investing indicate that their interest in climate and social factors stems from their view that poor management of those risks will impact financial portfolios and long-term business performance. The analytical focal point is impact on the economy and on the financial performance of companies, not the other way around.

Regulators also point to the risks that ESG considerations pose to the financial portfolios.  The Department of Labor, for instance, recently proposed rules that, if passed, would permit fiduciary investment managers to take ESG risks into consideration, namely because they “may have a direct relationship to the economic value of the plan’s investment.”  If there are any positive effects on people and the planet, it’s considered a “collateral benefit.”

The NY Department of Financial Services also provided guidance about climate change risks to the financial firms under its jurisdiction.  They indicated that financial firms, particularly insurance companies, should integrate into their governance and risk-management processes how various climate change scenarios are likely to impact their business

The frame of analysis, thus, is the impact on business and financial systems. The success of ESG depends on further expanding, measuring and defining the business case for ethics. This is one reason why making “the business case” for social challenges has become a feature of academic research and the business press (as I argue here, sometimes it goes too far).

Maintaining Principles Is a Key to Success

A principled ESG fund will therefore present investments that are at the intersection of financial performance and social or environmental good, so that investors can align their values with those opportunities. As Tariq Fancy describes in The Secret Diary of a Sustainable Investor, think of a Venn diagram where purpose and profit seek to intersect — that intersection constitutes the ESG integration approach for social and environmental good. 

For ESG to continue to grow and succeed, the intersection in that Venn diagram needs to expand. Financial firms, companies, rating agencies and other intermediaries need to collaborate to improve the consistency of data, the accuracy of marketing and continued standardizations in disclosures. 

To be sure, there is greenwashing in ESG, and some companies take advantage of sustainability reports by, for example, highlighting only marginal efforts around stakeholder engagement without any change in their core operations.  Governments and regulators should help define the space and provide oversight with respect to these practices.

We all need to speak, write and report more precisely around this topic. Conflating ESG, sustainability, impact and ethical investing can confuse the aims of adherents to each approach.  The longevity of the movement depends on it.

Executive Director, American College Center for Ethics in Financial Services

Azish Filabi, JD, is Executive Director of the American College Center for Ethics in Financial Services and an Associate Professor of Ethics at the American College of Financial Services. She joined The College in 2020. Before that, Filabi worked at BlackRock as Vice President for Investment Stewardship, where she was involved with topics such as executive compensation, board quality, diversity and composition, and disclosure of environmental and social risks.

Source: kiplinger.com

Dow Jones vs. Nasdaq vs. S&P 500 – What Are the Differences?

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Additional Resources

Wondering how “the market” did today?

When American investors refer to “the market” or “the stock market,” they’re usually referring to one of the three major U.S. stock exchanges: the Dow Jones, the Nasdaq, and the S&P 500. Or all three. 

But these indexes represent different stocks and market segments, so you should understand the differences before investing in stocks. 

The Dow Jones Industrial Average

The oldest U.S. stock exchange, the Dow Jones Industrial Average — or the DJIA, Dow, or Dow Jones for short — began in 1896 as a way to track the 12 largest industrial companies of the era. 

Today the Dow includes 30 blue-chip companies ranging from Microsoft to Coca Cola to Disney, and the index features all industries except for utilities and transportation. These market sectors have their own separate Dow Jones indexes. 

The DJIA doesn’t swap in or out companies often, and the criteria remains vague. Aside from being some of the largest companies in the country, the companies are expected to be leaders in their industry. A committee meets periodically to vote on keeping or replacing members of the index. 

Stocks in the Dow Jones are weighted by price, so stocks with higher prices make up a greater percentage of the total index. If a $100 stock rises by $10, and a $5 stock also rises by $10, both changes are weighted equally, even though that jump in price represents a much larger leap in value for the $5 stock. 

The Dow offers some insight into how the nation’s largest companies are performing. But with only 30 companies, it hardly represents the U.S. stock market as a whole. The price weighting also distorts the index’s performance, as a company’s share price tells you less than its market capitalization (market cap). 

