No financial institution can be all things to all people, but some come pretty close.
BMO Harris Bank is one of those banks. It’s a full-service bank with hundreds of branches in the United States (mainly in the Midwest and Southwest) and thousands of fee-free ATMs. With a comprehensive array of checking and savings accounts, plus credit cards, auto loans, and more, BMO Harris Bank is about as close as a bank can come to being a one-stop shop.
Does that mean BMO Harris Bank is right for you? Not necessarily. Plenty of other high-quality banks vie for your deposits every day. See whether BMO is the best fit — or whether you should see what else is out there instead.
What Is BMO Harris Bank?
BMO Harris Bank N.A. is an American bank that provides consumer and business banking services online and through a network of physical branches. Eligible deposits with the bank are FDIC-insured up to statutory limits set by Congress.
Its deposit accounts include checking, savings, money market, and certificates of deposit (CDs), and it also offers credit products like credit cards, mortgages, auto loans, personal loans, and private student loans. BMO Harris Bank has a wealth management division that focuses on relatively high net worth individuals and families, but no self-directed brokerage platform.
Is BMO Harris Bank a good place to park your cash, borrow money, and invest for the future? I’ve reviewed dozens of online banks and brick-and-mortar financial institutions over the years, and I believe BMO Harris Bank is in the upper echelon of the brick-and-mortar group. In other words, it’s one of the best traditional banks to work with — in part because it has embraced technology and innovation in a way that many of its competitors haven’t.
How BMO Harris Bank Stacks Up
BMO Harris Bank is a full-service financial institution that consistently ranks among the top traditional banks for U.S.-based consumers.
It competes not only with other big banks like Chase Bank and Citibank but with major online banks as well. If you’re torn between an “innovative incumbent” like BMO Harris Bank and an “established upstart” like Ally Bank, see for yourself how the two compare.
BMO Harris Bank
Ally Bank
Monthly Maintenance Fees for Checking
None on the BMO Harris Smart Advantage™ Account
None
Savings Account Yields
Relatively low
3.60% APY
CD Yields
Up to 4.50% APY
Up to 4.25% APY
Credit Products
Credit cards, mortgages, credit-builder loans, home equity products, personal loans, auto loans, private student loans
Credit cards, mortgages, home equity products, auto loans
Self-Directed Brokerage
No, managed investments only
Yes
Physical Branches
Yes, in Illinois, Arizona, Wisconsin, Indiana, Florida, Missouri, Kansas, and some other states
No
What Sets BMO Harris Bank Apart?
Where does BMO Harris Bank get its edge? Out of all the bank’s advantages and selling points, three things really stand out:
A Checking Account With No Monthly Maintenance Fee, Period. The BMO Harris Smart Advantage™ Account is a truly free checking account. It doesn’t charge a monthly maintenance fee, period, regardless of balance or relationship status with BMO, yet it’s packed with features. It’s rare to find an account like this at a big bank.
One-Stop Shop for Credit. Even Ally Bank, probably the best online bank for borrowers, doesn’t bother with certain credit products. BMO Harris Bank has a comprehensive lineup of loans and lines of credit, from home and auto loans to personal and student loans.
Excellent CD Rates (For a Traditional Bank). BMO Harris Bank’s CD rates are competitive with the top online banks for CD customers. And they blow most traditional banks’ CD rates out of the water.
Key Features of BMO Harris Bank
BMO Harris Bank has a comprehensive lineup of deposit accounts and loans, plus some nice value-adds like account opening bonuses and a handy digital app. See what to expect from its products and how to determine which, if any, are right for you.
Account Opening Bonus Opportunities
BMO Harris Bank has some fantastic new account opening bonus opportunities for new checking customers.
BMO Harris PremierTM Account — $350 Cash Bonus
This one is best for higher-income folks who have no problem meeting the direct deposit requirement. Here’s how it works:
Open a new BMO Harris PremierTM Account by July 14, 2023, and receive a total of at least $7,500 in qualifying direct deposits during the first 90 days of account opening. If you do, you’ll get a $350 cash bonus in your account.
This new checking account offer is not available for current BMO Harris personal checking customers, nor to customers who closed a personal checking account within the past 12 months. Open on-line or in branch; accounts subject to approval.
If you can’t notch $7,500 in qualifying direct deposits during the first 90 days, this bonus could be right for you. It’s nearly as generous:
Open a new BMO Harris Smart AdvantageTM or Smart MoneyTM Account by July 14, 2023,and receive a total of $4,000 in qualifying direct deposits within 90 days of account opening. Do this and you’ll get a $200 cash bonus in your account.
The same restrictions apply to this offer — you must be a new BMO Harris personal checking customer and can’t have had a BMO Harris personal checking account within the past 12 months.
Checking Accounts
BMO Harris Bank offers three consumer checking accounts, each with its own clear use case. All offer access to in-branch and online banking, plus low- or no-fee transactions at more than 40,000 in-network ATMs:
BMO Harris Smart Advantage™ Account: With no monthly maintenance fee, this account is ideal for folks with modest incomes and low-ish balances — folks who wouldn’t be able to avoid monthly maintenance fees at most big competitor banks.
BMO Harris Smart MoneyTM Account: Is a $5 monthly maintenance fee worth it for no overdraft fees, ever? If you occasionally dip into the red, probably yes. And there’s no maintenance fee if you’re under age 25, making this a solid student checking account.
BMO Harris Premier™ Account: BMO’s fanciest checking account entitles you to relationship benefits like up to $25 in monthly out-of-network ATM fee reimbursement and 0.50% off your home equity line’s interest rate. Benefits increase with your total BMO deposit balance.
Like all banks, BMO charges some account fees beyond the headline monthly maintenance fees (where present). Here’s how the Smart Advantage Account’s fee schedule looks:
Fee Type
Fee Amount
Monthly Maintenance Fee
$0
Allpoint and BMO Harris ATM transactions
$0
Non-BMO ATM transactions
$0
Paper statements
$2, but $0 when you opt into paperless
Check images
$3, but $0 when you opt into paperless
Overdraft fee
$15, but $0 when you opt into overdraft services
Minimum opening deposit
$25
Savings Builder Account
The Savings Builder Account is BMO Harris Bank’s standard savings account. There’s a $25 minimum opening deposit and no monthly maintenance fee.
Savings Builder’s defining feature is a $5 reward for each month you save at least $200 during the first year. Save $200 per month for all 12 months of the first year from account opening and you’ll clear a cool $60 in extra cash.
Moving forward, the Savings Builder Account has a negligible yield — just 0.01% APY. First-year deposit bonus aside, it’s not suitable if you’re looking for a high-yield savings account. On the bright side, it doesn’t have the usual savings account transaction limit. You’re free to make as many withdrawals as you like without incurring a penalty.
Money Market Account
BMO Harris Bank’s money market account has a higher yield than the Savings Builder Account. However, the yield requires a paired Premier checking account, and your actual return depends on how much you have on deposit across all BMO accounts.
To get the best rates — 2.00% higher than the baseline — you need at least $250,000 in deposits with BMO. And you need at least $10,000 in the money market account to avoid the $10 monthly maintenance fee.
Needless to say, this one’s better if you have a lot of cash on hand.
Certificates of Deposit
BMO Harris Bank offers standard CDs with terms ranging from three months to 60 months (five years). All require a minimum opening deposit of $1,000 and charge interest penalties if you withdraw principal before maturity.
BMO’s standard CD rates are not competitive. The longer-term products earn less than 0.50%, compared with 4.00% APY or higher at the best online banks for CDs.
BMO does offer CDs with competitive rates though. These special CDs, as they’re known, earn upwards of 4.00% APY on terms ranging from 13 to 59 months. They require a minimum deposit of $5,000, but if you can swing that, they’re well worth it.
You can structure select CDs as individual retirement accounts (IRAs) and enjoy tax-deferred or tax-free growth.
Individual Health Savings Account
BMO Harris Bank is one of relatively few banks that offer direct-to-consumer health savings accounts (HSAs). If you’re enrolled in an individual or family high-deductible health plan (HDHP) not through your employer, a BMO Harris Bank HSA can help you save for planned and unplanned medical expenses — or save for retirement if you stay healthy.
BMO’s HSA is delivered by Lively, a leading provider of individual HSAs. There are no ongoing or hidden service fees or monthly fees — you pay nothing out of pocket for the account — and you can withdraw money at any time to cover eligible health care expenses without paying taxes. Your contributions may be tax-deductible as well.
Credit Cards
BMO Harris Bank has four consumer credit cards, although its lineup has changed in the past and could in the future:
BMO Harris Bank Platinum Rewards Mastercard®. Earn 2 points per $1 spent on eligible gas and groceries, up to $2,500 in combined purchases each calendar quarter. Plus, get 10% bonus points on your cardmember anniversary each year (based on prior-year spending) and 0% introductory APR on balance transfers for 12 months from date of first transfer (must be completed within 90 days from date of account opening).
BMO Harris Bank Premium Rewards Mastercard®. Earn 3 points per $1 spent on eligible dining, hotels, and airfare, up to $2,500 in combined spend each calendar quarter, plus 15% bonus points on your anniversary. The same first-year balance transfer promotion applies, but there’s a $79 annual fee after the first year.
BMO Harris Bank Cash Back Mastercard®. Get 5% cash back on eligible streaming and cable/satellite TV purchases and 3% cash back on eligible gas and grocery purchases, up to $2,500 in combined spend per calendar quarter. Plus, get up to $400 in cellphone protection (restrictions apply) and the same first-year balance transfer deal.
BMO Harris Bank Platinum Mastercard®. If you need to finance a major purchase, this is your card. Enjoy 0% APR for 15 months from account opening on purchases and balance transfers.
Loans and Lines of Credit
BMO Harris Bank offers a full lineup of loans and lines of credit:
Mortgage loans, including fixed-rate and variable-rate conventional loans, jumbo loans, and specialty loans like VA and FHA mortgages
Home equity products, including home equity loans and lines of credit
Specialty property loans for bank-owned properties — BMO is one of the few banks that connects consumers with distressed property opportunities
Unsecured personal loans and lines of credit
Savings secured loans — borrow against your savings balance
Credit-builder loans — ideal for people just beginning their credit journeys
Auto loans
Private student loans and student loan refinancing
Premier customers may qualify for rate discounts and other benefits on select loan products.
Wealth Management Services
BMO Harris Bank has a team of in-house wealth advisors who offer financial planning and investment management services customized to your needs. One thing to note here: BMO doesn’t have a self-directed brokerage, so if you prefer to manage your own funds, you’ll need to look elsewhere.
Mobile Banking App
The BMO Harris mobile banking app is compatible with Android and iOS devices. It’s capable of handling most everyday banking functions, including online bill pay, money transfers, and statement review.
Advantages of BMO Harris Bank
BMO Harris Bank has a lot going for it. These are its most notable advantages.
Actually Has a Free Checking Account With No Minimum Balance. BMO Harris Bank is one of the few big banks that has a truly free checking account: the Smart Advantage Account. Most competitors require you to jump through some sort of hoops to avoid a monthly fee or impose age-based restrictions you can’t avoid.
Offers a Health Savings Account for Individuals. BMO Harris Bank’s individual HSA is another rarity among big banks. And it’s backed by Lively, a leader in the HSA space.
Built-in Free Overdraft Protection With Smart Money. BMO’s Smart Money Account doesn’t charge for overdrafts, period. Call it complimentary overdraft protection — it’s a big deal if you sometimes cut it close.
Impressive Range of Deposit Accounts and Loans. BMO Harris has three checking accounts, several savings products, and just about every major type of consumer loan you can imagine. It’s a one-stop shop for consumer financial products and services.
Competitive Rates on Special CDs. If you can meet the $5,000 minimum balance requirement, BMO’s special CDs are a great deal. Yields range from 2.00% to 3.00% annual percentage yield and appear responsive to changes in benchmark interest rates.
Disadvantages of BMO Harris Bank
Consider these potential drawbacks before opening an account with BMO Harris Bank.
Poor Savings Account Yields. BMO’s Savings Builder Account has a very poor yield. It’s not even worth talking about, frankly — if you’re in the market for a high-yield savings account, look elsewhere.
Standard CD Rates Aren’t Competitive. BMO’s standard CD rates aren’t competitive either. Fortunately, as long as the special CDs are available, you don’t have to bother with them.
Special CDs Have High Minimum Balance Requirements. BMO’s special CDs have high minimum balance requirements ($5,000). If that’s tough for you to swing, you may need to look elsewhere for competitive CDs.
Premier Benefits Have High Balance Requirements. BMO’s Premier relationship tiers offer lots of potentially valuable perks and benefits, but you have to hold up your end of the bargain by bringing tens of thousands of dollars to the table. The juiciest perks are reserved for people with at least $250,000 in eligible BMO accounts.
Is BMO Harris Bank Legit?
Yes, BMO Harris Bank is legit. It’s the eighth largest bank in North America by assets and serves more than 12 million customers on both sides of the U.S.-Canada border. It has been in business for nearly 200 years and has paid dividends to shareholders for virtually all of that time — dividends that have steadily increased over the decades.
For U.S.-based customers, BMO Harris Bank is a Member FDIC institution, which means eligible deposits are insured up to statutory limits by the Federal Deposit Insurance Corporation. When you open a checking, savings, money market, or CD account with BMO Harris, you can rest assured that your money is backed by the full faith and credit of the U.S. government — up to $250,000 per account type.
Final Word
BMO Harris Bank is a full-service financial institution that has been in business for hundreds of years and serves millions of customers in the U.S. and Canada. It’s accessible through a network of physical branches (mostly in the Midwest and Southwest), through thousands of in-network ATMs, and online and through the BMO Harris Bank mobile app from anywhere.
BMO Harris Bank stands out for several reasons. It has one of the best no-maintenance-fee checking accounts of any big bank. It offers a comprehensive lineup of savings products, although its actual savings accounts don’t have competitive yields. And it’s basically a one-stop shop for consumer credit, from credit cards and auto loans to mortgages and education financing.
If you’re in the market for a new bank, I’d encourage you to give BMO Harris Bank serious consideration. It’s not perfect, to be sure, but it’s better than most.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
The thought of investing–and doing it successfully–can be a daunting task. This is especially true if you’re a beginner investor. However, if you’re willing to take advantage of the information on the best investment sites, you’ll have a wealth of investment knowledge right at your fingertips.
The top investment sites for stock news, research, and analysis can be great tools for keeping you up to date on the latest financial and economic news. As you learn more from each site, you’ll have more knowledge with which to plan your own personal investment strategy.
Of course, they’re just opinions, but they are educated opinions. Whether you’re a beginner investor or a seasoned investor, these sites have information you should check out.
Our Top Picks For Investment Sites
Motley Fool – Great For Beginner Investor & Get $100 off
Morningstar – Great For DIY Investors & 14 Day Free Trial
Market Watch – Great For Up to Date Investment News
In This Article
What Are the Top Investment Sites?
Even the best investment sites aren’t guaranteed to pick stock winners and losers. However, the people who are hired to write on the sites typically have a wealth of experience and education behind them.
There are a few investment sites that people “in the know” use when they want information about companies and other economic news. Here are some of our favorite investment sites for garnering important economic information.
Here’s a list of some of our favorite investment sites for learning what you need to know about investing and company financial information.
1 .Motley Fool Stock Advisor
Motley Fool was founded in 1993 by David and Tom Gardner, brothers. Their goal? “Make the world smarter, happier, and richer.” Sounds good to me.
The Motley Fool brothers are big believers in buying stock in great companies and holding onto it. Their site has a great section on investing for beginners.
It also shares a wealth of information on the stock market, on investing for retirement and more. The site even shares personal finance information such as where to find the best checking accounts and credit cards.
Personally, I find the site very well put together and easy to use too. I’d happily use this site (and do) whether I was just starting out as an investor or knew most everything I thought I needed to know.
Motley Fool Stock Advisor: Join for just $99 a year!
