Boston, a coastal city steeped in history and culture, is also a haven for renters seeking walkable neighborhoods. From the charming cobblestone streets of Beacon Hill to the lively energy of the South End, Boston offers endless pedestrian-friendly locales. Rentals are expensive, though, with one-bedroom units in Boston costing an average of $3,780.
In this ApartmentGuide article, we’ll uncover the most walkable neighborhoods in Boston, providing insights to help you find your perfect fit. So, get ready to explore the city’s unique neighborhoods, where every corner holds a new discovery.
All data sourced March 2024.
1. Beacon Hill
Walk Score: 99
Beacon Hill is the most walkable neighborhood in Boston, with a Walk Score of 99. Renowned for its historic charm, residents and visitors alike can explore the area and take advantage of its walkable layout. Notable attractions include the Massachusetts State House and the famous Boston Common.
Search for Beacon Hill apartments for rent.
2. Chinatown – Leather District
Walk Score: 99
Chinatown – Leather District has a Walk Score of 99, tied for being the most walkable neighborhood in Boston. There’s a lot to love about the area, from its vibrant food scene to its bustling shopping district. While you’re walking around the neighborhood, check out the beloved Chinatown Gate.
See Chinatown – Leather District apartments for rent.
3. North End
Walk Score: 99
North End is the third most walkable neighborhood in Boston. There are numerous walkable areas and attractions throughout North End, like the Paul Revere House and the Old North Church. And if you’re in the mood for an adventure, you’re not far from the Boston Harborwalk.
Find North End apartments for rent.
4. Bay Village
Walk Score: 98
Bay Village has plenty of amenities a resident might need within walking distance. From Elliot Norton Park to the Charles Playhouse, you’re sure to find something to love. A notable amenity is the Kings Chapel Burying Ground, which is a historic tourist attraction.
Browse Bay Village apartments for rent.
5. Downtown
Walk Score: 98
As the fifth most walkable neighborhood in Boston, Downtown is known for its bustling business district. Consider exploring NOrman B. Leventhal Park or grabbing a bite to eat at the Quincy Market with friends. There are plenty of other amenities in this urban community as well, like the New England Aquarium and the Boston Tea Party Ships & Museum.
Discover Downtown apartments for rent.
6. South End
Walk Score: 97
South End has a Walk Score of 97, making it the sixth most walkable neighborhood in Boston. Known for its Victorian brownstone homes, residents and visitors can choose from walkable amenities such as the SoWa Open Market and the Boston Center for the Arts. While you’re out, check out the South End Historical Society.
Look for South End apartments for rent.
7. West End
Walk Score: 97
West End is tied as the sixth most walkable neighborhood in Boston. This urban community has quite a few hotspots for residents to visit on foot, including the Museum of Science and the TD Garden. While you’re walking, take a moment to smell the flowers along the Charles River Esplanade.
Search for West End apartments for rent.
8. Back Bay
Walk Score: 97
Back Bay has a Walk Score of 97, making it also tied as the sixth most walkable neighborhood in Boston. There’s a lot to love about the area, from grabbing a bite at one of dozens of restaurants along nearby Newbury Street, to taking a walk at the Boston Public Garden. If you’re up for a longer outing, Back Bay Fens is popular among locals.
Find Back Bay apartments for rent.
9. Central Maverick Square
Walk Score: 95
The ninth most walkable neighborhood in Boston is Central Maverick Square. Pedestrians can enjoy the variety of restaurants, cafes, and shops, like the East Boston Farmers Market and the Piers Park Sailing Center. It’s also easy to walk over to the East Boston Greenway for a great day out.
Peruse Central Maverick Square apartments for rent.
10. Fenway
Walk Score: 95
Fenway is the tenth most walkable neighborhood in Boston. Local attractions here include Fenway Park, Northeastern University, and the Museum of Fine Arts, providing residents plenty of places to get together and enjoy their urban community.
Discover Fenway apartments for rent.
Methodology: Walk Score, a Redfin company, helps people find walkable, bikeable, and transit-friendly places to live, rating areas on a scale from 0-100. To calculate a Walk Score for a given point, Walk Score analyzes thousands of walking routes to nearby amenities, population density, and metrics such as block length and intersection density. Points are awarded based on the distance to amenities in each category.