Take the index’s movements with a grain of salt, and consider it more of an ultra-high cap bellwether rather than a definitive statement about U.S. stock trends.


The S&P 500

The S&P 500 index includes 500 U.S. companies rather than only 30, making it a broader indicator of U.S. large cap stocks. These companies include Alphabet (Google), 3M, Allstate, Amazon, and Microsoft. Note that companies can appear in multiple stock indexes, as Microsoft does. 

The number of companies included in the S&P has changed over time. Going back to 1927, the S&P has returned around 10% per year on average. That includes an era when the index only included 90 companies, before expanding to 500 in 1957. 

Like the Dow, the stocks making up the S&P 500 are determined by a committee. As of 2021, companies must have a market cap of at least $13.1 billion, have positive earnings for at least the last four quarters, maintain adequate liquidity based on price and trading volume, and at least 50% of shares must be owned by the public (known as public float).

Unlike the Dow, the S&P 500 is weighted by market cap rather than price. Market capitalization includes the total value of all a company’s shares: the share price multiplied by the number of outstanding shares. 

Imagine a company with shares priced at $1,000, but which only has 100 shares in circulation, for a total market cap of $100,000. In contrast, another company has 1 million shares in circulation, but each share is worth only $10, for a total market cap of $10 million. Which company has a higher market value? The one with a market cap of $10 million of course, which is why the S&P 500 weights by market cap rather than stock price.  

The S&P 500 offers a broader picture of how U.S. stocks are trending. Even so, the index represents the largest U.S. companies, and tells you nothing of how smaller companies have performed.


The Nasdaq Composite

First and foremost, understand that the Nasdaq is a stock exchange, and was in fact the first completely electronic stock exchange. The Nasdaq Composite is the stock index, which includes over 3,000 of the companies traded on the Nasdaq. The index includes all companies with common stock trading on the Nasdaq, but excludes preferred stock, exchange-traded funds (ETFs), and other types of securities. 

While investors tend to think of the Nasdaq as an exchange for technology stocks, stocks from all market sectors trade on the Nasdaq. Even so, the Nasdaq Composite index does disproportionately feature tech stocks. 

Example companies listed on the Nasdaq include Apple, Microsoft, Netflix, Tesla, and Intel. Many investors and pundits use the Nasdaq Composite as a barometer for the technology sector as a whole, even though it includes many non-tech companies (such as PepsiCo). 

Like the S&P 500, the Nasdaq Composite is weighted by market capitalization. 

Don’t confuse the Nasdaq Composite — which includes nearly every stock that trades on the Nasdaq — with the Nasdaq 100. The latter includes just 100 of the largest non-financial stocks that trade on the Nasdaq, such as Starbucks, Adobe, and Amazon. 


Which Index Should You Follow?

As a broad measure of the U.S. stock market, the S&P 500 serves as the most representative index. It includes companies in every industry, and is weighted by market cap. Even so, it includes only large-cap companies. 

For a more tech-oriented weathervane, follow the Nasdaq Composite’s movements. If you want a glimpse into small-cap stocks, check the Russell 2000. 

The Dow Jones may get the most attention from reporters, but it actually represents the U.S. market least well of the three major indexes. The sample size is too small, and being price-weighted further distorts its value.


Final Word

The three major stock indexes above only represent U.S. stocks, not international companies. 

For more global exposure, you can explore foreign stock market indexes such as the S&P Europe 350 Index or the Dow Jones Asian Titans 50 Index. 

Better yet, save yourself the stress and don’t bother following the stock market’s movements at all. Instead, automate your stock investments with a robo-advisor, and simply dollar-cost average your investments in index funds. Avoid emotional investing by ignoring the daily volatility of the market. 

While day traders need to stay glued to their stock tickers, you don’t. The stock market rises and falls, and over the long term it averages a strong upward trend. I sleep easily at night knowing that when it goes up, I enjoy a higher net worth. When it goes down, I get to buy stocks at a discount. No matter what happens, I win — because I participate in the market on autopilot, without letting emotions affect my investment decisions.

