How Risky is Investing in Rental Properties?

I am trying to buy as many rental properties as possible because of the great returns they provide. I am also trying to help other investors discover the fantastic world of investing in long-term rentals through my blog. However, I run into a lot of feedback from people who are worried about how risky it is to invest in rental properties. I hear: “my friend went broke investing in real estate” or “my parents had a rental and it was a money pit up until the day they were forced to sell it.” There are many horror stories involving real estate, but I have no doubt whatsoever long-term rentals are a great investment if you do your homework and buy properties right. Most of those horror stories come from people who did not do their homework, turned a personal residence into a rental out of necessity, or were hoping for appreciation. What are the real risks of rental properties and how can you mitigate these risks?

What are the main risks of investing in rental properties?

There are real risks with investing in rental properties. Many people felt the wrath of these risks in the last housing crash. Housing values plummeted and in some areas rents plummeted as well. Interestingly enough, not every area saw lower rental rates. Some areas saw rents increase because there were so many more renters (people who lost their houses) and the demand pushed rents up.

The investors who were hurt the most in the housing crash were those who were breaking even on their properties or losing money each month and hoping prices would increase to make money. When the bottom dropped out, they now had a property that was losing money each month and was worth less than they had bought it for. Many investors allowed these homes to go into foreclosure because they didn’t think they were worth keeping.

Other risks come from rentals when people buy a property and do not have enough cash to maintain the property or hold it when it is vacant. Most banks will require a certain amount of reserves when you get a loan on an investment property. But as soon as the property is purchased there is nothing stopping the owners from spending that reserve money. When you own a rental there will be times when the tenants move out, there can be evictions, and rarely a tenant can destroy a property. We see these situations occur quite often because people love to see drama but for the most part our tenants take care of our rentals and are awesome.

Why invest in rentals with these risks?

Rental properties have made me a ton of money over the last decade. Prices have increased significantly, which is great, but the properties also make money every month, and I always get a great deal on everything I buy which means I build equity on day one. There are many ways to mitigate the risks of rentals and the money I have made from my properties more than makes the risks worth it!

A lot of people will assume that when you are investing in large value assets like real estate and there can be huge returns, that the risk must be through the roof. There are types of real estate that can be very risky. We flip houses as well, and that is a much riskier venture than owning rental properties in my opinion. Development can also be much riskier but again come with huge rewards as well.

I also was an REO broker during the housing crash and I talked to many investors who lost homes. I was able to see why they lost their homes, what they could have done differently, and what happened after they lost their homes. For the most part, they bought houses that did not cash flow or make money every month and when things went bad they lost the motivation to keep paying into them. Losing the houses was also not the end of the world for these investors. Many of them had put little money down thanks to the crazy lending that was happening prior to that last crash. They were also able to keep those houses for quite a while after they stopped making payments. Many investors kept collecting rent during this time period which may or may not have been legal, but it did happen.

Many of those investors got right back in the real estate game after recovering and invested the right way with cash flow!

How can you mitigate the risk from rentals?

Buy below market value

One key to a low-risk rental strategy or any successful real estate strategy is to buy property below market value. Buying a property below market enables you to create instant equity, increase your net worth, and protects against a downturn in the market. One of the investors who was hurt badly during the crash was buying brand new houses and turning them into rentals. The houses were in great shape, but he paid full retail value for them.

When I buy rentals I want to pay at least 20% less than they are worth after considering any repairs are needed. For example:

  • A home needs $20,000 in repairs and will be worth $200,000 after those repairs. I want to pay $140,000 or less for that property ($200,000 x .80 – $20k). If I am flipping houses, I need to get an even better deal!

I also usually put about 20% down when I buy rentals which means after the property is repaired I have a loan around $110,000 and a property worth $200,000. Even if prices lost 30%, which is about how much they dropped across the county I am fine.

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Cash flow

I consider cash flow the most important factor in my long-term rental strategy. I want every property to make money each month after paying all expenses. Finding these properties that are also a great deal is not easy, but if you want to change your life with massive returns, it is not easy! When I invest I look for a return of 15% cash on cash. That means I make 15% on the money I have invested into the property. These are very high returns and not everyone needs to make this much but it is what I shoot for.

When you have cash flow coming in every month, it does not matter if values decrease because you do not need to sell the property. While it is true that rents can decrease and lower your cash flow, that is very rare and was even very rare in the last housing crash. There were some areas like Florida and Arizona that were massively overbuilt that saw lower rents, but the nation as a whole barely saw any drop.

My cash flow calculator can help you figure the real income on rentals.

Type of property

The older the property, the better the chance of a major repair needing to be done. I have enough cash flow coming in to account for major repairs, but homes over 100 years old can have issues come up that could wipe out all equity. It is rare, but a foundation or structural problem can make a property uninhabitable and cost tens of thousands of dollars to repair. By purchasing newer properties, I lessen the chances of running into repairs that could wipe out my profit for a year or even two.

Multifamily and commercial real estate can also carry more risk. Those types of properties are more complicated and have fewer buyers. I also buy multifamily and commercial properties but I am very careful what I buy and understand there will most likely be way more costs and exposure if the market changes.

If you buy properties that need a ton of work that can add to the risk as well. On my flips and rentals, the worst deals I have done were properties that needed massive remodels. It takes so much time, so many resources, and there is so much that can go wrong. It can also be risky trying to do all of that work yourself!

Cash reserves

One of the most important things to have when investing in real estate is cash! If you buy rentals or flips that can be expensive at times. It is very important to set aside cash to take care of the problems that might come up. When I figure my cash flow I set aside money for vacancies and repairs. You need to have cash set aside in case something goes wrong and this is one of the biggest mistakes landlords make is not having cash around.

Ironically, getting a loan allows investors to have more cash in many cases. Paying down the mortgage early or trying to pay it off with all your extra cash can leave you in a bad situation. If you do pay a property off and need to access that money in an emergency it can be hard to get to without selling.

Good management

Another way to have problems with your rentals is to manage them poorly. Many people have no idea how to manage a rental but decide they can do it on their own. They choose a bad tenant after not screening them, then never check on the property, and are surprised when it gets trashed. If you are going to manage rentals on your own you have to take the time to learn how to manage them. You have to screen tenants, and keep tabs on the properties!

If you don’t want to manage them yourself, you can hire a property manager as well. It takes time to find a good property manager and this is where it takes from work from the landlord as well. Again, no one said owning rentals was easy, but there are many ways to make them a great investment if you are willing to put in the work.

Liability and damage

Another risk that comes with rental properties is natural disasters or liability from accidents. People can get hurt and can sue tenants or tornados can wipe your property off the earth. Both instances are rare, but they happen. To mitigate the liability side you can put your properties in an LLC or make sure you have the property insurance coverage like a landlord and umbrella policy. With these policies, if you have a tenant destroy property or need to be evicted, they can help cover those costs as well! Putting a property in an LLC can help with getting sued but is not foolproof.

It is important to make sure your insurance agent knows you are using the property as a rental so you have the right coverage. It might be cheaper to leave homeowners insurance on the property if you used to live there but that can cause problems down the road.

Risks that are tough to mitigate

There are some cases where a landlord does everything right but still has a massive loss. These are rare but can happen and just about any investment or simply living life comes with risks.

  • Meth or drug house: If someone is cooking meth or using meth in your house it can cause damage that insurance will not cover. You may have to make major repairs depending on how bad it is. These risks can be alleviated by good tenant screening and checking on the properties often. It is not always the case, but many drug houses we see have cameras all over. That can be a sign to check the house out more if you see cameras on your rental.
  • Floods: Not all floods are covered by insurance. You often need an additional rider or flood coverage. If you are in a flood zone the lender will require the additional coverage but if you pay cash or use private money you may not be required to have it. There is also the risk of a flood outside a flood zone. If the property has a risk of flooding it is important to talk to your insurance agent about additional coverage.

Why does everyone say rentals are risky?

I won’t tell you it is impossible to lose money investing in long-term rentals. It can easily happen if you don’t have a plan, have reserves, or are impatient. It is not easy to buy properties below market value with great cash flow. If it were easy investing in long-term rentals, everyone would be investing in real estate.

The reason so many people think rentals are risky is that they hear anecdotal stories. Stories are good for entertainment and drama but they don’t give the entire picture. “my cousins, aunts, friend, lost all their money when their rental was trashed!” They failed to tell us the person self-managed a property they used to live in from 4 states away and never once talked to the tenant in 3 years. Then they were surprised it was trashed. There are all kinds of stories but usually, you can find one of the main reasons above for why people lose money on rentals. Overall, real estate is one of the best ways to build wealth!

Don’t be scared to invest in rental properties

There are many people who have gotten rich and retired early by investing in long-term rentals. There is a lot of opportunity and many advantages to investing in real estate. Just because you can have some great rewards does not mean there is a massive risk. Some risk? Yes of course and the less you pay attention to your investment the riskier it will get!

Categories Rental Properties


Is the Citi Rewards+ Card worth it?

The Citi Rewards+® Card is a no-annual fee rewards credit card that earns 2 points per dollar on supermarket and gas station purchases (on up to $6,000 per year, then 1 point) and 1 point per dollar on all other purchases.

While these are not the most impressive rewards rates, the card also offers a feature rounding up rewards from each purchase to the nearest 10 points per dollar. This can prove especially valuable for small purchases under $10.

For some cardholders, the Citi Rewards+ may be worth it if they pair it with other Citi cards or make a habit of using it for running errands. Others, however, may want to look into other card options.

Here’s how to determine whether the Citi Rewards+ is worth it for you.

When is the Citi Rewards+ Card worth it?

The Citi Rewards+ Card’s rewards rates are modest, even with the roundup feature and the annual bonus of 10% back on the first 100,000 points redeemed (worth $100 in gift cards if maximized). It also doesn’t have much to offer in terms of perks and benefits.

Still, there’s a couple of situations where adding the Citi Rewards+ Card to your wallet may be a good idea.

You’re building a Citi card combo

Some cardholders ensure they’re getting value out of their cards by picking the best credit card products from different issuers that fit their spending the most.

Others maximize value by sticking with one issuer – like Citi.

If you’re interested in travel rewards, you can pair the Citi Rewards+ with the Citi Premier® Card, which offers 3 points per dollar spent on restaurants, supermarkets, gas stations, air travel and hotels and 1 point per dollar spent on other purchases.

With this card, you can earn points on travel and transfer them to any of Citi’s travel partners to get the best value, which the Citi Rewards+ on its own doesn’t allow.

You can go even further and create a Citi trifecta by adding another Citi cash back card. For instance, the Citi® Double Cash Card can earn you 2% back (1% at purchase, then another 1% upon payment) on all your general spending, or the Citi Custom Cash℠ Card – 5% back in your top eligible spend category each month (up to the first $500 spent, 1% cash back thereafter).

With multiple credit cards from one issuer, you can maximize your earnings in one rewards ecosystem and get the most out all it has to offer.

You want to maximize cash back on small purchases

Sometimes, credit card strategies can become quite intricate. Getting as much as you can out of credit card rewards often involves deciding on the best card for each transaction – even the smallest ones.

Speaking of small transactions, that’s where the Citi Rewards+ truly shines.

Say, you’re running an errand. You grab a $4 coffee, then you stop at a gas station and fill up your car for $22. Later, you drop by a convenience store and get a $2 pack of gum (coffee is the juice of life but coffee breath can also happen sometimes).

With the Citi Rewards+, you’ll get 70 points (70 cents) total for these purchases, thanks to the roundup feature.

To compare, say you have another similar card instead. For example, the Wells Fargo Active Cash℠ Card earns 2% cash rewards on purchases. That’s quite generous, but in the scenario above, you’d only earn 56 cents on your purchases.