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I’ve been told that life is about living in the moment.
But are you living with intention?
Intention means to be aware of what you want, and your desires should align with your purpose.
If they don’t, it can lead to a feeling of not knowing who you are or where on earth life is heading. And without those two things happening in unison – clarity and direction – then any type of accomplishment becomes difficult if not impossible (see my personal story below, for example).
So how do you live with intention?
For many people, life is a struggle.
We are constantly told that we need to do certain things and be a certain way in order for us to feel fulfilled or happy.
While this may sound like good advice, it can lead some of us down the wrong path–especially when our lives are already suffering from a lack of motivation or direction.
In this post, we will discuss seven reasons why you should consider living your life with intention now rather than just letting life lead you. Also, this may change your perspective on life.
There are great benefits that come along with living your life with intention and what it means to live without limitations.
Most importantly, there will be questions you may want to ask yourself which could help get you started on the right path going forward.
Either way, to live life with intention, you must take action now!
What is Intentional Living?
This is an intentional practice of living more intentionally, with a greater focus on self-care and mindfulness.
Intentional living is a lifestyle that encourages you to identify your priorities and values.
This means that it matters more than ever before because people are gradually becoming clearer on what they want in life and how they can achieve those things.
It is not an easy task but one worth taking up if you’re ready for the challenge, as there will be greater clarity of focus when pursuing this goal.
Living Life with Intention Meaning
Intentional living means that we are aware of what’s going on in our lives and make conscious decisions about the things we want to do. It also implies being present, stopping for a moment, reflecting, and thinking about what’s happening.
When you live intentionally it gives your life meaning because you will see progress over time as opposed to just fixing things or achieving goals by ticking them off a list.
Intentional living is a lifestyle that allows for more time to experience love, laughter, happiness, and appreciating the intrinsic value of simpler things.
Saying I appreciate you is important.
In these exploratory questions below, we looked at what makes you happy, how you spend your time, and your future plans.
Why is it important to live intentionally?
It is important to live intentionally because you will have a life that is more meaningful, purposeful, and rewarding.
You are able to make decisions about what you want out of your life and know what is most important to you.
In this busy world, it is easy to get caught up in the rat race. Simplify your life and spend time doing what matters most requires living with intention.
We need to be mindful of how we choose our day-to-day activities so that they serve a greater purpose.
By living intentionally, one can live a happier and healthier life. Purpose in life is correlated with happiness.
7 Reasons For Living Life with Intention and Purpose
Intentional living is a lifestyle that focuses on reflecting and making conscious decisions about what’s in alignment with your values.
This approach to life helps you live more meaningful, satisfying lives by taking time out of each day to consider who you are, what matters most to you, and how might be able to change the course of your life for the better.
It only takes 7 minutes per day for intentional reflection.
In a short amount of time, the benefit is it allows you not only to think about what is in alignment with your values but also how you might be able to change the course of your life for the better.
And that’s the point of intentional living: to live your life with intention.
These 7 reasons are not only worth pursuing now but also in life’s present moments where there is no need to wait until tomorrow because it can be done today!
1. You’ll be more in the present moment.
You will be able to live a life more spontaneously and deeply, with intention.
By living each day more deliberately, you will find greater peace bliss, serenity in your day-to-day life, and increased meaning in a world where things and people repeatedly start to look the same.
Living a life with intention and purpose is going to be one of the best decisions you can make. Why? The power that comes from living a deliberate life will impact every area of your being.
2. You’ll be focused on goals and daily tasks, not distractions.
A person’s life is often focused on daily tasks, work, and going through the same routine day after day. This focus has its benefits, but it also entails forgetting about important goals that a person has set.
With the abundant distractions in our lives, we seek the next big project (or social media) to distract us from what we need to focus on.
In times like these, it becomes difficult to make the “life decisions” that will lead us closer to success.
3. You’ll be more likely to make smarter decisions and take on new challenges with confidence.
Happiness is a choice, and so are meaningful relationships. Time well spent will be a joyful day.
Managing your expectations will improve your life, making it harder for you to get too disappointed.
Start new projects with ease and make motivation part of your daily routine.