.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-table-of-content-wrappadding:30px 30px 30px 30px;background-color:#f9fafa;border-color:#cacaca;border-width:1px 1px 1px 1px;.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-table-of-contents-titlefont-size:14px;line-height:18px;letter-spacing:0.06px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:inherit;text-transform:uppercase;.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-table-of-content-wrap .kb-table-of-content-listcolor:#001c29;font-size:14px;line-height:21px;letter-spacing:0.01px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:inherit;.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-table-of-content-wrap .kb-table-of-content-list .kb-table-of-contents__entry:hovercolor:#16928d;.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-table-of-content-list limargin-bottom:7px;.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-table-of-content-list li .kb-table-of-contents-list-submargin-top:7px;.kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_b1122d-50 .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:beforebackground-color:#f9fafa;

Source: moneycrashers.com

Using In-School Deferment as a Student

Undergraduate and graduate students in school at least half-time can put off making federal student loan payments, and possibly private student loan payments, with in-school deferment. The catch? Interest usually accrues.

Loans are a fact of life for many students. In fact, a majority of them — about 70% — graduate with student loan debt.

While some students choose to start paying off their loans while they’re still in college, many take advantage of in-school deferment.

What Is In-School Deferment?

In-school deferment allows an undergraduate or graduate student, or parent borrower, to postpone making payments on:

•   Direct Loans, which include PLUS loans for graduate and professional students, or parents of dependent undergrads; subsidized and unsubsidized loans; and consolidation loans.

•   Perkins Loans

•   Federal Family Education Loan (FFEL) Program loans.

Parents with PLUS loans may qualify for deferment if their student is enrolled at least half-time at an eligible college or career school.

What about private student loans? Many lenders allow students to defer payments while they’re in school and for six months after graduation. Sallie Mae lets you defer payments for 48 months as long as you are enrolled at least half-time.

But each private lender has its own rules.

Recommended: How Does Student Loan Deferment in Grad School Work?

How In-School Deferment Works

Federal student loan borrowers in school at least half-time are to be automatically placed into in-school deferment. You should receive a notice from your loan servicer.

If your loans don’t go into automatic in-school deferment or you don’t receive a notice, get in touch with the financial aid office at your school. You may need to fill out an In-School Deferment Request .

If you have private student loans, it’s a good idea to reach out to your loan servicer to request in-school deferment. If you’re seeking a new private student loan, you can review the lender’s deferment rules.

Most federal student loans also have a six-month grace period after a student graduates, drops below half-time enrollment, or leaves school before payments must begin. This applies to graduate students with PLUS loans as well.

Parent borrowers who took out a PLUS loan can request a six-month deferment after their student graduates, leaves school, or drops below half-time enrollment.

Requirements for In-School Deferment

Students with federal student loans must be enrolled at least half-time in an eligible school, defined by the Federal Student Aid office as one that has been approved by the Department of Education to participate in federal student aid programs, even if the school does not participate in those programs.

That includes most accredited American colleges and universities and some institutions outside the United States.

In-school deferment is primarily for students with existing loans or those who are returning to school after time away.

The definition of “half-time” can be tricky. Make sure you understand the definition your school uses, as not all schools define half-time status the same way. It’s usually based on a certain number of hours and/or credits.

Do I Need to Pay Interest During In-School Deferment?

For federal student loans and many private student loans, no.

If you have a federal Direct Unsubsidized Loan, interest will accrue during the deferment and be added to the principal loan balance.

If you have a Direct Subsidized Loan or a Perkins Loan, the government pays the interest while you’re in school and during grace periods. That’s also true of the subsidized portion of a Direct Consolidation Loan.

Interest will almost always accrue on deferred private student loans.

Although postponement of payments takes the pressure off, the interest that you’re responsible for that accrues on any loan will be capitalized, or added to your balance, after deferments and grace periods. You’ll then be charged interest on the increased principal balance. Capitalization of the unpaid interest may also increase your monthly payment, depending on your repayment plan.

If you’re able to pay the interest before it capitalizes, that can help keep your total loan cost down.

Alternatives to In-School Deferment

There are different types of deferment aside from in-school deferment.