Best for: Those looking for comprehensive information on individual stock purchases
2. Morningstar
Morningstar’s tagline is “Empowering investor success.” The site stays true to its investment philosophy of putting investors first. That means they won’t give you investment advice based off of an affiliate relationship.
Instead, they share what they believe to be the best guidance for investors. Morningstar is probably best known for the ratings it publishes on varying investments.
If you want access to Morningstar ratings and detailed investment analysis, you’ll have to sign up for their premium account, which costs $199 per year. However, the site does have an endless number of free informational articles talking about all things investment-related.
Best for: Both beginner and seasoned investors who want detailed information
3. MarketWatch
MarketWatch is another top-rated investment site. It’s a good site for keeping up to day with the latest investment and economic information.
The site shares global information for most all stock markets, commodities markets, forex markets and more. The Moneyist (the Dear Abby of personal finance and investing) is a personal favorite for me.
He answers questions ranging from “Do I have enough to retire?” to “My brother won’t give me my share of our father’s inheritance. What do I do?” and more.
You can also find personal finance information on the site. MarketWatch is full of useful information, easy on the eyes and a pleasing website to navigate.
The site also shares valuable news articles from around the web, whether it be auto reviews or best retirement spots.
Best for: Anyone who wants to find up-to-date investment and other financial information quickly and easily.
4. Barron’s
Barron’s is an investment site for the serious investor. This site is formatted most like the newspapers of old. Clear and concise, Barron’s shares market information along with its favorite current stock picks.
The site’s e-magazine contains articles about popular publicly traded companies’ ups and downs. And the site’s e-advisor keeps you up to date on it’s favorite investment moves.
The articles and information are written smartly and simply. However, they assume you’ve got a solid basic understanding on investing and economics as a whole. While Barron’s is a phenomenal site for seasoned investors, beginner investors might want to stick with one of the other sites mentioned here.
Best for: The seasoned investor who wants a wide span of information on current economics and company performance.
5. Wall Street Journal
I clearly remember seeing my grandfather and his friends perusing over the Wall Street Journal in the early 90’s as they shared breakfast together at the local greasy spoon.
My family and I would eat there on occasion, but we never interrupted the group other than to say “hi” to grandpa and give him a quick hug. Yep, this group of wealthy men would never spend more than $10 for breakfast, but they all had the money to buy the cafe’ if it ever went up for sale.
Thank you, Wall Street Journal. For as long as I can remember, the Wall Street Journal has been the go-to source for those seeking investment advice. It’s changed with the times but still stayed the same, keeping its “real” paper but managing a well-put-together website too.
Wall Street Journal covers everything regarding economic markets in the U.S. and the world. And it tosses in some articles on politics, tech, and current events as well.
The online website headlines are free, but if you want complete information you’ll have to pay for the digital editions, print editions, or both. The good news is that WSJ is affordable at no more than $20 per month. Therefore, we love it as one of the best investment sites.
Best for: Investors that want to get the scoop on the markets and the rest of the world’s happenings, as well as those craving that great feeling of holding a printed newspaper in their hands.
6. Zacks
Zacks is an investment website that’s committed to independent research analysis. The Zacks “About” page says their strategy has beat the S&P market by quite a length (over double) for the past 25+ years.
Of course, past performance is not a guaranteed indicator of future results, but it sure does tell you a thing or two. Namely that the group at Zacks knows their stuff when it comes to investing.
While the site provides a wealth (no pun intended) of free information, you’ll have to pay to get the inside scoop on the Zacks investment strategy. That includes the Zacks #1 rank list of 220 of the best stocks.
They offer a 30-day free trial. After that, you’ll pay $249 a year to continue getting access to Zacks’ investment secrets.
Bonus: Zacks links to the best articles from popular sites such as MarketWatch too.
Best for: The serious investor who’s willing to take the time to learn about in-depth investing.
7. Seeking Alpha
Seeking Alpha does a great job of delving deeper into the “whys” behind investing in a particular stock or fund. While this is a terrific feature for experienced investors, beginner investors may find the information a bit lofty.
Seeking Alpha is part investment news source and part investing community. Articles are written by investor members and then rigorously scrutinized to ensure accurate information.
With over 7,000 members, there’s no shortage of investing information and opinions. The site is great for those who want to do some in-depth research on markets, stocks, and investments.
The Basic Seeking Alpha site is free. However, the site also offers a Premium membership for $240 annually and a Pro membership for roughly $2400 annually.
Think of the Premium membership as a self-directed site and the Pro membership as a full-service site. See the website for more detailed information on what you get with the upgraded memberships.
Best for: Intermediate and advanced investors looking for community support and advice
8. The Financial Times
The Financial Times (or FT as it’s often called) focuses primarily on stocks, funds, and stock news. But you’ll also find tech information, personal finance articles, and more. In-depth information on company performance rounds out the offerings.
The site has a nice collection of charts and graphics too. There are some free articles on Financial Times, but as with Wall Street Journal you’ll have to pay if you want full access.
Like Zacks, Financial Times is a bit on the spendy side if you’re not used to paying for investment information. Digital access is $39.50 per month or $369.20 per year. The print access subscription includes digital access and costs $199 per year.
You can pay $1 and get a 4-week trial if you’d like to sample Financial Times. And there are other subscription options as well.
Best for: Investors looking for a melting pot of investment and economic news, information, and opinion
9. CNBC
CNBC is a popular news channel with a focus on investment and economic news. While you can get CNBC regularly with many paid TV subscriptions, you can also access the company’s many articles for free on their website.
Current market numbers are conveniently displayed throughout the site. And you’ll find articles on investing, technology, business, politics, and more.
Under the “Investing” tab, you’ll find “Invest in You” and “Personal Finance” sections that have a wealth of articles aimed at making personal finance more, well, personal. These sections show you how to put the site’s advice into action and better your personal money situation.
If you want access to CNBC’s “PRO” content, however, you’ll have to buy a subscription. CNBC PRO gives you access to live programming, exclusive video series, and more.
It costs $29.99 per month to subscribe to CNBC PRO, or you can pay $299.00 annually. There is a 7-day trial period you can use to check it out.
Best for: those wanting a quick glance at the world’s most up-to-date economic information
10. Kiplinger
Kiplinger was started in the 1920’s by a former AP economic reporter. The Kiplinger Letter, the company’s weekly economic publication, is considered the most widely read business forecasting publication in the world, according to the Kiplinger website.
Kiplinger also has a monthly magazine. The Kiplinger website gives access to The Kiplinger Letter if you’re a member. You can find a wealth of free information on the site, including investment information. The site also shares informational articles on:
Retirement
Taxes
Wealth creation
Personal finance
And more. However, if you want the goodies like the print magazine and/or complete access to all website information, you’ll have to subscribe.
As of this writing, you can get access to print subscriptions, digital access, or both for $29.95 for 12 months or $39.90 for 24 months. But I think you might find it well worth the price.
One thing I really like about the Kiplinger site is that many of the articles are written in a way even the most beginner personal finance/investment aficionado can understand. The site has a great mix of both beginner and experienced investor articles and information.
Best for: Beginner and experienced investors who want print news and digital news
11. Stock Rover
Stock Rover makes our list of best investment sites because of its mission to help all levels of investors make informed decisions. The Stock Rover website works to provide affordable, comprehensive research to help investors learn before they invest.
The site can help you compare companies or investments, research reports, and manage your portfolio. Stock Rover’s blog includes investing articles, stock research articles, and other valuable information.
For instance, you can learn how to build a better stock portfolio. Of course, these features don’t come for free–at least not all of them. Stock Rover has four plans you can choose from, one of which is free.
While the “free” plan does provide a lot of information and articles, the paid plans provide other valuable tools. The Essentials, Premium, and Premium Plus plans range in price from $7.99 per month to $27.99 per month.
Watchlists, screens, and the number of portfolios you can manage go up with each plan. You can get additional information via other subscriptions on Stock Rover too, such as research reports plans and bundles.
Best for: People who want more of a personal touch as they invest
12. AAII
AAII, or the American Association of Individual Investors, is a non-profit organization aimed at helping people learn about investing and grow their investment portfolios. They’ve been in business for over 40 years.
The organization uses education, information, and research to help members learn about investing and manage their investments. Along with the AAII website, you may have a local chapter that meets in person in your area.
AAII has two membership options. The Basic membership is $1 for the first 30 days and then $3.25 a month going forward. You get access to the AAII market-beating portfolio, investor guides, and other information.
The Plus membership is $2 for the first 30 days and then $15.67 per month going forward. It includes additional benefits such as stock and fund evaluators and graders, and detailed portfolio analysis and alerts.
Both membership options include free access to the local chapters of AAII. In addition, you get access to the award-winning AAII Journal in digital format, print format, or both.
Best for: Those looking for investment guidance with a heart
13. Yahoo Finance
Yahoo Finance, albeit basic, is a good at-a-glance option for investment information. The site shares market numbers along with investment and economic news articles from around the web.
You’ll find links to articles from Reuters, MarketWatch, Investopedia and other well known sites. Yahoo Finance also has their own penned articles on the site. It’s a good one stop shop for economic news.
Best for: Those wanting access to current investment and economic news from a variety of sources
14. Investopedia
Last but certainly not least, we like Investopedia as one of the best investment sites for investment news. What started out as sort of a Wikipedia with a money/investing focus has morphed into a great resource for investing and economic news and information.
Along with current investment news, you can check out Investopedia’s stock simulator. And Investopedia Academy features paid online courses to help you learn everything you want to learn about investing.
The articles cover every type of investor from the beginner to the day trader. And while the courses do cost money, most of the basic information on Investopedia is free.
Best for: Those interested in an education-based investment site
Summary
With the plush selection of the best investment sites out there, there’s no reason you can’t stay up to date on current investment news. And there’s no reason that even the most beginner of investors can’t learn how to invest smartly and successfully.
There are investment sites out there for the knowledge levels and learning preferences of just about everyone on earth.
Laurie is personal finance writer and a licensed Realtor. Her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.
One of the keys when it comes to investing for the long term is to make sure you’re minimizing the fees you’re paying to invest your money.
Whether it’s plan administration fees for the company you’re investing with, mutual fund expense ratios and fees, or fees for added account functionality, the more you can minimize how much you’re paying, the better.
Morningstar reports that the average expense ratio for actively-managed equity mutual funds is 1.2% and investment-grade bond funds have an expense ratio of 0.9%. For me, I prefer to invest in mainly low-cost index funds with expense ratios that are much lower.
Beyond saving money on the expense ratios, I also would love to save money on the administration fees I pay in order to invest. My company 401(k) has fees just under 1%, which is way too much for my tastes. I’ve stopped investing there first since there is no company match.
This past week I was doing some research on the new slate of robo advisors that have popped up. One of them jumped out at me because the company is extremely affordable, but it also has shown some of the best results in the past couple of years. Not only do they invest your money for you in a slate of well-diversified ETF index funds, and rebalance your holdings on a regular basis, but they charge you a pretty minimal fee to do it.
This all sounded too good to be true, so I decided to do a full review of this new automated investing service called Axos Invest Managed Portfolios, to see what they are all about.
Axos Invest History
Axos Invest launched several years ago under the name WiseBanyan. They had the goal of being the world’s first completely free financial advisor.
Here’s their reasoning behind why they launched their site.
Herbert Moore and Vicki Zhou founded WiseBanyan after seeing that the incentives between financial advisors and clients were often misaligned. They saw this firsthand while working in asset management and investment banking respectively, and later as colleagues at a quantitative asset management firm. They realized that the main cause of misalignment was a conflict of financial interests, which often resulted in high fees, unnecessary tax consequences, and unreasonable account minimums for the clients. As a result, they set out to build a company that was not incentivized to earn money at its clients’ expense.
WiseBanyan began with the idea that investing is a right – not a privilege. Our mission is to ensure everyone can achieve their financial goals, which starts with investing as early as possible. This is why there is no minimum to start and we do not charge high fees. We hope you are as excited about WiseBanyan as we are, especially what it means for you, your friends, and society as a whole.
Axos Invest was launched with the hope of making investing easy, accessible, and cheap – even for beginning investors who could only invest a small amount every month.
While the service is no longer free (They started charging a 0.24% annual assets under management fee in 2020), they still practice the values of making investing more accessible and affordable for everyone.
WiseBanyan Holdings was acquired by Axos Financial, and as of October 2019 and moving forward the company formerly known as WiseBanyan is now known as Axos Invest.
Axos Invest has become a part of the Axos Financial online banking platform. Check out our full review of Axos Bank.
Axos Invest Account Types – Managed Portfolios Vs. Self-Directed Trading
After reading up a bit about Axos Invest I was intrigued enough to sign up for one of their accounts. I went to their site to find that there are a couple of different account types you can sign up for.
I was mainly interested in signing up for Managed Portfolios since I intended to use this as a robo-advisor to automatically invest, rebalance and reinvest my dividends for me. I wanted it to be hands-off.
If you prefer to research and invest in your own choices of individual stocks, the commission-free Self Directed Trading account may be a better choice for you.
If you’re an advanced trader the Self Directed Trading account has the “Axos Elite” subscription which gives you real-time market data, TipRanks market research, extended trading hours, margin trading, stock lending, and more for a monthly fee.
Head on over to the Axos site via my exclusive invite link below to get started on your Axos Invest account now:
Open Your FREE Axos Invest Account Now
Open an Axos Self Directed Trading account and deposit at least $2000, and you’ll get a $250 bonus for a limited time!. Open Axos Self Directed Trading
Opening An Account With Axos Invest
After going to the Axos Invest site to open my Managed Portfolios account, it dropped me right into a brief questionnaire to assess my risk tolerance, investment time horizon, and more.
While you’re answering the questions you’ll see a progress bar and a “current risk score” listed to the right, telling you just how conservative or aggressive Axos Invest believes you are.
My risk score went up and down throughout the survey based on my answers, and when I finally completed it gave me a risk score of 7.2. That would give me an estimated asset allocation of 65% stocks to 35% bonds – which seems about what most would suggest as I’m relatively conservative in my investments, and the bond allocation roughly matches my age (put your age in bonds!)
I decided that I wanted to change my risk score and asset allocation to be a bit more aggressive, however, and you can do that simply by moving the slider to the right (or left if you’re more conservative). I ended up with closer to 75/25 stocks to bond allocation.
After completing the survey you click on the “Open My Account” button, which takes you into the account opening process. It will ask for all of your personal information including an email, password, employment information, and Social Security number (like you would have to at any brokerage).
Once you’re done entering your personal information you’ll be asked to choose an account type. Currently, you can choose:
Taxable Investment Account
Roth IRA
SEP IRA
Traditional IRA
After you choose an account type you’ll be asked to link a bank to fund your account. You can then choose to fund the account with as little as $500. If you want, you can also set it up to automatically invest for you every month. I have it set to automatically invest $300 for me on the 15th and 30th of the month.
Once you’re done your account will be sent to Axos Financial for approval. Their site says it takes about 5 business days for an account to be approved.
Axos Invest Investment Philosophy
Axos Invest will invest your funds based on Modern Portfolio Theory (MPT).
We use the tools of Modern Portfolio Theory to design the optimal portfolio for a given level of risk. In addition, we further optimize our investment process to minimize tax consequences and streamline the reinvestment of dividends and contributions.
Their investment philosophy is built upon four main pillars:
The value of diversification
Keeping fees as low as possible
The value of passive investing
Starting sooner rather than later
Axos Invest will attempt to give you a portfolio that is well-diversified, low-cost, and at low minimums so just about anybody can get started now. They’ll use the ideas behind MPT to give you the optimal portfolio for your given risk score.
The Actual Investments
So what are you getting when you invest with Axos Invest? You’re getting a well-diversified portfolio that contains passively managed exchange-traded funds (“ETFs”).
