There are plenty of so-called experts and gurus out there with all types of advice on what you should do with your money, but perhaps the most celebrated is Warren Buffett, known affectionately as the “Oracle of Omaha.”
On Saturday, the 82-year old financial wizard held his annual shareholder meeting for Berkshire Hathaway in Nebraska’s largest city, which many refer to as “Woodstock for Capitalists.”
He talked about everything from politics to the economy to his personal life on Star Wars Day (May the fourth…), and every single word was taken as gospel by his loyal legion of followers.
Fox News also caught up with Buffett, who took the time to discuss the state of the economy with Liz Claman.
The most interesting tidbits (to me) were about housing and mortgages, something you may want to pay attention to if you’re thinking about buying a home or refinancing.
Buffett Says Get a Mortgage Today
One major takeaway from the interview was the line, “if you ever want to get a mortgage, today is the day to get a mortgage.”
If you’re wondering why he is so bullish on mortgages, it’s pretty simple. Mortgage rates are at or near all-time record lows, so you can borrow money on the cheap.
This low-rate environment explains why housing is so affordable at the moment, even though home price-to-income ratios are above historic norms.
Like anyone else with half a brain, he knows interest rates (including mortgage rates) will eventually rise, and so locking in a low fixed rate today is paramount.
He also said those who are borrowing money to finance a home should do so for a “long period of time,” meaning go with the 30-year fixed mortgage instead of the 15-year fixed.
Heck, one could even make an argument for a 40-year fixed mortgage if they’re comfortable investing elsewhere.
Why? Well, as I’ve discussed in other posts, most recently my mortgages vs. inflation post, the value of money erodes over time. And a fixed mortgage balance will be easier to pay off in the future with inflation-adjusted dollars.
For the record, Buffett expects inflation in the future thanks to the quantitative easing that has been keeping rates low for years now.
In other words, why pay off your mortgage as quickly as possible when rates have never been lower and money is expected to be worth less?
Why not take advantage of a low fixed mortgage rate for as long as you possibly can, seeing that we may never see them this low again.
Sure, this advice comes from a big-time investor who can easily beat the rate of return on a mortgage, but even amateurs can probably pull it off with rates so low.
[Pay off mortgage or invest?]
Good Time to Invest in Single-Family Homes
Speaking of investing, Buffett also noted that today is a good time to invest in a single-family home, though he did say, “It’s not quite as attractive as it was a year ago.”
Yes, home prices have increased from levels seen a year ago, but they’re expected to keep flying higher thanks to limited inventory, low rates, and other market factors.
However, Buffett believes that those who buy today should expect to stay put for a long period of time to do well in housing. Of course, Buffett isn’t a day trader, so his trades are never seen as short-term.
He’s not going to tell you to buy a home to flip a year from now, even if you could make a huge profit doing so.
Finally, Buffett spoke out about the mortgage interest deduction, which he doesn’t think is going anywhere.
Despite ongoing pressure from certain groups to eliminate the favorable tax break, he thinks it’s unlikely to be dropped, and if it is, it will be part of a larger piece of legislation.
So that’s that. Even Warren Buffett thinks it makes sense for you to buy a house and finance it with a mortgage, as if you needed another reason.
Are you stuck in a rut feeling like nothing is exciting left to do? Think again! If you were lucky enough to inherit $100,000 suddenly, what would be the first thing on your bucket list? Redditors had plenty of ideas for how they’d spend their newfound fortune. From purchasing exotic vacations, high-end home renovations, virtual reality headsets, and dream weddings to community sculpture gardens to more practical investments in college tuition grants—there are plenty of ways to imagine how you’d spend a large inheritance!
1. Attend the Funeral
One user pointed out, “Attend funerals.”
Another user replied, “It took me a second, but yep.”
One commenter responded, “Goes without saying.”
“First, I would attend the funerals of the deceased. Then I would think about what to do with the money. Just a matter of respect,” another Redditor shared.
2. Pay Off Debt
“Become debt free!” exclaimed one user.