•   Economic Hardship Deferment. You may receive an economic hardship deferment for up to three years if you receive a means-tested benefit, such as welfare, you are serving in the Peace Corps, or you work full time but your earnings are below 150% of the poverty guideline for your state and family size.

•   Graduate Fellowship Deferment. If you are in an approved graduate fellowship program, you could be eligible for this deferment.

•   Military Service and Post-Active Duty Student Deferment. You could qualify for this deferment if you are on active duty military service in connection with a military operation, war, or a national emergency, or you have completed active duty service and any applicable grace period. The deferment will end once you are enrolled in school at least half-time, or 13 months after completion of active duty service and any grace period, whichever comes first.

•   Rehabilitation Training Deferment. This deferment is for students who are in an approved program that offers drug or alcohol, vocational, or mental health rehabilitation.

•   Unemployment Deferment. You can receive this deferment for up to three years if you receive unemployment benefits or you’re unable to find full-time employment.

For most deferments, you’ll need to provide your student loan servicer with documentation to show that you’re eligible.

Then there’s federal student loan forbearance, which temporarily suspends or reduces your principal monthly payments, but interest always continues to accrue.

Some private student loan lenders offer forbearance as well.

If your federal student loan type does not charge interest during deferment, that’s probably the way to go. If you’ve reached the maximum time for a deferment or your situation doesn’t fit the eligibility criteria, applying for forbearance is an option.

If your ability to afford your federal student loan payments is unlikely to change any time soon, you may want to consider an income-based repayment plan or student loan refinancing.

The goal of refinancing with a private lender is to change your rate or term. If you qualify, all loans can be refinanced into one new private loan. Playing with the numbers can be helpful.

Just know that if you refinance federal student loans, they will no longer be eligible for federal deferment or forbearance, loan forgiveness programs, or income-driven repayment.

Recommended: Student Loan Refinancing Calculator

The Takeaway

What is in-school deferment? It allows undergraduates and graduate students to buy time before student loan payments begin, but interest usually accrues and is added to the balance.

If trying to lower your student loan rates is something that’s of interest, look into refinancing with SoFi.

Students are eligible to refinance a parent’s PLUS loan along with their own student loans.

There are absolutely no fees.

It’s easy to check your rate.


We’ve Got You Covered


SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF JANUARY 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SLR18202

Source: sofi.com

Dear Penny: Can My Husband Stop His Brother From Stealing His Inheritance?

Dear Penny,
I should note that some of the assets you mentioned, like IRAs and life insurance policies, pass through beneficiary designation rather than probate. That means whoever is listed as the beneficiary receives them regardless of what the person’s will states.
I’m also a bit confused about what role the accountant played in this situation. Typically, you’d need an attorney to draft legally binding documents, like a will or a trust.
But disputing a will is a long and expensive process. Most people who mount a challenge will lose.
Your husband can try to foster a discussion. He can try to make it as transparent as possible to avoid disputes with his brother. But ultimately, these aren’t your husband’s decisions. This is your mother-in-law’s money, not his. You and your husband will need to live with whatever choices she makes.
Related Posts
Is my husband’s brother able to keep him from his half of their inheritance? His brother has made himself the executor of the will and power of attorney, or something. 

Privacy Policy
I think your husband is most likely to be successful if he doesn’t approach the conversation from a position of entitlement. This isn’t about making sure he gets his half. The discussion should be about making sure they understand their mother’s wishes.
A better option would be for your husband to talk directly with his mother and brother about his concerns. That means your husband will have to re-establish communication with his brother. They don’t have to become best friends, but they will need to be cordial. Sometimes parents avoid discussing estate planning with their children when they know the siblings’ relationship is strained.
It’s possible to contest a will during the probate process after someone dies, but this is an uphill battle. Usually, you’d have to prove that the person lacked the mental capacity to make or change their will, or that they signed the will because of fraud or undue influence. You can also argue that the will wasn’t properly signed or witnessed in some cases.