The funds held with Axos Invest have an average fund fee of 0.12% – the only fees you’ll pay to invest. Here is the breakout for the individual funds they use (the funds used by Axos is subject to change, and probably will) and their expense ratios:
Vanguard Total Stock Market ETF (VTI): 0.03%
Schwab U.S. Broad Market (SCHB): 0.03%
Vanguard FTSE Developed Markets ETF (VEA): 0.05%
Schwab International Equity (SCHF): 0.06%
Vanguard FTSE Emerging Markets ETF (VWO): 0.15%
iShares Core MSCI Emerging Markets (IEMG): 0.14%
Vanguard REIT Index Fund (VNQ): 0.12%
iShares U.S. Real Estate (IYR): 0.42%
iShares Investment Grade Corporate Bond ETF (LQD): 0.15%
Vanguard Intermediate-Term Corporate Bond Index (VCIT): 0.05%
Vanguard Intmdte Tm Govt Bd ETF (VGIT): 0.05%
iShares Barclays TIPS Bond Fund (ETF) (TIP): 0.19%
State Street Global Advisors Barclays Short Term High Yield Bond Index ETF (SJNK): 0.40%
PIMCO 0-5 Year High Yield Corporate Bond Index (HYS): 0.56%
Vanguard Short-Term Corporate Bond (VCSH): 0.05%
As you can see they have a broad diversification that also includes real estate via the Vanguard REIT Index fund, which isn’t something that Betterment gives you.
The performance of Axos Invest has been pretty good. As you can see from the screenshot from Barron’s “Ranking the Robos” article below, WiseBanyan/Axos Invest had the second-best two-year annualized return, through 6/30/19. Not too bad!
Axos Invest Mobile App
When the service first came out one of the complaints some users had was that there was no mobile app for the service. A mobile-optimized app for iOS was released shortly thereafter, as well as an app for Android users.
From the app, you can now do things on the go like check your balances, view your allocations, make a quick deposit, and more. The apps really are very pretty to look at and are a pleasure to use.
Axos Invest Fees & Account Charges
One of the biggest draws for Axos Invest when they started was the fact that they were essentially a fee-free service. While that is no longer the case, they are still very low-cost, one of the lowest-cost robo-advisors on the market.
Here are a few of the fees (or lack thereof) that you’ll see with the service:
Managed Portfolios
Management fee: 0.24% of assets under management. Accounts less than $500 pay $1/month.
Trading fees: FREE
Rebalancing fees: FREE
Dividend reinvestment fee: FREE
Self-Directed Trading
Stock Trading fees: FREE
ETF Trading Fees: FREE
Options trading: $1 per contract
Self-Directed Trading – Axos Elite
Axos Elite is the premium self-directed investing service that offers more powerful investment tools, real-time market data, extended trading hours, lower fees, stock lending, and margin trading.
Monthly fee: $10/month
Stock Trading fees: FREE
ETF Trading Fees: FREE
Margin Trading: 5.5%
Options trading: $0.80 per contract with Axos Elite
So essentially the Axos Invest service is very low cost with only the 0.24% AUM fee for Managed Portfolios. There are no trading fees, and no fees to rebalance your account or reinvest dividends. Competing services often charge much higher annual management fees, so with Axos being one of the very lowest when it comes to fees, you’re saving on those fees right off the bat.
There are some fees related to transferring funds via wire transfer, or do a full account transfer out, although regular electronic funds transfers (EFT) are free.
Electronic Fund Transfer (EFT) fee: FREE for deposits or withdrawals.
Wire transfers in: FREE (although your bank may charge).
Wire transfers out: $30 per domestic wire transfer.
Account closing fee: FREE.
Full account transfer out fee: $75 per account.
Partial account transfer out fee: $5 per security ($25 minimum/$75 max).
Disbursement of funds by check by mail: $10 per check.
Returned check fee: $40 per occurrence.
As mentioned above, Axos Invest’s product and service is very low cost and there are only a few small fees for certain types of transfers or check disbursements.
Premium Add-On Products & Services
There are several premium packages in your Axos Invest account that have a fee associated with them. You can turn them off and on whenever you want.
Currently, the premium packages include:
Portfolio Plus: The ability to create your own custom portfolio from an expanded list of investments. You can choose from lists of different investment classes and types and add up to 20 investments to each portfolio you create. It costs $3/month to use this add-on package.
Quick Cash: When activated this gives you quick same-day deposits, auto-deposit scheduler, and overdraft protection. It costs $2/month to use this add-on package.
Tax Protection: This package will give you tax loss harvesting, selective trading (to remove ETFs you hold elsewhere to avoid the potential for wash sales) and IRAutomation, which helps you to maximize the use of your retirement account deposits, setup auto deposit plans and more. Each month the cost will be the lesser of 0.02% of your average Axos Invest account value (0.24% annually) or $20. So if you have $5,000 in your account, the monthly cost would be $1.
Using these add-on packages is purely optional, but even if you were to turn them all on it likely isn’t going to cost you more than a few bucks per month.
Axos Invest: Great For Cost-Conscious Investors
When I first read about Axos Invest I dismissed it out of hand because I thought that there had to be a catch somewhere, there’s no way they were offering this service for such a low cost when others are charging anywhere from .35%-1.0% annual management fees for similar services.
After looking into it further, however, it does truly seem like Axos Invest is committed to offering a low-cost investing service for both self-directed investors and those who want their portfolios managed for them.
Axos Invest does seem like a good option for newer investors. Not only can you start investing with no account minimums, and low management fees – but you can buy fractional shares with as little as $10 and get a highly diversified portfolio that should match the market in the long term.
The account has SIPC protection that covers up to $500,000 per client as well, so if Axos Invest were to go under you’d be covered.
I’ve signed up for my own Axos Invest account and have been with them now for years. They are my go-to recommendations for new (and even experienced) investors.
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Many Americans have income that fluctuates from week to week. When incomes are unsteady, any unexpected expense can leave you coming up short. If you don’t have a fully funded emergency fund, you may find yourself looking around for loans to bridge the gap and get you to your next paycheck. Payday loans are out there, but at a high cost to borrowers. Before taking out a payday loan you may want to first make a budget. You can work with a financial advisor who can help you make a long-term financial plan that you can budget your finances to meet.
Payday Loans: Short-Term Loans with a High Price
What are payday loans? Say you’re still 12 days away from your next paycheck but you need $400 for emergency car repairs. Without the $400 your car won’t run, you won’t make it to work, you’ll lose your job and possibly lose your housing too. High stakes.
If you go to a payday lender, they’ll ask you to write a future-dated check for an amount equal to $400 plus a financing fee. In exchange, you’ll get $400. You’ll generally have two weeks or until your next paycheck to pay that money back. Say the financing fee is $40. You’ve paid $40 to borrow $400 for two weeks.
If you pay back the money within the loan term, you’re out $40 but you’re not responsible for paying interest. But the thing is, many people can’t pay back their loans. When that happens, the money they borrowed is subject to double-digit, triple-digit or even quadruple-digit interest rates. It’s easy to see how a payday loan can lead to a debt spiral. That’s why payday loans are illegal in some places and their interest rates are regulated in others.
When your loan term ends, you can ask your payday loan lender to cash the check you wrote when you agreed to the loan. Or, you can roll that debt into a new debt, paying a new set of financing fees in the process. Rolling over debt is what leads to a debt spiral, but it’s often people’s only choice if they don’t have enough money in their account to cover the check they wrote.
Are Payday Loans a Good Idea?
Not all debt is created equal. An affordable mortgage on a home that’s rising in value is different from a private student loan with a high-interest rate that you’re struggling to pay off. With payday loans, you pay a lot of money for the privilege of taking out a small short-term loan. Payday loans can easily get out of control, leading borrowers deeper and deeper into debt.
And with their high-interest rates, payday loans put borrowers in the position of making interest-only payments, never able to chip away at the principal they borrowed or get out of debt for good.
Payday Loans and Your Credit
Payday loans don’t require a credit check. If you pay back your payday loan on time, that loan generally won’t show up on your credit reports with any of the three credit reporting agencies (Experian, TransUnion and Equifax). Paying back a payday loan within your loan term won’t boost your credit score or help you build credit.
But what about if you’re unable to repay your payday loan? Will that payday loan hurt your credit? It could. If your payday lender sells your debt to a collection agency, that debt collector could report your unpaid loan to the credit reporting agencies. It would then appear as a negative entry on your credit report and lower your credit score. Remember that it takes seven years for negative entries to cycle off your credit report.
Having a debt that goes to collections is not just a blow to your credit score. It can put you on the radar of some unsavory characters. In some cases, debt collectors may threaten to press charges. Because borrowers write a check when they take out a payday loan, debt collectors may try to press charges using laws designed to punish those who commit fraud by writing checks for accounts with non-sufficient funds (these are known as NSF checks).
However, future-dated checks written to payday lenders are generally exempt from these laws. Debt collectors may threaten to bring charges as a way to get people to pay up, even though judges generally would dismiss any such charges.
Alternatives to Payday Loans
If you’re having a liquidity crisis but you want to avoid payday lenders, there are alternatives to consider. You could borrow from friends or family. You could seek a small personal loan from a bank, credit union or online peer-to-peer lending site.
Many sites now offer instant or same-day loans that rival the speed of payday lenders, but with lower fees and lower interest rates. You could also ask for an extension from your creditors, or for an advance from your employers.
Even forms of lending we don’t generally love, like credit card cash advances, tend to have lower interest rates than payday loans do. In short, it’s usually a good idea to avoid payday loans if you can. Instead, consider working on a budget that can help you get to your next paycheck with some breathing room, and make sure you have a rainy day fund.
The Bottom Line
When considering a short-term loan, it’s important to not just look for low-interest rates. Between fees and insurance policies, lenders sometimes find ways to bump effective interest rates to triple-digit levels even if they cap their APRs. The risks of taking a payday loan bring home the importance of working hard to build up an emergency fund that you can draw on.
Tips for Retirement Planning
If you’re not already preparing for retirement then it’s a good idea to create a retirement plan and make sure you’re contributing to it regularly. If you’re overwhelmed or don’t know where to begin, a financial advisor can help you map it all out. Finding a 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.
Not sure how much you need to save for retirement? Consider using our free retirement calculator to get the number you need so that you can start making the right progress.
Amelia Josephson
Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
In Best Low-Risk Investments for 2023, I provided a comprehensive list of low-risk investments with predictable returns. But it’s precisely because those returns are low-risk that they also provide relatively low returns.
In this article, we’re going to look at high-yield investments, many of which involve a higher degree of risk but are also likely to provide higher returns.
True enough, low-risk investments are the right investment solution for anyone who’s looking to preserve capital and still earn some income.
But if you’re more interested in the income side of an investment, accepting a bit of risk can produce significantly higher returns. And at the same time, these investments will generally be less risky than growth stocks and other high-risk/high-reward investments.
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Determine How Much Risk You’re Willing to Take On
The risk we’re talking about with these high-yield investments is the potential for you to lose money. As is true when investing in any asset, you need to begin by determining how much you’re willing to risk in the pursuit of higher returns.
Chasing “high-yield returns” will make you broke if you don’t have clear financial goals you’re working towards.
I’m going to present a large number of high-yield investments, each with its own degree of risk. The purpose is to help you evaluate the risk/reward potential of these investments when selecting the ones that will be right for you.
If you’re looking for investments that are completely safe, you should favor one or more of the highly liquid, low-yield vehicles covered in Best Low-Risk Investments for 2023. In this article, we’re going to be going for something a little bit different. As such, please note that this is not in any way a blanket recommendation of any particular investment.
Best High-Yield Investments for 2023
Table of Contents
Below is my list of the 18 best high-yield investments for 2023. They’re not ranked or listed in order of importance. That’s because each is a unique investment class that you will need to carefully evaluate for suitability within your own portfolio.
Be sure that any investment you do choose will be likely to provide the return you expect at an acceptable risk level for your own personal risk tolerance.
1. Treasury Inflation-Protected Securities (TIPS)
Let’s start with this one, if only because it’s on just about every list of high-yield investments, especially in the current environment of rising inflation. It may not actually be the best high-yield investment, but it does have its virtues and shouldn’t be overlooked.
Basically, TIPS are securities issued by the U.S. Treasury that are designed to accommodate inflation. They do pay regular interest, though it’s typically lower than the rate paid on ordinary Treasury securities of similar terms. The bonds are available with a minimum investment of $100, in terms of five, 10, and 30 years. And since they’re fully backed by the U.S. government, you are assured of receiving the full principal value if you hold a security until maturity.
But the real benefit—and the primary advantage—of these securities is the inflation principal additions. Each year, the Treasury will add an amount to the bond principal that’s commensurate with changes in the Consumer Price Index (CPI).
Fortunately, while the principal will be added when the CPI rises (as it nearly always does), none will be deducted if the index goes negative.
You can purchase TIPS through the U.S. Treasury’s investment portal, Treasury Direct. You can also hold the securities as well as redeem them on the same platform. There are no commissions or fees when buying securities.
On the downside, TIPS are purely a play on inflation since the base rates are fairly low. And while the principal additions will keep you even with inflation, you should know that they are taxable in the year received.
Still, TIPS are an excellent low-risk, high-yield investment during times of rising inflation—like now.
2. I Bonds
If you’re looking for a true low-risk, high-yield investment, look no further than Series I bonds. With the current surge in inflation, these bonds have become incredibly popular, though they are limited.
I bonds are currently paying 6.89%. They can be purchased electronically in denominations as little as $25. However, you are limited to purchasing no more than $10,000 in I bonds per calendar year. Since they are issued by the U.S. Treasury, they’re fully protected by the U.S. government. You can purchase them through the Treasury Department’s investment portal, TreasuryDirect.gov.
“The cash in my savings account is on fire,” groans Scott Lieberman, Founder of Touchdown Money. “Inflation has my money in flames, each month incinerating more and more. To defend against this, I purchased an I bond. When I decide to get my money back, the I bond will have been protected against inflation by being worth more than what I bought it for. I highly recommend getting yourself a super safe Series I bond with money you can stash away for at least one year.”
You may not be able to put your entire bond portfolio into Series I bonds. But just a small investment, at nearly 10%, can increase the overall return on your bond allocation.
3. Corporate Bonds
The average rate of return on a bank savings account is 0.33%. The average rate on a money market account is 0.09%, and 0.25% on a 12-month CD.
Now, there are some banks paying higher rates, but generally only in the 1%-plus range.
If you want higher returns on your fixed income portfolio, and you’re willing to accept a moderate level of risk, you can invest in corporate bonds. Not only do they pay higher rates than banks, but you can lock in those higher rates for many years.
For example, the average current yield on a AAA-rated corporate bond is 4.55%. Now that’s the rate for AAA bonds, which are the highest-rated securities. You can get even higher rates on bonds with lower ratings, which we will cover in the next section.
Corporate bonds sell in face amounts of $1,000, though the price may be higher or lower depending on where interest rates are. If you choose to buy individual corporate bonds, expect to buy them in lots of ten. That means you’ll likely need to invest $10,000 in a single issue. Brokers will typically charge a small per-bond fee on purchase and sale.
An alternative may be to take advantage of corporate bond funds. That will give you an opportunity to invest in a portfolio of bonds for as little as the price of one share of an ETF. And because they are ETFs, they can usually be bought and sold commission free.
You can typically purchase corporate bonds and bond funds through popular stock brokers, like Zacks Trade, TD Ameritrade.
Corporate Bond Risk
Be aware that the value of corporate bonds, particularly those with maturities greater than 10 years, can fall if interest rates rise. Conversely, the value of the bonds can rise if interest rates fall.
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4. High-Yield Bonds
In the previous section we talked about how interest rates on corporate bonds vary based on each bond issue’s rating. A AAA bond, being the safest, has the lowest yield. But a riskier bond, such as one rated BBB, will provide a higher rate of return.
If you’re looking to earn higher interest than you can with investment-grade corporate bonds, you can get those returns with so-called high-yield bonds. Because they have a lower rating, they pay higher interest, sometimes much higher.
The average yield on high-yield bonds is 8.29%. But that’s just an average. The yield on a bond rated B will be higher than one rated BB.