Handle criticism with ease knowing there will be some bumps and bruises along the way, but you know it is worth sticking your neck out.
Utilize today’s technology to your advantage – not a distraction device.
Sidestep old patterns or bad habits, so that you are open to the opportunities that lie ahead.
Perception of ease is attainable when you make healthy lifestyle choices and become reliant on an inner sense of what is worth.
4. It will help you better understand your priorities, which means less decision fatigue!
You’ll feel more relaxed knowing you are saving your time for the activities that matter: conversation, cooking dinner with friends, sitting on the couch working on your weekend project, and reading a book.
Maintaining your lifestyle and personal growth should be a top priority in your personal development plan since it is impossible to get back any time you waste.
This should not have to be a life of hustle.
In this life, you have time for time activities with meaning and purpose.
5. It will help keep you on track with your goals and priorities, which can be hard to do without a plan.
You have to find your 100% pure motivation and encouragement in this journey of life!
By setting goals and aligning your priorities, it will transform the way you live your life and have a fulfilling time.
Our focus on this post resonates with a well-timed message to help facilitate personal growth and success- with empowering and easy steps.
Learn how to make money goals and a vision board.
6. You’ll have the freedom to live life how YOU want to live it.
You’ll have the freedom to live life how YOU want to live it.
You will have the freedom to set and achieve objectives using the resources you have.
You will love how it keeps you balanced, since your world is always changing, and the results will show on your path to success.
One of the ways to achieve this is to understand the real meaning of time freedom. More importantly, you need to figure out how to live with time freedom dominating your day.
7. You will have clarity of your desired outcome and what you want to create for yourself, others, or both (meaning you’ll have a purpose).
Since the idea of pursuing happiness can be vague, you have to define the truths about living this free life and live more intentionally.
In these times, many are foregoing happiness in favor of sacrificing something to feel secure within their careers or daily overexerting themselves by trying to “keep up with the Jones.” You deserve clarity of how you want to spend the remaining years you have.
This answer will vary from person to person and situation to situation because you have the freedom to design the life you want.
With so many distractions and options, it can be hard to find your way. Whether you’re looking for love, fulfillment, or a career path, this mantra is the life guideline that will provide clarity and stay true.
Now, It is Your Turn…
Living Life with Intention turns the phrase “figuring it out” into a guide to the life you love.
It is about being aware of what matters most and prioritizing it in a way that helps you reach your goals. Intentional living is not just for those seeking blessings or divine guidance; anyone can benefit from this approach – whether they be spiritual seekers or simply trying to improve their quality of life.
This is how can I have an intentional life.
Is intention and purpose the same thing?
Intention is a conscious choice to act in a certain way. Purpose, on the other hand, is something that we do because it’s part of our core values and who we are as people. Intention helps you live life with purpose and intention.
The difference between Intention and Purpose:
– Intentions are short term goals or actions. These are things you do today to achieve your purpose.
– Purposes are your long term goals or actions. This is whys why you are doing the things that lead up to your intentions.
In addition, purpose also means that you are doing something for a larger reason than just the goal or action itself.
Intention and purpose are different because the intention is short-term, while purpose is long-term. They correlate to each other on how you live your life each day.
How to Live Life with Intention
Intention is defined as the direction or goal of one’s thoughts and actions. Even though people may be living their lives without intention, life still has a direction.
In order to live life with intention, one must think about their actions and their consequences of them. The consequence could be something small such as not picking up an item at the store that you needed to buy, or it could be something monumental such as not staying in a relationship that you feel is no longer healthy for you.
The point of living life with intention is to make the best choices for oneself, one’s family, and one’s future.
In order to do this, you must answer these soul-searching questions.
For most people, this is difficult because it requires you to consider how you want to live your life.
There are many ways that one can do this, and the answer will be different for everyone. However, it is important to do this with intention and intentionality.
1. Envision your perfect day
Make a picture of what your life would look like if you were living that perfect day and make it as detailed as possible.
Find a quiet place to sit and be still for at least 10 minutes.
Think about:
What would you spend your time doing?
Where would you be?
Who would be with you?
Now, how can you live days like that more often?
2. Decide your Personal Values
In order to make a change, you must first decide what is important to you. This process can be difficult and painful, but it’s necessary in order to keep yourself motivated towards your goal.
