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Apache is functioning normally

September 16, 2023 by Brett Tams

College is expensive, with the yearly cost of attendance at some private schools now topping $75,000. Looking at these numbers, you may wonder how you will ever possibly afford to send your kids to college.

But before you get too disheartened, it’s important to understand that a college’s published “sticker price” is often very different from what you actually have to pay (known as the net price). What’s more, just putting a small amount of money aside each month in a college fund can add up to a significant sum over time, especially if you take advantage of a tax-advantaged college savings account.

Read on to learn key things about how to save for college — from estimating how much you need to set aside to picking the right college saving fund.

Determining the Cost of College for Your Children

Tuition costs vary widely, depending on the type of school your child wants to attend, the type of degree they’ll earn (bachelor’s or associate), and even geographic location.

According to the College Board, the average annual college tuition costs for the 2022-23 school year were:

• $10,940: public four-year in-state (a 1.8% increase from 2021-21)

• $28,240: public four-year out-of-state (a 2.2% increase from 2021-22)

• $39,400 : private nonprofit four-year (a 3.5% increase from 2021-22)

• $3,860: public two-year in-district (a 1.6% increase from 2021-22)

The College Board also studied the annual, inflation-adjusted change in college tuition and fees over the last decade:

• -1%: four-year public schools

• -4%: two-year public schools

• +6%: four-year private (nonprofit) schools

If your kids are young, you may wonder how much college will cost when it’s time for them to head off. Fortunately, there are many online calculators that can help you figure this out, taking factors like your child’s age, the type of school you expect your child to attend, and the expected rise in the cost of college into account.

💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

Net Price vs. Sticker Price

Every college and university, private or public, lists a sticker price, which is also known as the cost of attendance (COA). This price includes tuition, fees, room and board, books, supplies, and miscellaneous expenses.

The net price, on the other hand, is what a student would actually pay, after factoring in any financial aid provided by the college and the federal government.

Financial aid is based on your family’s income, as well as the student’s academic achievement. Aid is offered in the form of grants, scholarships, work-study, and sometimes federal student loans. Schools offer aid based on financial need, a student’s “merit,” or a combination.

When you fill out the Free Application for Federal Student Aid (FAFSA), you will receive a Student Aid Index, or SAI. (Previously, this was called the Estimated Family Contribution, or EFC.) Colleges use this number to determine the amount of financial aid they award to accepted students. Typically, colleges come up with a financial aid package to help bridge the gap between the school’s sticker price and what your family can afford to pay.

Indeed, sometimes colleges with the highest sticker price end up costing less than a college with a much lower sticker price.

Recommended: How to Start Saving for Your Child’s College Tuition

Using a Net Price Calculator

Fortunately, you can get an idea of what the net price will be for a particular college before you apply by using the government’s net price calculator. This tool can help students and their families get a better idea of the cost of college, after subtracting scholarships, grants, and other financial aid.

Keep in mind, though, that the net price calculator is going to require specific details about your income and assets, so the more transparent you are regarding your personal finances, the more precise your calculation is likely to be.

When is a Good Time to Start Saving for Your Child’s Education?

Generally, the sooner the better. In fact, it can be wise to set up and start making small monthly contributions to a college savings fund soon after your child is born.

For some familes, however, it may not be possible to start saving that early. It’s equally important to pay attention to your other expenses and family’s needs. For example, you may want to prioritize building an emergency and paying off expensive credit card debt over saving for college. It’s also a good idea to make sure you’re on track with retirement savings. At the end of the day, students are able to get loans for an education but it’s not possible to take out loans to fund retirement.

Some Options for Saving

529 Plan

A 529 education savings plan is an investment account that can be used to save for the beneficiary’s qualified education expenses. The funds can be used to pay for higher education or private elementary or high schools. A 529 plan allows your savings to grow tax-free, and some states even offer a tax deduction on your contributions.

All 529 plans are set up at the state level. However, you don’t have to be a resident of a particular state to enroll in its plan.

If your child decides not to go to school, it’s possible to roll the account over into the name of another family member. If the funds aren’t used for education-related expenses, there may be taxes and penalties.

Family members and friends can also contribute to a child’s college savings plan. They may choose to make deposits to an existing 529 account or set up one themselves, naming a beneficiary of their choice.

Some 529 savings plans offer an age-based investment option to automatically adjust the risk of the investment strategy as the beneficiary gets older. This type of investment approach might be similar to how a target date fund works in your retirement plan.

Regular Savings Accounts

You can also save for your child’s college tuition using a savings account at a traditional bank, credit union, or online bank. Just keep in mind that interest rates, even for high-yield savings accounts, tend to be relatively low. Plus, savings accounts don’t offer the tax advantages you can get with some other college savings vehicles.

It may be difficult to reach education financing goals through a traditional savings account alone since the interest rate might not keep pace with the inflation of college expenses.

Roth IRAs

Although generally used for retirement savings, a Roth IRA can be used to pay for the cost of college. Contributions to a Roth IRA are made with after-tax dollars but earnings grow tax-free.

Generally, to withdraw the earnings from an IRA without paying a penalty (or taxes), the account holder needs to be at least 59 ½ years old. However, if you made the first contribution to your Roth IRA at least five years before, you can also withdraw the growth penalty-free for qualified education expenses, including tuition, books, and supplies.

Keep in mind that, while there may not be an early withdrawal fee, the earnings withdrawn may still be subject to income tax.

Other Options to Pay for College

Sometimes saving alone isn’t enough to cover the cost of college. In that case, there are other funding options available that could help students and their families pay for college.

Private Scholarships

Scholarships are essential free money for college because you don’t have to pay them back. Scholarships are typically merit-based and are offered through a variety of organizations and institutions, including nonprofits, corporations, and even directly from universities and colleges. In some cases, scholarships are awarded on the basis of nationality, ethnicity, or economic need. There are a number of searchable databases that compile different scholarship opportunities.

Federal Financial Aid

When you complete the FAFSA each year, you will become eligible for federal financial aid. This can include scholarships, grants, work-study, and federal student loans (which may be subsidized or unsubsidized).

Private Student Loans

If savings and financial aid aren’t enough to cover the full cost of college, you can fill in gaps using private student loans. These are available through private lenders, including banks, credit unions, and online lenders.

Loan limits vary from lender to lender, but you can often get up to the total cost of attendance, which gives you more borrowing power than with the federal government. Interest rates vary depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.

Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically come with federal student loans.

💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

The Takeaway

College tuition can be a daunting expense. Setting up a dedicated account to save for college tuition can help make the process much more manageable. There are accounts, like 529 plans, that are designed specifically to pay for educational expenses.

In addition to savings, students and their families may rely on scholarships, grants, federal student loans, or even private student loans to pay for tuition and other educational expenses.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Apache is functioning normally

September 15, 2023 by Brett Tams

Whether you attend a public or private college—in your home state or another—costs are higher than they’ve ever been. In fact, college tuition costs have nearly tripled over the last 40 years, according to Bankrate.

“The cost of college has gotten completely out of control,” agrees Maggie Germano, a financial coach. And it’s not only tuition. “The cost of room and board, books, and other necessary expenses have been going up, too. This can end up putting students and graduates in lots of debt that may make it difficult for them to get ahead in life.”

That’s why earning money as a student in college can be so beneficial to your financial health, both for today and tomorrow. Not only is the money helpful, but it also gives you a chance to build a budget and manage your own finances—critical skills for being financially secure throughout life.

So, how to make money as a college student? The reality is that it can be difficult for students to earn money while keeping up with their studies. But by taking advantage of scholarship opportunities and choosing part-time jobs for students that fit with their schedule, undergrads can enter the next stage of life with a more stable fiscal foundation.

How can students help pay for college?

It’s never too early to begin planning for the cost of college. Even if your parents started a 529 college savings plan for you when you were young, you can look for additional opportunities to lighten the financial load.

The two most common ways to do that, Germano says, are scholarships and financial aid.

Scholarships and grants

“Students should take steps to apply for as many scholarships and grants as they can even before the start of their senior year of high school,” Germano says. “This will help lower the cost burden for them once they begin school.”

Students should speak with their high school guidance counselor to learn about available local, state, and national scholarship programs. Germano also suggests they take the initiative to research online, as new programs are constantly being created.

Financial aid and loans

Many colleges offer financial aid programs for students from lower socioeconomic backgrounds. While it’s important to speak to your university’s financial aid office directly, students should also consider filling out the FAFSA form, as many schools rely on it to assess eligibility for assistance. FAFSA stands for Free Application for Federal Student Aid, and by filling it out, students will learn which federal aid and loan programs they may qualify for.

Even with a scholarship and other types of aid, many students will still need to take out a student loan, Germano says.

Be cautious, though. “Most students take out student loans without understanding the terms or how much it will really cost over time,” she says. “Talk to your parents, guidance counselor, or other trusted adults about this process so that you’re going into it with as much understanding as possible.”