You should also be aware that, in addition to potential market value declines due to rising interest rates, high-yield bonds are more likely to default than investment-grade bonds. That’s why they pay higher interest rates. (They used to call these bonds “junk bonds,” but that kind of description is a marketing disaster.) Because of those twin risks, junk bonds should occupy only a small corner of your fixed-income portfolio.
High Yield Bond Risk
In a rapidly rising interest rate environment, high-yield bonds are more likely to default.
High-yield bonds can be purchased under similar terms and in the same places where you can trade corporate bonds. There are also ETFs that specialize in high-yield bonds and will be a better choice for most investors, since they will include diversification across many different bond issues.
5. Municipal Bonds
Just as corporations and the U.S. Treasury issue bonds, so do state and local governments. These are referred to as municipal bonds. They work much like other bond types, particularly corporates. They can be purchased in similar denominations through online brokers.
The main advantage enjoyed by municipal bonds is their tax-exempt status for federal income tax purposes. And if you purchase a municipal bond issued by your home state, or a municipality within that state, the interest will also be tax-exempt for state income tax purposes.
That makes municipal bonds an excellent source of tax-exempt income in a nonretirement account. (Because retirement accounts are tax-sheltered, it makes little sense to include municipal bonds in those accounts.)
Municipal bond rates are currently hovering just above 3% for AAA-rated bonds. And while that’s an impressive return by itself, it masks an even higher yield.
Because of their tax-exempt status, the effective yield on municipal bonds will be higher than the note rate. For example, if your combined federal and state marginal income tax rates are 25%, the effective yield on a municipal bond paying 3% will be 4%. That gives an effective rate comparable with AAA-rated corporate bonds.
Municipal bonds, like other bonds, are subject to market value fluctuations due to interest rate changes. And while it’s rare, there have been occasional defaults on these bonds.
Like corporate bonds, municipal bonds carry ratings that affect the interest rates they pay. You can investigate bond ratings through sources like Standard & Poor’s, Moody’s, and Fitch.
Fund
Symbol
Type
Current Yield
5 Average Annual Return
Vanguard Inflation-Protected Securities Fund
VIPSX
TIPS
0.06%
3.02%
SPDR® Portfolio Interm Term Corp Bond ETF
SPIB
Corporate
4.38%
1.44%
iShares Interest Rate Hedged High Yield Bond ETF
HYGH
High-Yield
5.19%
2.02%
Invesco VRDO Tax-Free ETF (PVI)
PVI
Municipal
0.53%
0.56%
6. Longer Term Certificates of Deposit (CDs)
This is another investment that falls under the low risk/relatively high return classification. As interest rates have risen in recent months, rates have crept up on certificates of deposit. Unlike just one year ago, CDs now merit consideration.
But the key is to invest in certificates with longer terms.
“Another lower-risk option is to consider a Certificate of Deposit (CD),” advises Lance C. Steiner, CFP at Buckingham Advisors. “Banks, credit unions, and many other financial institutions offer CDs with maturities ranging from 6 months to 60 months. Currently, a 6-month CD may pay between 0.75% and 1.25% where a 24-month CD may pay between 2.20% and 3.00%. We suggest considering a short-term ladder since interest rates are expected to continue rising.” (Stated interest rates for the high-yield savings and CDs were obtained at bankrate.com.)
Most banks offer certificates of deposit with terms as long as five years. Those typically have the highest yields.
But the longer term does involve at least a moderate level of risk. If you invest in a CD for five years that’s currently paying 3%, the risk is that interest rates will continue rising. If they do, you’ll miss out on the higher returns available on newer certificates. But the risk is still low overall since the bank guarantees to repay 100% of your principle upon certificate maturity.
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7. Peer-to-Peer (P2P) Lending
Do you know how banks borrow from you—at 1% interest—then loan the same money to your neighbor at rates sometimes as high as 20%? It’s quite a racket, and a profitable one at that.
But do you also know that you have the same opportunity as a bank? It’s an investing process known as peer-to-peer lending, or P2P for short.
P2P lending essentially eliminates the bank. As an investor, you’ll provide the funds for borrowers on a P2P platform. Most of these loans will be in the form of personal loans for a variety of purposes. But some can also be business loans, medical loans, and for other more specific purposes.
As an investor/lender, you get to keep more of the interest rate return on those loans. You can invest easily through online P2P platforms.
One popular example is Prosper. They offer primarily personal loans in amounts ranging between $2,000 and $40,000. You can invest in small slivers of these loans, referred to as “notes.” Notes can be purchased for as little as $25.
That small denomination will make it possible to diversify your investment across many different loans. You can even choose the loans you will invest in based on borrower credit scores, income, loan terms, and purposes.
Prosper, which has managed $20 billion in P2P loans since 2005, claims a historical average return of 5.7%. That’s a high rate of return on what is essentially a fixed-income investment. But that’s because there exists the possibility of loss due to borrower default.
However, you can minimize the likelihood of default by carefully choosing borrower loan quality. That means focusing on borrowers with higher credit scores, incomes, and more conservative loan purposes (like debt consolidation).
8. Real Estate Investment Trusts (REITs)
REITs are an excellent way to participate in real estate investment, and the return it provides, without large amounts of capital or the need to manage properties. They’re publicly traded, closed-end investment funds that can be bought and sold on major stock exchanges. They invest primarily in commercial real estate, like office buildings, retail space, and large apartment complexes.
If you’re planning to invest in a REIT, you should be aware that there are three different types.
“Equity REITs purchase commercial, industrial, or residential real estate properties,” reports Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University and co-author of several books, including The Tools and Techniques Of Investment Planning, Strategic Value Investing and Investment Banking for Dummies. “Income is derived primarily from the rental on the properties, as well as from the sale of properties that have increased in value. Mortgage REITs invest in property mortgages. The income is primarily from the interest they earn on the mortgage loans. Hybrid REITs invest both directly in property and in mortgages on properties.”
Johnson also cautions:
“Investors should understand that equity REITs are more like stocks and mortgage REITs are more like bonds. Hybrid REITs are like a mix of stocks and bonds.”
Mortgage REITs, in particular, are an excellent way to earn steady dividend income without being closely tied to the stock market.
Examples of specific REITs are listed in the table below (source: Kiplinger):
REIT
Equity or Mortgage
Property Type
Dividend Yield
12 Month Return
Rexford Industrial Realty
REXR
Industrial warehouse space
2.02%
2.21%
Sun Communities
SUI
Manufactured housing, RVs, resorts, marinas
2.19%
-14.71%
American Tower
AMT
Multi-tenant cell towers
2.13%
-9.00%
Prologis
PLD
Industrial real estate
2.49%
-0.77%
Camden Property Trust
CPT
Apartment complexes
2.77%
-7.74%
Alexandria Real Estate Equities
ARE
Research Properties
3.14%
-23.72%
Digital Realty Trust
DLR
Data centers
3.83%
-17.72%
9. Real Estate Crowdfunding
If you prefer direct investment in a property of your choice, rather than a portfolio, you can invest in real estate crowdfunding. You invest your money, but management of the property will be handled by professionals. With real estate crowdfunding, you can pick out individual properties, or invest in nonpublic REITs that invest in very specific portfolios.
One of the best examples of real estate crowdfunding is Fundrise. That’s because you can invest with as little as $500 or create a customized portfolio with no more than $1,000. Not only does Fundrise charge low fees, but they also have multiple investment options. You can start small in managed investments, and eventually trade up to investing in individual deals.
One thing to be aware of with real estate crowdfunding is that many require accredited investor status. That means being high income, high net worth, or both. If you are an accredited investor, you’ll have many more choices in the real estate crowdfunding space.
If you are not an accredited investor, that doesn’t mean you’ll be prevented from investing in this asset class. Part of the reason why Fundrise is so popular is that they don’t require accredited investor status. There are other real estate crowdfunding platforms that do the same.
Just be careful if you want to invest in real estate through real estate crowdfunding platforms. You will be expected to tie your money up for several years, and early redemption is often not possible. And like most investments, there is the possibility of losing some or all your investment principal.
Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency
10. Physical Real Estate
We’ve talked about investing in real estate through REITs and real estate crowdfunding. But you can also invest directly in physical property, including residential property or even commercial.
Owning real estate outright means you have complete control over the investment. And since real estate is a large-dollar investment, the potential returns are also large.
For starters, average annual returns on real estate are impressive. They’re even comparable to stocks. Residential real estate has generated average returns of 10.6%, while commercial property has returned an average of 9.5%.
Next, real estate has the potential to generate income from two directions, from rental income and capital gains. But because of high property values in many markets around the country, it will be difficult to purchase real estate that will produce a positive cash flow, at least in the first few years.
Generally speaking, capital gains are where the richest returns come from. Property purchased today could double or even triple in 20 years, creating a huge windfall. And this will be a long-term capital gain, to get the benefit of a lower tax bite.
Finally, there’s the leverage factor. You can typically purchase an investment property with a 20% down payment. That means you can purchase a $500,000 property with $100,000 out-of-pocket.
By calculating your capital gains on your upfront investment, the returns are truly staggering. If the $500,000 property doubles to $1 million in 20 years, the $500,000 profit generated will produce a 500% gain on your $100,000 investment.
On the negative side, real estate is certainly a very long-term investment. It also comes with high transaction fees, often as high as 10% of the sale price. And not only will it require a large down payment up front, but also substantial investment of time managing the property.
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11. High Dividend Stocks
“The best high-yield investment is dividend stocks,” declares Harry Turner, Founder at The Sovereign Investor. “While there is no guaranteed return with stocks, over the long term stocks have outperformed other investments such as bonds and real estate. Among stocks, dividend-paying stocks have outperformed non-dividend paying stocks by more than 2 percentage points per year on average over the last century. In addition, dividend stocks tend to be less volatile than non-dividend paying stocks, meaning they are less likely to lose value in downturns.”
You can certainly invest in individual stocks that pay high dividends. But a less risky way to do it, and one that will avoid individual stock selection, is to invest through a fund.
One of the most popular is the ProShares S&P 500 Dividend Aristocrat ETF (NOBL). It has provided a return of 1.67% in the 12 months ending May 31, and an average of 12.33% per year since the fund began in October 2013. The fund currently has a 1.92% dividend yield.
The so-called Dividend Aristocrats are popular because they represent 60+ S&P 500 companies, with a history of increasing their dividends for at least the past 25 years.
“Dividend Stocks are an excellent way to earn some quality yield on your investments while simultaneously keeping inflation at bay,” advises Lyle Solomon, Principal Attorney at Oak View Law Group, one of the largest law firms in America. “Dividends are usually paid out by well-established and successful companies that no longer need to reinvest all of the profits back into the business.”
It gets better. “These companies and their stocks are safer to invest in owing to their stature, large customer base, and hold over the markets,” adds Solomon. “The best part about dividend stocks is that many of these companies increase dividends year on year.”
The table below shows some popular dividend-paying stocks. Each is a so-called “Dividend Aristocrat”, which means it’s part of the S&P 500 and has increased its dividend in each of at least the past 25 years.
Company
Symbol
Dividend
Dividend Yield
AbbVie
ABBV
$5.64
3.80%
Armcor PLC
AMCR
$0.48
3.81%
Chevron
CVX
$5.68
3.94%
ExxonMobil
XOM
$3.52
4.04%
IBM
IBM
$6.60
5.15%
Realty Income Corp
O
$2.97
4.16%
Walgreen Boots Alliance
WBA
$1.92
4.97%
12. Preferred Stocks
Preferred stocks are a very specific type of dividend stock. Just like common stock, preferred stock represents an interest in a publicly traded company. They’re often thought of as something of a hybrid between stocks and bonds because they contain elements of both.
Though common stocks can pay dividends, they don’t always. Preferred stocks on the other hand, always pay dividends. Those dividends can be either a fixed amount or based on a variable dividend formula. For example, a company can base the dividend payout on a recognized index, like the LIBOR (London Inter-Bank Offered Rate). The percentage of dividend payout will then change as the index rate does.
Preferred stocks have two major advantages over common stock. First, as “preferred” securities, they have a priority on dividend payments. A company is required to pay their preferred shareholders dividends ahead of common stockholders. Second, preferred stocks have higher dividend yields than common stocks in the same company.
You can purchase preferred stock through online brokers, some of which are listed under “Growth Stocks” below.
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Preferred Stock Caveats
The disadvantage of preferred stocks is that they don’t entitle the holder to vote in corporate elections. But some preferred stocks offer a conversion option. You can exchange your preferred shares for a specific number of common stock shares in the company. Since the conversion will likely be exercised when the price of the common shares takes a big jump, there’s the potential for large capital gains—in addition to the higher dividend.
Be aware that preferred stocks can also be callable. That means the company can authorize the repurchase of the stock at its discretion. Most will likely do that at a time when interest rates are falling, and they no longer want to pay a higher dividend on the preferred stock.
Preferred stock may also have a maturity date, which is typically 30–40 years after its original issuance. The company will typically redeem the shares at the original issue price, eliminating the possibility of capital gains.
Not all companies issue preferred stock. If you choose this investment, be sure it’s with a company that’s well-established and has strong financials. You should also pay close attention to the details of the issuance, including and especially any callability provisions, dividend formulas, and maturity dates.
13. Growth Stocks
This sector is likely the highest risk investment on this list. But it also may be the one with the highest yield, at least over the long term. That’s why we’re including it on this list.
Based on the S&P 500 index, stocks have returned an average of 10% per year for the past 50 years. But it is important to realize that’s only an average. The market may rise 40% one year, then fall 20% the next. To be successful with this investment, you must be committed for the long haul, up to and including several decades.
And because of the potential wide swings, growth stocks are not recommended for funds that will be needed within the next few years. In general, growth stocks work best for retirement plans. That’s where they’ll have the necessary decades to build and compound.
Since most of the return on growth stocks is from capital gains, you’ll get the benefit of lower long-term capital gains tax rates, at least with securities held in a taxable account. (The better news is capital gains on investments held in retirement accounts are tax-deferred until retirement.)
You can choose to invest in individual stocks, but that’s a fairly high-maintenance undertaking. A better way may be to simply invest in ETFs tied to popular indexes. For example, ETFs based on the S&P 500 are very popular among investors.
You can purchase growth stocks and growth stock ETFs commission free with brokers like M1 Finance, Zacks Trade, Wealthsimple.
14. Annuities
Annuities are something like creating your own private pension. It’s an investment contract you take with an insurance company, in which you invest a certain amount of money in exchange for a specific income stream. They can be an excellent source of high yields because the return is locked in by the contract.
Annuities come in many different varieties. Two major classifications are immediate and deferred annuities. As the name implies, immediate annuities begin paying an income stream shortly after the contract begins.
Deferred annuities work something like retirement plans. You may deposit a fixed amount of money with the insurance company upfront or make regular installments. In either case, income payments will begin at a specified point in the future.
With deferred annuities, the income earned within the plan is tax-deferred and paid upon withdrawal. But unlike retirement accounts, annuity contributions are not tax-deductible. Investment returns can either be fixed-rate or variable-rate, depending on the specific annuity setup.
While annuities are an excellent idea and concept, the wide variety of plans as well as the many insurance companies and agents offering them, make them a potential minefield. For example, many annuities are riddled with high fees and are subject to limited withdrawal options.
Because they contain so many moving parts, any annuity contracts you plan to enter into should be carefully reviewed. Pay close attention to all the details, including the small ones. It is, after all, a contract, and therefore legally binding. For that reason, you may want to have a potential annuity reviewed by an attorney before finalizing the deal.
15. Alternative Investments
Alternative investments cover a lot of territory. Examples include precious metals, commodities, private equity, art and collectibles, and digital assets. These fall more in the category of high risk/potential high reward, and you should proceed very carefully and with only the smallest slice of your portfolio.
To simplify the process of selecting alternative assets, you can invest through platforms such as Yieldstreet. With a single cash investment, you can invest in multiple alternatives.