It is important to decide what your personal values are and use them as a guide for making decisions in life.
This is a process that starts with thinking about what your personal values are. This can be difficult to do in the abstract, but it is helpful to think of your values as being somewhere on a spectrum between your beliefs and what you do.
Do this exercise like you were an outside person looking in. What would that person say about you? What do you value in life?
Your life of personal values will be necessary in order to live with intention.
3. What is your Vision for Life?
Your vision for life is what makes all the difference in how you live your day-to-day life.
Core values are the guideposts that lead you along your path to fulfillment and happiness. By looking back on moments when you feel proud or happy, it’s easier to find out what is important to you and how those things can be expressed through your actions today.
A simple example could be:
My vision for life is to be happy and healthy. I want to live a long, fulfilling life with the love of my family and friends.
If you have never created a vision board, then this vision board planner will help you out!
4. Question the “Norms”
Think about everything you believe you belong on your list of “have tos.”
Those things you feel like you must do. Some examples of these are “you have to go,” “you need to eat,” and “I have to do my homework.”
Now, take a birds-eye observation… do these “norms” and “have tos” serve you well?
Are these “norms” the reasons why you are not living your life with intention?
Take inventory of what you actually have to do every day and eliminate all that does not serve your goals.
5. Relax Intentionally
Relaxing intentionally is a process in which one seeks to achieve a temporary escape from stress and the overwhelming pressures of everyday life.
This is something that is HARD to do when you first attempt to relax.
It is important to take some time for yourself.
Unwind from a busy day and get back into the life of intention by choosing low-energy activities that re-energize you.
During quiet time, spend time intentionally uncovering ways that help you relax.
Are you Ready to Live Life with Intention?
Ultimately, living life with intention is about curating a life based on things that really matter.
You can do this through intentional time management and making sure you are spending your time in the way that makes the most sense for yourself. This will help you to be more clear on what it means to live intentionally as opposed to just being dictated by society’s standards or guidelines.
This is something that you deserve to do.
Furthermore, intentional living is about being present and aware of what you value.
It is a shift from striving for the life that others think you should be leading to embracing the one that feels good. Intentional living allows us to find more room for love, laughter, happiness, and appreciate all those things we often take for granted in our daily lives.
It doesn’t mean giving up on your goals or aspirations but rather finding rhythm so they feel true instead of false like many other pursuits.
Living a life of intention will impact the world on what you believe in.
This is a step necessary for personal growth, which leads to accomplishing more things than you ever thought possible.
With true reflection, it will take time to figure out your values and decide what they are.
Intentional living is about more than just paying bills and going to work each day — it’s about giving your life a purpose. It means considering every decision from all perspectives that are relevant to the kind of life you want
You just have to start questioning every single action you take.
This is how can we live an intentional and purposeful life.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
It wasn’t that long ago — perhaps your mother’s or grandmother’s time — when women couldn’t get bank loans or credit cards, and employers could pay them less, explicitly for being women. While women have made considerable strides in attaining financial equity over the past 60 years, this history still plays a role in their current experiences and finances.
A January 2024 NerdWallet survey of more than 2,000 U.S. adults, conducted online by The Harris Poll, asked Americans about the gender financial divide and found remnants of that recent past.
“A lot has changed since the 1960s and 1970s, but these decades and what came before them still impact our financial lives,” says Kimberly Palmer, personal finance expert at NerdWallet. “Acknowledging how our financial experiences differ across gender, race and even age can help us understand what we can do in our personal lives and household budgets to improve our financial outlook as well as the role that governments, companies and institutions can play.”
Key findings
Men are seen as having an easier time finding well-paying jobs, but women are more optimistic about their current roles. More than 2 in 5 Americans (44%) say men have the easiest time finding a well-paying job, while just 11% think women do. However, employed women are more likely to feel optimistic about keeping their current job over the next 12 months, with 81% saying this versus 76% of employed men, according to the survey.
Men were more likely to receive a pay raise over the past year. More than 1 in 4 men (27%) say their salary or pay rate increased over the last year compared with 21% of women, according to the survey.