Of course, a 14-cent difference might not seem like much, but cash back earnings overall don’t inspire much awe if you only look at separate transactions. Cash back works when you help it add up. Even an extra 14 cents earned every day adds up to more than $50 in extra cash back over a year.

If you’re the kind of cardholder who gets excited about squeezing as much value as possible out of each dollar spent, the Citi Rewards+ might be a valuable tool in your strategy.

When is the Citi Rewards+ Card not worth it?

Despite its unique features, the Citi Rewards+ isn’t the best choice for everyone, especially in the following scenarios.

You’re looking for a primary rewards credit card

The Citi Rewards+ has an easy-to-understand rewards system which may be attractive to cardholders who’d rather avoid juggling multiple high-maintenance credit card products. But while it does offer simplicity, it’s lacking in rewards potential.

If you’d prefer to get a single credit card that’d earn the same rate on most of your spending, look into other flat-rate cash back credit cards.

The Citi Double Cash and the Wells Fargo Active Cash are the best options in this category. Both offer unlimited 2% cash back on purchases (although with the Double Cash, you need to pay off your purchases first to get the full 2%), while the Citi Rewards+ only earns 2% back in two categories with a $6,000 annual purchase cap.

You’re looking for a card for gas or grocery purchases

The Citi Rewards+ is also not the strongest offer when it comes to its bonus categories – supermarkets and gas stations.

Some of the best credit cards for groceries can earn up to 6% cash back at supermarkets if you’re comfortable with annual fees. If you’re not, there are still better options.

For example, the Blue Cash Everyday® Card from American Express earns 3% cash back on your first $6,000 in annual spending at U.S. supermarkets (then 1%), giving you a higher return with the same annual cap.

Gas may not be a major spending category for many, but if it is for you, look into the Bank of America® Customized Cash Rewards credit card. It earns 3% back on a category of choice and gas is one of the eligible categories. You can also get 2% back on grocery store and wholesale club purchases. There’s a $2,500 combined purchase limit on these categories each quarter, which sums up to $10,000 per year. As you can see, this card’s earning potential can easily beat that of the Citi Rewards+.

You’re looking for a travel card

As you’ve probably realized by now, the Citi Rewards+ isn’t a travel credit card. Even though it technically earns ThankYou points, they’re “basic” points, meaning you won’t be able to transfer them to Citi’s travel partners.

You can still redeem rewards for travel, but only at a 1-cent-per-point rate.

Additionally, the card has a 3% foreign purchase transaction fee and no travel perks.

Should you get the Citi Rewards+ Card?

The Citi Rewards+ Card can work well if you’re a Citi loyalist or a cash back enthusiast passionate about maximizing the value of each and every dollar you spend.

In most other cases, however, you may find that other cards can offer more value for your spending. Whether you’re looking for a primary rewards credit card, travel card or a card to boost your grocery or gas cash back, the Citi Rewards+ isn’t the best pick.

Bottom line

The roundup feature makes the Citi Rewards+ Card a compelling and unique product that can fit into some cardholders’ spending. Still, for others, this card won’t be worth it.

Analyze your credit card needs and spending patterns and head over to CardMatch to find credit card offers tailored to your credit. Checking your offers won’t impact your credit and you have a good chance of qualifying for your matched cards.


How to Get a Shower Curtain to Stop Sticking—Plus More Shower Curtain Hacks

How to keep a shower curtain from sticking

If you’ve ever had a shower curtain liner that kept sticking to you while you were trying to shower, you know it’s less funny, more annoying. Get rid of this problem forever with a spray bottle! Pour a tablespoon of liquid fabric softener into the empty bottle and fill the rest with water. Spray on the liner just before you shower and it will always stay in its proper place.

Stop mildew before it starts

Avoid leaving a shower curtain bunched up after use, especially in a small bathroom—the steam encourages mildew. Always pulled it closed after bathing, and if small spots of mildew do appear, dab with baking soda on a damp cloth. Wash larger areas in hot detergent, rub with lemon juice, and dry in the sun, if possible.

5 Shortcuts to Make Cleaning Your Bathroom Easy

Keep mildew off the bottom of your shower curtain

If you have a pair of pinking shears (scissors with a zigzagging edge used in sewing), put them to good use in the bathroom. Use them to cut the bottom of your shower curtain liner: The uneven hem allows water to more easily slide off, making bottom-of-the-curtain mildew a thing of the past.

How to get mildew off a shower curtain

Need to remove mildew from a plastic shower curtain? Try running it through the washing machine (on cold) with two large, white bath towels. Add a little bleach in with your usual detergent, and use 1 cup white vinegar in the rinse cycle to prevent future mildew growth. Or, rub a wedge of lemon on the stains and leave the curtain out in the sun. By the time it dries, the stains will be gone.

Make a shower curtain liner last forever

Keep soap scum and mildew off your shower curtain on the regular with the help of hydrogen peroxide. Stick the curtain and a bath towel into your washing machine, pour in regular detergent, and start the wash. Add 1 cup peroxide during the rinse cycle. Do this once a month and you’ll pretty much never have to buy another shower curtain liner again.

It’s also said that soaking a shower curtain liner in saltwater before you use in can help repel mildew.

Keep shower curtain rings from squeaking

Do the rings on your shower curtain squeak as they run along the rod? The solution is simple: Just rub some petroleum jelly or car wax along the rod and they’ll slide right along it without making a noise.

18 Quick and Easy Shower Cleaning Hacks


Is This Your Last Chance to Refinance Your Mortgage?

Mortgage loan refinance
Yuriy K /

Time may be running out to get the best rate on a home loan.

This week, rates rose to their highest level since May 2020 and are now more than 0.5% higher than they were in January 2021, according to the Freddie Mac Primary Mortgage Market Survey released today.

Freddie Mac, formally known as the Federal Home Loan Mortgage Corp., is a government-sponsored company. It helps foster stability and affordability in the housing market by purchasing mortgages that meet certain standards from lenders. That in turn helps lenders provide more loans to qualified buyers.

The trend toward higher mortgage rates may continue for a while. In a press release, Sam Khater, Freddie Mac chief economist, says:

“With higher inflation, promising economic growth and a tight labor market, we expect rates will continue to rise.”

This week, a 30-year fixed-rate mortgage averaged 3.22%. One year ago, the rate was 2.65%.

Meanwhile, a 15-year fixed-rate mortgage averaged 2.43%, up from 2.16% one year ago.

Freddie Mac’s Primary Mortgage Market Survey focuses on conventional home purchase loans for borrowers who make a 20% down payment and have excellent credit.

Of course, the forecast that rates will go higher is only a prediction. No one knows for sure where mortgage rates are headed. Over the past couple of decades, forecasters often have said rates couldn’t go much lower, only to have reality prove them wrong.

Still, there are multiple factors pushing rates higher. Not only is inflation showing up in prices everywhere, but there are now whispers that the Federal Reserve might raise the federal funds rate in March, much earlier than many experts had expected.

Although mortgage rates do not rise in lockstep with increases in the federal funds rate, the two rates generally move in the same direction.

So, if you want to lock in a great rate, now might be the time. You can look up refinance rates for lenders such as Better, a Money Talks News partner, right on the lenders’ websites.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


11 Super-Simple Ways to Build Wealth in 2022

A wealthy couple
Jacob Lund /

To paraphrase William Shakespeare, some people are born wealthy and others achieve wealth. If you weren’t lucky enough to be in the first group, then it’s time to get going on your self-made fortune.

Think that can’t happen? You’re wrong. Pathways to wealth are everywhere. Why shouldn’t you take them?

Some of these smart choices will save you money upfront. Next, use that money to make more money through strategies like fractional investing and online wealth management.

Want to put yourself on the road to riches? These tactics can help.

1. Used Chevy or new Mercedes?

Save $100 a month, earn 1% on it and after 20 years you’ll have $26,545. Enough for a used Chevy.

Boost that percentage to 15%, and you’ll end up with $124,569 after 20 years. That’s nearly $100,000 more: enough for a new Mercedes.

Of course, earning 15% isn’t easy (the stock market’s average return is about 10%) and never guaranteed, but here’s something that is guaranteed: You won’t be earning big returns at the bank.

If you want to super-charge your savings, you’ve got to invest.

Plenty of people grow up thinking that “investing” is something only rich people do. Not so! You can start your investing journey with as little as $1, without paying a dime in fees, thanks to an investing app called Public.

With the Public app, you take part in “fractional investing,” which means buying little slivers of companies, funds or crypto assets. Take your choice from among thousands of exchange-traded funds (ETFs) and stocks.

Start by signing up and telling the app what investing experience (if any) you have and what your investing goals are. According to Public, 90% of users are in it for the long haul.

There’s no charge to join, although you’re allowed to leave tips on transactions. And again: You can start with as little as $1. What else can you get for a buck these days? Even dollar stores are raising their prices!

Download the app now, and take the first step toward getting rich instead of just getting by.

2. Chop your car insurance bill by $700 a year

Auto insurance is a must. You know what isn’t a must? Paying too much for coverage.

People who switch to Progressive for their auto insurance can save up to $700 – not just initially, but every year. Imagine what you could do with an extra $700 in your budget.

Emergency fund? Extra payment against your mortgage? Retirement planning? It’s your call. Point is, those are dollars that are now working for you instead of for someone else.

Incidentally, a cheaper premium doesn’t mean you’re cheaping out on protection. Progressive is known for its strong coverage. Request your free quote now and see how much you can save this year, and every year.

3. Let mortgage savings put your kids through college

If you’re currently paying about 4% on your mortgage, refinancing could lower your rate to as low as 2.376%.

Not much of a difference, right?

Well, if your mortgage is $300,000, that lower rate would mean paying about $94,000 less in interest over the life of the loan. That’s enough to put your kids through college, start your own business or retire earlier.

Maybe you know the savings would be significant, but haven’t refinanced yet because it seems so complicated. It isn’t. A direct lender called Better will make it child’s play.

The simplifying starts with a near-instant rate quote, and continues through the refinancing process. Better doesn’t charge origination fees or lender fees, and you can get a mortgage interest rate lock if you like.

Millions of homeowners around the country are saving every month because they refinanced. But the experts are saying these low rates won’t last. It’s do-it-or-lose-it time.

Get your new, personalized rate today, and make strides toward a better tomorrow.

4. Stop worrying about expensive household breakdowns

For most of us, our home is our most valuable asset. We put a lot of money down to buy it and pay a lot of money each month to keep it. Sometimes we’re stretched pretty thin financially, so when things break down it can be tough to cover the fixes.

The heating/cooling system grinds to a halt. A major appliance gives up the ghost. And why are the lights flickering — could it be the electrical panel?

What you need is a full-time maintenance person.

The next best thing? A home warranty from America’s 1st Choice Home Club. You can choose from among several coverage plans that cover issues with appliances, plumbing, heating, electrical systems and more. You can use your own technician or let America’s 1st Choice send someone over.

A breakdown happens in the middle of the night? Doesn’t matter. The in-house service team is available 24/7.

All this starting for as little as $390 a year.

Homeownership is great. But when things go wrong — and they will! — we can no longer call the landlord. We are the landlord, and we might go into debt just to keep things running smoothly.

Stop worrying about household breakdowns, and the high costs that come with them. Get a free quote in 30 seconds.

5. Get paid to watch videos and take surveys

Think of all the time you spend waiting somewhere. Waiting for the spin cycle in the laundromat. Waiting at the auto shop until the mechanic can give you an estimate. Waiting for your kid’s sports practice to be over. Waiting in an exam room for the doctor, who’s running 20 minutes late.

You could spend that time watching funny cat videos — or you could use that time to make some money. Our friends at InboxDollars can help you with the latter.

InboxDollars is a rewards site that pays you actual cash to watch videos and take surveys. Seriously: Why not use your downtime to make money?