“Investors can purchase real estate directly on Yieldstreet, through fractionalized investments in single deals,” offers Milind Mehere, Founder & Chief Executive Officer at Yieldstreet. “Investors can access private equity and private credit at high minimums by investing in a private market fund (think Blackstone or KKR, for instance). On Yieldstreet, they can have access to third-party funds at a fraction of the previously required minimums. Yieldstreet also offers venture capital (fractionalized) exposure directly. Buying a piece of blue-chip art can be expensive, and prohibitive for most investors, which is why Yieldstreet offers fractionalized assets to diversified art portfolios.”
Yieldstreet also provides access to digital asset investments, with the benefit of allocating to established professional funds, such as Pantera or Osprey Fund. The platform does not currently offer commodities but plans to do so in the future.
Access to wide array of alternative asset classes
Access to ultra-wealthy investments
Can invest for income or growth
Learn More Now
Alternative investments largely require thinking out-of-the-box. Some of the best investment opportunities are also the most unusual.
“The price of meat continues to rise, while agriculture remains a recession-proof investment as consumer demand for food is largely inelastic,” reports Chris Rawley, CEO of Harvest Returns, a platform for investing in private agriculture companies. “Consequently, investors are seeing solid returns from high-yield, grass-fed cattle notes.”
16. Interest Bearing Crypto Accounts
Though the primary appeal of investing in cryptocurrency has been the meteoric rises in price, now that the trend seems to be in reverse, the better play may be in interest-bearing crypto accounts. A select group of crypto exchanges pays high interest on your crypto balance.
One example is Gemini. Not only do they provide an opportunity to buy, sell, and store more than 100 cryptocurrencies—plus non-fungible tokens (NFTs)—but they are currently paying 8.05% APY on your crypto balance through Gemini Earn.
In another variation of being able to earn money on crypto, Crypto.com pays rewards of up to 14.5% on crypto held on the platform. That’s the maximum rate, as rewards vary by crypto. For example, rewards on Bitcoin and Ethereum are paid at 6%, while stablecoins can earn 8.5%.
It’s important to be aware that when investing in cryptocurrency, you will not enjoy the benefit of FDIC insurance. That means you can lose money on your investment. But that’s why crypto exchanges pay such high rates of return, whether it’s in the form of interest or rewards.
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17. Crypto Staking
Another way to play cryptocurrency is a process known as crypto staking. This is where the crypto exchange pays you a certain percentage as compensation or rewards for monitoring a specific cryptocurrency. This is not like crypto mining, which brings crypto into existence. Instead, you’ll participate in writing that particular blockchain and monitoring its security.
“Crypto staking is a concept wherein you can buy and lock a cryptocurrency in a protocol, and you will earn rewards for the amount and time you have locked the cryptocurrency,” reports Oak View Law Group’s Lyle Solomon.
“The big downside to staking crypto is the value of cryptocurrencies, in general, is extremely volatile, and the value of your staked crypto may reduce drastically,” Solomon continues, “However, you can stake stable currencies like USDC, which have their value pegged to the U.S. dollar, and would imply you earn staked rewards without a massive decrease in the value of your investment.”
Much like earning interest and rewards on crypto, staking takes place on crypto exchanges. Two exchanges that feature staking include Coinbase and Kraken. These are two of the largest crypto exchanges in the industry, and they provide a wide range of crypto opportunities, in addition to staking.
Invest in Startup Businesses and Companies
Have you ever heard the term “angel investor”? That’s a private investor, usually, a high net worth individual, who provides capital to small businesses, often startups. That capital is in the form of equity. The angel investor invests money in a small business, becomes a part owner of the company, and is entitled to a share of the company’s earnings.
In most cases, the angel investor acts as a silent partner. That means he or she receives dividend distributions on the equity invested but doesn’t actually get involved in the management of the company.
It’s a potentially lucrative investment opportunity because small businesses have a way of becoming big businesses. As they grow, both your equity and your income from the business also grow. And if the business ever goes public, you could be looking at a life-changing windfall!
Easy Ways to Invest in Startup Businesses
Mainvest is a simple, easy way to invest in small businesses. It’s an online investment platform where you can get access to returns as high as 25%, with an investment of just $100. Mainvest offers vetted businesses (the acceptance rate is just 5% of business that apply) for you to invest in.
It collects revenue, which will be paid to you quarterly. And because the minimum required investment is so small, you can invest in several small businesses at the same time. One of the big advantages with Mainvest is that you are not required to be an accredited investor.
Still another opportunity is through Fundrise Innovation Fund. I’ve already covered how Fundrise is an excellent real estate crowdfunding platform. But through their recently launched Innovaton Fund, you’ll have opportunity to invest in high-growth private technology companies. As a fund, you’ll invest in a portfolio of late-stage tech companies, as well as some public equities.
The purpose of the fund is to provide high growth, and the fund is currently offering shares with a net asset value of $10. These are long-term investments, so you should expect to remain invested for at least five years. But you may receive dividends in the meantime.
Like Mainvest, the Fundrise Innovation Fund does not require you to be an accredited investor.
Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency
Final Thoughts on High Yield Investing
Notice that I’ve included a mix of investments based on a combination of risk and return. The greater the risk associated with the investment, the higher the stated or expected return will be.
It’s important when choosing any of these investments that you thoroughly assess the risk involved with each, and not focus primarily on return. These are not 100% safe investments, like short-term CDs, short-term Treasury securities, savings accounts, or bank money market accounts.
Because there is risk associated with each, most are not suitable as short-term investments. They make most sense for long-term investment accounts, particularly retirement accounts.
For example, growth stocks—and most stocks, for that matter—should generally be in a retirement account. While there will be years when you will suffer losses in your position, you’ll have enough years to offset those losses between now and retirement.
Also, if you don’t understand any of the above investments, it will be best to avoid making them. And for more complicated investments, like annuities, you should consult with a professional to evaluate the suitability and all the provisions it contains.
FAQ’s on High Yield Investment Options
What investment has the highest yield?
The investment with the highest yield will vary depending on a number of factors, including current market conditions and the amount of risk an investor is willing to take on. Generally speaking, investments with the potential for high yields also come with a higher level of risk, so it’s important for investors to carefully consider their options and choose investments that align with their financial goals and risk tolerance.
Some examples of high-yield investments include:
1. Stocks: Some stocks may offer high dividend yields, which is the annual dividend payment a company makes to its shareholders, expressed as a percentage of the stock’s current market price.
2. Real estate: Investing in real estate, either directly by purchasing property or indirectly through a real estate investment trust (REIT), can potentially generate high returns in the form of rental income and appreciation of the property value.
3. High-yield bonds: High-yield bonds, also known as junk bonds, are bonds that are issued by companies with lower credit ratings and thus offer higher yields to compensate for the added risk.
4. Private lending: Investing in private loans, such as through peer-to-peer lending platforms, can potentially offer high yields, but it also carries a higher level of risk.
5. Commodities: Investing in commodities, such as precious metals or oil, can potentially generate high returns if the prices of those commodities rise. However, the prices of commodities can also be volatile and subject to market fluctuations.
It’s important to note that these are just examples and not recommendations. As with any investment, it’s crucial to carefully research and consider all the potential risks and rewards before making a decision.
Where can I invest my money to get high returns?
There are a number of places you can invest your money to get high returns. One option is to invest in stocks, which typically offer higher returns than other investment options. Another option is to invest in bonds, which are considered a relatively safe investment option.
You could also invest in real estate, which has the potential to provide high returns if done correctly. Finally, you could also invest in commodities, such as gold or silver, which can be a risky investment but can also offer high returns.
What investments can I make a 10% return?
It’s difficult to predict exactly what investments will generate a 10% return, as investment returns can vary depending on a number of factors, including market conditions and the performance of the specific investment. Some investments, such as stocks and real estate, have the potential to generate returns in excess of 10%, but they also come with a higher level of risk. It’s important to remember that past performance is not necessarily indicative of future results, and that all investments carry some degree of risk
Sometimes it can seem like banks always put profits over the people they serve, but several U.S. banks are committed to doing just the opposite.
I found 15 banks that shape their business models around community support and environmental sustainability. Many of them even qualify as B Corporations, which have to abide by legal requirements such as a diverse workforce, sustainable practices, and more.
What’s Ahead:
Overview of the best socially responsible banks
Bank or credit union
Best for
Are they a Certified B Corporation?
Unique feature
National Cooperative Bank
Cooperatives
No
Real estate mortgages for homeowners with low to moderate income
Southern Bancorp
Those who live in rural areas
No
Free financial education center
Amalgamated Bank
Those who support sustainable business
Yes
Donate your spare change with their “Donate the Change” program
Ando Savings
Tracking the effect of your investment
Yes
Auto-save by rounding up debit card purchases
BankPurely
Investing in planting trees
No
One tree is planted for every SavingPurely account opened
Aspiration Bank
Knowing how your spending stacks up to your values
Yes
Investment accounts with fossil fuel-free portfolios
Clearwater Credit Union
Montana small businesses
No
All-in-one banking options
Verity Credit Union
Entrepreneurs in underserved communities
No
Microloans
Virginia Community Capital (VCC)
Real estate entrepreneurs taking on eco-friendly construction projects
Yes
The Revolving Loan Fund that fills financial gaps for investors who can’t afford commercial financing
Central Bank of Kansas City
Tax help and Missouri residents
No
Incentives to invest in economically disadvantaged areas
Carver Federal Savings Bank
Those looking to help support the Black community
No
They donate to local communities
First Green Bank
Those in economically disadvantages areas
No
A loan plan for homeowners who wish to install solar panels
Mascoma Bank
Those living in low-income cities in New England
Yes
Loans for energy-efficient renovations
City First Bank
Those who want to support the development of low-income communities
Yes
Through CDARS, customers can make larger, FDIC-insured deposits
Beneficial State Bank
Those with less than perfect credit
Yes
Underwriters consider factors other than credit score
Best national banks for socially responsible banking
These banks have brick-and-mortar branches, but they’re large enough to have seamless online and mobile account services, as well as multiple resources for customers and borrowers.
National Cooperative Bank
The National Cooperative Bank began as a lender to business cooperatives that meet community needs, including grocery stores, health centers, nonprofits, housing co-ops, credit unions, and more.
Cooperatives remain their main lending focus, but NCB also specializes in real estate, mortgages for homeowners with low or moderate incomes, and loans for solar energy installation. They’ve branched into personal banking as well, and personal or commercial accounts can be opened online from anywhere in the United States.
Like many socially responsible banks, NCB prioritizes investments in renewable energy projects, and they don’t invest in fossil fuels.
Some of their standout features include:
Member of the Global Alliance of Banking on Values (GABV), a worldwide banking network with a commitment to economic and environmental sustainability.
Personal checking and savings accounts come with up to 0.50% Annual Percentage Yield (APY).
Retirement accounts include IRAs, Roth IRAs, and IRA rollovers.
Learn more about the National Cooperative Bank.
Southern Bancorp
Southern Bancorp is a huge organization with banking, lending, community development, and more services under its $1.1 billion-asset umbrella, but don’t let the size fool you — this bank provides big solutions for small communities, with a commitment to expanding opportunity in rural areas.
In addition to the basics like checking, savings, and lending, Southern Bancorp has a robust public policy advocacy division where they work to promote laws that have positive financial impacts on working families. There’s also a free financial education center with credit counseling and tax prep services.
Since Southern Bancorp is headquartered, and specializes in, the Arkansas and Mississippi Delta regions, physical branches are mostly in this region. But customers from anywhere in the U.S. can open personal or business accounts online.
The bank’s leadership demographic reflects the community it serves; the CEO and 50% of the board members are Black.
Their unique features include:
A Community Development Financial Institution (CDFI).
Certified B-Corporation or B-Corp — a designation reserved for organizations committed to responsible practices.
Personal checking and savings accounts, including accounts designed for specific financial goals.
Online banking is available anywhere with internet access.
Home, auto, and personal loans.
Learn more about Southern Bancorp.
Amalgamated Bank
Headquartered in New York and Washington D.C., Amalgamated Bank extends online checking and savings account access across the United States. They’re committed to sustainable business practices within their own walls. Employees earn a minimum hourly wage of $20/hour, above the federal minimum, and over 30% of employees are union members. The business strives to be 100% carbon-neutral in its operations.
Amalgamated makes its lending priorities clear from the start. They don’t lend to fossil fuel companies, weapons manufacturers, or private prison operators. Instead, they focus on lending to companies in the solar energy or sustainable food industries. If you invest with Amalgamated, you can opt for a portfolio that’s fossil-fuel-free.
And they’re the first major U.S. bank to endorse HR 40, the bill calling for a national commission to establish reparation payments for Black Americans.
Their standout features include:
Certified B Corp and member of the GABV.
Online personal checking and savings accounts with 0.10%-0.40% APYs.
Restart Checking accounts available for customers with poor credit.
Give-Back savings accounts donate half your interest (0.30% APY) to an organization of your choice.
An optional “Donate the Change” program rounds up your purchases and donates the change to a cause the bank selects.
Over 40,000 free in-network ATMs for customers outside NY and D.C.
Learn more about Amalgamated Bank.
Ando Savings
Ando is another bank that puts the environment front and center. They’ve pledged 100% of their investments to initiatives supporting sustainable practices, like agriculture and public transit.
Investors can track the effect of their own investment dollars in the Ando mobile app’s Impact Center, which traces financial impact across five categories including clean energy, sustainable transportation, and green buildings.
You’ll find the following with Ando:
Spending and savings accounts, as well as a Visa debit card, are available to anyone in the U.S.
Accounts have no fees or minimum balances.
Ando’s Count the Change program helps you “auto-save” by rounding up debit card purchases to the nearest dollar and moving the difference from spending to savings.
Learn more about Ando.
Best online banks for socially responsible banking
These banks are fully digital — not only is the all-mobile bank trendy and convenient, but its format also allows the bank to live a little lighter on the earth, with no energy use from physical branches.
BankPurely
BankPurely is the digital arm of NYC-based Flushing Bank, a bank that invests most of its money in community initiatives. As a fully online operation, BankPurely has formal PayItGreen approval for reducing its paper waste and carbon footprint.
They’re currently partnering with Plant-It 2020 to plant indigenous trees in New York State. Ando is one of many socially progressive banks that works with a tree-planting organization, taking a small but important step to counteract climate change.
A few great features include:
Checking, savings, and money market accounts available, with up to 0.25% APY on savings accounts and 0.5% on money market accounts.
CDs are available with 0.55% APY, and Ando will plant a tree for every CD you open.
Learn more about BankPurely.
Aspiration
Aspiration is one of the best-known socially responsible online banks, with multiple account options for the conscious customer. Their “pay what’s fair” fee model for a basic checking account is a rare offering even for the most flexible banks (and yes, paying $0 in fees is an option).
Both the free and fee-based “Aspiration Plus” checking accounts give you a personal impact score to see how your spending stacks up against your values. Accountholders get 3%-10% cash back when they buy anything from Aspiration’s Conscience Coalition partner vendors — an incentive to shop for the greater good.
The bank is currently rolling out a credit card that will reward shoppers who make carbon-friendly financial choices.
Here are a few key features:
Certified B Corp and member of global environmental organization 1% for the Planet.
Aspiration Plus savings accounts ($5.99/month) offer up to 5.00% APY.
Investment accounts available with fossil fuel-free portfolios.
IRA retirement accounts.
As a donor, Aspiration prioritizes funding microloans for low-income recipients.
Learn more about Aspiration or read our full review.
Best regional banks and credit unions for socially responsible banking
Some regional banks offer online accounts to residents elsewhere in the U.S., while others are only open to residents of a certain state or region. Here’s a cross-section of ethical standouts across the country.
Clearwater Credit Union – Montana residents
As Montana’s largest CDFI and a member of Inclusiv, an organization serving residents in low-income communities, Clearwater Credit Union is making its mark nationally but keeping a local focus.
They loan primarily to local businesses and offer a solid selection of financial services to customers.
Here are a couple of great features they offer:
Checking and savings accounts are available.
Health savings accounts (HSAs), traditional IRAs, and Roth IRAs.
Personal, student, and car loans for borrowers.