What bank accounts do students need?

Before applying for jobs, students should be sure they have a place to put their money. Germano suggests students open a checking account and a savings account so they can best manage their money in both the near and long term.

Rewards checking account

Opening a rewards checking account is a great place to start because it can provide cash-back benefits similar to credit cards—and offer the flexibility to make purchases online and with your debit card.

Earn cash back with your debit card

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Just make sure your checking account features overdraft protection in case you accidentally overdraw your account.

High-yield savings account

Many students find it difficult to keep up with their bills, let alone put money away for savings. It’s important to make an effort, however, since any money deposited in a high-yield savings account can earn compound interest, potentially leading to significant growth over time.

You can also use different high-yield savings accounts to save for multiple savings goals, such as buying a car, paying off student loans, and building an emergency fund.

How can you find the best part-time jobs for students?

If you’re wondering how to make money as a student, a smart first step is to see what part-time jobs are available. The right part-time job can provide you with a reliable income without having to sacrifice time for studying and socializing. Check out these ideas for both on-campus and off-campus part-time jobs for students:

On-campus jobs

Finding a job on campus is a convenient option for how to make money as a college student. You won’t have to worry about commuting, and the workplace is designed to accommodate your student schedule.

In addition to searching around your campus, Germano recommends finding out if you qualify for the federal work-study program at your school, based on your FAFSA application.

To get your wheels turning, Germano suggests these on-campus job ideas:

Resident assistant
Administrative assistant for a department office
Campus bookstore associate
Campus café barista
Tour guide
Tutor
IT assistant
Mail room assistant
Research assistant
Dining hall worker

Off-campus jobs

Consider applying for a job off campus. Restaurants, theaters, and stores near campus are often open to hiring students, though these jobs may not be as accommodating as those on campus.

Germano recommends asking upperclassmen what the best part-time jobs for students are. They may point you in the right direction and could even be willing to give you a referral.

You can also look into remote part-time jobs for students that you can do from your dorm room.

What is a good part-time job for students online?

If you’re wondering how to earn money online for students or how to make money from home for students, you can check job boards for part-time remote work.

Translation work, being a digital assistant, and tutoring are some potential online jobs for students to earn money.

If you speak two or more languages, then translation work could be one of the first places to turn when looking for online part-time jobs from home for students. These roles often involve translating videos, podcasts, or documents—and, if you have knowledge in the medical or legal sphere, it can be more lucrative.

Digital assistants can provide a range of services, from social media management to responding to email or scheduling appointments. These jobs may require a certain level of availability, so be certain to discuss the expectations of this job so you know if you can balance the role with your classes and social life.

If there’s one or more subjects where you really excel, online tutoring could be a good way to make extra money without leaving your dorm. It can also be rewarding to help your fellow students find success.

Can side hustles help with earning money as a student?

If you can’t consistently work at a part-time job, consider more convenient ways to make money as a student—like a side hustle.

There are plenty of side hustles to choose from, including driving for a ride-share app, house sitting, and pet sitting.

Many modern side hustles can be managed through an app, offering a lot of flexibility. It means you can adjust your work schedule based on when you’re available, for example pulling back during finals week so you have time to study. It’s how to make money as a college student without having to take on too big a commitment.

How can college students manage their time between work and school?

It’s important to make sure your money-making ventures don’t interfere with your studies.

“Some students need to work in order to live and support themselves in school, so those students will have to work as much as will support them,” Germano says. “But for those who have more flexibility, try to be realistic about how much work you can take on without sacrificing your schooling and other responsibilities.”

She recommends reducing your work hours if your grades are being negatively affected. One tip: Try designating specific blocks of time for your academic tasks. With your work and school time clearly defined, you can then enjoy any free time you have to the fullest, without stressing about how you’ll get everything done.

Germano says it’s also important to set realistic goals. If anything, plan for a little more time than you think you might actually need to write an essay or study for a test. Finishing early will be more motivating than failing to accomplish a task in time.

You can also try different time management and finance apps. There are plenty of free apps out there that can help you organize your time and money.

Get ready for a fun, financially secure college experience

While keeping your finances in line and building a strong foundation for the future is essential, you should be enjoying this time of your life.

“Many students who have to work to put themselves through school can have a difficult time balancing work and school in a healthy, sustainable way,” Germano says. Finding time for fun and relaxation is critical and should be top of mind to avoid burnout and maintain positive mental health.

With these tips, you can find the way to make money as a college student that works best for you. Once the cash starts coming in, be sure you know how to budget as a college student and how to save money as a student. Earning extra money is only one part of money management for students. You also want to know that every dollar is being spent wisely.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

Discover Bank does not sell non-deposit investment products (“NDIP”) or provide recommendations regarding NDIP. NDIP are NOT FDIC insured.

Source: discover.com

Apache is functioning normally

September 13, 2023 by Brett Tams

When it comes to investing, your time horizon refers to the desired amount of time before you reach a financial goal. It’s one of the most important factors in your financial plan because the amount of time you have to reach your goal — whether it’s 3 months or 30 years — influences how much risk you want to take on, and therefore which investments you’ll choose.

In fact, a good way to think about your investing time horizon is like the leg of a table. Four key decisions uphold your investment portfolio, and the first is how much time you have, ideally, to attain a certain goal. The other three cascade from there: your risk tolerance, your investment choices, and your asset allocation.

Recommended: Investment Strategies for Beginners

What Is a Time Horizon?

What is an investment time horizon? In short, it is the expected time available to hold an investment or to achieve a financial goal.

First, an investing time horizon can refer to the amount of time that an investor is planning on holding an investment. For example, an investor may be planning to hold an investment for 10 years. Therefore, the investment horizon is 10 years.

Or, investors can think of a time horizon as a type of deadline: e.g. how long they plan to work toward a goal. For example, one common goal is to save and invest for retirement, which may be decades away.

This investing time horizon will likely be determined by the age of the investor and how much progress they are making towards their retirement goal.

An investment time horizon could also be short, long, or somewhere in the middle.
💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

Why Is Time Horizon Important?

Most financial goals have a time horizon attached to them implicitly, even if you haven’t spent much time thinking about it. If you’d like to buy a home, you might be thinking 2-3 years — or 10 years. If you’d like to buy a car, you might be thinking six months to a year. It all depends.

What drives the time horizon is the urgency of your goal. If you need a bigger home as soon as possible for your growing family, the goal of saving for a downpayment might be a short-term goal, with a shorter time horizon. If you want to buy a car, but you want to pay all cash, you might need a few years to save that money — so that goal would have a longer time horizon.

Goals like saving for college or retirement typically take years, and those time horizons are longer.

Once you can identify a realistic time horizon for the goal you’re investing toward, you can think about your investment strategy in more detail. Understanding the difference between short- and long-term investments is important, because some strategies will support your goals better than others.

Time Horizon and Risk Tolerance

Deciding on a short or long time horizon can help inform (or influence) your risk tolerance. Your tolerance for risk is, as it sounds, how much investment risk you can tolerate, when risk = the risk of losing money. If you can’t sleep unless you know your portfolio is relatively secure, and you’re on edge when markets are bumpy, you probably have a low risk tolerance.

Investors who have a low risk tolerance are considered risk averse, and they may prefer more conservative investments, like bonds. Low-risk investments like bonds and certificates of deposit (CDs) are less volatile, but they typically also have lower returns than higher-risk investments like stocks.

If you have a shorter time horizon of a year, and you don’t want to risk losing money, you may choose lower-risk investments like short-term bonds or types of CDs.

But if you have a higher risk tolerance, and you want to take on more risk with the hope of seeing higher returns, you might want to invest in stocks, mutual funds, or exchange-traded funds (ETFs).

Now let’s say you have a low risk tolerance, but you have a long time horizon to save for retirement: say 25 or 30 years. With a time horizon of three decades, your portfolio has more time to recover from periods of volatility, so you might feel more comfortable having a higher percentage of stocks in your portfolio, even though that increases your risk to some degree. It also increases your potential for growth over time.

This is often referred to as the risk-reward ratio, or a risk-reward calculation. Since no investment is genuinely risk-free, using a risk-reward ratio helps calculate the potential outcomes of any investment transaction — good or bad.

Recommended: 11 Golden Rules of Investing

Time Horizon, Risk, and Investment Choices

From the above examples, you can see that there is an interaction between the time you have until you achieve your goal, how much risk you’re willing to take on, and therefore what investment choices you might be open to.

Various investment types can exhibit different risk characteristics over different time periods. The stock market can be volatile during short time periods, like a month or a year. But over longer periods, the stock market generally continues to rise.