Another user added, “Become debt free, stash the rest in savings and CDs for sure. I’ll even get adventurous and go out and have a nice dinner.”
One commenter shared, “You know you’re an elderly millennial when you see the term CDs and start thinking about replacing your beloved but heavily scratched pop-punk and hardcore punk collection from the early and mid-2000s.”
3. Pay Bills
One user posted, “Pay bills.”
Another user confirmed, “100% this. Pay bills. Pay off debt. Bank the rest against a rainy day.”
One replied, “Smart.”
4. Plan Ahead
One user shared his own story, “I inherited a little more, roughly $150k total, than that after my mom passed away a few years ago. My dad [had been] a doctor, and she didn’t have to worry about money for her remaining 21 years. When they sold their rental duplex (they never raised the rent in the 30 years they had it), I used my share to open an investment account for both of my kids and used the rest to pay off one credit card.
“With the cash I received from the trust, I paid off the other cards and started my own investment account. I’m 50, and for the first time in my adult life, I don’t have debt other than a student loan (that will hopefully get discharged under the borrower’s defense for false advertising) and our house.
“Before doing that, though, I booked a family vacation to Riviera Maya. I mentioned Dad was a doctor; well, he and Mom traveled the world going to dads medical conferences and just seeing the world. They lived to see new places and do new things. So, to honor and thank them, I spent a small amount and took the family on our first trip outside the US. I cried on the plane, I cried on the beach, I cried when I saw apple pie at the resort like mom made, and I cried when we came home. At one dinner, we talked about Grandma and what we miss most about her. Dad passed before I met my future bride, so only I mentioned him.
“So if I inherited that again, I’d probably do the same thing again. I remembered where it came from, and I prepared for those it would eventually go to.”
One user replied, “This is beautiful, thank you for sharing your incredible story with me.”
“For a person who is not from the US, it’s mind-blowing that you are 50 years old (not that far away from retirement age), and you still have student loans,” one user commented.
5. Make Sure it’s Not a Scam
Another user posted, “You know how generational wealth is kind of a thing—well, so is generational poverty, as it turns out. So if I suddenly inherited 100k, the first thing I would do is make sure this wasn’t a prank or a scam.”
One confirmed, “Yes, fortunately, it’s not a scam, as my aunt passed away.”
Another user added, “I missed that part. Condolences and congratulations in whichever order you feel is more appropriate. Take the sincere advice of a generational poor person for what it is—but if I were in your shoes, I would act conservatively. I imagine there are a lot of people with a lot of enticing pitches for the newly rich. Just keep pulling in a regular paycheck for your day-to-day if you can, and make sure you have found a well-regarded accountant before the next tax season. Start inquiring into a money manager that can provide a realistic plan to ensure your long-term retirement.
“(Edit: Also, think of ONE affordable extravagance you could never financially justify before but might have been able to pull off and give to yourself as a gift. For me, that would be a 3-day weekend in some major city.)”
“Sending condolences, I was put in a similar situation when my dad passed away. The best advice I can give is to not rush into any decisions financially, take your time, and the money isn’t going anywhere!” shared one user.
6. Fully Exhale
“For the first time in my adult life, I could fully exhale,” one user confirmed.
One user pointed, “THIS.”
Another user commented, “YES.”
One Redditor added, “Hell yeah, just to breathe easy is a luxury.”
7. Add It to the Rest
One user shared, “Throw it on the pile.”
One user added, “New paint job for the jet.”
“Ya know, my old boss traded in his propeller plane for a jet and got $100,000 in tax write-offs…” a user commented.
One user commented, “I get it… sometimes it’s just super exhausting just thinking of all the money I have.”
8. Invest
“Invest,” one user shared.
Another user replied, “All in SPY 0DTE 0.5% OTM calls.”
One user commented, “Invest half, and with the other half, live pretty much the same life, stay at my job, etc., but with complete financial security.”
Another user said, “Invest, invest, invest.”
The OP asked, “What would you invest in?”