Learn more about Clearwater Credit Union.
Verity Credit Union – Washington state residents
Verity is active in the local microloan business — one project they’ve funded is the Business Impact Northwest loan program, which gives a financial boost to entrepreneurs in underserved communities.
As an environmentally conscious credit union, they’ve hopped on board the solar installation funding train as well, providing loans to homeowners installing solar panels.
Some especially helpful features include:
Open an account online or through their branch locations.
Accounts can be managed online.
IRAs and 401(k) rollovers are available.
Learn more about Verity Credit Union.
Virginia Community Capital (VCC) – Virginia residents
VCC is the community development arm of VCC Bank, a state bank that’s also a certified B Corp. Food access is a VCC funding priority, and they work with businesses providing healthy, local groceries across the state.
As a real estate funder, VCC has a Clean Energy Financing loan program for entrepreneurs taking on environmentally friendly construction projects.
Some helpful features include:
The Revolving Loan Fund fills financial gaps for investors who can’t afford commercial financing.
Personal savings accounts have low $25 opening deposit minimums.
Checking accounts, CDs, and Roth IRAs are available.
Learn more about VCC.
Central Bank of Kansas City – Missouri residents; online banking for all U.S. residents
Based in Kansas City, Missouri, Central Bank of Kansas City focuses most of its efforts on the local economy. Their lending programs include New Market Tax Credits — incentives to invest in economically disadvantaged areas — and tax credits for developers building low-income housing.
Some exciting features are:
Checking, savings, and money market accounts have fully online options for non-local customers.
Personal accounts earn between 0.05% – 0.15% APY.
Brick-and-mortar banks forMissouri locals.
Learn more about the Central Bank of Kansas City.
Carver Federal Savings Bank – NYC, New England, and Mid-Atlantic residents
Carver Federal Savings Bank was founded in Harlem, NYC, and designed to strengthen Black communities, and the bank’s stayed true to this mission since 1948.
As a CDFI, they focus their donations on local initiatives, and they don’t invest in fossil fuels. Residents of eight states — CT, DE, MA, MD, NY, NJ, RI, and VA, as well as Washington, D.C., and Philadelphia, PA — can open accounts with Carver.
Their key features are:
Interest-bearing checking and savings accounts.
A mobile banking app makes Carver accounts easy to access online.
Account fees are waived with minimum monthly balances.
Learn more about Carver Federal Savings Bank.
First Green Bank – Florida residents
First Green Bank is a local leader in “green” investments. They fund commercial and residential projects that meet environmental standards, and community initiatives that support sustainable development in areas like water and agriculture. They have a loan plan specifically for homeowners who want to install solar panels.
Here are some exciting features:
Florida residents have checking and savings account options, including interest-bearing sustainable savings.
HSAs, IRAs, and youth savings accounts are available.
Learn more about First Green Bank.
Mascoma Bank – New Hampshire, Vermont, and Maine residents
Mascoma finances projects designed to revitalize low-income communities in Northern New England.
Local residents can take advantage of their suite of financial services, from the basic checking and savings accounts to mortgages and homeowner loans for solar or energy-efficient renovations.
Some key features include:
Three tiers of checking accounts are offered, and two earn interest.
Home equity loans and lines of credit, as well as traditional mortgages.
Emergency flood loans are available to cover storm-related damages.
Learn more about Mascoma Bank.
City First Bank – Washington, D.C. area residents
For individuals, nonprofits, and other businesses in or near Washington, D.C., City First Bank is a CDFI worth checking out. They give 80% of their loan funds to projects in low-income communities, and they’ve financed thousands of affordable housing units in a city where the cost of living is rising quickly. City First has even branched out to finance nonprofits across the Mid-Atlantic.
Some top-of-the-line features include:
Personal checking and savings accounts havecompetitive interest rates.
Customers can make larger, FDIC-insured deposits through CDARS (Certificate of Deposit Registry Service) and money market accounts.
Learn more about City First Bank.
Beneficial State Bank – Oregon, Washington, and California residents
Beneficial State Bank funds renewable energy, affordable housing, and other community projects across the Pacific Northwest. Their nonprofit Beneficial State Foundation is a vocal public policy advocate for progressive change in the banking system.
As a lender, Beneficial uses a nontraditional underwriting model that considers factors other than credit scores. They’re also a trustworthy stop for auto loans if you’re a Pacific Northwest resident with subpar credit.
Here are some of their features:
Checking and savings accounts are fully mobile.
Money market accounts and IRAs are available.
California residents can finance an electric or hybrid vehicle at affordable rates through Beneficial’s Clean Vehicle Assistance program.
Learn more about Beneficial State Bank.
Why choose a socially responsible bank?
A bank or credit union account might seem like a convenience-based choice, not a values-based one. But when you entrust a bank with your money, you’re implicitly supporting the projects the bank funds.
You can make a difference
As a consumer, you have the power to make choices that sway banks’ overall priorities. Banks want your business, and if more customers opt for banks that support community development or environmental causes (or avoid fossil fuel funding that contributes to climate change), the industry will take note that people want socially responsible banking.
It is safer in their hands
Your money’s also in safe hands — just because these banks have a “people over profit” focus doesn’t mean they don’t make a profit.
Along with the standard FDIC insurance protection guarantees, socially responsible banks are just as profitable (if not more so) than their competition, according to research by the GABV.
What makes a bank socially responsible?
The primary barometers of social responsibility for banks are their lending and investment choices.
Read more: Ethical Banking: What You Should Know About Socially Responsible Banks
Charitable donations and community service
Many, if not most, banks advertise their charitable donations and community services, but they may still fund projects that contribute to climate change or displace low-income residents. If you go beyond a bank’s self-promotion materials to their lending practices, you’ll get a sense of the bank’s true priorities.
Transparency about their investment donation
Another indicator of responsibility is the bank’s transparency about their investment and donation choices — ethical banks take their accountability to the public seriously. And many socially responsible institutions are working for economic equity, with programs designed to help low-income residents or borrowers from underserved communities.
Public commitment to social good
Some large national and regional banks have received accolades for public commitments to the social good. The Ethisphere Institute, a think tank that examines corporate responsibility, has rewarded U.S. Bank on their list of the World’s Most Ethical Companies for seven straight years. Though awards from an outside organization don’t necessarily indicate a bank is truly making impactful, ethical choices, they can be a sign the institution is on the right track.
If you’re holding banks to the highest standard, however, you’ll look for certifications that indicate a deeper commitment. Every bank or credit union on this list is either a certified B Corp, a certified CDFI, or a member of the GABV.
Certified B Corporations
B Corporations have a legal obligation to meet certain requirements, including a diverse staff, a well-paid workforce, environmentally sustainable in-house practices, and more.
The B Corp certification needs to be renewed every two years and can be lost if the company changes its practices to focus more on profit than customers.
Global Alliance for Banking on Values (GABV)
The GABV is a small but impactful network of about 50 worldwide banks. Each bank has pledged to invest in its community, be transparent about its practices, and establish long-term client relationships.
Like B Corps, GABV members have to score well on a regular, detailed assessment of their ethical practices.
Community Development Financial Institutions (CDFIs)
CDFIs may be banks or credit unions, but they earn their U.S. Treasury CDFI certification by financing projects in low- or moderate-income or traditionally underserved communities. This may mean lending to nonprofits, supporting affordable housing, or offering mortgages to aspiring homeowners denied by other lenders.
How to find a socially responsible bank
This list is a start, but there are many, many more banks and credit unions on the local level that have socially responsible goals.
Mighty Deposits is a great site for finding out how banks are spending their money — just type in your bank(s) and/or credit union(s) and find out what percentage of the bank’s funds get invested in community projects.
Mighty Deposits includes detailed spending breakdowns in categories for each bank. You can also search for a bank that doesn’t fund fossil fuels, a CDFI, or a bank owned by Black Americans.
The independent site Better Banking Options is another way to find community-focused banks.
If you want to know more about a bank’s political donations, including any national and local candidates the bank supports, Open Secrets has data on most large banks (and several of the smaller ones, too).
Summary
If you’re thinking about a bank switch, consider a bank that’s dedicated to socially responsible causes. With the variety of checking, savings, and investment features these banks offer, you’re likely to find a spot that meets your needs.
Historically, life insurance has been a taboo subject.
As humans, we’re hardwired to think we’ll live forever. Since discussing life insurance means we’re addressing our own mortality, far too many of us choose to avoid the situation altogether.
Fortunately, the tide appears to be turning as more and more families choose to buy coverage for their families.
A study from Life Happens and life insurance research and development agency (LIMRA) showed that over 106 million of American adults are in need of some type of life insurance coverage or more of it.
Further, the number of households with life insurance coverage decreased by 13% over the last decade.
Parents under 45 with children in the home are buying coverage at higher levels than ever. From 2010 to 2022, individual coverage for millennials under the age of 35 also grew by a whopping 48 percent.
While this is all good news, far too many families still don’t have enough life insurance coverage in place. As a 2022 study from Bankrate showed, nearly half of respondents said they had less than $100,000 in coverage, while 21 percent noted they had $21,000 in coverage or less.
While some coverage is better than nothing, for most families, this isn’t nearly enough.
Introducing Haven Life
Fortunately, there’s a new – and easy – way to purchase the right amount of term life insurance coverage for your family. With Haven Life, you can apply for a tailored life insurance policy online and get coverage in a matter of days – or even hours.
Better yet, you can purchase a Haven Life term life insurance policy on top of the life insurance coverage you already have. So, if you have a life insurance policy through your employer, you don’t have to give it up. Best of all, term life insurance typically coverage costs a lot less than you think.
But, why Haven Life? First off, Haven Life only sells affordable term life insurance. With Haven Life, you’ll never have to endure a long sales speech about whole life insurance that costs an arm and a leg.
Since Haven Life only sells term coverage, you can shop for the coverage you want without worrying about cheesy salesman or absurd pricing. Keep in mind, a 35-year-old man could buy $500,000 in term life insurance coverage for as little as $21 per month!
Another huge reason to shop for life insurance with Haven Life? You can apply entirely online. By clicking through to Haven Life’s online application page, you could be on your way to affordable life insurance coverage in minutes.
Simply fill out the application with your personal details, health information, and life insurance needs, and you’ll quickly find out how much you qualify for – and how much it costs.
And if you’re in perfect health, the news could be even better.
Because Haven Life offers InstantTerm – a type of policy that doesn’t require a medical exam – those with excellent health could apply for life insurance coverage and have a policy in place within hours. You don’t have to apply for an InstantTerm policy separately, either.
Once you fill out Haven Life’s application, you’ll find out whether you qualify for InstantTerm right away. Check to see if no exam life insurance for smokers applies to you.
If you do not qualify, you will have 90 days to go through the standard medical exam procedure that most other term life insurance companies employ.
Where you once had to sit in a stuffy insurance agent’s office to buy life insurance or get contacted by a bunch of agents through an online form, the online application process created by Haven Life has made buying a policy that much easier.
Better yet, you’ll get the same quality of coverage you would buy through a normal agent and you get coverage that is competitive with the rest of the industry, even those that require a medical exam.
With Haven Life, you can count on receiving:
A simple online application process
No medical exam for qualified, healthy applicants
Easy price and policy comparisons
An immediate decision with InstantTerm
Backing of Mass Mutual, an insurer with 160 years of experience
A plain language no commission policy
The Haven Life Online Application Process
Since you’re reading this review, you’re probably aware you need more life insurance coverage. While you’ve taken a positive first step in the right direction, you’re not done yet.
In order to receive the coverage your family so desperately needs, you need to move forward with the application process.
The good news is, the Haven Life online application process is simple – and with no strings attached. To get started, you’ll simply head to HavenLife.com and fill out some basic information on the home page.
From there, you’ll select the prompt that says “Apply Now.”
Once you begin your application, you’ll need to fill out some basic information about yourself, your income, your family, and your health.
Before you get started, here are some details you’ll need to have ready:
Name
Address
Income
Net Worth
Employment Status
Military Status
Criminal History
Driving History
Travel Plans
Tobacco Use
Alcohol Use
Health History
Social Security Number
Driver’s License Number
Once you submit the required information, you’ll get an answer immediately on whether you’re approved or not and how much your monthly premium will be.
In some cases, you’ll need to complete a medical exam to get coverage, but will still have coverage while the underwriting process takes its course.
Fort those who qualify with the best rate class, however, will likely qualify for an InstantTerm policy with no medical exam required. With Haven Life’s InstantTerm, you can apply for coverage in the morning and have a life insurance policy in place by afternoon.
How Much Does Term Life Insurance from Haven Life Cost?
While whole life insurance coverage can be prohibitively expensive, term life can be downright cheap. I filled out a few applications to work up some examples, and here’s what I found:
A 35-year-old woman in excellent health can buy a 20-year term policy with a death benefit of $500,000 for as little as $18.50 per month.
A 47-year-old man in excellent health can buy a 20-year term insurance policy for $500,000 for as little as $58.50 per month
A 26-year-old man can buy a 30-year term life policy for $250,000 for as little as $19.75 per month.
A 36-year-old woman can buy a 20-year policy for $750,000 for as little as $28 per month.
At the end of the day, the cost of your policy depends on factors such as your age, your health, and how much coverage you want to buy.
That’s why filling out a preliminary application with Haven Life is the best way to get started – you don’t know how much you could save unless you apply.
Even if you hope to buy a larger policy, it may be more affordable than you think.
On the other hand, Haven Life does have the right to deny applicants who have poor health or a higher risk of early death. And even if you’re quoted an affordable monthly rate, the true monthly premium of your policy could change once your medical exam results are read.
Fortunately, you are not required to purchase a term life insurance policy from Haven Life – even after you submit an application and complete a medical exam.
Also keep in mind that Haven Life offers quotes from competing insurers as well as their own. If you could find a better deal on term life insurance elsewhere, Haven Life will let you know.
Since term life insurance all works similarly, the best thing you can do is shop around among different issuers or at least compare prices before you buy. Haven Life makes this part easy by offering competing quotes directly on their own site.
Haven Life Plus
Haven Life has unveiled a new “rider” on their insurance plans, and it’s very different than most riders out there. You don’t get accelerated death benefit or anything like that. Instead, you’re getting additional benefits that you won’t get with any other carrier.
First, you’re getting legal services (wills and healthcare power of attorney) through Trust & Will. These services usually cost $129, but if you have a Haven Life insurance plan, you get them for free.
Next, you’ll get 15% off health care services at any MinuteClinic. These MinuteClinics are in CVS and Targets across the country. You don’t have to have an appointment and they are open every day.
Additionally, if you’re a Haven Life policyholder, you get a LifeSite membership for free. LifeSite is a secure and easy way to store all of your important documents and share them across multiple platforms and devices. A membership typically costs $80, but you get this for free with Haven Life.
The most interesting benefit of Haven Life Plus is the discount to use TeloYears. What is TeloYears? It’s an at-home DNA test which details your biomarkers. These biomarkers can outline some ways you can improve your health and point out any potential problems in your lifestyle.
Lastly, you’ll get a LifeLink subscription. The goal of LifeLilnk is to make calling emergency services as easy and simple as possible. If you’re ever in an emergency, LifeLink allows you to get in touch with emergency services with just one button. After the call is over, your emergency contacts will be automatically contacted.
All of these benefits are included in the cost of your plan. You won’t have to pay extra for the benefits. Haven Life wants to help you live your best life, not just provide coverage after you pass.
What are People Saying About Haven Life?
Although Haven Life launched in May of 2015, they have already built an excellent reputation among both consumers and life insurance ratings agencies.
This is partly because Haven Life is owned by MassMutual, an insurer with 160 years of experience in the life insurance business.
As of February 2023, MassMutual and its subsidiaries C.M. Life Insurance Company and MML Bay State Life Insurance Company were rated by A.M. Best Company as A++ (Superior; Top category of 15).
Of course, ratings aren’t nearly as important as firsthand reviews and experience. Fortunately, I know one person who saved almost 50 percent on her premiums when she bought a 20-year term policy for $1,000,000 last year.