In fact, long-term investors may want to view risk through a different lens: If you don’t take on enough risk, you might not reach your investing goals. It is also possible to lose money by doing nothing, due to the effects of inflation. When cash just sits in low-interest accounts, it tends to lose purchasing power over time.
💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.

Asset Allocation and Time Horizon

The purpose of deciding on the time horizon for your goals, examining your risk tolerance, and selecting different investments is to then land on an asset allocation that makes sense for you.

Asset allocation is the investor’s decision to divide a portfolio among various asset classes. Popular asset classes can include different types of stocks, bonds, as well as cash and cash equivalents (e.g. money market funds).

Asset allocation typically has a large impact on the performance of a portfolio over time. So, once again, an investor’s time horizon and risk tolerance will influence not only the selection of certain securities, but the proportion of higher- and lower-risk investments in a portfolio.

Asset Allocation Formula

For investors saving for retirement, there’s a general rule of thumb for deciding asset allocation. Subtract your age from 110, and that’s how much an investor should allocate to stocks.

If an investor is 30, subtract 30 from 110, which is 80. Thus the investor might consider an allocation of 80% stocks, with the other 20% going to bonds and cash. Of course, this is just a general rule — each investor will likely need to use their discretion and evaluate their overall financial profile and risk tolerance as they make investing decisions.

Short-Term Investing Time Horizons

A short-term investing time horizon could be anywhere between zero and three years. Some examples of short-term goals include: saving up for a vacation, emergency funds, holiday gifts, or a down payment on a home.

For the most part, it makes sense to keep money for short-term goals in cash or cash equivalents, because the focus is generally on safety and liquidity — and investors won’t want to risk losing money that they’ll need relatively soon.

This can be especially true when the goal does not allow for any timing flexibility.

For example, say that you’re saving up for a down payment on a house in about six months. Because this is a short-term time frame, and because the objective is to make sure that the money is available for use in six months, it does not make much sense to subject this money to risky assets with high volatility, like stocks and bonds.

Cash can be held in a checking or savings account. This can be done with a traditional retail bank or an online bank account.

Another option to consider is a short-term CD at a bank or local credit union. Investors may be able to earn slightly more interest with a CD. Tread carefully, here: There may be a penalty to access money held in a CD before the maturity date.

For short-term goals that are flexible on timing, it may be possible to invest all or some of that money. For example, imagine an investor with the goal of starting a business in about three years.

Because they are flexible on timing, and willing to take on more risk in order to potentially see bigger gains, they may put some of their business start-up money into stocks or equity mutual funds or ETFs.

Recommended: Investing for Beginners

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Medium-Term Investing Time Horizons

A medium-term investing time horizon could be anywhere between three and 10 years. Examples of medium-term goals include: starting a family or paying for a child’s college education, or potentially a house remodel.

Investing in mid-term goals can actually be more complex than investing for both short and long-term goals.

Likely, an investor will want to consider a balanced approach in a diversified combination of investments. The nearer the goal, the more bonds and cash the investor will likely want to have. The farther out the goal, the more risk that an investor might take.

How much an investor allocates to equities (stocks) will depend on their comfort level with the stock market during a medium investing time frame, and their willingness to be flexible.

Long-Term Investing Time Horizons

A long-term investing time horizon is generally longer than ten years.

Examples of long-term financial goals include: paying for college, retirement, financial independence, creating an endowment, and building intergenerational wealth.

How should long-term money be invested? In general, longer investment time horizons allow for more risk — which may set the stage for higher potential returns. Therefore, it is possible to have the majority of long-term funds invested in the stock market or similarly risky asset classes, if the investor’s personal risk tolerance allows.

The notion of risk is complex during longer periods, however. With money that is saved and invested now to be held for use over the long-term, investors may have to contend with losing purchasing power to inflation, in addition to market volatility.

Inflation is the economic phenomenon of rising prices, which means that over time each dollar can buy less. Historically, the inflation rate has run at 2% to 3%, which means money that’s “earning nothing” is actually losing 3% each year. Therefore, one of the biggest risks for long-term investors may actually be acting too conservatively, too soon.

Example of an Investment Time Horizon

To recap the above, an investor’s time horizon depends on the goal in question. Not all goals have a specific time horizon, but those that do — like retirement or buying a home or paying for college — require careful planning.

In order to reach a specific goal with the needed amount of money, investors must take into consideration how much risk they are willing to take on, given the time allowed, and choose their portfolio investments and asset allocation accordingly.

Investment Time Horizon and Risk Types

Investor’s must contend with different types of risk, depending on the time horizon for their goal.

Market Risk

This is the most common and likely the most well-known type of risk: it’s simply market volatility. The more exposure you have to the equity markets (or any market with greater volatility, e.g. crypto, commodities, high-risk bonds) that puts you at a higher risk for losing money.

While market risk is a factor for most investments to some degree, time horizon obviously impacts how much market risk you’re exposed to.

Inflationary Risk and Investment Time Horizon

As noted above, a big risk factor for longer time horizons is inflation risk: The risk that your money won’t grow enough to keep up with inflation. If an investor has a 20-year time horizon, for example, and invests conservatively during that time, there is a risk that they won’t end up with enough growth.

Interest Rate Risk

Interest-rate risk is the risk that interest rates could rise, affecting the value of the fixed-income part of a portfolio. While interest rate changes can impact many investments, bond values fall as interest rates rise.

Investing With SoFi

Your investment time horizon is effectively a type of financial deadline for any given goal. Some time horizons are more flexible than others — and that’s important to know, because the amount of time you have may influence your risk tolerance and investment choices.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

How do you calculate your time horizon?

Your time horizon is simply the amount of time between now (or when you start investing for your goal) and when you hope to reach your goal. For example, if you’re 35 and you’re planning to retire at 65, your time horizon for that goal is 30 years.

If you’re aiming to buy a home once you have $50,000 saved, you need to create a time horizon for when you’ll be able to reach that goal, based on the amount you can save per year, and your expected rate of return for the investments you choose.

What is the ideal investment horizon?

The ideal investment horizon varies from goal to goal. In the course of your life you may find yourself dealing with multiple time horizons for a range of goals. In some cases (e.g. saving for college or the arrival of a new baby), there’s an inflexible time horizon and you may have to adjust the amount you’re saving or the investments you choose. In other cases, like retiring or buying a home, you may be able to take more time to reach your goal.

What is time important in investing?

Time is a critical element in all investing decisions, whether long term or short term. As its most basic, time may allow investors to save more, recover from market volatility, adjust their risk exposure (if needed), and potentially see greater gains.

SoFi Invest®
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Apache is functioning normally

September 9, 2023 by Brett Tams

For many people, college is the first time they’re truly in charge of their own finances. While it’s often a challenge, creating and maintaining a savings account for students is a foundational lesson for building healthy financial habits that last a lifetime.

And saving money as a student has its short-term, practical benefits, too.

“Life throws a lot of expenses our way that are hard to plan for—like when your car suddenly refuses to start when you’re running late for class,” says Jacqueline DeMarco, a freelance writer specializing in personal finance content. “That’s why building out a solid emergency fund is something that every college student should prioritize.”

So, how can you save money as a student in college? These savings tips can help give you some monetary breathing room and a financially secure start in adulthood.

Can you make your bank accounts work for you?

First things first: Make sure you have a good place to keep your savings. That means finding a bank that’s convenient and offers the features and benefits that work best for you.

DeMarco notes that students may feel limited to banks available on or near campus.

“If they aren’t happy with their on-campus bank options, college students may find that an online bank is a better fit for them,” DeMarco says. “Not only do online-only banks offer all of their services digitally, they also tend to have lower fees and offer higher interest rates than banks with expensive brick-and-mortar locations to pay for.”

Whichever bank you choose, DeMarco says there are two accounts every new student should strongly consider opening: a checking account and a savings account.

Setting up both a savings account and a checking account can be done online within a few hours at the bank of your choice.

How can students save money?

Once you’ve set up your checking and saving accounts, it’s time to take the next step toward financial responsibility. One of the best ways to save money for students is by setting up a budget.

How much should a college student spend per month? To determine that, DeMarco recommends subtracting your monthly expenses (essentials like food, utility bills, etc.) from your monthly income (whether it’s from a part-time job, student loans, or money from a parent). Doing this simple math will help reveal how much you can safely spend each month on fun stuff like new clothes or going to the movies—after you’ve put aside a portion for your savings, of course.

Looking to add more wiggle room to your budget? Try these money-saving tips for students:

Shop at consignment and thrift stores

Consignment and thrift stores offer previously owned clothes and other items at a discount. The primary differences are that thrift stores tend to be nonprofit organizations, accept more donations, and are generally less selective in what they choose to sell. Consignment stores are often more selective about the donations they accept, and they pass a portion of the sale to the person who donated—or consigned—the product.

DeMarco notes that consignment stores are not only a smart option for saving money—they’re also a way for students to make extra money by selling unwanted items.