Those aren’t the only ways to earn money with InboxDollars, however. You can also do some online shopping, click on daily emails, scan your grocery receipts into the “Magic Receipts” function, complete special offers (especially those for things you’d planned to buy anyway), play games and even help others by making donations to various causes.

From now on, get paid for waiting. It takes seconds to sign up, and you’ll get a $5 welcome bonus just for joining.

6. Find cheaper homeowners insurance in 60 seconds

Again, our homes are usually our most valuable asset. It’s essential to make sure they’re protected in the event of an emergency. But how do you know whether you’re overpaying for homeowners insurance?

Simple: You ask Lemonade for an estimate. It takes only a few seconds to find out whether you could be keeping more of your hard-earned money each month. Lemonade’s coverage starts from just $25 a month.

Homeowners insurance isn’t just about fixing things up after a fire, though. The dog bit the mailman? Lemonade can help with legal and medical payments.

A thief steals your stuff? Lemonade has your back, even if the theft happened away from home.

Your home rendered unlivable due to that fire? A homeowners insurance policy through Lemonade will cover expenses until you can get back into your home sweet home.

Why overpay with your current carrier? Find cheaper home insurance in seconds.

7. Add $1.7 million extra to your retirement

A recent Vanguard study indicated that a self-managed $500,000 investment would grow into $1.69 million in 25 years, on average. Sounds pretty good, huh?

However, with professional help, that same $500,000 would have turned into $3.4 million. In other words, a quality financial adviser could double your retirement nest egg!

At least talk to a pro, especially when finding one is free and easy. SmartAsset is a free service that will match you with a qualified money manager who can help you put your money where it will do you the most good.

Bank interest rates don’t beat inflation, so the value of your savings erodes over time. Stocks and other investments have historically beaten inflation, but a lack of knowledge and experience leaves you vulnerable to dodgy advice or financial scams.

SmartAsset will put you in touch with up to three local, experienced professionals, all of whom are fiduciaries, meaning they’re required to put your best interests over their own. They can give you a clear picture of where you are now, and help you develop the right plan for the long term.

Since the first appointment is often free, what have you got to lose? If you’re ready to at least consider a local adviser, check it out.

8. Protect your wealth with a gold IRA

Not everyone is comfortable with traditional retirement investments. Some people are opting for a “gold IRA,” which is just what it sounds like: gold, gold and more gold. This can be bullion (coins or bars) only, or also include gold stocks, ETFs and mutual funds. Gold is one of the few commodities that the Internal Revenue Service approves as an IRA investment. It’s a finite resource, rather than one that can be controlled by governments or banks.

Sound intriguing? Time to educate yourself, with help from American Hartford Gold.

This family-owned company can help you set up a gold IRA that meets all IRS standards. Chief among them: The gold must be kept at an approved depository. (No, you can’t bury it in your backyard.)

There may be less than 20 years’ worth of mineable gold remaining in the ground. As the saying goes about real estate, they ain’t making any more of it. Demand for gold is rising all over the world, especially in the electronics industry, so your IRA has a great chance to increase its value until you’re ready to retire.

American Hartford Gold has an A+ rating with the Better Business Bureau, and a 5-star rating with TrustPilot. Get your free investors kit now.

9. Diversify your portfolio with art collected by billionaires

Billionaires didn’t become billionaires by making bad investment choices. And billionaires have been collecting art for generations; for example, the Rockefellers amassed a collection that sold for an eye-popping $835 million in 2017.

But it isn’t just the ultra-rich who can invest in art by Banksy, Warhol and Picasso. With a new investing app called Masterworks, you can invest in iconic artworks as well – right alongside deep-pocketed folks like Bill Gates, Oprah Winfrey and Jeff Bezos.

Blue-chip art outpaced the S&P 500 from 1995-2021, which is impressive considering that historic bull run we’re now witnessing. The Wall Street Journal recently reported that art is “among the hottest markets on Earth.”

Art also has one of the lowest correlations to stocks that you can find. In other words, art’s value doesn’t have anything to do with the stock market’s wild swings, which makes it a good hedge.

Masterworks is an invitation-only art investment platform. So if you want to invest like a billionaire, request your invitation to join here.

10. Borrow $50,000 to erase your debt

Ever feel like you’ll never get out from under your credit card debt? Consumer debt is way too easy to get into, yet sometimes feels impossible to escape. You pay as much as you can each month, but the high interest rate just keeps piling on the dollars.

AmOne is a free service that matches people like you with loan providers. When you fill out one simple form online, AmOne finds lenders who want to fund your loan of up to $50,000.

Once you’ve been approved and agree on the terms, it can take as little as 24 hours to get the cash. Use the money to erase all your debt at once, then pay back the personal loan at a lower interest rate than those credit cards were charging you.

The service does only a “soft” credit pull, rather than have you going directly to lenders and getting “hard” credit pulls that affect your credit score. And speaking of your credit score: You don’t need an “excellent” rating to be considered, since AmOne’s lending partners are willing to work with people of varying credit ratings.

AmOne has a 4.7-star rating (out of 5) on TrustPilot. It’s free to check your rate online, and it literally takes just one minute.

11. Pay no interest until 2023 with a better card

Another way to deal with high credit card balances? Get another credit card. Specifically, get a 0% APR card, transfer those balances and get charged no interest while you’re paying down the debt.

There’s another good reason to get a 0% APR card: to get free financing on a big-ticket item.

Suppose your HVAC system goes out or your car needs a few thousand bucks’ worth of repairs. Rather than deplete your emergency fund, pay with that new 0% APR card to give yourself some breathing room while you pay it off.

How much breathing room? Anywhere from 15 to 21 months, depending on the card you choose.

You’ll need a plan to go along with that new card: no more using the other cards with unnecessary splurges while you pay off the 0% APR card. It doesn’t make sense to run up more debt while you’re paying off old debt.

But with a 0% card, you’ll pay no interest. Think of all the interest you’d been paying, and what those dollars could have done for your long-term financial security. With a 0% APR card, you won’t have to waste any more of your hard-earned dollars on interest.

Compare these top cards and discover the best one for you.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


Dogs of the Dow 2022: 10 Dividend Stocks to Watch

The start of the new year means a fresh chance for yield-seeking investors to get in on one of the easiest market strategies in the book:

The Dogs of the Dow.

Investment manager Michael B. O’Higgins popularized the idea in his 1991 book Beating the Dow. And it doesn’t get much simpler: At the beginning of the year, buy the 10 highest-yielding Dow Jones Industrial Average components in equal amounts. Hold them until the end of the year. Rinse. Repeat.

While the Dogs of the Dow sounds like a dividend strategy, it has its roots in value. O’Higgins’ proposed that firms with high dividends relative to their stock price in the index would be near the bottom of their business cycle and represent bargains compared to components with lower dividend yields.

And why the DJIA? The Dow Jones has long been considered one of the leading stock-market gauges of America’s economy. While the S&P 500 has more components and is more diversified, the Dow still covers most sectors. Not to mention, its components are extremely liquid and there are reams of research available on all 30.

But buyer beware. While the Dogs of the Dow have posted a respectable 8.7% annual total return since 2000, the Dogs have trailed the DJIA in each of the past four years. Analysts have proposed that the shift to growth investing has hurt the strategy’s performance; but with value stocks predicted to regain their mojo, the Dogs could again have their day.

Without further ado, here are the 2022 Dogs of the Dow.

Data is as of Dec. 31, 2021, the date on which the Dogs of the Dow are identified. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Stocks listed in reverse order of yield.

1 of 10


Intel building signIntel building sign
  • Sector: Technology
  • Market value: $209.5 billion
  • Dividend yield: 2.7%

Oh, how the tables have turned.

A decade ago, Intel (INTC, $51.50) was the leading name in chips, while Advanced Micro Devices (AMD) and Nvidia (NVDA) were promising yet still relatively minor players – combined, the two were worth less than a tenth of Intel by market capitalization.

But Nvidia is now several times Nvidia’s size, and AMD isn’t too far behind Intel’s $210 billion market value. That’s because in recent years, Intel has missed the boat on a variety of fronts. From mobile computing and productions capabilities for faster/smaller chipsets, Intel has stumbled … and its rivals have eaten its lunch.

But while Intel might be down, it’s hardly not out.

Intel’s Alder Lake 12th-generation core processor chips have started to eat away from AMD’s high-end processors, and Intel recently announced the latest line of Alder Lake chips that include what the company says is “the fastest mobile processor. Ever.” The next two years should see its 13th-gen (Raptor Lake) and 14th-gen (Meteor Lake) chips come live.

Intel also could squeeze some value out of Mobileye, the autonomous vehicle-chip stock that it acquired back in 2017. INTC in December announced its intent to spin the company off in an initial public offering (IPO) while maintaining controlling interest – allowing Intel to enjoy both an immediate windfall while still realizing gains as Mobileye grows.

In keeping with the Dogs of the Dow’s value bent, Intel trades at just 14 times the coming year’s earnings estimates, significantly less than both the S&P 500 (21) and technology sector (28). INTC’s 2.7% yield is also much better than what you typically get out of tech shares.

2 of 10


Coca-Cola With Coffee can sitting in a pocket of snowCoca-Cola With Coffee can sitting in a pocket of snow
  • Sector: Consumer staples
  • Market value: $255.8 billion
  • Dividend yield: 2.8%

In today’s low-carb and keto-friendly world, sugary soft drinks and sodas are practically verboten. And in recent years, that has largely muted the returns of giant Coca-Cola (KO, $59.21), which has produced roughly half the total returns (price plus dividends) of the S&P 500 over the past half-decade.

But KO is doing a better job of ensuring it has the goods to shift with consumer tastes.

Coca-Cola has spent a few years moving its portfolio into healthier options. That includes teas, milk and sparkling water, among others. It also unveiled new zero-sugar versions of soda brands such as Sprite and Coca-Cola, which fueled about 25% of the Coca-Cola brand’s growth in the third quarter.

KO is also looking toward athletics and fitness fanatics for growth. Back in November, Coca-Cola purchased sports beverage group BodyArmor – which it already had a 15% stake in – for $5.6 billion. This instantly gives it a meaningful presence in the industry. “BodyArmor is currently the #2 sports drink in the category in measured retail channels, growing at about 50% to drive more than $1.4 billion in retail sales,” the company says.

And you don’t get more dependable than Coca-Cola’s dividend, which has been growing uninterrupted for 59 consecutive years. That easily puts it among the longest-tenured Dividend Aristocrats.

3 of 10


Scotch tapeScotch tape
  • Sector: Industrials
  • Market value: 102.4 billion
  • Dividend yield: 3.3%

Unlike most of Wall Street, 3M (MMM, $177.63) was already getting crushed by the time the COVID bear market came around. The U.S.-China trade war and other difficulties were already weighing on the industrial name when COVID cramped demand for many of the company’s products (except its N95 masks and filtering division, of course).

But 2022 could be another year of recovery for 3M.

3M makes more than 60,000 products, from consumer products such as sponges and packing tape to industrial diamond-coated grinding disks and orthodontic supplies. In normal times, this wide product portfolio provides insulation from specific shocks to its various businesses. And it allows 3M to enjoy in numerous facets of a broad economic recovery.

The company grew third-quarter revenues 7.1% year-over-year and generated more than $1.5 billion in free cash flow. 3M is benefiting from continued cost cutting and development programs, as well as from selling chronically underperforming business lines.

3M’s forward P/E of 16 makes it one of the more expensive 2022 Dogs of the Dow, and yet it still trades for much cheaper than the S&P 500 and industrial sector (20) alike.

