savings
The Dos and Donâts of Borrowing Money
Taking on debt is a thorny subject. Signing on an affordable mortgage is one thing. Racking up credit card debt on unnecessary purchases? Quite another. Any time you borrow money, you put your finances at risk. That’s why it’s important to … Continue reading →
The post The Dos and Don’ts of Borrowing Money appeared first on SmartAsset Blog.
CIT Bank Locations? Where Are They?
CIT Bank locations: are there any near me? CIT Bank is an online only-bank, so, unfortunately, they do not have any physical locations. However, if you’re looking to know how to open a CIT Bank account beyond wondering if they have a location what are their current products and offers, then you have come to …
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The post CIT Bank Locations? Where Are They? appeared first on GrowthRapidly.
A Beginner's Guide to Investing in Stocks
To new investors, the stock market can seem mysterious and intimidating. Many people hear that buying stocks is risky, but they like the potentially high investment returns. Fortunately, there are some ways to make money investing in stocks that significantly limit your risk.
Just about every investor should own some amount of stocks, even during times of market volatility.
Just about every investor should own some amount of stocks, even during times of market volatility. I'll explain how to invest in stocks when you have little experience or money. You’ll learn the pros and cons of stocks and the best ways to own them to build wealth safely.
What are stocks?
Stocks are intangible assets that give you ownership in a company. That’s why they’re also known as equities or equity investments. Owning stock entitles you to part of a company’s earnings and assets.
Let's say a company needs to fund groundbreaking research, open a division in a foreign country, or hire a crew of talented engineers. Companies issue stock to raise money from investors for these types of ventures—it’s that simple.
Publicly traded stocks are bought and sold on exchanges such as the NASDAQ or the New York Stock Exchange (NYSE). However, you can trade them only through a broker or investment firm.
When a stock increases in value, it’s called "capital appreciation." That’s a fancy way of saying that the price goes up. As I'm writing this episode, Facebook and Apple stock are selling on the NASDAQ exchange for $266.12 and $469.51 per share. Visa and Walt Disney stock are selling on the New York Stock Exchange for $202.41 and $127.92.
If you buy Visa at $202.41 per share and the price goes up to $210, you can sell it for a gain of $7.59 ($210 – $202.41). You can easily find current stock price quotes on sites like Google Finance and Yahoo Finance.
In addition to capital appreciation, some stocks also pay a portion of company profits. If so, it’s called a dividend stock and distributes dividend payments to stockholders. For instance, right now, Discover pays a dividend of $0.44 a share. If you own 1,000 shares of Discover, you'd be paid $440 in dividends over a year.
Dividend stocks pay you even when the share price goes down, so owning them is smart to hedge against potential market losses. You can find a list of dividend stocks on a site like Morningstar.
The pros and cons of investing in stocks
There are many advantages to investing in stocks. One is that you don't need much money to buy them compared to other assets such as real estate. Buying just one stock share makes you an instant business owner without investing your life savings or taking on significant risk.
Buying just one stock share makes you an instant business owner without investing your life savings or taking on significant risk.
Another advantage of making stock investments is that they offer the most significant potential for growth. Although there's no guarantee that every stock will increase in value, since 1926, the average large stock has returned close to 10% a year.
If you're investing for a long-term goal, such as retirement or a child's education, stocks turbocharge your portfolio with enough growth to achieve it. Over the long term, no other type of common investment performs better than stocks.
The main disadvantage of investing in stocks is that prices can be volatile and spike up or plummet quickly as trading volume fluctuates from minute to minute. News, earnings forecasts, and quarterly financial statements are just a few triggers that cause investors to buy or sell shares, and that activity influences a stock's price throughout the day.
Price volatility is why stocks are one of the riskiest investments to own in the short term.
Price volatility is why stocks are one of the riskiest investments to own in the short term. Investing at the wrong time could wipe out your portfolio or cause you to lose money if you need to sell shares on a day when the price is below what you originally paid.
But as I mentioned, you can minimize this risk (but never eliminate it) by adopting a long-term investing strategy.
What is diversification in stock investing?
In addition to taking a long-term approach, another key strategy for making money investing in stocks is diversification. Having a diversified stock portfolio means you own many stocks.
People are often surprised to learn that it's better to own more investments than less. Diversification allows you to earn higher average returns while reducing risk because it's not likely that all your investments could drop in value at the same time.
Diversification allows you to earn higher average returns while reducing risk because it's not likely that all your investments could drop in value at the same time.