Buy used textbooks

Textbooks can cost students hundreds of dollars if they’re new. Instead of paying full price, consider buying or renting used textbooks. “Many college bookstores offer used options, and online platforms often provide affordable alternatives,” DeMarco says.

You might also be able to recoup some of the money you spent once you’ve finished a class by reselling your textbooks to a used bookstore or an online vendor. “Sometimes I could even sell a book for more than I bought it,” DeMarco says, referencing her time as a student. Cha-ching!

Think about meal planning

So busy with classes and assignments that you find spending money at vending machines for on-the-go snacks easier than planning ahead? Stop, shop, and save. Set aside a few hours each weekend to prepare all of your meals for the week to come. Or, if you live in a dorm, hoard some extra items from the dining hall so you’re ready when those late-night study session cravings inevitably strike.

“Planning meals in advance gives students the chance to make a shopping list and stick to it,” DeMarco says. “As a bonus, having their meals planned will make it easier to avoid the temptation to dine out after a long day of classes.”

Explore free activities

Who says you need to splurge to have a good time? There are plenty of ways to have fun without spending money. Chances are, multiple free activities are happening on and around your campus on any given night. You can look up event calendars online or keep an eye out for announcements. Groups and clubs are always looking for participants and potential new members, so you can bet they’ll be happy to have you. (Plus, a lot of these events have free food.)

Ask for student discounts

It’s common for stores on and off campus to offer student discounts. To reap the benefits, always keep your student ID in your wallet, purse, or cellphone case so you can flash it and save some money.

“You’d be surprised how many retailers, restaurants, theaters, and entertainment venues offer discounts specifically for students,” says DeMarco, who relied on student discounts to help build her professional wardrobe as she neared graduation. “Plenty of major mall brands offer these discounts.”

Get a cheap coffee maker

Relying on caffeine to get through those late-night study sessions—or just to get moving each morning? Save money on java by buying a coffee maker and becoming your own barista. DeMarco says that a cheap or used French press is easy to use and could save you hundreds of dollars over the course of a year.

Rethink the car

It can be tempting to bring a car to college—whether for grocery runs or the occasional road trip. But the costs of gas, maintenance, and parking can add up quickly, DeMarco says. So leaving that set of wheels at home is another way for students to save money. Most college campuses are great for biking and walking. And many also provide shuttle buses and rides to essential off-campus places like grocery stores—as well as safe rides at night.

Track your savings

As you put these ways for students to save money into practice, DeMarco suggests tracking their positive impact on your budget. That way, you can see how your small saving techniques can add up over time. There are even money-saving apps for students you can download to measure your progress.

Where should college students keep their savings?

As you’re finding new ways to trim your budget, where should you put the money you’ve set aside? DeMarco says you’ve got a few options to consider:

Rewards checking account

While there are better places for long-term savings, rewards checking accounts are a valuable tool for college students as they begin to manage their own finances. Certain online checking accounts will provide cash back rewards based on how much you spend. For example, the Discover^® Cashback Debit Account provides a 1% cash back bonus¹ as well as overdraft protection if you overdraw your account.

Checking accounts are an ideal place to keep your spending money, funds for paying bills, and income earnings from part-time jobs or side hustles since they allow you to access the cash you need at any time.

High-yield savings account

Starting a high-yield savings account, like the Discover Online Savings Account, in college can make a dramatically positive impact on the rest of your financial life.

DeMarco recommends a high-yield savings account for any money that students may not immediately need but still want to keep available. “That way, their savings can earn interest, but they can access those funds if needed,” she says.

Call it a sunny day fund—online savings with no monthly fees

Discover Bank, Member FDIC

And putting aside a set amount of money each month into a high-yield savings account can start earning you compound interest. Even depositing a small amount of savings while you’re in college can add up over the years to make a sizable stash down the line.

CD

CDs, or certificates of deposit—especially those with a longer maturity term—can provide a higher return than a savings account. Use CDs for savings that you don’t expect to need over the CD’s term. The term length for CDs can vary widely. For example, Discover Certificate of Deposit terms range between three months and 10 years, with competitive annual percentage yields.

“If a student has a solid chunk of savings they know they won’t touch for a while, they may want to consider keeping their money safe in a CD, where it’s guaranteed to experience growth,” DeMarco suggests.

Retirement account

If you’re ready to start preparing for the more distant future (always a good idea), you can start by contributing money to an IRA, or individual retirement account. While some college students wait until they have a full-time job that offers a 401(k) plan to begin saving for retirement, the sooner you can get a head start, the better.

Discover offers both IRA CDs and IRA savings accounts.

Why not start saving while in college?

There’s really no better time to start saving than in college. To make your savings dreams a reality, set goals at the start of each semester and check your progress periodically. Maybe even reward yourself (nothing too extravagant, of course) for staying on track. Something as small as the occasional special meal or an activity that doesn’t blow your budget can be a fun way to celebrate those financial milestones.

Saving money can also create some amazing memories with the new friends you’ll be making. Ramen might seem dull, but challenging friends to see who can come up with the best recipe using cheap instant noodles can spice up the fun.

College can be a wonderful experience. And weaving these saving tips into that experience can help build the foundation for a comfortable and secure financial future. Just think: It could all start with a high-yield savings account.

¹ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay® is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.

Source: discover.com

Apache is functioning normally

September 7, 2023 by Brett Tams

College is an exciting time: You’re surrounded by new people, new opportunities, and a chance to dive into the next chapter of your academic career. But this transition also comes with different financial realities—and the need to develop new skills around spending and saving money.

Along with navigating your new campus and sharpening your study skills, there’s another key lesson to learn: how to create a college student budget. When done right, a budget can help you limit debt, build some savings, and accomplish your goals. Need to make sure you have enough for textbooks, rent, food—and some left over for a little fun? Want to spend a semester abroad? Creating a college student budget can help with these goals and more.

Whatever financial issue is giving you trouble, Katie Waters, CFP®, founder of a financial planning firm, has tips for how to set yourself up for success. Here’s how to get started.

Assess your income and expenses

As you begin building your college student budget, you first need to figure out how much money you have coming in and how much you have going out. You can use anything from a simple spreadsheet to a budgeting app to track your income and expenses.

How should students pay for monthly expenses? Start by writing down all the sources of after-tax money you get each month, Waters says. That includes money from a part-time job, financial aid, stipends, grants, loans, or a monthly allowance from your parents.

Next, figure out how much you’re spending each month. Waters recommends looking back at three months’ worth of your expenses. To do that, refer to your debit and/or credit card statements, plus any record of money sent through payment apps.

You should account for every dollar you’ve spent, Waters says, separating expenses into common categories such as:

Cell phone
Food
Entertainment (movies, fun with friends, streaming services)
Clothing
Internet
Transportation (airfare, bus tickets, car insurance, gas)
Tuition
Room and board or rent
Textbooks and school supplies

The point is to add up everything, Waters says. “We want a line item for it all.”

If you’ve gotten this far and you already realize that your expenses weigh in heavier than your income, consider ways you could start giving your income a leg up. Check out these tips to help you make money as a college student.

Create your college student budget

Making and following a college student budget is the best way to ensure you have enough money to pay for the things you need while still having some money left over for the things you want. Here’s how to budget as a college student:

1. Create your spending categories.

Your budget should contain categories for all your major spending groups. (Refer to the list of expenses you created when assessing your expenses.) Then decide how much you must spend for each and assign a dollar amount or percentage to that category.

2. Choose a type of budget.

There are different budgeting styles, and Waters notes that one might fit your specific situation better than another. You could try the 50/30/20 rule, which allocates 50% of your money toward needs (food, textbooks, tuition); 30% toward wants (entertainment, clothing); and 20% toward savings.

You can also go with the envelope system, which involves setting aside a limited amount of money for each spending category. Once you hit the limit in a given category by running through money in its envelope—whether literal or digital—you can’t spend any more in that category until the next budget period begins.

3. Optimize your budget regularly.

Once you’ve set a budget, keep track of it. If you’re consistently under or over, see if there are areas where you can save more or spend less. As your needs change, so should your budget.

Checking with cash back and no monthly fees

Discover Bank, Member FDIC

Prioritize essential expenses

Whichever kind of college student budget you choose, make sure necessities such as your tuition payment (if you’re paying for school yourself) or things like bus fare to get to your part-time job are covered. To make that easier, Waters says you can find ways to reduce your expenses, such as:

Renting, borrowing, or buying used textbooks
Buying snacks in bulk or cooking meals that are large enough that you’ll have leftovers
Asking for student discounts when shopping in person or looking for online discounts
Opening a cash back checking account or using a cash back rewards credit card to earn rewards¹ for purchases you already make.

Focusing on what you must pay for first can help to lessen the debt you acquire, Waters says. Bonus: If you can do that, you’ll also reduce the amount of interest you’ll have to pay while in school or after you graduate.