4 of 10


Amgen needleAmgen needle
  • Sector: Healthcare
  • Market value: $126.7 billion
  • Dividend yield: 3.5%

Patent expirations are a hurdle most pharmaceutical and biotechnology companies have to face, and that’s no different for established biotech Amgen (AMGN, $224.97). Top drugs such as Enbrel, Neulasta and Otezla will fall off the patent cliff in coming years.

The good news? The earliest drug in that cohort to fall off patent won’t do so until 2025. And often, U.S. drug manufacturers can kick the can down the road by making minor changes to drugs or adding more indications for the therapy. Not to mention, expirations go both ways – AbbVie’s (ABBV) blockbuster drug Humira is set to lose patent protection in the U.S. in 2023, and Amgen has already gained approval to sell Amjevita, a biosimilar form of the drug.

Another big reason AMGN shareholders shouldn’t panic is its potential-packed pipeline. The biotechnology firm has more than 20 drugs in Phase 2 or 3 trials. And recently, the FDA approved Amgen severe-asthma medication Tezspire, a potential blockbuster drug.

Nearer-term, another reason to like Amgen is its dividend. Namely, it’ll be 10% bigger in 2022, at $1.94 per share quarterly, the company announced in December.

5 of 10


Merck buildingMerck building
  • Sector: Healthcare
  • Market value: $193.6 billion
  • Dividend yield: 3.6%

Merck (MRK, $76.64) has been doing a lot of evolving in recent years. It has gone on an impressive pipeline-buying spree, which continued in late November with its $11.5 billion buy of Acceleron. And Merck also recently spun off its legacy generic drug and off-patent medicines into a separate company, Organon (OGN).

The resulting Merck is one of the top growth-oriented drug producers in the world.

Sales of oncology blockbuster drug Keytruda jumped 22% year-over-year during Q3, to $4.5 billion. Some analysts believe Keytruda will soon be the world’s best-selling drug, overtaking AbbVie’s Humira. That’s in part because Merck intends to seek approval for other indications of the drug. But Merck has other major drugs in the tank, including Gardasil, whose sales grew 68% to $2 billion in Q3. And its pipeline includes dozens of products in Phase 2 and 3 trials.

A low forward P/E of around 10, and a yield well above 3%, make MRK a model example of the income and value found in the Dogs of the Dow.

6 of 10

Walgreens Boots Alliance

Walgreens pharmacyWalgreens pharmacy
  • Sector: Consumer staples
  • Market value: $45.2 billion
  • Dividend yield: 3.7%

Walgreens Boots Alliance (WBA, $52.16) wasn’t the COVID winner you might have thought. COVID prompted a shift in the company’s sales mix to lower-margin items, and it dragged heavily on foot traffic in the company’s Boots U.K. stores.

So, like many other retailers, an escape from the pandemic should help Walgreens, which used COVID as an opportunity to cut nearly $2 billion in costs from its operations.

Partnerships will be essential too. For instance, Walgreens has been opening branded primary-care clinics with VillageMD, who staffs these locations with physicians, allowing them to cater to more than ear infections and sniffles. Walgreens plans to open 1,000 of these clinics at its stores by 2027.

Also in play is the potential divestiture of its Boots business; several reports in December said Walgreens was mulling the move.

With foot traffic on the rebound and new avenues for growth opening up, WBA could be a productive Dow Dog. A forward P/E of around 10 doesn’t hurt, either.

7 of 10


A Chevron gas stationA Chevron gas station
  • Sector: Energy
  • Market value: $226.2 billion
  • Dividend yield: 4.6%

COVID was downright miserable for the energy sector – even integrated oil-and-gas giants such as Chevron (CVX, $117.35).

However, while numerous companies closed, and many more were forced to cut jobs, slash capital expenditures and pull back on their dividends, Chevron managed to keep its dividend running and even used an all-stock deal to acquire Noble Energy.

Chevron’s acquisition of Noble at fire-sale prices boosted its overall presence in low-cost fields in the Permian Basin, allowing the company to better leverage a rebound in energy prices, which came in spades in 2021.

Energy stocks of all sorts went bananas in 2021, making it the S&P 500’s top sector. Chevron returned 46% amid a complete rebound in its operations. For instance, its third quarter saw Chevron earn $6.1 billion versus the $207 million it lost in the year-ago quarter.

However, despite its massive 2021 move, CVX stock yet again finds itself among the Dogs of the Dow.

Chevron’s 4.6% current yield isn’t as generous as the 6% or so it offered at this same time last year, but it’s still one of the top yields in the Dow. Meanwhile, it’s value-priced at just 12 times earnings estimates.

8 of 10

International Business Machines

IBM buildingIBM building
  • Sector: Technology
  • Market value: $119.9 billion
  • Dividend yield: 4.9%

International Business Machines (IBM, $133.66) has been nothing short of a disappointment in recent years.

Big Blue has struggled to remain relevant in the age of cloud computing while rivals chipped away market share. At one point, the firm recorded 22 consecutive quarters of declining revenue, then restarted that streak shortly after breaking it. Even including dividends, IBM shares returned just 1% between 2017 and 2021.

But IBM might finally be getting itself together.

Its 2019 purchases of open-source software firm Red Hat boosted the company’s operations. Fast-forward to 2021, and the company cut loose some dead weight, spinning off its legacy IT infrastructure services as Kyndryl (KD).

A now leaner, meaner IBM is focused once again on growth.

We saw signs of this in the company’s third quarter, where overall cloud revenues grew 14% year-over-year. It’ll still be a while before IBM can report its post-separation numbers, but analysts are generally expecting IBM to start heading in the right direction once again.

Better still: IBM didn’t give away any of the dividend game with Kyndryl. International Business Machines remains a Dividend Aristocrat whose 4.9% yield is among the best of 2022’s Dogs of the Dow.

9 of 10

Verizon Communications

Verizon storeVerizon store
  • Sector: Communication services
  • Market value: $215.1 billion
  • Dividend yield: 4.9%

Verizon (VZ, $51.96) spent the last few years trying to build out a communications and media empire. Wireless communication has become a commodity; there isn’t much difference between carriers, plans or offerings at this point. The U.S. market is saturated. The major carriers can’t rely on their legacy businesses for growth.

But Verizon’s ventures, which included buying Yahoo! And other media properties, simply didn’t pan out. Several write-offs later, and VZ is just getting back to basics: improving its giant network and providing services that utilize said network.

The 5G transformation is a major tailwind for Verizon. It’s not just consumer devices; smart vehicles, the Internet of Things and other applications will be a big driver for its network. Also, Verizon has started to transition toward more enterprise customers, which includes fleet management software and applications to data security. These should also provide a runway for growth.

A forward P/E under 10 and a nearly 5% dividend, meanwhile, provide some of the best features of the Dogs of the Dow.

10 of 10


Dow buildingDow building
  • Sector: Materials
  • Market value: $42.0 billion
  • Dividend yield: 4.9%

Dow has had a wild and transformative few years that saw it spin off assets before merging with rival DuPont (DD), then the chemical giant split into three separate firms. The remaining Dow contains the materials sciences chemicals, including adhesives, polyurethanes, silicones, resins and waxes, among others.

Like most other materials stocks, Dow struggled right alongside the broader economy during the COVID recession. For instance, during Q3 2020, the company lost 4 cents per share on $9.7 billion in sales. By Q3 2021, Dow had recovered considerably, posting $2.23 per share in earnings on $14.8 billion in revenues.

The omicron and future variants could throw more hurdles at the Dow recovery, but in general, a growing global economy should mean continued growth in demand for Dow’s products.

You can buy into that recovery on the cheap through Dow. Shares trade at a svelte nine times future earnings and yield nearly 5% at today’s prices. That’s roughly four times the income you’ll pull from the broader market, and at a much better valuation. A fair dividend payout ratio of 45% of earnings leaves Dow ample room to raise that payout further.

Aaron Levitt was long AMGN and MRK as of this writing.


Dear Penny, I’m a single woman in…

Dear Penny,

I’m a single woman in my early 40s currently earning $35,000 per year, which is definitely not enough to survive on in my area. I have less than $20,000 in my 401(k). In seven years at my current job, my pay increases haven’t even equaled $3 an hour. 

I’m able to pay all of my own bills, plus I have very little credit card debt, which is a silver lining. Saving money has proven to be quite difficult with the recent increased cost of living. I’ve tried so many different career paths to change my station in life, but those led to nowhere. 

What concerns me is that I feel like I’m not a financially desirable romantic partner. It takes money to build a life with someone. I fear that I’m running out of time to find a career that will enable me to financially contribute to a relationship. 

My traditional family thinks finances are the man’s responsibility in a relationship and not the woman’s. But this is 2022. I just don’t think that mentality holds up. I guess my question for you is, should I be this worried about my financial situation? Or am I just making myself feel inadequate? 

Society tends to judge men in my financial position as stereotypical low-lives. Is it the same for women?

-Financially Undesirable

Dear Undesirable,

Let’s reframe things a bit. You don’t rely on anyone to pay your bills. You have minimal debt. You’ve been employed at the same job for seven years.

You may not make much money, but you’re self-sufficient. That right there is a desirable trait.

I can’t tell you how society will judge a woman in your financial position. Obviously, the answer depends on the person. Money matters a great deal to some people. But plenty of people care more about building a life with someone who shares their values and interests. Regardless, your family’s beliefs that a man should swoop in and handle the finances are ridiculously antiquated in 2022.

You have a financial goal, which is to earn enough to save for retirement and keep up with the cost of living. You also have a relationship goal, which is to find a partner and build a life together. Treat these as two separate goals.

I’m not sure if you’re looking for a career overhaul or you simply want to make more money. Regardless, if ever there was a time to push for better pay, it’s now. The Great Resignation is forcing businesses to fight hard to recruit new workers and retain their existing employees. It’s worth asking for a raise at your current job. Try to emphasize your contributions, though you can certainly mention rising living costs.

In the meantime, apply for other jobs, even if it’s a similar level of responsibility. You may be able to negotiate for significantly more than you’re currently making. Consider reaching out to any former co-workers who recently quit for leads on better opportunities. If switching jobs isn’t an option, look for a side gig that doesn’t require a big upfront investment.

As for your relationship goal, I want you to think about what you’re looking for in a partner. I hope you recognize that your value as a person goes way beyond the amount of your paycheck. You say men in your financial position are often dismissed as “stereotypical low-lives.” But are you doing any of this stereotyping? Would you be open to dating a man who’s kind and responsible and treats you well, but who only makes $25,000 or $30,000 a year?

In no way am I suggesting that you can’t date outside of your tax bracket. But it isn’t fair to have expectations from a partner that you can’t meet yourself. If you want someone to be open to your financial situation, extend the same openness to others.

Typically, we don’t exchange salary info early on in relationships, though you often get a sense of where someone is at based on their job and lifestyle. You don’t need to disclose that you only make $35,000 right away, but I would be clear to any potential partner that you’re on a tight budget. Focus on finding common ground through shared interests.

Someone who truly values you will meet you where you’re at. That may mean you both agree to embrace frugality. Or if you find a relationship with someone who significantly outearns you, they may need to be comfortable paying for a greater share of expenses.

Earning more money is clearly important. But please don’t put your love life on hold as you work toward this goal. We’re all works in progress.

More importantly, stay focused on your career prospects, even if you meet the man of your dreams tomorrow. Financial security is something to work toward because you deserve it, not because it will make you a more attractive mate.

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




How to Know When You Can Retire

See if you can relate to this … You have contributed to a 401(k) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.

You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.

Sound familiar?  Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. 
And then it happens, you begin searching the internet for answers.  (That may even be how you ended up here!)  After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about.  Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.

This is an all-too-common situation.  Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.

Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.

What to Do and How to Know When You Can Retire

There is a lot to this if done correctly, and at some point you’re probably going to want some professional help, but there are a few things you can do to get moving in the right direction.