The user answered, “The reality is 100k is just the starting point to getting anywhere financially. If you did inherit 100k like you say you did in another comment, it’s worth knowing that if you’re still young (30 or under), you have a huge head start in a secure financial future. I’ll get crap for this, but only spend up to 15% or so of the actual money you get from this. For the rest of it, you should first look to invest in a tax-advantaged account like a Roth IRA. If you max out that annual limit ($6500 for 2023), then either open up high-yield savings (if you’re in a place to buy a house soon) or put it in something simple like the S&P 500 index fund (if you can put this money away for a long time you’ll be shocked at how much it’s grown in 20 years). But most importantly, if you have any high-interest debt, pay that off first.”
9. Buy Lottery Tickets
One user shared, “50,000 lottery tickets.”
The OP commented, “Love this, thanks for a laugh.”
Another user shared, “Laugh?”
One user commented, “And then you get $70k back if the MrBeast videos are any indication.”
10. Pay Off Mortgage
A user shared, “Pay off my mortgage and other debts, then go back to living as normal, just with more disposable income since I won’t be making repayments anymore. It’s such a boring adult answer, but it’s accurate.”
Another user replied, ‘I agree with it; I would do the same.”
11. Save As a Safety Net
One user shared, “Wife and I inherited around $175k. What we did was largely just keep living life, exhale finally, and catch up on some… debts we had. Used the money as a safety net to get out of construction and into something else, and now our lives are, without a shred of doubt, 100x easier than they were before.”
The OP of the thread replied, “This is my hope.”
12. Ask a Financial Advisor
One user posted, “I’m 50F on a disability pension with high rent and living costs. It’s an unexpected windfall, and I am not financially literate. I don’t want to blow it. Yes, I am going to get a financial advisor!”
One user commented, “Go to a personal finance Reddit or something and ask how to choose a good advisor. Some are shady!”
“It’s honestly not that much these days, a down payment on a house at most. Pay off any debt, but otherwise, live as you have been. Hopefully, with a safety net for the next financial speedbump,” replied one user.
13. Trucks and Good Times
One user freely posted, “Trucks and H–kers. It would be best if I didn’t get 100k.”
Another user replied, “That’s like 1 of each, lol”
One replied, “Each? You must have gotten a cheap truck.”
14. Government Bonds
One user commented, “After potentially paying estate/ inheritance tax, Spend [40k] on settling debts (I don’t have much, so there’s going to be leftovers, but I will put them in government bonds as savings $. Spend [10k] on online courses and career certifications. Spend [10k] on buying stuff I’ve wanted for a while. Spend [10k] on new tech. Spend [5k] on a mini solo budget vacation to somewhere random. Keep [5k] as pocket cash. Save [20k] in a high-interest account or maybe split into government bonds, high-interest accounts, green tech stock options, etc. ( I am hesitant investing real estate because of the obvious market bubble).”
“Love this detail; much appreciated. No tax and I’m debt free. I’ll be making a list off this,” replied one user.
15. Donate
“Help out a lot of people,” one user shared.
Another user replied, “Yes. I’ve already decided who I’m going to help and how much. Giving back is important. I couldn’t imagine not sharing my blessing with those closest to me. I also need help as I have been living on the disability pension, so I’d also like to be out of poverty if at all possible, lol.”
Do you agree with the things listed above? Comment below!
Source: Reddit.
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For better or worse, you know you’re really an adult when it’s time to buy life insurance.
For me, it was immediately after having our daughter, Molly. I bought a term life insurance policy so that, in the event the unspeakable happens, my wife, Lauren, wouldn’t have to worry about making ends meet or paying for Molly’s education after I’m gone.
But as I set out to shop for life insurance, I didn’t really know how much life insurance I even needed.
In case you’re like I was, we’ve put together a simple life insurance calculator to help you determine the right amount of term life insurance to buy.
Read more: Term Vs. Whole Life Insurance: What’s the Difference?
What’s Ahead:
Calculator: How Much Life Insurance Do You Need?