Both men and women are more likely to say the most financially successful person they know is a man. Just 16% of Americans say the most financially successful person they know is a woman, compared with 37% who say it’s a man, according to the survey. That includes 42% of men and 33% of women who say a man is the most successful person they know.
Women were cited as better money managers. Close to 3 in 10 Americans (28%) say women are better at managing money on a daily basis than men. Just 15% say men are better at it, according to the survey.
Financial Outlook
Overall, 72% of Americans say they’re optimistic that their financial situations will improve over the next 12 months — roughly equal shares of women (71%) and men (72%). But beneath the surface, there are some disparate perspectives. Here’s a look at several, along with advice for consumers on navigating personal finances.
Current job security and job-seeking
Women have become major players in the labor market over the past several decades. In 1953, about 34% of women participated in the labor force. That figure peaked at 60% in 1999, and had dropped to 57% in 2023, according to the Bureau of Labor Statistics.
But being more prominent in the workforce doesn’t mean getting the best jobs is easy. In the NerdWallet survey, more than 2 in 5 Americans (44%) say men have the easiest time finding a well-paying job (just 11% think women do).
The ability to maintain employment once you find it is key to financial security, and in this regard, women are feeling good. About 4 in 5 employed women (81%) are optimistic about continuing to work in their current job over the next 12 months, compared with 76% of employed men, according to the survey. That divide was larger among generations: just 59% of employed Generation Z (ages 18-27) expressed optimism about their current jobs, compared with 79% of employed millennials (ages 28-43), 84% of employed Generation X (ages 44-59) and 88% of employed baby boomers (ages 60-78).
Stay competitive in your field. Even the best employees aren’t guaranteed their job will be there forever. Keep your resume updated and look at open roles occasionally to stay abreast of what employers are seeking. Then, if the economy takes a turn and you lose your job, you can quickly pursue new opportunities.
Recent pay increases
The Equal Pay Act of 1963 barred employers from wage discrimination based on sex. While the gender pay gap has narrowed since that time, it hasn’t closed.
On average, women’s paychecks continue to fall short of those of their male counterparts. According to the BLS, women who are in the 25-34 age group earn about 90% of men of the same age, on a weekly basis. Looking at 35- to 44-year-olds, women earn even less (84%) than men. Lower earnings mean women generally have less of a buffer to rely on when times are tight.
More than 1 in 4 men (27%) say their salary or pay rate increased over the last year compared with 21% of women, according to the NerdWallet survey. That divide expands among Gen Xers, where 40% of men say they had a pay bump and 25% of women say the same.
“Given those pay disparities, it’s harder for women to funnel money into savings and investing accounts, since on average, they are starting with less. With the power of compound interest, those discrepancies can add up over time, creating even greater wealth gaps between men and women by the end of their lives,” Palmer says.
Ask for more from your employer. Only 8% of Americans — roughly equal shares of men and women — negotiated for a higher salary at their current job, according to the survey. Whether it’s time for your annual review or you’re considering a new job, be prepared to negotiate for more money and/or perks. A 2021 study by researchers at the University of Southern California found participants often avoided negotiating compensation, but those who did wound up getting larger pay packages.
Financial Security
Roughly equal shares of men (61%) and women (63%) say they’re optimistic that the financial companies they use care about their financial well-being, according to the survey. But it wasn’t always that way. There was a time when women in the U.S. couldn’t take out loans or have their own credit cards, particularly if they were unmarried. The Equal Credit Opportunity Act of 1974 changed that, barring discrimination by lenders based on gender or marital status.
Access to credit can be a lifeline when unexpected expenses arise. So can an emergency fund. The survey reveals that a smaller share of women believe they won’t have to tap such a fund in the coming year: 65% of men are optimistic they won’t have to dip into their emergency savings in the next 12 months, while 58% of women express the same optimism.
But millennial women are concerned: About 1 in 5 (17%) of this group say they’re “very pessimistic” about having to use those emergency funds over the next 12 months compared with 8% of millennial males, according to the survey.
The ability to build an emergency fund can feel like a luxury, one that may be afforded less to folks with less wealth. And while the gender pay gap is notable, the gender wealth gap — which takes debt and assets into account — is even more pronounced, according to the St. Louis Fed.