Calculate Your Income Need

Before you jump in and begin picking from the assorted list of investments that you found on the internet or that a broker recommended, you should understand that this is the very last step in the process.  You would be well advised to set all of that aside for now and begin with your income needs. You cannot sidestep this, because you have to know this figure before you can do anything else.

To do this right, sort through and total up all your bank payments, then your insurance payments, then your tax payments, then your monthly living expenses, and don’t forget the irregular expenses throughout the year, like gifts and travel.  You want to know how much money you spend over the course of a year. 

Another point to make here, realize that this spending amount will be for when you are retired – not while you’re working.  Things are going to look different for you in retirement, so be sure to think about how you will be spending your time in retirement.  You’ll have a lot of time to fill!

Calculate Your Income Gap

Once you have this figure, subtract from it your Social Security or pension benefits. Any fixed income you have coming is already solved for, so we have to figure out what your “income gap” is between what you need and what income you already have coming in.

Identify the Return You Will Need from Your Investments

So, the amount you have determined as your income gap needs to be annualized and divided by the amount of retirement assets you have designated for retirement. This calculation will tell you what yield you need from your investments. This figure shouldn’t be more than between 4%-5% at the most. If it is higher, then you may not be ready for retirement just yet.

For example, say you have an income gap of $70,000 per year and retirement savings of $2 million. Divide $70,000 by $2 million, and you find that you will need an investment return of 3.5% to support your living expenses. That’s well within an acceptable range.

Remember that you stretch your resources too far right out of the gate, you’re just setting yourself up for failure. This is no time to be overly optimistic with your calculations and will want to lean on the side of caution.

Hedge For Inflation

Unfortunately, there is inflation in your future that you will need to account for on top of market volatility. The income gap amount you came up with a moment ago will need to be hedged due to the future effects of inflation.  The amount of money you need today will be greater in the future simply due to the price of goods and services increasing over time. 

By using a historical figure for inflation of 3.5%, we can estimate that in 15 years your income need will increase by 68%!  So, you have to consider this headwind in your calculations and realize that you need two pools of retirement assets, one to generate the income you need now and another designated for income in the future.  One portfolio would be allocated using income producing assets while the other allocated for long term growth.

Find Income-Producing Assets

When you’re looking to fill your income gap, the obvious solution is to generate more income to fill it. How this is done can vary from person to person, but the primary outcome you’re looking for is income regardless of how you go about it.

If you’re wanting to remain active, you can consider taking on a part-time job, start or buy a business, acquire some rental properties or work another full-time job that you enjoy.

If you prefer not to work and want passive income, then you’re going to have to rely on income-oriented investments.  This would be through specific types of income annuities or select alternative investments that are designed specifically for income.

When doing this, be sure you are working with a qualified professional who is properly licensed and who can education you on your options. You can read this article and learn what to look for before working with an adviser. 

Get A Checklist

It is always a good idea to work off of a checklist, and regardless of where you are in this process, there are likely a few tweaks that can help increase your probability for a successful retirement. I encourage you to formulate a plan that articulates where you are, where you’re going and what needs to be done to start receiving the income you need. 

You can download the Successful Retirement Checklist™ for free here and use it as a guide as you prepare for your retirement.  In addition, taking a retirement readiness quiz can be a good idea, too. A quiz is a useful tool to measure your level of understanding about a topic or your readiness for progressing toward something. Here is a retirement readiness quiz you can take for free that can help you figure out how ready you are for retirement.

Securities offered through Kalos Capital, Inc., Member FINRA/SIPC/MSRB and investment advisory services offered through Kalos Management, Inc., an SEC registered Investment Advisor, both located at11525 Park Wood Circle, Alpharetta, GA 30005. Kalos Capital, Inc. and Kalos Management, Inc. do not provide tax or legal advice. Skrobonja Financial Group, LLC and Skrobonja Insurance Services, LLC are not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.

Founder & President, Skrobonja Financial Group LLC

Brian Skrobonja is an author, blogger, podcaster and speaker. He is the founder of St. Louis Mo.-based wealth management firm Skrobonja Financial Group LLC. His goal is to help his audience discover the root of their beliefs about money and challenge them to think differently. Brian is the author of three books, and his Common Sense podcast was named one of the Top 10 by Forbes. In 2017, 2019 and 2020 Brian was awarded Best Wealth Manager and the Future 50 in 2018 from St. Louis Small Business.


The Fair Housing Act: Anti-Discrimination Laws for Renters and Buyers

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Additional Resources

In June 2020, Florida homeowners Abena and Alex Horton decided to take advantage of low interest rates due to the pandemic and refinance their mortgage. So their lender sent a professional appraiser to their home in a predominantly white area of Jacksonville.

Homes in the Hortons’ well-to-do neighborhood typically sell for $350,000 to $550,000. They expected theirs to appraise for about $450,000, a comfortable midpoint. But that’s not what happened. And it all came down to race.

Why We Need Fair Housing Laws 

In the Hortons’ case, the appraiser pegged the value at just $330,000, well under the going market price for comparable homes nearby.

To its credit, the lender agreed the appraisal was too low and ordered another. It came in at $465,000, in line with the homeowners’ expectations.

The Hortons didn’t undertake any last-minute home improvement projects or even take steps to improve the home’s curb appeal in the interim. They made only one change: removing any evidence that a Black person lived in the house. 

Before the appraiser arrived, Abena Horton, who’s Black, took her son shopping. She replaced mantel photos of herself and her son with images of Alex Horton, who’s white, and his white family members. She removed holiday cards from Black families. She even took books by prominent Black authors like Toni Morrison off the shelves.

The ordeal was humiliating but not surprising.

“I [knew] what the issue was,” Abena Horton told The New York Times. “And I knew what we needed to do to fix it, because in the Black community, it’s just common knowledge that you take your pictures down when you’re selling the house. But I didn’t think I had to worry about that with an appraisal.”

The Hortons’ low appraisal was neither a fluke nor the work of a rogue, racist appraiser. The family’s experience plays out in countless households of color across America more than a half-century after the passage of the federal Fair Housing Act. 

That law’s goal was to protect minority homeowners from discrimination. It was a vital component of a larger package of legislation — the Civil Rights Act of 1968 — meant to build upon the Civil Rights Act of 1964. 

The Fair Housing Act explicitly prohibits certain types of discrimination in the sale and rental of housing and mortgage lending against members of certain protected classes.

Subsequent legislation and court decisions have strengthened and expanded the act in meaningful ways.

Unfortunately, the Hortons’ experience shows that the Fair Housing Act did not usher in a world free from housing discrimination. 

Indeed, the National Fair Housing Alliance’s 2019 Fair Housing Trends Report recorded more than 31,000 housing discrimination complaints in 2018, an 8% increase from 2017 and the highest figure since the National Fair Housing Alliance began tracking housing complaints in 1995.

About three-quarters of these complaints were filed with nonprofit housing organizations compared with just under 6% filed with the U.S. Department of Housing and Urban Development (HUD). Many involve more egregious infractions than the Hortons’ lowball appraisal.

Some would-be homeowners or tenants dealt with outright denial of rental housing. Others experienced discriminatory mortgage lending practices that increased foreclosure risk and cost affected borrowers tens or hundreds of thousands of dollars over the life of a loan.

It’s true that not all Americans experience housing discrimination. But all Americans participate in the country’s housing market, even the housing-insecure. And any unequal treatment distorts that market, no matter how localized. That makes discrimination a collective problem, even when it doesn’t directly affect us as individuals.

Key Fair Housing Act Protections for Renters & Buyers

The Fair Housing Act protects most homebuyers, mortgage applicants, and renters from discrimination based membership in a protected class, including race and sex. The act prevents property owners, sellers, selling agents, and housing lenders from taking specific actions defined as discriminatory against members of its protected classes.

Certain identities not explicitly mentioned in the act, notably gender identity and sexual orientation, can be covered by explicit protections of the act, such as sex and disability status (which covers chronic health conditions like AIDS and the virus that causes it). Coverage for these identities is subject to judicial interpretation per the U.S. Supreme Court’s ruling in Bostock v. Clayton County.

Likewise, many states have enacted laws that expand and complement provisions of the federal law. However, the Fair Housing Act does have important exemptions that limit its applicability in certain situations, such as owner-occupied or unmarketed small-scale rental housing.

Protected Classes Defined by the Fair Housing Act

The Fair Housing Act’s protections extend to members of the protected classes or identities outlined in the law. These protections cover both explicit and indirect or implicit discrimination.

Race or Color

This protection applies to official Census-recognized racial categories: 

  • White American
  • Asian American
  • Black or African American
  • Native American and Alaska Native
  • Native Hawaiian and other Pacific Islander
  • Hispanic or Latino of any race
  • People of two or more races 

It also applies to informal racial or ethnic categories and perceived categories, such as assumptions based on a person’s dialect or accent. An offender need not definitively know the race of a buyer or renter to discriminate against them based on it.


The Fair Housing Act requires equal treatment of members of all religious groups, including nonbelievers. For example, in most cases, an apartment community or municipality can’t advertise itself using religious labels like “Christian” or “Jewish.”

National Origin

The Fair Housing Act prohibits activities that favor or disfavor buyers, renters, or borrowers based on national origin. For example, while it’s not illegal under federal law for property owners and other housing providers to ask applicants for proof of United States citizenship or legal residency, it is unlawful to do so only for certain applicants.

Familial Status

This protection prohibits discrimination based on family organization, marital status, and age in most cases. For example, a property owner who prefers not to rent to college students can’t simply deny housing to all applicants under age 23. 

Though the Fair Housing Act does not explicitly protect LGBTQ Americans from discrimination, the familial status class does include same-sex couples.


Any unequal treatment based on sex is prohibited under the Fair Housing Act. That includes restrictive policies enacted in the name of safety, such as refusing to rent first-floor walkout apartments to single women. It also covers any form of sexual harassment or coercion during the rental or sale process.


This protection covers individuals with significant documented disabilities, whether physical or cognitive. That includes those with chronic addiction disorders, such as alcoholism or substance abuse disorder, provided they’re engaged in treatment or recovery programs. 

Those engaged in the sale or rental of housing can’t ask about perceived disabilities or deny housing to those with disabilities. That’s true even when the offender’s intentions are pure, such as preemptively asking a person in a wheelchair if they require a first-floor apartment. 

Also, in rental housing, disabled tenants must be permitted to make reasonable improvements at their expense, and public areas and entryways must be accessible.

Explicit Prohibitions of the Fair Housing Act

The Fair Housing Act explicitly prohibits dozens of specific actions taken against members of any protected class by property owners, sellers, real estate agents and brokers, mortgage lenders, leasing agents, public officials, civil service, and insurance professionals. 

Some of these prohibitions pertain specifically to the sale or rental of housing, while others apply in the narrower mortgage lending context.

Actions Prohibited in the Sale or Rental of Housing

These actions include egregious violations, such as posting a sign restricting applications to a particular race, gender, or sexual orientation. But they also include more subtle offenses, such as steering nonwhite buyers away from predominantly white neighborhoods.

Some actions, such as eviction, may be legal when the intent or result is not discriminatory. For example, if local regulations allow, a property owner is within their rights to evict a tenant who’s seriously behind on rent as long as they treat all such tenants equally regardless of protected status.