Where another company quoted her $60 per month for coverage, a policy with Haven Life came in at just $28 per month.
Haven Life on Trust Pilot
Trust Pilot also offers a range of ongoing reviews from new Haven Life customers. Here are some of the reviews consumers have left:
“The experience with Have Life was excellent. The process was very easy and not burdensome. The response was quick and not drawn out like I experienced with other life insurance companies.” – Tiffani
“Can’t say enough good comments about this product and the ease, no hassle experience with this company. Their website is very easy to use which made it easy to decide exactly what I wanted. A couple of emails back and forth, a 20-minute visit by the nurse to for the medical checkup and that was it. No pressure, no trying to steer me to a different product, can’t beat it!” – William
“The process of buying life insurance through Haven Life was great. I dreaded going to see a financial advisor who would try to sell me on products I didn’t want or need. This was a perfect alternative to that process and took less than 30 minutes to complete. If you know what your looking for and don’t want the hassle of a salesman trying to upsell you, Haven Life is perfect.” – Benjamin
How Much Life Insurance Should I Buy?
If you’re one of the millions of Americans who have some life insurance coverage, you might wonder whether buying more is a good investment. Keep in mind that most experts suggest buying at least 5-10x your income in life insurance coverage. If you earn $50,000 per year, for example, you’ll want to have at least $250,000 – $500,000 in place.
While this is a good place to start, many experts believe you need a whole lot more.
Fortunately, Haven Life offers a life insurance calculator you can play around with to get an idea of how much coverage to buy. Based on your answers to a series of questions, you can get a general range of coverage that will adequately protect your spouse and kids.
While there are numerous reasons to load up on life insurance coverage, here are some of the main life expenses your policy needs to cover:
Income Replacement – If you or your spouse were to pass away early, you would need to make sure your life insurance policy was adequate to replace your income during your working years.
College Tuition – If you have children and want them to attend college, it’s important to consider this expense when you buy life insurance. With enough coverage in place, you could get your kids through college debt-free.
Mortgage Payments – Whether you have the typical thirty-year mortgage or a loan with a shorter term, it’s important to consider how this loan will be paid off if you died. Consider adding enough life insurance to pay for your mortgage in its entirety upon your death.
Funeral Expenses – Passing away before your time is both tragic and expensive. Depending on the type of funeral your family plans, they might need to spend $10,000 or more. Make sure your life insurance policy is large enough to cover funeral expenses in addition to everything else.
Children’s Expenses – Kids are expensive, and they only get more expensive as they age. If you have children at home, make sure you have plenty of coverage to pay for daily living expenses, college tuition, sporting events, weddings, and more.
Who Can Get a Haven Life Policy?
If you’re thinking about getting a Haven Life term life insurance policy, you’re in luck. Currently, the insurer sells affordable term life insurance in 48 states plus the District of Columbia.
They’re not yet available in California or Montana, but they hope to change that soon.
To qualify for a policy, you must meet medical standards or pass a medical exam set up by Haven Life. You should be at least 18-years-old but younger than 65. You also need to meet the following qualifications:
Be a non-military U.S. citizen
Have a valid driver’s license
Not intend to use the policy for business purposes or to replace another policy
Financial Strength of Haven Life
The financial strength of Haven Life is evidenced by the fact that it is backed by the 150-year-old MassMutual, a leading provider of life insurance and retirement products.
With over $500 billion in assets, MassMutual has maintained an A++ rating from AM Best for nearly two decades, making it one of the most highly rated life insurers in the US. Additionally, Haven Life is licensed to sell life insurance in all 50 states and also holds licenses with other jurisdictions.
RATING AGENCY
RATING
OUTLOOK
A.M. Best Company
A++ Superior
Stable
Fitch Ratings
AA+ Very Strong
Stable
Moody’s Investors Service
Aa3 High Quality
Stable
Standard & Poor’s
AA+ Very Strong
Stable
The Bottom Line – Haven Life Insurance
If you’re thinking of buying a term life insurance policy, don’t delay.
The younger you are when you buy a policy, the more affordable your monthly premiums will be. And if you should happen to become sick, you’ll have peace of mind knowing you already have the life insurance coverage you need.
To get started, visit Haven Life’s home page to begin the quick and simple process of applying online. Within a matter of minutes, you should have a general idea of whether you’ll qualify, how much coverage you can buy, and how much your monthly premiums will cost.
You may not want to talk about life insurance, but you do need to act. Buying an inexpensive term policy is the best way to protect your family today, tomorrow, and always.
Do you have term life insurance coverage? How much did you pay?
Haven Life offers a refreshing approach to life insurance, making the process of purchasing a policy easier and more convenient for consumers. The company provides a user-friendly online platform where you can quickly compare different life insurance options, determine your coverage needs, and apply for a policy. The application process is straightforward and easy to complete, with no medical exams required in many cases. One of the standout features of Haven Life is the use of technology to streamline the life insurance experience. From the online platform to the automated underwriting process, everything is designed to make the process as fast and hassle-free as possible. Customers also appreciate the ability to manage their policy online, view account information, and make payments with ease.
Cost and Fees
Customer Service
User Experience
Overall
4.3
Pros
Convenient online process: Haven Life makes it easy to purchase a life insurance policy online, with a simple and straightforward application process.
No medical exams required: In many cases, Haven Life does not require a medical exam for approval of coverage, making it a convenient option for those who are healthy and do not want to go through a medical exam.
Affordable: Haven Life offers competitive life insurance rates, making it a cost-effective option for many consumers.
Access to financial advice: Haven Life provides customers with access to financial advice and support, helping them make informed decisions about their coverage and overall financial health.
Cons
Limited coverage options: Haven Life primarily offers term life insurance, which may not meet the needs of everyone. If you are looking for a more comprehensive coverage solution, you may need to consider a different company.
Online process may not be for everyone: While the online process can be convenient for some, it may not be ideal for those who prefer to work with a human agent.
Potential for higher premiums: If you have pre-existing health conditions, you may be charged a higher premium for life insurance coverage, which could make it more expensive than other options.
Newer company: Haven Life is a relatively new company in the life insurance market, which may make some customers hesitant to work with them.
LifeHappens.org (2022 April) Owning Life Insurance Provides a Clear Path to Financial Security Retrieved from https://lifehappens.org/research/owning-life-insurance-provides-a-clear-path-to-financial-security/
MassMutual.com (n.d.) Financial Performance and Insurance Ratings Retrieved from https://www.massmutual.com/about-us/massmutual-financial-summary
Trust Pilot Haven Life Review (n.d.) Retrieved from https://www.trustpilot.com/review/havenlife.com
The 2022 TIAA Institute-GFLEC Personal Finance Index (2022) Retrieved from https://gflec.org/wp-content/uploads/2022/04/TIAA-Institute-GFLEC-2022-Personal-Finance-P-Fin-Index.pdf?x59497
Hello! Today, I have a debt payoff story from Alyssa Hunt. Alyssa is the creator of TheLifeHunt.com a blog that helps busy hustlers work towards business success and financial freedom all while managing full-time jobs. She is currently working towards a Master’s degree in English Literature and she teaches writing composition to university freshmen.
When I graduated college in 2014 with my undergraduate degree, I had racked up $30,000 in student loan debt. During my four years of college, I didn’t think much of taking out a loan here and there.
After all, I needed a way to pay for tuition.
Once the excitement and celebrations of graduation ended, I felt a mound of debt on my shoulders.
It was then that I decided to focus all my attention on paying off my debt as fast as I could. And by fast, I meant that I wanted to have all $30,000 paid off in exactly 2 years after receiving my first bill.
Setting my goal of 2 years felt entirely achievable to me, but to everyone else, it was crazy and impossible. I don’t believe a single person thought it could be done. So many people tried to convince me that student loan debt is “good debt” and that it’s “normal” to have debt.
While this might be true, I hated the thought of owing that much money to anyone and I wanted to get rid of that burden immediately. So, I developed “Operation Debt Payoff” and gave myself a 2-year time frame.
Many people questioned me as to why I decided on only 2 years. The truth is, I wanted the financial freedom to travel, plan my dream wedding, get a master’s degree, start a business, and live comfortably without the burden of debt. Since I was able to pay my debt off at such a young age, I’ve been able to succeed at all the things on my list.
Within 2 years after receiving my student loan bill, I made my final payment and became debt free by the age of 23.
Related content on paying off your debt:
Here are the exact steps I took to achieve my goals!
Loan Audit and Professional Help
The truth is I set my goal of 2 years before I even knew much about my loans. All I knew was that they totaled $30,000. That meant the first thing I needed to do was conduct a loan audit to figure out all the nitty, gritty, logistics.
I learned that there are two types of student loans: federal and private. During my four years, I took out 8 federal loans. That meant that my monthly payment was over $500 and my interest rates varied from 3.4% to over 6% per loan.
This is from my FedLoan Servicing account, which shows the date that I took out the loan, the type of loan, and the status (which they are all paid in full by now).
This was extremely overwhelming.
To help me out, my parents took me to our families’ financial advisor. I came prepared with a print out of each loan so that I could be transparent with the advisor. After I told him that I would have all my debt paid off in only 2 years, he chuckled and told me that it was impossible and unrealistic.
He then told me that everyone needs a little debt in their lives because the payments help with your credit score. Maybe this is true, but I still had no interest in paying $500 a month for the next 10 years, even if that meant a tiny bump on my credit score. And besides, debt is debt and I hate owing anyone anything.
Once he saw that I was determined to stick to my plan, he told me to come back in 2 years if I succeeded. And, guess what? In 2 years, I popped into his office and announced that I was debt free.
The look on his face: Priceless!
The Method Behind my Success
This method specifically works for federal loans that are unconsolidated.
I owe my success to two major decisions:
The decision not to consolidate my loans.
The decision to pay only the monthly minimum.
The reason I chose not to consolidate my loans into 1 giant loan was because I chose to focus on paying off one loan at a time.
My entire game plan was to pay off one individual loan in full at a time, starting at the loan with the highest interest rate, while still making my monthly minimum payments.
These are some screenshots of the payments I made on three of my loans with the starting principal and the interest the loan accrued.
Let me break this down for you.
I put my loans in order from the loan with the highest interest rate, which was over 6% all the way down to the lowest, which was 3.4%. Then, I focused on saving enough money to pay off an entire loan in the order of highest to the lowest interest rate.
While it was a simple and straightforward plan, it took some willpower to not jump ahead. What I mean by this is that it was tempting to pay off the loans out of order.
For example, one loan was only $2,000 at a 3.61% interest rate while another loan was $4,500 at 4.5%. Since the $4,500 loan had a higher interest rate, I needed to pay that one off first to save me money in the long run.
The temptation came once I had $2,000 saved and sitting in the bank because I wanted to just pay off that loan. However, I stuck to paying off the loans in the order of interest rate and it absolutely worked.I can’t stress enough how wildly successful this plan was.
Why Paying the Minimum Balance Worked So Well
While paying more than the minimum monthly balance might seem like a faster way to pay down debt, it’s important to know that your money doesn’t always go to your overall principal balance.
Part of your monthly payments goes straight toward your accumulated interest and then the money that is left over goes to the principal balance. That is why it takes approximately 10 years to pay off student loans because they are calculating in all the interest you will accumulate over the years.
By using the method of focusing on saving for one loan at a time while paying the minimum balance, you ultimately cut down on thousands of dollars of interest. Also, when you pay in full for an individual loan, you don’t have to worry about whether or not that money goes to the principal or your interest because you are completely wiping out a loan from your bill.
Additionally, by focusing on one individual loan, it helps to break down the overwhelming idea of paying $30,000. For me, I was able to focus on a $5,500 loan, or a $3,500 loan, which felt way more doable than trying to pay off $30,000. It’s easier to see progress when money is going towards individual loans rather than putting money towards a giant principal balance and feeling like nothing is happening.
This method also allowed me to set tangible short-term savings goals. Based on the money I was making with my full-time job, I knew exactly when I would have enough to pay off an entire loan so I was able to plan accordingly.
My ultimate suggestion is to stick to the monthly minimum and save up to pay off an entire loan. Doing that is the only reason I was able to pay off my bill in 2 years.
Other debt payoff stories:
Saving Aggressively
Believe it or not, I came up with “Operation Debt Payoff” within one week of graduating college. I knew that if I was going to be successful, I only needed to do one thing: save money.
That’s exactly what I did. I started to save, and I mean aggressively.
In fact, by the time my first bill came in the mail, I had enough money set aside to pay off my 3 highest loans immediately. That meant that my $500 monthly payment dropped to $300 within the first month.
By the time I had only one loan left to pay, my minimum payment was around $30 a month. That’s a huge drop from the $500 I started out paying. Talk about success!
However, to save that much money came with a list of sacrifices.
After doing some calculations, I learned that I needed to save approximately 70% – 80% of each paycheck to meet my goal of 2 years. To save that much, it meant that I had to make some serious cuts and adjustments to how I lived.
The first big adjustment was that I moved back home after college so I could save on rent. This was such a great decision (and I loved living with my parents!). Next came all the things I needed to cut: Starbucks, eating out, manicures, getting my hair done, shopping, trips, etc. Basically, I became the most frugal 21-year-old ever.
And let me tell you, people were quick to call me prude, stingy, uptight, no-fun, and so much more. Did I care? Well, honestly, a little bit. But, did I see the bigger picture? Absolutely. And by the way, those same people who called me prude back then are now asking me how to save money so they can be debt free.
Making such a huge adjustment to how I saved money, and ultimately becoming a frugal person, ended up being something that stuck with me. While I do take trips now and spend money on the occasional luxury, I learned that giving up Starbucks and manicures for 2 years didn’t harm me at all. Those two years of aggressive saving taught me discipline, focus, and the difference between the things I wanted and the things I needed.
If you think aggressive saving sounds difficult, I assure you that it’s not. After you make the necessary adjustments, it becomes second nature. For me, once I saved up enough money to pay off a loan, I was so excited to start my saving process all over again.
By the time I paid off all $30,000, I decided to continue with my aggressive saving methods (with a little more flexibility), in order to build up a solid savings account.
The Reality of it All
This method of paying off student loan debt takes a lot of discipline. Just because I was paying off a large amount of debt didn’t mean that the world around me stopped.
I still had bills such as car insurance, phone bill, health insurance, gas, groceries, retirement, tithing, etc. I also had emergencies come up that required me to spend money I was planning on saving. On top of all of that, I had to travel across the country to a family reunion for a week that resulted in me spending even more money.
Despite all of this, I still found as many ways possible to make my plan work given my circumstances. Here are some things I did:
Started saving before my bill came. This helped make a huge dent right away.
Set a budget. I listed all my bills and then worked in my 70% – 80% savings from my paycheck.
I found ways to make extra money through freelance writing gigs.
I didn’t upgrade any technology, like my phone, in those two years.
I got hand me down clothes from friends instead of shopping.
I learned how to meal prep.
I worked extra hours at my job when I could.
Reactions Then vs. Now
When I first announced my goal to everyone, many people didn’t take me seriously. I was told that it couldn’t be done, that I was being foolish, that I didn’t understand how debt worked, and that I would lose my friends. But, I stuck to my plan. And guess what happened?
Everyone quickly learned that I was very determined and they eventually adapted to my new lifestyle.
Since I knew I couldn’t spend much money on socializing, I learned how to enjoy hanging out with friends without spending. I took advantage of window-shopping, I didn’t order food at restaurants, I made DIY gifts for birthdays, my friends and I had many fun nights in, and we did plenty of free outings such as the beach, farmer’s markets, and museums.
During this time I didn’t lose a single friend.
Yes, they joked and called me stingy, but the truth is, I was being stingy, and it was completely worth it.
Nowadays, the same people who told me I couldn’t do it ask me how I managed to pay off that much debt in such a short amount of time. I have even received random emails from a friend of a friend because they need help crafting their repayment plan.
Most of the time when I tell people how I succeeded, they think it’s some miracle that only I could have pulled off. That’s not true at all!