For instance, if you put your life’s savings into one technology stock that tanks, you’re in trouble. But if that stock only makes up a fraction of your portfolio, the loss is negligible. Having a mix of investments that responds to market conditions in different ways is the key to smoothing out risk.
Diversification isn’t a guarantee that you’ll make a killing with your investments, but the idea is that as some investments go up in value, others may decline and vice versa. It prevents you from “putting all your eggs in one basket,” financially speaking.
RELATED: How to Invest in the Perfect Portfolio
How to create a diversified stock portfolio
If you think creating a diversified stock portfolio sounds difficult or time-consuming, I want to put you at ease. Buying one or more stock funds is a simple and inexpensive way to achieve instant diversification.
Funds bundle investments of stocks, bonds, assets, and other securities into packages convenient for investors to buy. They’re made up of many underlying investments. Some funds may focus on one asset class only, such as international stocks, others may have a mix of asset types, such as stock and bonds.
Depending on the investment firm you use, you may see the following types of funds:
- Mutual funds are collections of assets that are managed by a fund professional. They give you a simple way to own a portfolio of many stocks. Shares can be bought or sold only at the end of the trading day when the fund’s net asset value gets calculated.
- Exchange-traded funds (ETFs) are similar to mutual funds because they’re baskets of assets. However, they trade like an individual stock on an exchange and experience price changes throughout the day.
- Index funds are a mutual fund that aims to match or outperform a particular index, such as the S&P 500. They typically come with low fees and may be comprised of thousands of underlying investments.
- Target date funds are a type of mutual fund that automatically resets the mix of stocks, bonds, and cash in its portfolio according to a selected time frame, such as your estimated retirement date.
How much stock should you own?
Stocks or stock funds should be an essential part of every investor's long-term portfolio. If you're young and have a long way to go before retirement, consider owning a large percentage of stocks. Though prices will go up and down in the short term, you're likely to see prices trend up and give you an impressive return over time.
But if you're nearing or already in retirement, take a more conservative approach to preserve your wealth. That doesn't mean eliminating stocks from your portfolio entirely but instead, owning a lower percentage.
There's a rough rule of thumb that says you should subtract your age from 100 or 110 to find the percentage of stocks to own.
There's a rough rule of thumb that says you should subtract your age from 100 or 110 to find the percentage of stocks to own. For instance, a 40-year-old should consider holding 60% to 70% of their investment portfolio in stocks. The remainder would be in other asset types such as bonds, real estate, and cash.
These investment allocation targets are not hard rules because everyone is different. To design your ideal allocation strategy, you can use an online resource, such as Bankrate's Asset Allocation Calculator.
What's important to remember about making money with stocks is that the amount you own should change over time. When you have decades to go before retirement, take advantage of as much growth as possible by investing mostly in stocks. As you get closer to retirement, devote more of your portfolio to bonds and cash, which preserve the wealth you worked hard to accumulate.
7 Smart Ways to Get Rid of Holiday Debt Fast
Many people overspend on their loved ones during the holidays, even going into “holiday debt” to do so. If that sounds like you, donât worry â youâre not alone. In fact, a recent survey found Americans racked up an average of $1,054 in debt this past holiday season. We want to help, so here are seven […]
The post 7 Smart Ways to Get Rid of Holiday Debt Fast appeared first on Incomist.
How Much of Your Paycheck Should You Save Each Month?
Youâve always heard itâs important to save as much as you can, but what does that really mean? Realistically speaking, saving can be hard once your paycheck hits your bank account. Bills, necessities, and extra wants may slowly diminish your…
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The post How Much of Your Paycheck Should You Save Each Month? appeared first on MintLife Blog.
Hitting the Books Again? Here’s How to Financially Prepare for Grad School
Earning an advanced degree as a working professional can be a challengeâunless you have a good financial plan.
The post Hitting the Books Again? Here’s How to Financially Prepare for Grad School appeared first on Discover Bank – Banking Topics Blog.
Money-Saving Hacks to Implement Now
Redo your monthly budget (and stick to it)
You can do plenty of things to improve your budget, and it's not all about pain and suffering, as many would have you believe. Everyone has a few things they overspend on. The challenge lies in identifying those particular items and weeding them out. A good place to begin is with restaurant spending, grocery bills, and impulse buying. A wise general philosophy is to assign a destination for every dollar you earn and place that category on your budget. Try cutting restaurant expenditures in half, reducing impulse buys at convenience stores, and shopping for groceries just once each week to regulate what goes toward food items.