Prohibited actions are:

  • Outright refusal to rent or sell housing
  • Refusing to negotiate the sale or rental of housing
  • Refusing to confirm housing is available for sale or rent
  • Discouraging the sale or rental of housing
  • Segregating housing (for example, grouping tenants of the same ethnic or racial group on a specific floor or building or in a specific neighborhood)
  • Extending favorable terms or unique incentives (for instance, charging opposite-sex couples lower rent than same-sex couples)
  • Making mention of any prohibited preference (for example, “families preferred”) in housing advertisements
  • Using different applications, screening or qualification criteria, or qualification processes (such as running credit checks for nonwhite applicants only)
  • Harassing applicants, tenants, or occupants or conditioning approval of a housing application on the applicant’s response to harassment
  • Evicting tenants or guests
  • Delaying or declining to make necessary repairs or maintenance
  • Offering property insurance on unequal terms (for example, asking higher premiums from members of certain protected classes, though underwriters may use indirect methods like credit scoring to account for higher perceived risk from certain occupants)
  • Profiting or attempting to profit by persuading homeowners to sell because members of a particular protected class are moving nearby
  • Denying real estate agents or brokers access to local agent organizations or multiple listing services

Actions Prohibited in Mortgage Lending

These actions also include a mix of egregious and subtle violations. However, all involve lenders’ or loan servicing companies’ refusal to treat mortgage applicants or borrowers equally based on their identities.

  • Refusing to provide information about loan opportunities
  • Refusing to originate mortgage loans to otherwise qualified applicants
  • Refusing to provide other financial assistance to otherwise qualified applicants
  • Offering unequal terms or conditions — such as higher rates, fees, or points — on mortgage loans
  • Discriminating during the appraisal process
  • A secondary lender or loan servicing company refusing to purchase a home loan
  • Conditioning issuance of a loan on the applicant’s response to harassment or coercion

HUD’s fair lending guide details mortgage applicants’ fair housing rights and mortgage lenders’ obligations under the law.

These actions are prohibited in all housing-related contexts:

  • Threatening, intimidating, or otherwise interfering with anyone attempting to exercise their rights under the Fair Housing Act or assist others in doing so
  • Retaliating against anyone who has filed a fair housing complaint or assisted with a fair housing investigation

State & Federal Housing Protections for LGBTQ Individuals

The Fair Housing Act does not explicitly forbid housing discrimination based on sexual orientation, sexuality, or gender identity. However, HUD requires lenders insured by the Federal Housing Administration (a HUD agency) to observe its Equal Access Rule. That rule prohibits certain acts of lending discrimination based on sexual orientation.

Additionally, the Fair Housing Act effectively forbids discrimination against LGBTQ individuals or families in circumstances covered by other class protections. And many state laws explicitly prohibit housing discrimination against members of the LGBTQ community.

Common Examples of Anti-LQBTQ Housing Discrimination Covered by the Fair Housing Act

The Texas Access to Justice Foundation-funded highlights common examples of circumstances in which explicit Fair Housing Act protections extend to LGBTQ individuals:

  • Sex Discrimination. A rental housing operator asks a transgender woman not to dress in women’s clothing in her building’s common areas; a property manager refuses to rent to a gender-nonconforming applicant.
  • Disability Discrimination. A property owner evicts a gay man whose HIV or AIDS status qualifies as a disability under the Fair Housing Act.
  • Equal Access Rule. A mortgage lender denies a loan to two same-gender co-applicants presumed to be a couple.

State Laws Protecting LGBTQ Individuals From Housing Discrimination

HUD maintains a list of states with laws prohibiting housing discrimination based on sexual orientation, gender identity or expression, or both. Jurisdictions that forbid housing discrimination on both grounds include:

  • California
  • Connecticut
  • Colorado
  • Delaware
  • Hawaii
  • Illinois
  • Iowa
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • Oregon
  • Rhode Island
  • Utah
  • Vermont
  • Washington, D.C.
  • Washington state

New Hampshire and Wisconsin prohibit housing discrimination based on sexual orientation but not gender identity or expression.

Noteworthy Fair Housing Act Exemptions

The Fair Housing Act covers most housing types and the vast majority of housing units available for sale or rent in the U.S. However, it does have important exemptions and carve-outs for certain housing types:

  • Small-Scale Rental Housing. Owner-occupied rental properties with four or fewer units (such as duplexes and quadplexes) and single-family rental housing that is not marketed or rented with help from a real estate broker. In the latter case, the exemption does not apply when the property’s owner owns more than three qualifying properties.
  • Housing Operated by Exempt Organizations. This category includes housing operated by legally recognized religious organizations or private clubs that limit eligibility to their own members.
  • Senior Housing. Multifamily communities that meet one of two criteria may legally deny housing to younger applicants: a) every resident is 62 or older or b) at least 80% of occupied units have at least one resident age 55 or older.

Why the Fair Housing Act Matters Today

It’s clear from the massive (and growing) volume of fair housing complaints tabulated by the National Fair Housing Alliance that the Fair Housing Act remains necessary and relevant to modern renters and homebuyers. And many acts of housing discrimination go unreported.

Though egregious examples of overt housing discrimination still occur, modern examples tend to be subtle, even covert. Modern housing discrimination often occurs without victims’ knowledge and sometimes without agency or intent on the perpetrator’s part. 

The Hortons’ first appraiser might not have acted on conscious animosity toward people of color or an explicit directive from their employer. They might well have acted on unconscious bias — an internalized, unquestioned notion that Black-owned homes are less desirable than white-owned homes.

Even if you believe you’ve never experienced housing discrimination and aren’t at risk from it in the future, you need to understand what housing discrimination looks like in practice. You also need to know how to recognize the financial, economic, and social consequences it can wreak. 

These consequences can and do affect all Americans’ personal finances and overall well-being. The effects can be direct financial issues for victims of discrimination or indirect harm to local economies and a fraying social fabric. 

For example, the subprime mortgage crisis of the late 2000s was fueled partly by discriminatory lending practices that resulted in higher default rates by borrowers of color. It resulted in millions of job losses, including those of many Americans who didn’t apply for a mortgage before or during the crisis.

Real-World Examples of Housing Discrimination

Theoretical examples from HUD and nonprofit fair housing organizations like the National Fair Housing Alliance provide a basis for public understanding of the various forms of housing discrimination.

Sadly, these theoretical examples have far too many real-world analogs. Many happened (or continued) during the 2010s. Another was a widespread historic ill that profoundly influenced America’s urban geography.

Disability-Based Discrimination in Dozens of Multifamily Housing Communities

In 2019, the U.S. Department of Justice (DOJ) reached a civil settlement with multistate apartment community operator Miller-Valentine Operations Inc. and Affiliates. According to the DOJ, the company stood accused of violating disability protections enshrined in the Fair Housing Act and the Americans With Disabilities Act. 

Under the terms of the settlement, the DOJ required the operator to “take extensive corrective actions” to improve accessibility at more than 80 properties in more than a dozen states and establish a $400,000 fund to compensate disabled individuals affected by its violations.

Illegal Lending in Sacramento & Philadelphia

Banking giant Wells Fargo has been accused of discriminatory lending practices by federal, state, and local authorities since at least the 2000s. 

The bank agreed to pay more than $230 million in 2012 to settle a DOJ civil action alleging a “pattern and practice” of lending discrimination against Black and Latino borrowers from 2004 to 2009. 

In 2017, the city of Philadelphia sued Wells Fargo over similar claims. The bank settled for $10 million in 2019, according to the Philadelphia Inquirer. A similar lawsuit filed by the city of Sacramento, California, in 2018 (per CNN) remains pending.

Racially Discriminatory Housing Ordinance & Enforcement

In 2019, the DOJ sued the city of Hesperia, California, and the San Bernardino Sheriff’s Department alleging that a city ordinance and its enforcement constituted discrimination against Black and Latino renters, according to U.S. News. 

A HUD investigation found that enforcement of the ordinance resulted in more than 140 evictions over alleged criminal conduct in 2016. In some cases, entire families were evicted over allegations leveled at a single tenant or guest. 

Enforcement disproportionately targeted minority neighborhoods, with Black tenants four times more likely to face eviction than white tenants.

Refusal to Rent to a Same-Sex Couple

In 2017, a federal court ruled that the denial of rental housing to a same-sex Boulder, Colorado, couple constituted prohibited discrimination under the Fair Housing Act and applicable state law. According to Lambda Legal, the property owner refused to rent to the couple over concerns that doing so would harm her standing in the community.

Racially Restrictive Covenants

Restrictive covenants are clauses in housing deeds that restrict future homeowners’ activities and are not in and of themselves illegal. 

However, one particular type of restrictive covenant has long been rendered unenforceable by state and federal law: racially restrictive covenants that forbade homeowners from selling to buyers of certain races or nationalities — often simply anyone who was not white. 

Racially restrictive covenants were common in the first half of the 20th century in cities like Minneapolis, Chicago, Seattle, and the Kansas City metropolitan area. Where widespread, they contributed to profound housing segregation. They were often used in conjunction with redlining, a common lending practice that diverted nonwhite borrowers into specific neighborhoods. 

These practices helped create majority-minority neighborhoods that subsequently experienced ills including disinvestment, neglect, and civil unrest.

Potential Consequences of Housing Discrimination

Real-world housing discrimination has real-world consequences for homeowners, renters, and their communities. 

Some are direct, such as harmful effects on victims’ long-term wealth-building capacity. Others, while indirect, can be more devastating at scale. Generations on, many cities continue to grapple with the far-reaching consequences of early- to mid-20th century redlining and restrictive covenants.

But all are incredibly harmful, both to the individuals who experience them and others. 

Greater Exposure to Environmental Health Risks

High-profile calamities like the lead drinking-water crises in Flint, Michigan, and Newark, New Jersey, underscore the disproportionate environmental health risks low-income communities face. These risks are particularly prevalent in low-income communities of color, like Flint and Newark. 

That isn’t merely a media narrative. A 2018 Environmental Protection Agency study found that people of color are more likely to live near sources of air pollution and breathe polluted air, often due to historical settlement patterns influenced by redlining and restrictive covenants. 

And a 2016 study published in the journal Environment International found that long-term exposure to particulate matter correlates directly with housing segregation. That is, residents of highly segregated areas inhale more particulate matter than those in less segregated areas.

Lead Exposure in Older Housing Stock

Affordable housing tends to be older. Subsidized housing available through programs like the Section 8 voucher scheme does as well. 

Unfortunately, many older homes still contain lead paint or water service lines. Lead exposure can cause a host of serious health and developmental problems in both children and adults. (Lead water service lines are typically benign but can cause problems when drinking water is not properly treated, as occurred in Flint). 

Inadequate Nutrition

The market opportunity is greater in moderate- to high-income areas. As such, full-service grocery stores with well-stocked produce sections tend to favor these places over low-income neighborhoods. 

The U.S. Department of Agriculture’s food access atlas shows regions that qualify as “food deserts” with limited nutritional resources. These places often occur in low-income urban neighborhoods and small rural towns served primarily by corner stores and dollar stores with little if any fresh produce.

Higher Incidences of Gun Violence & Other Serious Crime

According to a 2019 study published in PLOS Medicine, gun violence incidence closely correlates with higher rates of poverty and income inequality, low rates of social mobility, and low levels of trust in public institutions.

The legacy of residential segregation exacerbates these ills. For example, a 2018 mapping project by The Trace found that two low-income neighborhoods in highly segregated Cincinnati accounted for a disproportionate share of that city’s shootings.

Unequal Access to Quality Schools

NPR reports that a 2016 study by EdBuild found a $23 billion funding gap between predominantly white and predominantly nonwhite school districts. The gap is caused in part by two government-imposed phenomena. 

Districts rely heavily on local taxes, which generate more revenue in wealthier, predominantly white districts. Then there’s the principle of “local control,” which limits the equitable distribution of state education funds to poorer districts. 

This gap contributes to unequal educational outcomes, reinforcing the very racial wealth disparities responsible for it.

Impact of Discriminatory Lending on the Broader Economy

A 2010 study published in the American Sociological Review cited a “highly racialized process” of “differentially market[ing] risky subprime loans” to borrowers of color as a cause of the late-2000s subprime mortgage crisis that precipitated the Great Recession. 