Indeed, just 16% of Americans say the most financially successful person they know is a woman, compared with 37% who say it’s a man, according to the survey. That includes 42% of men and 33% of women who say a man is the most financially successful person they know.
Bolster your emergency fund. A robust emergency fund is the bedrock of financial security. It can insulate you from a variety of financial shocks. If you’re starting from scratch, build your fund incrementally, beginning with a goal of $500, for instance. In the long term, aim to have several months of essential living expenses set aside in a high-yield savings account.
Money management and advice
Having money and knowing what to do with it don’t always go hand in hand. The survey finds nearly twice the share of Americans think women are better at managing money than are men.
Close to 3 in 10 Americans (28%) say women are better at managing money on a daily basis than men. Just 15% say men are better at it. Men are fairly evenly split in this assessment — 21% say women are better at the task and 22% say men are. Women are a bit more biased — 35% say that women are better at it and 9% say men are.
The perspective that women are better at daily money management doesn’t necessarily translate to people seeking out their guidance: 15% of Americans say the person they most often turn to for financial advice is a woman and 25% ask a man.
Gen Zers and millennials are slightly more polarized, with 35% of Gen Z women and 24% of millennial women saying they most often ask a woman for financial advice. Compare that with just 15% of Gen Z men and 10% of millennial men who say the same.
“Own” the financial factors within your control. You can’t control how society adapts to significant cultural shifts (such as allowing women access to financial equity). But you can find ways to take authority over the money you have, learn how to manage your money daily and give yourself the best possible chance to earn more and reach your long-term financial goals.
“Setting financial goals that are realistic and manageable can make it easier to stay on track with your spending and saving habits,” Palmer says. “Sharing those goals with friends and family who can offer support and their own tips also helps. We’re in it for the long run, so think about where you want to be in several decades, and begin taking steps to reach that destination today.”
Methodology
This survey was conducted online within the U.S. by The Harris Poll on behalf of NerdWallet on Jan. 18-22, 2024, among 2,085 adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, contact [email protected].
Disclaimer
NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.
There is a difference between being rich and wealthy.
However, most people combine rich and wealthy into one bucket because they both seem so far off and unreachable.
It is important that you understand the distinction because what one person considers “rich” might actually be considered “wealthy.”
There is a huge difference between the two words, no matter how they are used.
Earning a lot of money does not automatically lead to happiness and success because when one achieves happiness when it can be reflected in the fulfillment of ambition.
Being rich usually means that you have an abundance of material things such as money and expensive items.
Being independently wealthy can be seen as someone who has a lot of money, but it also means that they have enough money that will last the test of time.
There is a difference between being rich and being wealthy, but they are both can be seen as positive things.
Let’s discuss the different types of wealth and how they are defined in order to help differentiate these two concepts.
The real key of Rich vs Wealthy is the discussion on which one you should be striving to be.
So, is it better to be rich or wealthy?
What is a Rich Person?
A rich person is someone who has a lot of money and assets. This may be a businessperson, an investor, or just someone who has been very successful in their field.
This rich person has probably created new money vs old money.
Rich people tend to barely save any money and spend excessively, meaning they run out of cash quickly. For example, a rich person might earn $10,000 in a month while spending $12,000 to wind up with a negative $2000 when the month is over.
The amount of debt for a rich person tends to be higher. They are willing to keep up the lifestyle rather than tell others about their debts.
To be rich you have to be able to take the risk of having money to invest and time to wait for the windfall.
What is a Wealthy Person?
A wealthy person is someone who has a lot of money for their lifestyle standards.
Since a wealthy person is consistently growing their money because they save and are wise with what they have. They tend to think of the future and put away some cash for it rather than spending everything.
Their goal is to take their large sum of money and grow that money even more through active or passive income.
A wealthy person does not have to be a number-crunching billionaire or someone who is living lavishly.
It is all about the decisions that you make and how those decisions can lead to wealth.
You can start to build wealth when you hit your first $100k in investments. When you have a salary of over $100k a year, this is much easier to do fast.
Wealthy people are those who have a lot more money than you do, but they work hard every day in order to keep it.
Rich vs Wealthy Money Habits
Rich people tend to spend more money than wealthy people.