Manage your fixed and variable expenses

Certain expenses, such as your cell phone or car insurance bill, typically stay the same every month. Those are fixed expenses. Variable expenses include costs that can change from month to month, like food, gas, or entertainment, depending on your behavior. Variable expenses can be tougher to budget for, but they can also provide more flexibility to your budget.

The envelope budget method can help you learn to budget more accurately for variable expenses when making a college student budget. For example, let’s say you spent $140 dining out in month one, $175 in month two, and $120 in month three. Take the average of the three—$145—and set that as your “dining out” monthly line item that you shouldn’t exceed.

“The biggest ‘don’t’ for college students is saying yes to everything,” according to Waters. Instead, it’s important to set limits. “Get to know your town and find ways to hang out that are free or low cost.”

Save for emergencies

College might not seem like a natural time to save money, especially if you’re not making much to begin with—but it can be done. And saving money will be a critical skill you can continue to use throughout your life.

Often, the easiest way to save is to make it automatic, Waters says. You can automate your savings by opening a savings account and setting up regular transfers from your checking to your savings account. You can choose how much is socked away based on a percentage of your income, as with the 50/30/20 rule, or you can set aside a chunk of your remaining balance at the end of each month.

It’s also important to try and build an emergency fund, even if it’s small, Waters says. An emergency fund is money you use for unexpected expenses—think paying to fix a flat tire, covering medical bills, or repairing a malfunctioning laptop. A good goal for the amount to save in an emergency fund is three to six months of your expenses. That might sound like a lot, but you can build your savings slowly over time.

Waters notes that a savings account or emergency fund is also a great place to stash cash you weren’t expecting to receive—like birthday money from Grandma. Think of it this way: If you save $25 a week, in just six months, you’ll have saved $600. This is also a great chance to learn how to invest as a college student. By keeping your savings or emergency fund money in a high-yield savings account, you can watch how your savings grows over time with interest.

Start building your financial foundation today

Once you’ve set a budget that you feel comfortable with, make sure to regularly check in with yourself about your spending. One trick that’s great for budgeting for college students is a financial checklist, which helps you look closely at your spending habits and whether your needs have changed. Earning more or less money, a change in your rent, or a tuition hike can make it necessary to reassess your budget and tweak as needed, Waters says.

College can be the perfect time to start your financial future off on the right foot. Things like building credit, saving for retirement, and creating a thriving savings account all come from making the right choices early—and regularly. Getting a handle on your finances in college with a college student budget is one of the best first steps you can take.

Creating a budget and learning to manage your finances as a college student can put you in a stronger financial position when you graduate. Here are some of the first steps you can take to ensure your long-term financial wellness.

¹ ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay® is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.

Source: discover.com

Apache is functioning normally

August 25, 2023 by Brett Tams

When someone heads off to college, they are often setting up a whole new household. They want and need items that help them get their new lifestyle up and running. If you are buying gifts for a student, you can help them achieve that by giving them items that are convenient, practical, and a little bit fun.

That’s where this list can come in handy. It identifies some of the most useful, in-demand gifts you could give a recent high-school grad or current college student. Plus there are clever ideas that may well elicit an “I love it!” from the recipient, such as a subscription to a favorite streaming service.

Read on for smart, inspiring ideas for presents for the students in your life.

Apparel and Accessory Gifts for College Students

College students need to be prepared for any situation on campus, whether that’s a winter storm, a job interview, or a trip to the school’s gym to workout. Clothing and accessories are college gifts that are likely to be appreciated. They’re practical, of course, and can help the recipient save money on clothes.

1. Backpack

A good-quality and versatile backpack is a college staple. Your college student may want a waterproof bag with plenty of compartments with room for books, a laptop, and other personal items. The backpack should also be comfortable to carry around throughout the day and durable enough to last for several semesters.

2. Messenger Bag or Tote Bag

An office-ready tote or messenger bag can be great for internships or interviews. Plus, it can be used beyond college.

3. Activewear

Whether they’re playing on a college team, a regular at the gym, or just like the style and comfort, activewear can be a useful gift for most college students. There are many different styles and brands at various price points.

4. Gym Bag

For college students who may use the school’s gym facilities or participate in a sport, a gym bag is essential. Make sure to get an appropriate size bag depending on how much they need to carry.

5. Outdoor Winter Gear

This may not be as important if they’re attending school in a warm location, but students need warm winter clothing when they’re walking back and forth between classes. Your college student may need warm winter boots for the snow, a heavy coat, thick socks, a hat, and gloves. And those can be pricey, so they make a great gift.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure online banking app.

6. Waterproof Gear

The last thing a college student wants is a wet bag while they’re carrying their textbooks and laptop. A waterproof backpack and an umbrella should help protect expensive gear and a raincoat and boots should keep your college student dry between classes.

7. College Hoodies/Sweatshirts

One popular gift for college students is a hoodie or sweatshirt with the school’s team logo. This can typically be found through the college’s website or they may sell them on campus as well.

This type of gear can be especially fun for students to wear when getting involved in on-campus activities and showing their school spirit.

8. Loungewear

The dorm will be home for the next couple of semesters so it’s important to be comfortable. Loungewear can be found online or in stores and come in a variety of styles and prices.

9. Professional Attire

A professional outfit is a must for the college student going on interviews or for any formal gathering. If you don’t feel comfortable picking out an office-ready outfit, there are subscription services available with styles based on the information filled out by the recipient, or a gift card to a specific store may work as well.

Another great idea for a present for a college student: a gift card to a specific store.

Recommended: What Is College Like?

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Dorm Room Gifts for College Students

There are too many dorm room college essentials to list. The little things go a long way and can help make college life more comfortable and enjoyable.

10. Bedding/Blankets

Most colleges only supply a mattress, so students must bring their own sheets, blankets, and pillows. Colleges typically have dorm beds with a twin XL mattress, but it should be confirmed with the school before buying bedding. Make sure to buy an extra set of sheets so that they always have a clean set.

11. Basic Kitchenware

Whether your college student has a dorm room kitchen or will mostly be eating in the dining hall, basic kitchenware is a necessity for a quick meal or a late-night snack. Basic kitchenware includes utensils, knives, plates and bowls, cups, and food storage containers.

12. Laundry Basket

Dorms typically don’t provide a washer and dryer in the dorm room so students will need to bring their laundry to the communal laundry room.

13. Alarm Clock

Getting up on time for classes can sometimes be a struggle so your college student may need a little help. A digital alarm clock should do the trick even for the heaviest of sleepers.

14. Bathrobe

Aside from the comfort and luxury that bathrobes may bring, they’re a necessity for college. A bathrobe will give a little bit of extra security when your college student goes to take a shower.

15. Storage

Dorm rooms are usually small, so your student will want to maximize every inch they have. There are tons of great storage solutions from under-bed bags and bins, over-the-door storage racks, and hanging strips or hooks.

16. Desk Supplies

Desk supplies are a must-have and make great gifts for college students. Consider desktop organizers, pens and pencils, a lamp, and also a comfortable desk chair.

17. Lap Desk

A lap desk can make a convenient gift for college students to make studying around campus more comfortable. They’re portable and perfect for taking notes or setting a laptop.

18. Streaming Service

It’s easy to spend a lot of money on streaming services, and college students are typically on a tight budget. Get a gift card for one or a couple of streaming services to gift your college student.

19. Personal Safe

If your student has expensive or important items, it’s important they’re kept in a safe location. A small personal safe to protect valuables can give your college student some peace of mind when living with roommates. Plus, if they work a cash job and want to save the money for tuition, they will have a safe place to stash it.

20. Games

Board games or card games are perfect for a relaxing night with roommates and friends.

Food and Drink Gifts for College Students

College cuisine doesn’t have to be instant ramen or dining hall meals. You might help your student get set up to cook meals for themselves, which can be a way to save money on food, given how pricey takeout can get. Before purchasing any kitchen appliances, contact a residential assistant to double-check if they are allowed in dorm rooms at the student’s school.

21. Insulated Water Bottle

It’s a simple gift but a leak-proof insulated water bottle will keep cold drinks cold and hot drinks hot for hours.

22. Microwave

A microwave for a college dorm needs to be compact as college students aren’t working with much space. It should be big enough to fit a full-sized plate but small enough to fit on a narrow counter.

23. Mini-Fridge

A mini-fridge is good for keeping drinks cool or storing a few snacks.

24. Electric Multi-Cooker

Multi-cookers, like the InstantPot, are simple machines but can take dorm room dishes to the next level. With a multi-cooker, college students can free up space and replace multiple kitchen appliances: rice cooker, frypan, pressure cooker, slow cooker, yogurt maker, and steamer. Worth noting again, before buying any kitchen appliances — confirm they are allowed in the dorm rooms at your student’s school.