It’s a stark example of the potential for discriminatory lending to impact the broader economy negatively. 

On a more granular level, Federal Financial Institutions Examination Council data cited by the Center for American Progress found that home prices in predominantly Black neighborhoods decreased by 6% between 2006 and 2017. During the same period, home prices in majority-white neighborhoods increased by 3%. 

This divergence disadvantages all homeowners in affected neighborhoods, not just members of the area’s ethnic or racial minority.

Increasing Racial & Cultural Tension

In a 2019 Pew study conducted before widespread protests over police violence in 2020, 58% of all Americans and 71% of Black Americans said race relations were bad in the U.S. 

Meanwhile, 65% of all Americans said it had “become more common for people to express racist or racially insensitive views” since Donald Trump was elected president. And 45% said it had “become more acceptable” to do so. 

While it might give comfort to characterize this as an aberration attributable solely to a particular political leader or party, that’s not the entire story. These alarming figures spotlight a fraying of the American social fabric caused in part by decades of residential segregation.

Despite incremental integration since 2000, a Washington Post visualization shows that most Americans continue to live in “majority” neighborhoods where one racial or ethnic group predominates. For example, a 2017 Harvard University study found that roughly 69% of the U.S. population lived in majority-white neighborhoods between 2011 and 2015.

Political Polarization & Increased Mistrust of Institutions

Residential segregation also exacerbates political polarization and public mistrust of institutions. 

Writing for Bloomberg CityLab shortly before the 2016 U.S. presidential election, urban studies professor Richard Florida noted that geography was increasingly predictive of political affiliation. 

Democratic voters cluster in cities and inner suburbs, while Republican voters favor lower-density geographies. This self-sorting creates bubbles of relative ideological homogeneity. That often manifests in antagonistic relations between local and state leaders, which came to a head during the COVID-19 pandemic in states including Texas and Wisconsin. 

It also leads to dysfunction in state and federal governments and coarsening public discourse. A 2016 study by researchers at the University of Mississippi and Stony Brook University, SUNY, found that the percentage of positive political ads declined from 90% during the 1960 U.S. presidential campaign to less than 15% during the 2012 presidential campaign.

Final Word

Selecting the “best” neighborhood is a fundamental part of finding new housing. Every prospective renter or homebuyer gives some thought to the characteristics of the communities they consider moving to and ranks them based on priorities like access to quality schools, open space, or urban amenities.

Few prospective renters and homebuyers think much about why certain communities have characteristics that make them desirable. They also never wonder why those same communities are often less accessible to those the Fair Housing Act exists to protect, from persons with disabilities to historically marginalized racial and ethnic groups. 

That’s understandable. The exercise is a discomfiting one, but it’s also necessary. 

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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 12 Best Tech Stocks to Buy for 2022

A multiyear bull market in the technology sector could be on shaky ground in 2022. So while in most years, investors might succeed with a broad-indexed approach to the sector, it might pay to be a stock picker in the space this year.

A smart place to start: our 12 best tech stocks for 2022.

Technology faces an uphill climb this year for several reasons. Most notably, at 27.9 times the coming year’s earnings estimates, tech is the second-priciest sector in the market, behind only consumer discretionary (31.1). And that’s just the sector average – it’s not uncommon to see tech stocks trading at triple-digit forward price-to-earnings (P/E) ratios.

Also noteworthy are the actions of the Federal Reserve. With inflation hitting levels not seen since the early 1980s, the U.S. central bank has taken a hawkish tone. Easy monetary policy is likely to tighten up over the coming year; the Fed itself anticipates three rate hikes to its benchmark rate in 2022, which would certainly cut into the sector’s fat margins.

But if you can stand a little heat, technology still looks like one of the best places to generate excess returns.

“Valuations still look expensive relative to the S&P 500,” say RBC Capital Markets strategists in their 2022 outlook. However, “Tech ranks the best among all sectors on our quality metrics, ranking at or near the top for all factors that we evaluated.”

Read on as we unveil our 12 best tech stocks to buy for 2022. Every stock here is a member of the Russell 3000, which covers most of the investable U.S. market. Moreover, each stock here receives a consensus Buy rating, according to analysts surveyed by S&P Global Market Intelligence. This list covers a wide range of approaches, from trillion-dollar tech behemoths to recent initial public offerings (IPOs) looking to disrupt established technologies.

Data is as of Jan. 2. Analyst opinions and consensus ratings from S&P Global Market Intelligence. Stocks are scored on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into Hold recommendations. Scores higher than 3.5 equate to Sell ratings, while scores equal to or below 2.5 mean that analysts, on average, rate a stock as being a Buy. The lower the score, the stronger the recommendation. Stocks listed in reverse order of analysts’ consensus recommendation.

1 of 12

International Business Machines

IBM buildingIBM building
  • Market value: $119.9 billion
  • Dividend yield: 4.9%
  • Analysts’ opinions: 4 Strong Buy, 1 Buy, 12 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.47 (Buy)

The past decade has not been kind to shareholders of International Business Machines (IBM, $133.66). The stock price has declined from the $180s to the $130s – meanwhile, the broader market has posted a gain of nearly 280%.

IBM’s biggest missteps were missing the early opportunities in the cloud and fumbling its efforts with artificial intelligence (AI). But investors shouldn’t through in the towel. The company has been making smarter moves of late that should boost the fortunes of this legacy tech name.

Among them: IBM recently spun off Kyndryl Holdings (KD), which was its information technology outsourcing division. The business had long lagged because of low margins and intense competition.

Also, CEO Arvind Krishna, installed in April 2020, has focused on becoming the leader in the hybrid cloud business, which he believes is worth more than $1 trillion worldwide.

IBM is positioned nicely here. The company has a deep portfolio of infrastructure software that can manage public and private clouds as well as traditional datacenters. The $34 billion acquisition of Red Hat is key to this this strategy. The business is the largest provider of open-source software for the enterprise, with applications for virtualization, integration, process automation and more.

As the recent AWS outage showed, there are considerable risks relying on one public cloud platform. Businesses simply need high IT stability. Private clouds and data centers may also be better options for certain applications because of security.

IBM reported more than 3,500 hybrid-cloud customers in October, up from 3,200 in July.

“The more favorable business mix resulting from nurturing growth markets and spinning off Kyndryl is expected to drive strong free cash flow generation, even on a substantially lower revenue base,” says Argus Research analyst Jim Kelleher, who rates shares at Buy.

The stock is also dirt-cheap, at a forward price-to-earnings (P/E) ratio of just 11 versus nearly 28 for the technology sector. IBM also is a rarity among 2022’s best tech stocks in that it’s a Dividend Aristocrat – one that has raised its payout for 26 consecutive years and currently yields nearly 5%.

2 of 12


concept art for Dropboxconcept art for Dropbox
  • Market value: $9.4 billion
  • Dividend yield: N/A
  • Analysts’ opinion: 2 Strong Buy, 3 Buy, 4 Hold, 1 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.40 (Buy)

Dropbox (DBX, $24.54) came public in March 2018 to a lot of investor excitement. The file-hosting company was growing quickly and seemed primed to disrupt the storage industry.

Returns, unfortunately, have been meager (indeed, negative!) since then amid competition from companies large and small, including mega-caps such as Alphabet (GOOGL) and Microsoft (MSFT). But the prospects for Dropbox finally appear to be improving.

Dropbox has been expanding its services, including the likes of digital signature program HelloSign, as well as DocSend, which allows for the secure sharing of business documents. DBX also has been aggressively building out offerings for remote workers, including video, collaboration and feedback.

Dropbox has scale to work with, boasting a massive user base of more than 700 million registered users. That means even a small increase in average revenue per user (ARPU) can really move the needle.

Another thing that could move the needle on DBX shares is a little activist agitation. Investor Elliott Management reportedly snapped up a double-digit stake in DBX last summer, and the investment firm has built a history of solid returns in the tech world.

Wall Street analysts are also getting upbeat on Dropbox stock. For example, Jefferies has a price target of $40, which compares to the current stock price of $24. The analysts believe there are multiple drivers, such as the addition of new features, M&A opportunities and the move to provide industry-specific applications.

3 of 12


concept of cloud servicesconcept of cloud services
  • Market value: $2.9 billion
  • Dividend yield: N/A
  • Analysts’ opinion: 3 Strong Buy, 2 Buy, 6 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.27 (Buy)

In 2011, Internet pioneer and venture capitalist Marc Andreessen wrote an article in the Wall Street Journal called “Why Software Is Eating The World” that certainly looks prescient now. Software has led to the disruption of numerous industries, and companies from virtually every sector have been forced to adopt software in several ways just to keep the lights on.

However, this has translated into a growing demand for systems to manage all that software. That means dealing with global teams, different platforms, real-time changes and other hurdles.

Enter JFrog (FROG, $29.70). This company has built a platform that manages the development, deployment and monitoring of software, whether it’s in an on-premise or cloud environment.

JFrog’s go-to-market strategy has traditionally been organic, relying on adoption from developers. It has delivered growth this way, but it did make it difficult to land larger enterprise deals.

Lately, however, the company has bolstered its direct sales force, in part helped by the influx of funds from its 2020 IPO. JFrog ramped up spending on sales and marketing to $24.3 million in the latest quarter, up from $14.8 million in the year-ago quarter. However, during this period, the number of customers with annual recurring revenues (ARR) greater than $100,000 spiked by 49% to 466.

“We believe the company is well positioned to sustain 30%-plus revenue growth in coming years as it leverages its unique position within the DevSecOps workflow,” say Stifel analysts, who upgraded the stock to Buy from Hold in December. “Building off its core Artifactory binary management solution, the company has assembled a growing suite of solutions to help customers more effectively and efficiently build, manage, distribute and secure their respective applications.”

And Stifel’s price target of $45 per share would translate into a 52% return across 2022. If achieved, that would easily put JFrog among 2022’s best tech stocks to buy.

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Cisco Systems

Cisco Systems buildingCisco Systems building
  • Market value: $268.0 billion
  • Dividend yield: 2.3%
  • Analysts’ opinion: 8 Strong Buy, 6 Buy, 13 Hold, 1 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.25 (Buy)

Wall Street didn’t like what it saw out of Cisco Systems (CSCO, $63.37) when it reported earnings in November, selling shares by about 8% in one day. Among the concerns were supply-chain issues, which hampered growth.

But CSCO has rebounded nicely since then, and it’s nicely positioned to be among the best tech stocks of 2022.

Supply-chain issues, of course, imply that the issue isn’t demand – it’s supply. This shouldn’t be a surprise. 5G rollouts, cloud computing, security and more all require networking infrastructure, and that’s what Cisco delivers.

What also makes CSCO attractive is the recent transformation of its underlying business. Cisco has focused more on subscription revenues; now, about 30% of sales come from software, such as its security offerings and WebEx platform. The result is higher growth and more predictability.

“Cisco is successfully shifting its mix away from over-reliance on hardware and toward an integrated software, hardware, and services solution,” says Argus Research’s Kelleher, who rates the stock at Buy. “On that basis, Cisco has been able to maintain high pretax margins while continuing to generate strong free cash flows. We believe that category leader Cisco represents … a core long-term holding.”

Meanwhile, a forward P/E of 17 looks reasonable compared to both the sector and its long-term growth prospects. CSCO stock also offers up an above-average yield of 2.3%.

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video conferencevideo conference
  • Market value: $1.9 billion
  • Dividend yield: N/A
  • Analysts’ opinion: 6 Strong Buy, 2 Buy, 6 Hold, 0 Sell, 1 Strong Sell
  • Analysts’ consensus recommendation: 2.20 (Buy)

Zoom (ZM) gets much of the attention when it comes to videoconferencing, but other players are worth considering – and some offer up much cheaper valuations.