The difference between rich people and wealthy people is that rich people have money habits that often lead to debt. Rich people are not usually frugal, and they tend to spend a lot of money.
Also, rich people have the ability to earn more if they choose something different in the future.
Rich people are usually defined as those with a net worth of over $10 million, but there is no set number for how much money someone has to be considered rich.
Wealthy people, on the other hand, have an annual income of $150,000 or more. Their wealth comes from hard work and saving money to slowly increase their net worth.
Broke People Habits:
Spend time watching TV and playing video games
Keep up with the Joneses’
Blame others for failures
The concept of change is too overwhelming
Too afraid of setting goals because they don’t want to be accountable
Deep in debt
Feel their situation will never change
Never save money
Willing to get a credit card just for a discount
Think bank fees and overdraft fees are a part of life
No emergency fund
Rich Habits:
Earns a lot of money
Spends a lot of money
Enjoys a flashy lifestyle
Okay being in debt
Focuses on the short term
Not big savers of their money
They frown upon being frugal
Prefer a challenge to make more money
Takes on bigger risks
Their inner circle is people exactly like them
Very impulse with decision making
Wealthy Habits:
Set long term goals
Creates an action plan to reach their goals
Take responsibility for their actions
Saves money consistently
Understands that passive income will grow their wealth
Constantly learning
Spend time reading
Enjoys the fact they have options
Lives below their means
Embraces frugal
Shy away from debt
Finds a mentor
How to Go from Rich to Wealthy
Many people feel the need to be rich because they have the idea that being rich is key to success.
However, many times, wealthy people are wealthier than their counterparts who are both richer and wealthier.
If you are rich, then it is important that you are not frugal because many times, being wealthy means having a lot of money and saving the rest. If you have a lot of money and are not frugal with it, then you could end up broke.
However, if your goal is to become wealthy meaning having a lot of money AND saving, then you are on the right path to financial freedom.
This is the difference between being rich and wealthy.
Rich vs Wealthy Mindset
First of all, the definitions of each of these are really close.
A rich mindset is a state of mind that knows that there are no limits to what you can achieve.
A wealthy mindset believes that success and wealth come from hard work and dedication.
Honestly, both money mindsets are needed to keep pushing yourself to reach financial freedom and enjoy time freedom.
You need a rich mindset to grow your money, but a wealthy mindset to keep that wealth.
The wealthy are more likely to have a growth mindset than the poor because they know that money is merely an instrument for achieving their goals.
Whereas, rich people often spend too much time worrying about what others think of them and why they aren’t as successful or wealthy as other people in society.
How to Become Wealthy
This is a question that has been asked many times, and finding the answer depends on how you define wealth.
In general, becoming wealthy means having enough money to support yourself without any outside help.
You have enough money to cover your expenses without the need for an additional influx of money. For many people, that means they need at least $1 million dollars, so they can live off the investments gains and dividends. If you are single, then $500k may be enough.
As such, becoming wealthy is one of the most difficult things to do.
If you are constantly struggling to make ends meet and never saving money, then becoming wealthy will be even harder for you to accomplish!
Here is what you need to do to move from well off vs rich vs wealthy.
Step #1 – Get out of debt
For people who are in debt, the solution is simple: get out of debt.
But for a lot of people, they need to make some changes before they can do that.
It’s important to get out of debt and that takes time. The more debt you have, the longer it will take.
However, I will tell you from personal experience. Until we paid off our debt, we didn’t make any progress financially. We were stuck on a hamster wheel. Since paying off our debt, we reach our financial goals so much easier.
Track your progress, set goals, and stay motivated while getting out of debt.
Step #2 – Stop comparing yourself
Although comparisons can be helpful and may indicate which side is doing better or worse, they are not always accurate. Sometimes comparing yourself to others will make you feel inferior and frustrated.
Keep in mind that you are not just the sum of your accomplishments.
Stop comparing yourself to other people and start focusing on the things that make you happy.
Conversely, spending time with people who inspire you will help cultivate a wealthy mindset. It can be anyone from your family members to celebrities, but it is important that these individuals are inspirational and not toxic for your mental health.
Step #3 – Become Your Own Boss
This doesn’t mean you can’t keep your 9-5 job. It means you are looking for ways to make money outside the traditional “job.”