My husband’s brother took their mother to his accountant to make sure her mutual funds, stocks and banking accounts were being taken care of and that nobody would be able to extort money from her. She is wealthy. The will stated everything was to be split equally, half and half. 
Ready to stop worrying about money?
I feel they should have gone together to the CPA. My husband won’t listen to me. Am I in the wrong? 
Source: thepennyhoarder.com
I’m not sure what you’re asking of your husband, or why you think you might be in the wrong. But I can’t imagine why your mother-in-law would leave everything to one sibling if she wanted both of her children to split things 50/50. And if your husband is counting on his brother’s goodwill to get an inheritance, he’s in for a rude awakening.
But your mother-in-law isn’t required to split everything down the middle. In fact, she doesn’t have to leave your husband anything at all. It certainly sounds like your brother-in-law is being sketchy here. But sometimes parents have good reasons for leaving one sibling a greater share of their estate. For example, if one child cared for them in their later years or one sibling has greater needs than the others, a parent may choose not to distribute things evenly.
Dear C.,
But that will be between your mother-in-law and her attorney. It’s important to understand that any attorney’s ethical obligation in this situation is to your mother-in-law. Their job isn’t to make sure your husband or his brother get the inheritance they think they deserve.
She has two homes. My husband’s brother has taken one of the homes and lets his mother-in-law reside there rent-free. 

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Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.

9 Best Books to Read Before Buying a Home

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Dig Deeper

Additional Resources

For most people, buying a home is the biggest purchase decision of a lifetime. In fact, it’s one of the biggest decisions, period. 

Your mortgage is probably the largest debt you’ll ever take on, and taking care of a house is one of the largest responsibilities. Next to getting married or having children, it’s hard to think of anything that will have a greater impact on your life. 

With so much at stake, it makes sense to learn as much as possible about the process before you take the plunge. You can find lots of articles about home buying online, of course, just like any other subject. But for a really in-depth take on the topic, you can’t beat a good book.

Best Books to Read Before Buying a Home

There are literally hundreds of books on home buying, covering the subject from every possible angle. Some real estate books provide a walk-through of the whole process. Some focus on the legal details. And some are all about getting the best deal on a mortgage.

With so many books to choose from, how do you find one that’s useful for you? To get started, look at what books other people have found most helpful. The books on this list all get good reviews from finance professionals, as well as ordinary homeowners.


1. “Home Buying Kit for Dummies” by Eric Tyson & Ray Brown 

All the books in the “Dummies” series explain complex topics — from computer languages to sports — to people who know nothing about them. “Home Buying Kit for Dummies” takes the same approach. It covers all the basics of buying a home in an easy-to-digest form.

This comprehensive guide covers every step of the home-buying process, including:

The book is ideal for first-time home buyers because it assumes no prior knowledge. It’s all in plain English, with no fancy lingo. You can read it from cover to cover or dip into it as needed to learn about specific topics.

To aid reading, the pages are peppered with icons marking key points. These include a light bulb for tips, a warning sign for pitfalls to avoid, and a deerstalker cap for topics to research on your own. They make it easy to spot important info at a glance.


2. “Buying a Home: The Missing Manual” by Nancy Conner 

The “Missing Manuals” series deals mostly with computer software and hardware. But it’s branched out into finance, another subject that ought to come with instructions. In this volume, Conner, a real estate investor, walks you through the home-buying process from start to finish.

“Buying a Home: The Missing Manual” is a step-by step guide to all the ins and outs of home buying. Its includes chapters on:

  • Choosing a real estate agent, mortgage lender, and lawyer
  • Choosing the right neighborhood
  • Finding your dream home 
  • Figuring out how much to offer on a house 
  • Financing your down payment
  • Comparing mortgages
  • Inspections
  • Closing costs

And it does all this with simple language and handy, bite-size chunks of information. Fill-in forms throughout the book help you apply the author’s expert advice to your specific situation.


3. “NOLO’s Essential Guide to Buying Your First Home” by Ilona Bray J.D., Alayna Schroeder & Marcia Stewart 

The legal website NOLO is the top place to find legal advice online. Along with its free articles, the site offers an array of do-it-yourself forms, books, and software. This walk-through guide to homebuying is just one example.

“NOLO’s Essential Guide to Buying Your First Home” covers most of the same topics as the Dummies and Missing Manual books, but from a different angle. It focuses on all the legal ins and outs of the home-buying process.