Refinance your education debt
If you have any education debt still hanging around after all these years, refinancing student loans through a private lender is a way to lessen your monthly expenses. Not only can you get a longer repayment period, but have the chance to snag a favorable interest rate. But the clincher for money-saving enthusiasts is that your monthly payments can instantly go way down. That means extra cash for whatever you want. Use the excess to fatten savings or IRA accounts, or pay off high-interest credit card debt.
Install a programmable thermostat
For less than $20, it's possible to chop at least three percent off your utility bills and perhaps much more than that.
Programmable thermostats are easy to install. You don't need special tools or advanced skills. Be sensible about summer and winter settings and you'll see a difference in your electric bill almost immediately, especially during the hottest months of the year. Don't forget to program the device to go into low-use mode while you're away for long weekends or longer vacations.
Join a shopping club
Although shopping clubs come with annual membership fees, the savings on groceries, household items, and gasoline usually offset them within a month or two of actively using the membership. That leaves the other months of the year for you to save money on household necessities.
For people who drive a lot, shopping clubs with on-site gas stations offer one of the best deals going. Not only do the clubs offer gasoline for about 10 cents off the regular price, but some also offer free car washes and coupons for repair work at participating shops. Although shopping clubs are a win for most anyone, a family of three or more can log thousands per year in savings.
Refinance your home or car
If you have owned your home or car long enough to ride the interest rate waves, you likely qualify for a refinancing agreement. This strategy is excellent for consumers who have better credit now than when they made the original purchase.
Young couples are perfectly positioned to refinance a home after several years of making payments on it. Likewise, anyone who still owes on a vehicle and can get a lower interest rate should look into a car or truck refi. Not only can you get additional months to pay off the obligation, but with a lower rate, you stand to save a nice chunk of money.
Take bagged lunches to work
One of the oldest, more reliable ways to instantly cut personal expenses is to prepare and take your own lunch to work each day. Not only do you save money by not eating out or buying lunch in the company cafeteria, but you also have added control over what you eat. That means you're doing a favor for your wallet and your health at the same time.
Don't fall into the rut of eating at your desk. Consider taking your bagged meal outside and enjoying the scenery, taking a walk after eating, or joining friends in the cafeteria to socialize.
Use public transportation as often as possible
If you live on or near a bus or light-rail route, do the logistical planning necessary to travel to work at least a few times each week by public transit instead of by car.
Unless you reside in a small town, chances are you have access to buses and trains for commuting purposes. Once you get into a habit of using the public transit system, consider buying a one-month or annual pass, which can represent a major discount on one-time fare prices. Public transportation can take a bit longer to get you to your destination, but it's easy enough to make use of the time reading, catching up on work, or just relaxing.
Use credit cards wisely
If you use credit cards to make purchases you can't afford, you're headed for trouble. But if you use your plastic wisely, you can reap real benefits.
If you have a good credit rating, you'll likely qualify for cashback cards that give a percentage of your money back on some or all of your purchases. You can use that cash to pay for a portion of your monthly credit card bill. You could also let your cashback savings accumulate and use it to pay for larger purchases in the future.
Just make sure not to outspend your monthly budget so you're able to pay your credit card balance off in full each month. Keeping a balance on your cards is counterproductive because you'll also be paying interest fees.
Capital One 360 savings account review
The Capital One 360 Performance Savings account, commonly called Capital One 360 Savings, is a high-yield savings account with no monthly fees and no minimum balance required. Capital One makes it easy to get started, allowing you to open a new account online in about five minutes. And with the well-reviewed Capital One mobile app, you can easily manage your account on the go.
In this post, weâll cover the details of having a Capital One 360 Savings account, including the pros and cons â and how it compares to similar accounts. Plus, weâll help you decide if this is the right account for you.
Capital One 360 Savings Account Fast Facts
- Annual fee: none
- Minimum balance: none
- Current APY: 1.50% (as of 30 April 2020)
- Pros
- Comparatively high yields
- No monthly fee
- No minimums
- Easy to get started
- Mobile app access
- Cons
- No ATM cards
- Comparatively few local branches
Capital One Savings Account Benefits
There are lots of benefits to having a Capital One savings account. Here are some of the highlights:
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How Do CDs Work?
A certificate of deposit, more commonly known as a CD, is a special type of savings account. You deposit your money into the account and agree not to make any withdrawals for a certain period of time. At the end of that time, you get your money plus whatever was earned in interest back. Want… Read More
The post How Do CDs Work? appeared first on Credit.com.