Everyone’s debt situation is unique, which means everyone needs to craft their own “Operation Debt Payoff” plan. Maybe you want to pay your debt off faster than I did, or maybe you need to take a little more time.
Whatever you decide to do, just know that regardless of what everyone says, you can absolutely do it. I believe in you! You totally got this!
What are your tips about paying off student loan debt?
This Personal Capital review goes over the Personal Capital app, which is something that you need! This free financial app will allow you to manage your money better.
Do you understand your money? Are you properly managing it? Today, in this Personal Capital review, I am going to go over my favorite personal finance tool, and explain how it will help you improve your financial life.
Over 3,400,000 people use Personal Capital, and I am one of those people!
Personal Capital provides free personal finance software that is somewhat similar to Mint.com, but better. If you like using Mint, I highly recommend checking out Personal Capital.
I recommend that everyone sign up for Personal Capital, whether you’ve been investing for years or if you haven’t even started yet. There is something for everyone when it comes to this free financial software, and it is extremely beneficial. Plus, it is free, so there is nothing to lose.
Quick summary of what Personal Capital is – their free personal finance software allows anyone to better manage their finances by allowing users to aggregate their financial accounts. You can connect accounts, such as your mortgage, bank, credit cards, investment portfolio, retirement, and more, and it is all FREE. You can track your cash flow, your spending, how much you’re saving, how your investments are doing, and more. With their free financial software, you can easily see all of your accounts in one place so that you can manage everything efficiently.
I’ll say it again. It’s free, and there’s no catch!
As you know, I’m all about making your finances as simple as possible so that you can focus on other areas of your life. Personal Capital allows you to manage all areas of your financial situation in one convenient place.
You can use Personal Capital via your computer, tablet, cell phone, and even a smart watch, which makes it great because you can stay up to date on your finances no matter where you are.
Personal Capital review.
Background information before we get into this Personal Capital review.
Personal Capital is growing in popularity, so I thought it was a great time to publish a Personal Capital review just in case any of you are interested in trying out their free personal finance software.
Personal Capital currently has over 3,400,000 registered users and over $20.5 billion assets under management.
If you’re interested in signing up for Personal Capital for free, please click here.
What can you do with Personal Capital?
With the Personal Capital app, there are many tools such as:
Net worth calculator
To protect my privacy, these images are not mine – they were all provided by Personal Capital.
You can track your net worth and measure your progress. This will help you reach your financial goals and see how you are doing. This allows you to track changes, make educated decisions, and monitor and reduce your debt.
Cash flow
You can manage your cash flow, view your income, analyze your spending, view your bills, and more with the free Personal Capital app. You can also view your transactions so that you can see where your money is going, which helps you see what areas you need to work on when it comes to your spending.
Retirement planner
You can track your investment portfolio all in one place so that you can easily track your performance, see your investment allocations, and easily analyze everything related to your investments. The Personal Capital Retirement Planner will also tell you if you have saved enough for retirement.
401k Fee analyzer
Do you know how much you are paying in fees for your various investments, such as with your 401k? There are often many fees that people pay for with portfolio management, but there are much cheaper options when it comes to investing your money.
With Personal Capital, you can easily see what fees you are paying, and Personal Capital shows you how this may be impacting your retirement plan.
Free investment checkup
You can receive a free investment checkup as well. You can see how your investments are performing, receive a free examination of your portfolio, and hear great advice so that you can improve your investment and retirement situation.
Their Investment Checkup tool creates a personal financial plan so that you can analyze your risk assessment and see how prepared you are for retirement.
How does Personal Capital make money?
So, after reading about all of the benefits in my Personal Capital review, I’m sure you’re probably wondering what the catch is and what the Personal Capital fees are.
Their core service, which is the Personal Capital platform, is free. If you choose to use their personalized investment strategy, they earn an income from their management fees, which are less than 1%. However, you don’t have to enroll in that service if you don’t want to. The free Personal Capital platform is all that I use, and it is a great service!
Again, you don’t have to pay for Personal Capital if you do not want to. All of the services I mentioned above are completely free. However, they are hoping that if you enjoy their services, you will eventually go a little further and let them manage your investments.
I just use their free version, and you can do the same to have access to all of their amazing free personal finance software. There’s no catch at all, it’s seriously free, and there are no hidden fees.
You can sign up for the free Personal Capital here.
Personal Capital security – Is Personal Capital safe?
The security of your financial information is very important, so, of course, I want to talk about this topic in my Personal Capital review.
Your information is very safe with Personal Capital. Here’s what Personal Capital says about their security:
“Data is encrypted with AES-256 with multi-layer key management, including rotating user-specific keys and salts. Strict internal access controls – no individual at Personal Capital has access to your credentials.”
Also, with Personal Capital, you can’t actually move any of your money through their system, and no one else can, so your information and money are safe in this way as well.
What’s my opinion on Personal Capital?
There are many pros of Personal Capital, which is why I decided to create this Personal Capital review. Some of the positives include:
It’s free. What’s better than free?
They have high-quality financial tools. Not only is it free, but the tools included with the free version of Personal Capital help you manage your money.
Personal Capital is easy to use. You simply link your accounts, and Personal Capital does all of the analyzing for you. Personal Capital helps in so many different areas, and anyone can benefit from its easy to use platform.
The variety of platforms makes it easy to use anywhere. You can access Personal Capital from your laptop, cell phone, or smart watch, which makes it easy to check in on your financial situation.
Personal Capital is a great service that I definitely recommend signing up for, and I wouldn’t write a Personal Capital review if I didn’t think so. Like I said, it’s free, and the financial tools are great.
You can sign up for Personal Capital here.
How do I use Personal Capital?
Signing up and using Personal Capital is very easy. After you create your account, you will be asked to link various financial accounts. Then, you can start using their free personal finance software right away. It’s really that easy!
Click here to sign up for Personal Capital.
Is Personal Capital worth using?
Yes, I think that Personal Capital is worth using. There are many investors, households, and people all over who enjoy using this tool.
The dashboard and platform are so very easy to use, and they also have advisory services that you can take advantage of. If you have investment accounts or are interested in starting to save for retirement, Personal Capital is a no-brainer tool.
Personal Capital works well for so many different types of people, whether you are brand new to saving or if you have been saving and investing for years.
The free financial tools that Personal Capital provides make it very easy to see how you are doing. They even have a mobile app so that you can check in whenever you’d like.
I hope you enjoyed my Personal Capital review! Please let me know if you have any questions about their money management tool.
According to a retirement study released by Stanford University, only about 50% of American workers have access to a 401(k) or equivalent employer-sponsored retirement plan. And many who have a retirement account, aren’t making sufficient contributions to meet their targeted retirement goals.
Retirement savings is a life venture where the stronger you start — and the earlier it happens — the better you’ll finish. If you work for an employer and have access to a 401(k) plan, do all you can to maximize your contributions, especially while you’re young.
401(k) plans are one of the most generous retirement plans available. You can contribute up to $19,500 per year, or up to $26,000 if you’re 50 or older. You’ll also get a tax deduction for your contribution and full tax deferral on your investment income between now and retirement. Early in life, fund your plan with reckless abandon, especially if your employer offers a matching contribution.
How Much You Should Have in Your 401(k)
There’s no heavy science here, since much of the progress you’ll make with your 401(k) plan is dependent on your personal circumstances. However, there are general retirement savings guides to know, based on your age.
One way to gauge this is through the Fidelity Retirement Widget. When using this free tool, enter your age, your expected retirement age, and what you think your lifestyle will be at reach retirement. The results will show you how much savings you should have in your 401(k) plan at various ages.
For the example below, we input age 25, a retirement age of 67, and an average expected lifestyle.
Age
Annual Income
Approximate 401(k) Income Multiple
Recommended 401(k) Balance
30
$50,000
1X
$50,000
35
$65,000
2X
$130,000
40
$80,000
3X
$240,000
45
$100,000
4X
$400,000
50
$140,000
6X
$840,000
55
$150,000
7X
$1.05 million
60
$150,000
8X
$1.2 million
67
$150,000
10X
$1.5 million
The recommended 401(k) balances are just approximations and can be adjusted higher or lower. For example, if you expect your lifestyle in retirement to be below average, the widget will recommend having 8X your annual income in your 401(k) plan at 67. If you expect your lifestyle to be above average, it will recommend 12X your annual income in retirement.
How to Manage My 401(k) Plan Investments
If you don’t know how to manage your retirement plan investments, that’s not a problem. There are services available to help you get the job done.
One example is Personal Capital. The free version comes with a 401(k) analyzer that discloses fund fees in your plan so you can switch to funds with lower fees. If you use the premium version, you’ll also get the 401(k) Fund Allocation, to help you learn where your money should be invested.
A more direct approach is available through blooom. For $10 per month, it provides direct management of your employer-sponsored retirement plan, whether it’s a 401(k), 403(b), 457 or Thrift Savings Plan (TSP). After a brief questionnaire, blooom sends you a recommended investment strategy for your plan. And since the service doesn’t actually take custody of your retirement account, you don’t need your employer’s approval to get started with blooom.
With the investment management services that are now available for 401(k) plans, lack of investment knowledge is no longer a reason to avoid investing through your retirement plan.
401(k) and Retirement Tips
Although the focus on retirement planning is almost entirely on the numbers, discipline and knowledge are equally important. When building your retirement plan, implement a few strategies.
1. Set Goals
You can certainly use the savings suggestions from the Fidelity Retirement Widget, but you need to work within the scope of your own financial circumstances. The important point is, whatever method you use, have goals in place. Those goals determine not only how much you’ll contribute to your plan, but also how aggressively you’ll invest the money.
For example, if you can’t make the full $19,500 per year contribution allowed, you might need to invest your plan portfolio more aggressively. One option is placing a higher allocation in stocks.
This strategy is recommended in the early years of your plan participation since you have more time to bounce back from aggressive investing. A popular rule for your stock portfolio allocation is calculating 120 minus your age.Here’s an example:
120 – 25 (years old) = 95 (% of stock allocation)
That means 95% of your retirement portfolio should be invested in stocks, and the remaining 5% in fixed-income investments. As you get older, the formula reduces your stock allocation as your investment time horizon shortens. The advantage of a heavier investment in stocks is that they’ve averaged 10% returns since the 1920s.
The larger stock allocation will result in a faster accumulation of investment earnings.
2. Start as Early as Possible
This is best demonstrated by two examples.
Investor A begins investing $10,000 per year into a 401(k) plan at age 25, with an average annual rate of return of 7%. By age 40, their plan accumulated $260,722 — but they stop further contributions.
Nonetheless, since Investor A continues earning 7% per year on their investment balance between the ages of 40 and 67, they reach retirement age with $1.62 million in their 401(k) plan.
Investor B begins investing $10,000 per year into his 401(k) plan at age 35, also with an average annual rate of return of 7%. Because Investor B started later than Investor A, Investor B plans to make annual contributions straight through to age 67.
But by retirement age, their 401(k) plan has grown to just $1,143,545.
Even though Investor B made $10,000 contributions for a full 32 years — while Investor A contributed for just 15 years, then stopped — Investor A still ended up with a larger 401(k) plan at retirement, and by nearly $500,000.
This example illustrates why it’s so important to start saving for retirement as early in life as possible.
3. Understand Your 401(k)
Not knowing much about 401(k) plans is perfectly understandable — after all, retirement savings isn’t a part of regular high school or college curriculums. Given that your 401(k) plan is your single biggest asset in life, and the very foundation of your retirement, it’s worth learning about this account.
First, information about your plan should be available from your plan administrator. You likely received a copy of it when you were first hired. Study the plan from cover to cover, and make sure you understand all the major provisions.
4. Never Touch Your Retirement Savings
For some workers, employer-sponsored retirement plans aren’t just their primary retirement savings, but their only savings. Borrowing against your retirement fund through a 401(k) loan, for example, might be tempting but you’ll hurt your long-term retirement plan.
The loans typically come with a five-year repayment period if you meet certain requirements, and have very low interest rates. But 401(k) loans have three very important “gotcha provisions”:
You lose investment growth on borrowed funds. Once loan proceeds are removed from the account, they’re no longer being invested. You’ll pay interest of maybe 3% or 4%, which goes into your account, but that’s a lot less than the 7% or 8% you can earn in a balanced portfolio.
You’ll have another debt to repay. You’ll ultimately have to repay the loan. Additional loan repayments on your monthly budget might reduce the amount of new funds you’re putting into your retirement plan.
If you’re terminated, the loan is due sooner. You’re required to repay the full amount of the outstanding loan balance within 60 days, if you’re terminated from your employer. If you don’t, the remaining balance is automatically considered a taxable early distribution, subject to both ordinary income tax and a 10% early withdrawal penalty if you are under 59 1/2.
No matter how attractive the terms of a 401(k) loan may be, your best strategy is to pretend it doesn’t exist.
5. Don’t Rely on Social Security
One of the major reasons people don’t contribute enough to their 401(k) plans is an overly optimistic estimate of their anticipated Social Security benefits. Unfortunately, Social Security is not a retirement plan. It’s better described as a retirement supplement.
At most, Social Security supplies about 40% of your pre-retirement income, and that’s primarily for lower-income earners. If you’re at the higher end of the income scale (e.g. $100,000 per year) the percentage is much lower.
Use the Social Security Quick Calculator to get a rough estimate of what your Social Security benefit might be once you reach retirement. With this information on hand, you can better estimate how much money you’ll need to save in your retirement fund.
Frequently Asked Questions
Since the main purpose of a 401(k) plan is to replace your earned income in retirement, you’ll also need to increase your contributions. Of course, you won’t be able to contribute more than the maximum amount allowed by the IRS, plus any matching contribution from your employer.
If that’s insufficient, look into adding a traditional IRA or Roth IRA to your investment mix. Under either plan, you can contribute up to $6,000 per year, or $7,000 if you are 50 or older. Roth IRA contributions aren’t tax-deductible, but you can take income out of the plan tax-free at retirement.
One other major advantage with IRA accounts, whether traditional or Roth, is that you can open them through self-directed investment accounts. There, you’ll have unlimited investment options and you can invest as aggressively as you choose. You may find yourself getting a higher annual return on your IRA investments than you do in your 401(k) plan.
One other factor to be aware of as your income increases is that your 401(k) contribution may be limited if you’re defined as a highly compensated employee (HCE). Special rules will apply, and you’ll need to be aware of them as well as to create workarounds.
If your income declines, you’ll be forced to lower your standard of living. That means you’ll need less income in retirement and won’t need quite as much in your 401(k) plan either.
But this is another compelling reason to begin contributing to your 401(k) plan as early as possible. If you begin contributing to a retirement plan right out of college, you might have enough money in your plan by the time you reach your 40s to withstand an income decline and the lower 401(k) contributions.
There’s no simple or blanket answer. View your company’s stock the same way you would any other security you’re thinking about investing in. Ask yourself this question:
Would I invest in my company’s stock if I didn’t work for them?
If the answer is no, you should avoid it. And even if the answer is yes, be careful.
Holding a large amount of stock in the same company you work for may sound noble, but it also holds the potential for financial trouble. After all, the same pressures that might cause your employer to terminate your employment could also put downward pressure on company stock.
You’d be facing a double-jeopardy situation in which both your employment and your retirement plan would be at risk of loss.
Most financial advisors recommend you put no more than 10% of your plan into your employer’s stock. Again — If you wouldn’t invest in the company if you weren’t an employee, you might not want to go that high either.
Maximizing Your 401(k) Savings
How you approach your 401(k) savings strategy is unique to your personal financial situation. However, the key points to a sound retirement plan are:
Participating in your employer’s 401(k) plan, if one is offered
Contributing to the plan as early as possible
Getting curious about your plan, and about how 401(k)s work
Using a 401(k) management service, if you need extra guidance
Setting goals and making adjustments along the way to stay on track
Avoid borrowing against your 401(k)
If you follow these tips, you’ll be in a more secure place upon reaching retirement.