25. Coffee Maker

It may be nice to get a coffee from the local coffee shop every morning, but the cost can add up. College students on a budget can save some cash by using a coffee maker instead.

Recommended: earn money at home (or at their dorm room), whether selling things online or perhaps tele-tutoring in a subject they love.

27. Portable Charger

A portable charger ensures your college student can study, take notes, and work on assignments without worrying about their battery dying. Portable chargers come in a variety of forms with a range of features.

28. Noise-Canceling Headphones

Dorm rooms and other areas around campus sometimes don’t make the best environment for studying. Noise-canceling headphones give your college-bound student a distraction from the surrounding noise.

29. Power Strip

You can never have too many power outlets. Your college student’s dorm room may not have enough outlets for their needs.

30. USB Flash Drive

College students may need a reliable USB flash drive to use when going to the library to work on a project, when a printer isn’t working, or when moving large files. Flash drives come in a range of storage capacities and prices.

31. Portable Bluetooth Speaker

It may not be a must-have, but a portable bluetooth speaker is a fun gift for college students. There are even waterproof models for a little extra protection.

The Takeaway

Still, stumped when it comes to finding gifts for college students? Cash or gift cards go a long way and it allows your college student to purchase exactly what they want or need. A gift card can be used for their favorite restaurant or store or some cash can go towards college books, saving for college tuition, or anything else they may need.

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SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

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Apache is functioning normally

August 18, 2023 by Brett Tams

Studies show that college tuition increased by 134% at private colleges and 175% at public universities from 2003 to 2023. So, for many families, these rising costs are making it harder to afford a college degree. To help cover these costs, many families and students start saving for college to help avoid student loans. There are many options you can use to help save money for college. For example, a 529 savings plan is specifically designed to help families save for college. However, this type of plan isn’t right for everyone. Keep reading to learn more about the pros and cons of 529 plans.

Quick Answer: 529 plans are tax advantaged savings plans to help pay for educational expenses.

In This Piece

What Is a 529 Plan?

A 529 plan is a college savings account. It provides parents, grandparents and even other interested parties a tool for saving money for their loved one’s college. In some cases, prospective students may be able to set up their own 529 accounts. The goal of a 529 plan is to save money for several years and then use this money to cover the costs of college. Similar to an IRA account, a 529 plan is an investment account. So, you have the potential to earn interest over the years.

Types of 529 Plans

There are many 529 plans to choose from but only two basic types. The most popular type of 529 plan is the savings plan. With this type of plan, you can use the money you save for tuition and related costs at any eligible university. In fact, you can even use these funds to cover private school expenses for grades K-12.

The second type of 529 account is a prepaid tuition plan. With this type of account, you’re prepaying tuition fees now to cover the cost of attendance later. The benefit is that you can lock in tuition rates well before going to college. The downside is that you’re limited to which universities and colleges the student can attend.

Tax Advantages of 529 Plans

Unlike 401(k) plans, you make 529 contributions with post-tax dollars. However, many states offer tax credits or tax deductions on annual contributions made to 529 plans. The good news is that distributions from 529 plans are tax-free as long as the money is used for qualified educational expenses.

How to Open a 529 Plan

Once you know what type of 529 plan you want to invest in, you should compare various options. Be sure to review all costs involved when making this comparison. If your state offers tax credits or deductions for 529 accounts, you may want to select an in-state plan.

When you’re ready, you can handle the application process yourself or seek the support of a financial advisor who can manage the account for you. If you have concerns about debt collectors having access to your 529 account funds, you may want to speak to a financial advisor about setting up an estate.

Once the account is open, you can make regular contributions to it throughout the year. There are also some 529 credit cards that automatically transfer cashback rewards to a 529 plan.

Who Can Open a 529 Plan?

Anyone can open a 529 plan, including parents, grandparents, aunts, uncles, and other friends and family members. You do have to designate a beneficiary for the funds in the account. Keep in mind that you may face a 10% penalty if you use the money for any purpose other than a qualified expense.

How Much Does a 529 Plan Cost?

The cost of maintaining a 529 account varies from plan to plan. You can expect to pay a variety of fees, including enrollment fees and account management fees. If you work with a broker, you may also incur brokerage fees.

How Much Can I Contribute to a 529 Plan?

There are no annual limits to how much you can contribute to a 529 plan. However, for IRS purposes, contributions up to $17,000 (for 2023) can qualify as a gift. You or a loved one, such as grandparents, can also superfund 529 plans with lump-sum contributions of up to $85,000, but it must be prorated over the next 5 years.

How Many Times Can You Superfund a 529?

There’s no limit to how many times you can superfund a 529 plan. However, you can’t exceed the state’s aggregated limits and shouldn’t contribute more than the gift limit for the year.

How Much to Save for College

According to recent studies, the average cost of college tuition and fees is $10,423 per year for public college and $39,723 per year for private college. If you plan to attend college in state, you may want to view the state’s aggregate limits, which are based on average tuition costs in the state. Once the 529 account balance reaches this maximum level, you can’t make any more contributions.

Who Maintains Control Over a 529 Plan?

The person who sets up the account maintains full control over the 529 account. The owner of the account determines when funds are distributed and the amount of each distribution. The funds must go to the beneficiary, but the owner of the account has the ability to change the beneficiary.

Does a 529 Affect Financial Aid?

When completing the Free Application for Financial Student Aid (FAFSA), you list funds in a 529 account as an asset. If this is a parent’s account, it typically has little impact on financial aid eligibility. However, if the funds come from an account established by a grandparent or other party, it’s treated as cash support. Depending on the value of these funds, these contributions can have a significant impact on eligibility for financial aid.

Qualified Expenses

For distributions for a 529 account to be tax-free, the student must use the funds for qualified expenses. These expenses include:

Tuition

Room and board

Textbooks

Computer

School supplies

How to Withdraw Funds

Funds can be withdrawn at any time by completing the required withdrawal form. Also, keep in mind that only qualified expenses are tax-free. Before requesting a withdrawal, be sure to calculate all your expenses to avoid taking out too much money. You also need to take the money out of your account the same year it will be used.

What If the Child Doesn’t Go to College?

It’s important to understand that you don’t lose your money if your child decides not to go to college. You have two options. First, you can transfer these funds to another beneficiary, such as another child or grandchild. Secondly, you can withdraw the funds.

What Happens to Money Not Used?

If you choose not to use these funds on qualified expenses, you’ll face a 10% penalty and you must pay taxes on all distributions. But, there are some exceptions to this rule. If your child receives a scholarship for college, enters the military academy, or becomes disabled and unable to attend college, you may be able to waive the 10% penalty.

Alternatives

There are a few alternatives to 529 college savings accounts, such as:

Custodial brokerage account. A custodial brokerage account doesn’t provide any extra tax benefits. However, it does give you the freedom to save as much as you want and use it for any purpose.

Roth IRA. A Roth IRA is typically for retirement savings, but in many cases, you can also withdraw funds without penalty for education purposes. However, this account does have annual contribution limits.

Cordell education savings account. The Cordell education savings account is similar to a 529 plan. But, there are strict income eligibility guidelines. Additionally, you can only contribute $2,000 per year per child.

Acorn Early. Help your child start investing money early with Acorn Early to help pay for college.

With a little planning and dedication to maintaining regular savings goals, you can help your child pay for college expenses more easily. Understand the pros and cons of 529 plans before moving forward.

Source: credit.com

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Apache is functioning normally

August 17, 2023 by Brett Tams

If you have financial goals, you need a financial plan. Here’s how to make one.

August 16, 2023

Having a financial plan could play a key role in achieving major life goals. Why wait any longer? Start assessing your current situation, setting financial planning goals, and thinking about how the right Discover® savings account could help you focus more closely on your financial future today.

The Best Laid Plans

Before you make a financial, you need a clear picture of where you stand today. Tracking your income and expenses on a regular basis and assessing your net worth — total assets minus total debts — helps you see how much money you can commit to individual financial goals.

Your First Home

Home ownership is at the heart of the American dream. The biggest obstacle facing homebuyers is funding a down payment – now often at least 20% of a home’s purchase price. The good news is there are many down-payment options for first-time buyers. Check with banks in your area to see what special programs may be available to you.

If you intend to buy a house within five years, it might be a good idea to include saving for a down payment when creating your financial plan. A good way to save for a down payment may be through short-term saving vehicles, such as those available through a Discover Money Market Account or Certificate of Deposit (CD) to help pay for your first home.

Your Child’s Education

Ideally you should start saving for your child’s education as soon as — or even before — he or she is born. According to Bankrate, tuition and fees at four-year public colleges have increased by 179% over the last 20 years. Depending on your child’s age, you may want to consider investing your education dollars in stocks or stock mutual funds. While stocks can be riskier than other investments over short time periods, over the long-term they have historically produced the highest returns.