How to Determine How Much Life Insurance You Need
How much life insurance you need is both somewhat subjective and a moving target. Your life insurance needs may be quite different today versus in five years.
Put simply, in the event you die, you want life insurance payouts to allow your spouse and children to continue their lifestyles without worrying about money. You may also want to provide for future expenses like your children’s education.
If you have investments or other assets, however, you may only need enough life insurance to make up the difference between your assets and your family’s potential needs.
Here’s a simple calculation, which is similar to what we use in our life insurance calculator above.
1. Annual income to replace: ________________ 2. Predicted retirement age: ________________ 3. Current age: ________________ 4. Years until retirement (line 2 – line 3): ________________ 5. Total income to replace (line 1 x line 4): ________________ 6. Amount for children’s education: ________________ 7. Amount to pay off mortgage or other liabilities: ________________ 8. Total amount needed (sum of lines 5-7): ________________ 9. Existing nonretirement assets: ________________ 10. Existing life insurance in force: ________________ 11. Life insurance needed: (line 8 – sum of lines 9-10): ________________
As you get older, earn more money, have kids, and live a correspondingly more expensive lifestyle, how much life insurance you need will go up — to a point. As you get closer to retirement age and accumulate more wealth in savings and investments, you will need less life insurance to make up the difference.
Read more: The Average Cost of Life Insurance by Age
Other Considerations when Buying Life Insurance
Paying Off Mortgages and Other Liabilities
In the event of your death, you may want to ensure that your surviving family doesn’t have to worry about a mortgage or other debts. Although they could continue making payments using the annual income from the life insurance payout, you may want to leave them with enough to pay off the debts right away.
Many lenders sell insurance policies that will pay off the loan balance in the event of death, but it’s typically more affordable to get a higher-value traditional life insurance policy.
Co-Signed Loans
If you have student loans or other obligations that were co-signed by somebody other than your life insurance policy’s beneficiary (for example, a parent), you’ll also want to ensure the life insurance policy provides enough to repay this balance, so the co-signer isn’t saddled with the remaining debt after your death.
Ask your insurer if they will allow you to designate multiple beneficiaries with specific amounts. If not, you’ll need to draft a will that stipulates who gets what.
Read more: Life Insurance: Is it Worth it and When Do You Need it?
Where to Buy Life Insurance
Policygenius
If you want an easy way to start looking for life insurance, check out Policygenius. They now offer term life insurance that requires no medical exam.
They’ve partnered with Brighthouse SimplySelect℠ to offer policies with up to $2 million in coverage, and you’ll get the same low premiums you get with companies that do require an exam.
To get started, call a Policygenius agent and take their over-the-phone questionnaire. Once you’ve done that, you can get insured in as little as three to four days.
Bestow
If you need to get life insurance quickly and don’t want to deal with a long waiting period, Bestow is another great option.
Bestow offers no-medical-exam life insurance and instant approvals. All you have to do is provide some basic information and Bestow takes it from there, using big data to issue a quote.
Bestow issues life insurance policies through the North American Company for Life and Health Insurance.
Get a quote with Bestow.
Ladder
Ladder offers affordable term life insurance that’s easy to understand and quick to set up online. It only takes a few minutes to apply for coverage and you can get an instant decision.
Ladder’s policies are issued by reputable providers, including Fidelity Security Life Insurance and Allianz Life Insurance Company of New York.
Get a quote with Ladder.
Read more: Best Life Insurance Companies: Find the Best Quotes
Summary
So, how much life insurance do you need? Enough to allow your surviving dependents to live their current lifestyle for a determined amount of time.
Typically, you’ll want your life insurance to provide for your children until they turn 18. You may also want to provide for your spouse until they reach retirement age. However, you may also need less life insurance coverage if you already have assets, such as investment accounts.
Overall, how much life insurance you need is a personal decision that you should make with your spouse and financial planner, if you have one (if you don’t, check out our handy tips for finding the right financial advisor for you).
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