Although three attorneys wrote this book, it doesn’t rely on their knowledge alone. It draws on the knowledge of 15 other real estate professionals, including Realtors, loan officers, investors, home inspectors, and landlords. It’s like having your own private team of experts. For example:

  • A real estate agent offers tips on how to dress for an open house. 
  • A mortgage broker explains the risks of oral loan preapprovals. 
  • A closing expert discusses the importance of title insurance. 

Along with the expert advice, the book provides real-world stories from over 20 first-time home-buyers. Their experiences let you preview the process before jumping in yourself.


4. “Home Buyer’s Checklist: Everything You Need to Know — But Forgot to Ask — Before You Buy a Home” by Robert Irwin 

Every home-buying guide talks about the need for a home inspection. However, there are many problems home inspectors don’t always look for. The only way to detect them is to ask the right questions. In “Home Buyer’s Checklist,” Robert Irwin tells you what those questions are.

Irwin is a real estate professional with over three decades of experience. He knows all about the hidden flaws in homes and how to track them down. Irwin walks you through a house room by room and points out possible problem areas, such as:

  • Doors and door frames
  • Windows and window screens
  • Fireplaces
  • Light fixtures
  • Floors
  • Woodwork
  • Attic insulation

For each area, he notes possible problems and how to spot them. He also explains what they cost to fix and what damage they can cause if you don’t fix them. And he helps you use that information to your advantage in negotiating the price of the house.

Armed with this information, you can avoid unpleasant surprises when you move into your new home. It won’t make your house’s problems go away, but it will prepare you to deal with them — and keep the money in your pocket to do it.


5. “The 106 Common Mistakes Home Buyers Make (and How to Avoid Them)” by Gary Eldred

To first-time homebuyers, the real estate market is a big, confusing place. In “The 106 Common Mistakes Home Buyers Make (and How to Avoid Them),” Gary Eldred offers you a map to help you find your way around.

Eldred’s guide draws on the real-world experiences of homebuyers, home builders, real estate agents, and mortgage lenders. They shed light on the mistakes homebuyers make most often, such as:

  • Believing everything a real estate agent says
  • Underestimating the cost of owning a home
  • Buying in an upscale neighborhood that’s on the decline
  • Paying too much for a house
  • Letting your agent handle the price negotiations
  • Staying out of the housing market due to fear

With the help of Eldred’s examples, you can avoid these pitfalls and find a house that’s both a comfortable home and a sound investment.


6. “No Nonsense Real Estate: What Everyone Should Know Before Buying or Selling a Home” by Alex Goldstein 

As both a Realtor and a real estate investor, Alex Goldstein has been on both sides of a real estate transaction. This gives him a unique perspective on what works and what doesn’t in the home buying process.

In “No Nonsense Real Estate,” Goldstein puts that experience to work for you. He offers a step-by-step guide to the home buying process in language a first time home buyer can easily understand. This comprehensive guide covers:

  • The economics of the housing market in simple terms
  • The pros and cons of working with a real estate agent
  • What to look for in a home
  • Assembling a real estate team
  • Types of homes, such as single-family homes, condos, and co-ops
  • Traditional home loans and non-bank financing
  • Tips for sellers to get the best price on a home
  • The five elements of a successful real estate negotiation
  • Real estate contracts and closing costs
  • The eight steps of a real estate closing
  • The basics of real estate investing
  • A real-world case study of a home purchase
  • A list of frequently asked questions
  • A glossary of real estate terms

As a bonus, all buyers of the book gain access to a library of training videos and materials. They can help you find a real estate agent in your area, evaluate investment properties, and more.


7. “The Mortgage Encyclopedia” by Jack Guttentag

One of the most intimidating parts of buying your first home is getting your first mortgage. Not only is it likely the biggest loan you’ve ever taken out, there are dozens of options to consider. And the jargon loan officers use, from “escrow” to “points,” doesn’t make it any easier.