There are many other education savings options, and some, such as state-sponsored 529 college savings plans and the Coverdell Education Savings Account, offer tax advantages as well.

Your Retirement

When making a financial plan, a secure retirement is probably your most important long-term financial goal. According to Bankrate, the common guideline is to replace 80% of your final working year’s salary for each year you spend in retirement.

That’s why it’s important to start saving for retirement early in life and keep saving as much as you can throughout your working years. Opening a Discover IRA CD is one of the easiest — and most effective — ways to save for this important goal.

Get the Help You Need

Knowing the right financial moves to make and when to make them is a complicated job that most of us don’t have the resources to handle alone. Consider consulting a qualified financial professional who can help you keep your financial plan on track with your ever-changing needs. And be sure to familiarize yourself with all the different ways that Discover’s savings accounts can be at the center of your strategy. Their great rates and convenient account management options may be just what you’re looking for.

Discover^®

Regardless of your time horizon, risk tolerance, or savings goal, you can always find the right savings vehicle for your needs at Discover^®. Discover^® offers an Online Savings Account to help you with your short-term savings goals, a full range of CDs and IRA CDs with terms from 3 months to 10 years as well Money Market Accounts that may be ideal for rounding out your overall savings strategy. Open a Discover® account online or call our 24-hour U.S-based Customer Service at 1-800-347-7000.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.

* The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.

Source: discover.com

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Apache is functioning normally

August 3, 2023 by Brett Tams

Sometimes you need a little guidance — especially when it comes to your money. After all, mistakes can cost you your financial future.

If you happen to live in Chicago, you not only have access to deep-dish pizza and Chicago Cubs games, but you have access to some of the best financial advisors in the country.

Here are eight of the best financial advisors in Chicago to help you forge the path ahead.

What’s Ahead:

Overview of the best financial advisors in Chicago

Mindful Money Financial Counsel

Contact: (312) 846-1437 or [email protected].

Services offered: Student loan paydown techniques, investing, retirement, tax optimization, general financial optimization.

Asset requirements: Mindful Money Financial Counsel does not have investment minimums.

Typical fees: Initial planning fees start at $600; a written plan of normal complexity is $3,600. You can sign up for a Wealth Builder membership, which is $60 per month and hourly support is $300 per hour.

Whether you’re looking for small tweaks or a complete game plan, Mindful Money Financial Counsel is ready to help you. This Chicago-based firm operates on a fee-only basis, so you know their advice is objective and not based on whether they’ll get a commission by signing you up for something you may not need. Plus, their approach is holistic and there are no investment minimums.

You don’t have to sign over any of your money to them, and you can lean on them as much or as little as you need: hire them for a one-time session, or keep them on year after year to help shape your finances as life progresses.

Basil Financial Group

Contact: (773) 697-9528 or [email protected].

Services offered: Risk management, taxes, estate planning, portfolio analysis, investment allocation, retirement planning, education planning.

Asset requirements: Basil Financial does not list an account minimum required.

Typical fees: Basil Financial Group are fiduciaries, meaning they are bound to advise in your best interest — not theirs. They operate on a fee-only basis, so you don’t have to worry that they are trying to sell you something so they can earn a commission.

Basil Financial Group is a Chicago-based firm that offers integrated financial planning services, including planning, investments, and taxes.

Basil Financial Group takes a holistic approach as well, so that all your decisions affecting your finances work seamlessly together.

The Planning Center

Contact: (888) 333-6986.

Services offered: Asset and debt management, cash flow management, investments, asset preservation, taxes, retirement planning, philanthropy, estate planning.

Asset requirements: None listed.

Typical fees: The Planning Center is a fee-only, fiduciary firm.

At The Planning Center, which has offices in Chicago as well as New Orleans, Tulsa, Fresno, Quad Cities, Twin Cities, and Anchorage, you have access to 232 combined years of experience. The Planning Center’s team gives you a safe place to discuss your finances and figure out your goals.

Garrett Investment Advisors

Contact: (910) FEE-ONLY.

Services offered: Retirement planning, portfolio review, cash flow management, housing decisions, insurance, estate planning.

Asset requirements: Veo Financial doesn’t advertise a minimum investment level, but does say they’re happy to advise clients who want to control their own investments in addition to those who want to turn it all over to an expert.

Typical fees: For a one-off session, expect to pay about $420-$630. Retiree resource planning typically starts at $1,050 and a full portfolio review can be $2,220 and up.

Garrett Investment Advisors connects clients with fee-only, fiduciary financial planners in offices across the country. Leisa Aiken, founder of Veo Financial Counsel, is a member who operates out of Chicago proper. Veo Financial Counsel offers a range of services to fit your budget and your needs.

Lake Life Wealth Advisory Group

Contact: (224) 286-1625 or patti.hughes@lakelifewealthadvisorygroup.

Services offered: Setting budgets, student loan debt, allocating assets, saving for college, retirement planning, insurance review, tax planning, portfolio management.

Asset requirements: None listed.

Typical fees: Lake Life is a fee-only, fiduciary advisor, earning no commissions on their recommendations and putting your best interests first. Annual retainer fees range from $3,000 to $20,000, depending on net worth, services needed, and other factors.

Patti Hughes of Lake Life Wealth Advisory Group is a fee-only financial planner who serves clients both Chicago-based and nationwide. She provides comprehensive financial planning services to clients in all financial situations.

Crescendo Financial Planners

Contact: (630) 446-0114 or [email protected].

Services offered: Tax-saving strategies and planning, charitable giving, asset allocation, risk management, estate planning, portfolio analysis, cash flow management, education funding.

Asset requirements: None listed.

Typical fees: Crescendo is a fee-only firm, and they offer no-cost consultations so you can see if their services are a good fit for you.

Actually located in Oak Brook, IL, just outside the city, Crescendo Financial Planners believes your investment portfolio is just part of the picture. They too take a holistic approach to your finances, helping you plan all the different parts of your financial life so they integrate effectively.

Mentor Capital Management

Contact: (630) 530-1191 or [email protected].

Services offered: Tax planning, employee benefit plans, investment management, saving for education, saving for a home.

Asset requirements: None listed.

Typical fees: Mentor Capital is fee-only. Fees for investment management range from 0.5% for very large portfolios to 1% for smaller portfolios. Financial planning fees depend on the complexity of your situation but will be spelled out at your initial meeting.

Mentor Capital Management offers comprehensive financial planning services and investment advice. Founder and principal John S. Davis is a NAPFA-registered Certified Financial Planner and has been helping people grow their money since 1991.

DeRose Financial Planning Group

Contact: (773) 380-8523 or [email protected].

Services offered: Retirement planning, education planning, wealth protection, estate planning, multi-generational planning.

Asset requirements: DeRose does not require any minimum income or net worth to work with them.

Typical fees: DeRose charges a flat fee, which is quoted at your initial meeting. It may depend on your net worth and the complexity of your financial situation.

DeRose Financial Planning Group is a holistic firm serving the greater Chicagoland area. They were founded by Karen DeRose, CFP, CRPC.

Summary of the best financial advisors in Chicago

Advisor Help with Contact info

Mindful Money Financial Counsel • Student loan pay down
• Investing
• Retirement
• Tax optimization
• General financial optimization 564 W Randolph St. Suite 200 Chicago, IL 60661

(312) 846-1437

Basil Financial Group • Risk Management
• Taxes
• Estate Planning
• Portfolio Analysis
• Investment Allocation
• Retirement Planning
• Education Planning 4040 N. Lincoln Avenue
Chicago, IL 60618

(773) 697-9528

The Planning Center • Asset and debt management
• Cash flow management
• Investments
• Asset preservation
• Taxes
• Retirement planning
• Philanthropy
• Estate planning 303 West Erie Street
Suite 311
Chicago, IL 60654

(312) 664-4090

Garrett Investment Advisors • Retirement planning
• Portfolio review
• Cash flow management
• Housing decisions
• Insurance and Estate planning Leisa Aiken
Veo Financial Counsel
Chicago, IL

(312)-265‐2220

Lake Life Wealth Advisory Group • Setting budgets
• Student loan debt
• Allocating assets
• Saving for college
• Retirement planning
• Insurance review
• Tax planning
• Portfolio management 200 West Madison
Suite 2100
Chicago, IL 60606

(224) 286-1625

Crescendo Financial Planners • Tax-saving strategies and planning
• Charitable giving
• Asset allocation
• Risk management
• Estate planning
• Portfolio analysis
• Cash flow management
• Education funding 110 Oak Brook Road
Oak Brook, IL 60523

(630) 446-0114

Mentor Capital Management • Tax planning
• Employee benefit plans
• Investment management
• Saving for education
• Saving for a home 257 N. West Ave.
Suite 205
Elmhurst, IL 60126

(630) 530-1191

DeRose Financial Planning Group • Retirement planning
• Education planning
• Wealth protection
• Estate planning
• Multi-generational planning 8755 West Higgins Road Suite 200
Chicago, IL 60631

(773) 380-8523

How I came up with this list

This list of top Chicago financial planners was created to focus on the needs of young professionals.