For instance, 8×8 (EGHT, $16.76) trades at a mere three times sales versus about 14 for Zoom.

Founded in 1987, 8X8 initially developed hardware systems for videoconferences. But the company has since broadened its product line to software, such as Voice over Internet Protocol (VoIP), video and messaging. 8X8 has traditionally catered to smaller customers, but it has gone upmarket over the past few years. It currently boasts 871 customers with ARR of more than $100,000, compared to 670 customers at the end of 2020.

Also bullish is 8×8’s December announcement that it had spent $250 million to purchase Fuze, a top provider of cloud-based communications for the enterprise. Fuze is expected to add about $130 million in revenues, bring the paid customer base up to 2.4 million from 2 million, and bring enterprise customers up to 1,200 from 900.

William Blair analysts are among those in the Buy camp given “the strengthening growth profile, improving margins and increased penetration of the global enterprise cloud communications market.”

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keyboard lockkeyboard lock
  • Market value: $15.2 billion
  • Dividend yield: 1.9%
  • Analysts’ opinion: 3 Strong Buy, 2 Buy, 2 Hold, 1 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.13 (Buy)

In 2019, security software developer Symantec sold its enterprise security business to Broadcom (AVGO) for $10.7 billion. The remaining entity, which would focus on consumer cybersecurity, changed its name to NortonLifeLock (NLOK, $25.98).

Unfortunately for shareholders, the move hasn’t resulted in much upside since then. But this could change soon thanks to its August move to buy Europe-based consumer cybersecurity software provider Avast for more than $8 billion.

On a combined basis, NortonLifeLock will have more than 500 million users and generate about $3.5 billion in revenues. The deal should result in about $280 million in annual gross cost synergies. And better still: The company expects the acquisition to be double-digit accretive to earnings per share (EPS) within the first full year after the deal closes.

Global consumer cybersecurity is an underpenetrated market, with NortonLifeLock analysis saying that less than 5% of the world’s 5 billion internet users have paid subscriptions.

NLOK doesn’t have a large analyst following, but its overall rating puts it among the best tech stocks to buy for 2022. Among the bulls is Argus Research, which has the stock at Buy with a $32 price target over the next 12 months.

“The company has expanded its product line from the venerable Norton security firewall business into personal identity protection with the LifeLock acquisition, and is now expanding further in this area with new add-on and standalone products. Avast will add personal privacy-related solutions to the mix,” says Argus Research analyst Joseph Bonner. “At the same time, NLOK has been converting from a transactional perpetual license model to a typically more profitable recurring fee-based model with an initial ‘freemium’ offer. It has also begun to invest in both direct-to-consumer marketing and indirect sales through institutional partners like AAR.”

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Pros Holdings

future artificial intelligence robotfuture artificial intelligence robot
  • Market value: $1.5 billion
  • Dividend yield: N/A
  • Analysts’ opinion: 4 Strong Buy, 1 Buy, 4 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.00 (Buy)

Founded in 1985, Pros Holdings (PRO, $34.49) is one of the early players in the AI market, though at the time of its founding, the technology was typically referred to just as “analytics.” The company developed pioneering systems that helped airlines with revenue management – systems that required sophisticated algorithms and huge sums of data.

Pros has since continued to build its platform and expanded into other industry verticals, including autos, B2B services, food, chemicals, energy and healthcare.

Acquisitions have been helpful in Pros’ expansion. Its latest deal, announced near the end of November, was for digital offer marketing pioneer EveryMundo, which helps its customers grow their reach and better engage customers.

Pros, which generated $247 million in Q3 2021 revenue, estimates the global market (which it calls underpenetrated) at $30 billion. And that global market could grow given the potential for AI to transform just about any industry.

PRO shares have struggled over the past few years, thanks in part to a COVID-related hit to its travel business. But a potential rebound could make it one of the best tech stocks for 2022.

“We believe Pros is well positioned now for FY22 and beyond as ARR growth returns to the mid- to upper-teens, driven by an improving mix of Travel-related ARR,” says Needham analyst Scott Berg, who rates the stock at Buy.

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A picture of a data center. A picture of a data center.
  • Market value: $4.1 billion
  • Dividend yield: N/A
  • Analysts’ opinion: 7 Strong Buy, 3 Buy, 7 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 2.00 (Buy)

When it comes to AI, sophisticated algorithms typically get most of the attention. The irony? These technologies – which include machine learning and deep learning capabilities – are fairly standard. Since many have come from the academic world, they are often freely available as open-source.

Interestingly, a main differentiator for AI is the data. It often takes a lot of work to clean and structure it, and if not done right, the results can fall way off the mark.

This is why companies use offerings from companies such as Alteryx (AYX, $60.50). This software automates many of the manual data processes and helps track models. This can save time and money – and given the challenges of hiring data scientists, companies don’t want these vital personnel wasting their talent on tedious functions, no matter how vital.

Alteryx has posted meager financial results of late, but this could be set to turn around in 2022. One reason for this is the expected early 2022 launch of the Designer Cloud, which should help boost growth. AYX also has taken steps to improve its sales force, including offering better incentives.

“We are positive on the long-term strategic value of Alteryx’s platform, its large and growing [total addressable market], expanding partner leverage and increased focus on G2K opportunities,” says Oppenheimer, which rates the stock at Outperform (equivalent of Buy) and gives it a $105 price target, implying 73% upside from current levels.

Needham agrees, calling AYX “Buy-rated for patient, long-term oriented investors.” But even 2022 should be fruitful, given its analysts’ 12-month price target of $97 (60% upside).

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Bentley Systems

person on laptopperson on laptop
  • Market value: $13.7 billion
  • Dividend yield: 0.3%
  • Analysts’ opinion: 4 Strong Buy, 1 Buy, 3 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.88 (Buy)

Bentley Systems (BSY, $48.33), a software company that develops sophisticated modeling and simulation software for engineers, was founded in 1984 but only came public in September 2020.

And it did so in a pleasantly different way. The founders actually gave all of the proceeds from the offering to its 4,000-plus employees. Not only was it an amazing gesture, but it showed that Bentley Systems didn’t need the money. It already generates a substantial amount of free cash flow (the cash remaining after a company has paid its expenses, interest on debt, taxes and long-term investments to grow its business), which was expected to hit $260 million in 2021.

Bentley’s technology helps with a myriad of projects, whether for bridges, rail, transit, building, utilities and mining – just to name a few.

The future looks bright. The Biden administration’s massive infrastructure bill will help provide additional demand within the U.S. But BSY should also see upside from increased infrastructure investment in Europe and Asia.

As one typically expects from high-potential tech stocks, Bentley’s shares aren’t cheap, trading at a whopping 16 times sales. But given an average price target of $69 per share – implying more than 40% price growth over the next 12 months or so – analysts clearly believe the company deserves to trade at a premium.

Mizuho analyst Matthew Broome, who has a Buy rating and $74 price target on shares, says the company “is well-positioned to deliver greater penetration within the vast global market for constructed infrastructure. Furthermore, we believe its market dynamics are extremely attractive, which should underpin profitable long-term growth.”

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Micron Technology

  • Market value: $105.2 billion
  • Dividend yield: 0.2%
  • Analysts’ opinion: 22 Strong Buy, 6 Buy, 6 Hold, 1 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.60 (Buy)

Traditionally, memory chip companies go through extreme boom-bust cycles. That has resulted in stomach-churning stock volatility that has dissuaded many would-be investors.

But this has moderated somewhat over the past decade. You can thank powerful megatrends in AI, the Internet of Things, edge computing, 5G and more that has powered enormous demand for memory chips that many have referred to as a “supercycle.”

Great news for Micron Technology (MU, $93.15), a global leader in the development of sophisticated DRAM and NAND memory chips. These and other storage solutions represent some 30% of the semiconductor market.

A key competitive advantage for Micron is its massive infrastructure, which includes manufacturing plants and research-and-development centers across 13 countries. It also sports a portfolio of more than 47,000 patents.

Micron is hardly done innovating, either. The company expects to shell out more than $150 billion over the next decade to bolster its manufacturing and R&D capabilities.

Deutsche Bank is among the outfits that are bullish on Micron, with recent supply-chain checks showing “robust demand especially for server DRAM with enterprise IT spending continuing to recover and hyperscale customers planning to invest aggressively for growth.”

Add to that a reasonable forward price-to-earnings ratio of less than 10, and MU could be one of the best tech stocks to buy in 2022.

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man with pen and laptopman with pen and laptop
  • Market value: $11.2 billion
  • Dividend yield: N/A
  • Analysts’ opinion: 7 Strong Buy, 7 Buy, 0 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.50 (Strong Buy)

Taxes can be boring and tedious, but just about every business has to deal with them. That makes taxes a massive industry – one that constantly changes over time as federal, state and local tax laws change.

Good news for Avalara (AVLR, $129.11), a developer of software to help businesses with tax compliance.

Avalara currently has more than 30,000 customers. Its extensive product line helps with sales and use taxes, value-added tax, excise taxes, goods and service tax, custom duties and indirect taxes, among other things. The Avalara platform processes billions of transactions every year, and files more than 1 million returns annually.

Growth is still running at a brisk pace, with most-recent-quarter revenues jumping 42% to $181 million. The company also is in a good financial position – it generated $11.4 million in operating cash last quarter, and total cash stands at $1.5 billion versus $960 million in long-term debt.

Avalara has bolstered some of its offerings via acquisitions. For instance, in October, AVLR announced it had acquired CrowdReason, which provides cloud software that helps with property taxes. Earlier in the month, Avalara said it bought Track1099, which helps companies manage, file and deliver IRS forms.

The stock has lost roughly a third of its value since early November, bringing shares to much more palatable levels. Mizuho, for instance, has a $220 price target on AVLR, implying 70% upside over the next 12 months alone. They are bullish on Avalara’s strategy of “incorporating international geographies, up/down-market penetration, deeper relationships with marketplaces and ecommerce partners, and strategic M&A to drive long-term revenue growth.”

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Microsoft buildingMicrosoft building
  • Market value: $2.5 trillion
  • Dividend yield: 0.7%
  • Analysts’ opinion: 30 Strong Buy, 12 Buy, 2 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.36 (Strong Buy)

Microsoft (MSFT, $336.32) almost feels like it’s back to its glory days of the 1980s and 1990s. Certainly, it can seem to do no wrong in analysts’ eyes, who rate it as one of the absolute best tech stocks to buy as we enter 2022.

Even with its massive scale, Microsoft continues to churn out strong revenue growth. In its latest quarter, for instance, MSFT sales grew by 22% year-over-year to $45.3 billion, resulting in a 48% spike in net income to $20.5 billion.

Since CEO Satya Nadella took the CEO spot in 2014, he has smartly focused Microsoft on capturing the cloud. He has built Azure into the second-largest cloud platform (only behind Amazon’s AWS, and has retooled legacy products such as Office, which is now heavily cloud-based.

Better still: The cloud opportunity is still in the earlier innings. Research firm IDC forecasts that cloud spending will climb from $706.6 billion in 2021 to $1.3 trillion by 2025. One of the drivers is the new reality of remote work, which requires substantial investments in new technologies of all sorts. The cloud, however, helps lower costs and allows companies to leverage artificial intelligence.

Microsoft has a few other potential growth drivers. It owns LinkedIn, the largest social network for professionals at about 800 million users generating more than $10 billion in revenues. And it also boasts the Xbox franchise, which could be key in leveraging new trends such as the metaverse.

“At 35 times our 2022 free cash flow estimate, Microsoft shares are in our view still reasonably valued given the revenue/EPS visibility and strong Azure growth,” say UBS analysts Karl Keirstead and Taylor McGinnis, who rate MSFT stock at Buy.