Jack Guttentag’s “The Mortgage Encyclopedia” offers a solution. The author, a former professor of finance at the University of Pennsylvania’s Wharton School, tells you everything you need to know about how mortgages work and what your options are. The book includes:

  • A glossary of mortgage terms, from “A-credit” to “Zillow mortgage”
  • Advice on nitty-gritty issues such as the risks of cosigning a loan and the pros and cons of paying points versus making a larger down payment 
  • The lowdown on common mortgage myths, traps, and hidden costs to avoid
  • At-a-glance tables on topics like affordability and interest costs for fixed-rate and adjustable-rate mortgages

For first-time homebuyers grappling with the details of choosing and signing a mortgage, it’s a must-read.


8. “How to Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye” by Elysia Stobbe 

Another book that focuses on mortgages is “How to Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye.” As the whimsical title suggests, mortgage expert Elysia Stobbe understands how frustrating the mortgage approval process can be. 

To keep you sane, she helps break the process down into bite-sized chunks of info that are easy to manage. Her guide walks you through such details as types of mortgages, loan programs, interest rates, mortgage insurance, and fees. 

Stobbe explains how to find the right lender, choose the best real estate agent to handle negotiations, and find an appropriate type of loan. She also devotes a lot of space to mistakes you should avoid. And she supports it all with interviews with top real estate professionals.


Buying a home is such a huge, complicated process that it’s often hard to figure out where to start. In “100 Questions Every First-Time Home Buyer Should Ask,” Ilyce R. Glink addresses this problem by breaking the process down into a series of questions.

This approach makes it easy to find the information you want. Look through the table of contents to find the question that’s on your mind, then flip to the right page to see the answer. Glink tackles questions on all aspects of home buying, such as:

  • Should I buy a home or continue to rent?
  • How much can I afford to spend?
  • Is a new construction home better than an existing home?
  • What’s the difference between a real estate agent and a broker?
  • Where should I start looking for my dream home?
  • What should I look for at a house showing?
  • How does my credit score affect my chance of getting a mortgage?
  • How do I make an offer on a home?
  • Do I need a home inspection?
  • What happens at the closing?

Glink combines advice from top brokers, real-world stories, and her own experience to provide solid answers to all these questions. And she wraps it up with three appendices covering mistakes to avoid and simple steps to make the home-buying process easier.


Final Word

All the books on this list offer a good grounding in the basics of home buying. But if you’re looking for more details on any part of the process, there’s sure to be a book for that too.

You can find books on just about every aspect of home buying. There are books on every stage of the process, from raising cash for a down payment to preparing for your closing. There are books about home buying just for single people and books on buying a home as an investment.

And once you move into your new home, there are more books to help you organize it, decorate it, and keep it in repair. Just search for the topic that interests you at Amazon, a local bookstore, or your local public library.

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Source: moneycrashers.com

Make Your Own DIY Wrapping Paper This Christmas

Each gift you give is unique and you should wrap them as such.

When it comes time to wrap Christmas gifts, finding the perfect wrapping paper is a little difficult. You want to wrap your gifts for your friends nicely, but you don’t want them to look like every other present out there. Just like all of your Christmas decorations, you want your gift wrappings to have a personality to them. To add your own flair to each gift you give this holiday season, make your own DIY Christmas wrapping paper. Here’s how you can get started making your own one-of-a-kind gift wrapping.

Materials

Before you begin, you’ll need to gather your materials. You’ll definitely need paper, but there are other optional materials you’ll want to consider for your DIY Christmas wrapping paper.

Roll of butcher paper

Roll of butcher paper

Paper

Decide on what paper you want to use. If you want to make a roll of wrapping paper, you’ll want to get butcher paper or a roll of craft or art paper. Art and craft paper can come in many different colors, so you choose what you like.

You can also use other paper, depending on the size of the gift. Newspaper works well for medium-sized gifts and printer or construction paper can do the trick for smaller presents.

Other optional items

You can really use anything you want to decorate your wrapping paper. Consider some of these to bring your paper to life:

  • Paint and paintbrushes
  • Ink pads and stamps
  • Craft foam
  • Scissors
  • Markers
  • Glitter
  • Sequins
  • Glue/glitter glue
  • Stencils
  • Stickers
  • Ribbon/string

Once you’ve gathered all of the materials you want to use, start making your own DIY Christmas wrapping paper!