Companies focused on only high-net-worth individuals did not make this list, in order to be more inclusive of all incomes and backgrounds. I also wanted to make sure each company abided by the following:

They are Certified Financial Planners

All of the advisors on this list are Certified Financial Planners (CFP), a designation that lets you know that they will be focused on your bottom line — not theirs.

They are fee-only

I excluded brokers that sell by commission to focus on fee-only advisors. With commission-based brokers or advisors, you may be pressured into an investment or other product because they stand to benefit from the commission. With fee-only advisors, you pay a flat rate no matter what their recommendations include.

They accept all income levels

There is no sense in recommending a financial planner that caters only to high-net-worth individuals, because many times people at the start of their careers still need financial advice, even if their income hasn’t caught up to their plans yet.

Although all material has been double-checked against published information, you should take special care to make run your selection through FINRA’s BrokerCheck system for the most up-to-date information. FINRA is the regulatory agency dedicated to protecting investors and can tell you if a broker is legally registered to be able to sell securities or give investment advice. You can also check FINRA’s Barred Individuals list if you are curious about your broker.

What questions should you ask a financial advisor?

No matter who you choose, it’s important to ask a few key questions before you commit to hiring a financial planner.

Are you certified?

Are you a fiduciary?

How do you receive compensation for your services?

What is your fee structure?

Are you a member of any financial planner associations or membership groups?

What is your education or background?

Do you require a minimum income or asset level?

Do you require an ongoing commitment, or can I hire you for a one-time consultation?

What is your investment philosophy?

What are the costs of hiring a financial advisor?

Hiring professional help isn’t free. Understand what the typical costs and expenses are in hiring a financial advisor so you know what to expect when you hire them.

You’ll be able to schedule an initial consultation, which is a time for you to “try out” the advisor and see if you like them as well as get a feel for whether there is a personality fit. Use this time to ask them questions about their philosophy, their methods, their fee structure, and everything else pertinent to your situation.

After that initial consultation, expect the advisor to charge an hourly fee for their advice and assistance, usually at a rate of a couple of hundred dollars. Some may be more, some may be a little less. Ask them for a declaration sheet, which should disclose their rates, fees, and other charges.

A typical, comprehensive financial plan from a certified financial planner should cost about $1,000 or $2,000, but an exceptionally complex financial situation could cost more.

When it comes to managing your investments, an advisor will typically charge a percentage of the assets under their management: usually about 1%. That is an incentive for them to help you grow your wealth, because the more returns you receive, the more they are paid. So if you have $100,000 invested, they would take $1,000 as a fee.

Source: moneyunder30.com

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Apache is functioning normally

July 20, 2023 by Brett Tams

Many years ago, buying life insurance meant simply purchasing coverage that paid out a death benefit when an insured passed away. Today, however, things have changed a great deal. Life insurance policies are still certainly used as a tool for replacing income or for paying off debt upon the death of an insured. But now, these plans can also be used for so much more.

No longer are life insurance policies just “plain vanilla” anymore. In fact, oftentimes, life insurance policies are used as financial planning tools that can help individuals and families solve all types of additional needs, such as saving for college, paying off a mortgage, and supplementing retirement income.

They can also be used for growing funds based on rising market conditions. One type of policy that can be particularly useful in offering a death benefit while also providing for additional financial needs is variable coverage.

How Variable Life Insurance Works

Variable life is a type of permanent coverage. This means that it offers both death benefit protection, as well as a cash value or investment component where the policyholder can invest in a variety of “separate” accounts.

These policies are referred to as such because when a policyholder pays their premium into the plan, the portion of his or her premium that goes into the cash – or investment – component of the policy will be subject to the ups and downs of the underlying market fluctuations. Therefore, the plan will be “variable” in its nature.

Typically, the policy holder has the option of choosing from a very wide variety of different investment options within this separate account. These can include mutual funds, stocks, money market funds, bonds, and a number of other financial vehicles. Because some of the investment options that are included in variable policies are securities, these types of life insurance policies are regulated by the federal securities laws.

Just as with the cash value component of other types of life insurance policies, the funds that are in the investment component of a variable insurance plan are allowed to grow on a tax-deferred basis, meaning that the money will not be taxed until the time of withdrawal. This can provide the opportunity for funds to increase at an even greater pace – especially over time and in positive market conditions.

The Advantages of Owning a Variable Life Policy

There are a number of advantages to owning a variable policy. First, as with any other type of coverage, the death benefit proceeds will provide financial protection to the insured’s survivors in the event of death. Such funds may be used to pay final expenses, to pay off large debts such as a mortgage, or used as income replacement in paying everyday living expenses going forward.

Another benefit of variable life coverage is that the premiums are typically fixed throughout the life of the policy. This means that, unlike term life insurance, the insured will never need to re-qualify for coverage, provided that the premiums are paid within the grace period and that the coverage stays in-force.

Likewise, the initial amount of the death benefit on a variable policy is also usually a fixed amount – regardless of what occurs in the underlying market. Because of this, the named beneficiary (or beneficiaries) on this type of policy can, therefore, be assured that they will be receiving a certain amount of proceeds upon the death of the insured.

This can be helpful in that if the funds were being counted on for payment of certain debts or the replacement of the insured’s income, there would be a set amount coming to the insured’s survivors from the variable life plan.

In addition, due to the variety of investment options, variable life can provide insurance policyholders with the opportunity to grow the funds that are in the cash portion of their policy. These funds may be used in the future for other financial needs and they could be accessed via withdrawals or through policy loans.

So, if funds are needed by a variable life policyholder during his or her lifetime, these plans will typically allow the individual to either withdraw or borrow cash from the investment component of the policy. In addition, funds from the cash value component can often be used for paying the policy premiums – alleviating the policyholder from having to do so out of pocket.

Some Things to Consider Before Purchasing Life Insurance

While there are many advantages of owning a variable life insurance policy, it is also important to consider some key factors prior to moving forward in order to be sure that this type of policy is the best option for you and your specific insurance and investment needs.

First, when considering a variable plan, the policy holder should be able to take on a more active role in the investment of the policy’s separate account. Given this, it may be wise to have a good understanding of how mutual funds and other investments work – and how each may, or may not, fit with your particular financial needs and goals.

Being aware that variable coverage comes with a higher level of risk than some other types of permanent life insurance, such as whole life or universal life, can also help to ease any surprises should the market take a sudden downturn.

In any case, an important consideration that any potential owner of a variable policy should have is that he or she will have much more control over how their funds are invested in this type of life insurance plan. This will differ substantially from ownership of a whole life or a universal life insurance policy, where the underlying funds are typically chosen for the policyholder by the insurance carrier.

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Is a Variable Policy Right for Everyone?

Unlike whole life insurance, where cash is only guaranteed to grow at a fixed conservative rate of interest, the funds that are inside of a variable life policy are tied to a variety of different market related investment options. This allows the opportunity for a substantial amount of growth. It also, however, can subject the funds to market risk. Therefore, variable policyholders need to be aware that their funds can rise in value. However, they can also fall.

The policyholder of a variable life policy also has a great deal of choices in the underlying investments that are chosen for his or her cash value component. This differs significantly from whole life insurance where the insurance company makes these selections. Therefore, those who are not active investors or who do not have a good understanding of stocks or mutual funds may want to obtain some initial knowledge of these investments prior to moving forward. It is also a good idea to have at least a basic understanding of how different types of market risk can occur, and how such risk may be offset.

How to Get the Best Variable Life Insurance Quotes

When shopping for variable life insurance quotes, it is best to work with a company or an agency that has access to more than just one insurance carrier. This way, you will be able to compare different insurers’ policies and benefits objectively in order to determine which fits best with your specific needs. You will also be able to compare different premium quotes in order to see which works best with your life insurance budget.

If you are ready to compare policies and quotes, we can help. We work with the best life insurance companies in the marketplace today, and we can get you all of the important information that you need quickly and easily – right from your home computer, and without the need to meet in person with a life insurance agent. When you’re ready to see how a variable life policy may benefit you and your loved ones, fill out the form on this page to start your quotes.

Should you have any questions along the way regarding how variable policies work – about life insurance in general, or about something more specific such as life insurance without medical exams – please feel free to contact us directly. Our experts can walk you through step-by-step the ins and outs of variable policies, and the many ways that these types of plans can be structured.

We understand that the process of buying life insurance can sometimes be confusing – especially when there are many options to choose from. We will ensure that you have all of the information that you need in order to make a well-informed buying decision about the coverage and the plan that’s right for you and those you love.

Source: goodfinancialcents.com

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