Ways to make Christmas wrapping paper

Making your own wrapping paper really comes down to your own preferences and creativity. Here are a few ideas to get you started.

Newspaper and watercolor

Grab some plain newspaper and watercolor paints. Using red, green and white watercolors and a large paintbrush, create large patches of each color on the newspaper, letting the paints blend together on the edges. This makes for a unique vintage-style wrapping paper.

Painting paper

Painting paper

Freehanded paint design

If you’re comfortable with it, you can freehand designs with paint. Cut off a piece of butcher paper, then use some paint and a paintbrush to paint a pattern or design. You can make it as simple or as elaborate as you want! Some Christmas designs you can paint, no matter your skill level, are a Christmas tree, leaves and holly berries, ornaments, stockings and candy canes.

Markers and stencils

Simply set your stencil on your paper, then use markers to fill it in. There are many ways you can lay out your stencil, whether you want individual designs that are large or a continuous pattern of something small.

Stamps and paint

Stamps and paint

Stamps and paint

Paint and stamps make for a quick and easy wrapping paper. Grab a stamp you can use with paint or make your own using craft foam or even a potato. Put some paint in a flat container or on a plate and dip your stamp into it. Then, stamp away! You can usually dip it once and stamp it a few times before needing to reload it with paint.

Painted handprint reindeer

This is great to involve the kids with. Put some brown paint in a pie tin or on a paper plate. Dip a tiny hand in the paint palm-down, making sure to cover the entire palm and all of the fingers (you may need to use a paintbrush to get it all covered). Use the hand like a stamp and place it on the paper. Next, grab a paintbrush and paint lines from the fingers to look like antlers. Add some eyes and a red nose on the palm to make the face. Voila! You’ve got a reindeer. Repeat as many times as you want across the wrapping paper.

Ink stamp

Ink stamp

Inked stamps

If you’d rather have designs or patterns that have finer lines, rubber stamps and ink are a good option. Grab a few different colors of ink pads and some of your favorite Christmas stamps. Then simply choose your favorite stamp designs and ink colors, and stamp them onto your paper!

Glitter snowflakes

If you want to add some sparkle and shimmer to your wrapping paper, you can make glitter snowflakes (or really any design). Use glue to draw out snowflakes or your desired design. Immediately after drawing a design, sprinkle glitter over the glue and wait for the glue to dry. Once dry, dump the excess glitter into a container to reuse. If you don’t want to worry about making a mess with glitter, there’s also the option of using glitter glue to make the designs, then letting it dry.

Colored paper cutouts

To add a little more texture and clean lines to your wrapping paper, you can add paper cutouts to it. Choose a few colors of construction paper and cut out designs. Glue the cutouts onto the wrapping paper

Additional items

Wrapping paper isn’t the only thing that can make gifts look great. Using a combination of ribbons, string and other additional pieces to decorate your wrapped presents can make them look festive and unique.

Foliage on present

Foliage on present

Plant foliage

Add small branches from evergreen trees such as fir, pine or spruce to give your packages a wintery feel. You can also grab some holly and tie it to your wrapped present for another Christmas-related decoration.

Ribbon and string

Accompany your handmade wrapping paper with matching ribbon or string. You can find a wide ribbon for large packages and tie elaborate bows or you can use thin, string-like twine to tie around gifts.

Mini ornaments

Mini ornaments

Miniature ornaments

Find small ornaments you can tie onto the gift with string or ribbon. There are plenty of different designs to choose from that will match any type of wrapping paper.

Gift tags

Cut out gift tags from construction paper. Either punch a hole in one side and tie it onto your package or use double-sided tape to attach it to the wrapping paper. You can also decorate the tags with paint, markers, stamps, etc.

Start wrapping!

Now that you’ve got some ideas for DIY Christmas wrapping paper, it’s time to get to work! Whether you’re making your own gifts or buying the perfect present, you can use your own creativity to make wrapping paper that represents how much you care about the people you’re giving presents to. Happy wrapping!

Source: rent.com