An entrepreneur is a person who organizes and runs a business, typically with manageable risk and a small amount of capital, in order to turn it into a profitable venture.
Become creative with ways to bring in extra money. Some ideas include day trading, dropshipping, starting an Etsy shop, driving for Uber, or walking dogs.
Here are great ways to make money on the side:
It is possible to make more money on your business than you make more money in your current job or career.
Step #4 – Be Generous
Be generous to others.
Being wealthy means living a comfortable life and being able to help others.
Giving away money can be a way to build wealth, but it is not the only way. This helps you realize the impact you can have on the world.
Your small contribution can help shape and change the lives of so many.
Consequently, giving and helping others will motivate you to work harder and continue building your wealth.
Step #5 – Think Long Term & Set Goals
Life goals have exploded in recent years and many of us are now focused on growing our own wealth.
The truth of the matter is both wealth and richness are great.
Wealth enables a person to live life on his own terms and allows them to achieve the things they have dreamed of.
But, getting there does not just magically appear.
It takes a plan of action to reach those smart financial goals.
By consistently saving money, you will slowly build your net worth. Step by step you are building the foundation to become wealthy.
Baby steps to becoming wealthy.
Rich vs Wealthy Quotes
This rich vs wealthy quote from Stephen Swid is one of my favorite all-time quotes.
This quote quickly summarizes the difference between the wealthy vs rich definition.
“Being rich is having money; being wealthy is having time.”
As an American businessman and investor, Stephen Swid spent countless hours on various deal negotiations and build his own wealth. He understood the wealthy vs rich meaning.
This quote is something I focus on when making decisions of what next steps to take.
What does this quote mean to you?
What is considered being wealthy?
Being wealthy is a subjective term that can be interpreted in many ways. The definition of the term is different for everyone, so it’s hard to answer this question definitively.
Many people believe you need 7 figures or even 10 figures.
One could be considered to be wealthy or poor based on their country’s standards, their personal spending habits, and the types of investments they have.
The richest people are those who have made their wealth through investments and not necessarily the ones that have spent a lot of money.
The definition of wealthy is different for everyone, but it’s generally considered to be someone who has a lot of money and financial stability.
Being wealthy is measured by how much money you accumulate and save.
It is understanding your personal finances to budget, track savings, contribute to retirement, and grow liquid net worth.
A wealthy person is someone who has made wise decisions. Wealth does not have anything to do with how much money you have in your bank account.
Do you Fit the Definition of Wealthy vs Rich?
Now, we have covered the difference between the wealthy and the rich. If you’re wondering what is the difference between rich and wealthy, it’s not that complicated.
Rich people are those who have saved, invested, and built net worth through their income or assets. Wealthy people can follow these three simple steps to build your own wealth: save money in a savings account or investment account; invest in stocks, bonds, or other securities for growth; create an asset such as real estate by purchasing property with borrowed funds on low-interest rates
The key distinction between being rich or wealthy is the mindset.
Rich people might have more money in their bank accounts or assets, but they don’t think of themselves as rich because they are worried about their appearance and keeping up with their elite society. Wealthy individuals are those who see value in accumulating wealth primarily through investing and growing their financial portfolio with investments over time.
A rich person is someone who has more money than the average person but may not wealthy. They are always looking to make more money and spend more because they believe that there is not enough time or money in this world for them to enjoy.
Wealthy individuals are those who can afford to buy things and choose not to because it helps them increase their net worth and become more wealthy.
The only way to be wealthy is by being smart on your investments and having time for yourself in order to find happiness.
Being rich may or may not be something you should aspire to be. The more money you have, the more responsibilities you get.
There are many rich and wealthy people who are unhappy because they are so busy trying to keep up with society’s expectations.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
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How to get the best mortgage rates and deals
Mortgage rates vary depending on the type of mortgage you’re looking for, your financial situation and your credit score. But when we talk about getting the best mortgage rate, it’s important to find the best rate among the mortgage deals that suit you and your circumstances.
Mortgage fees and the features you want in a mortgage should always be considered alongside the mortgage rate when making mortgage comparisons and shopping around for any mortgage deal.
If you’re in any way unsure or want help finding the best mortgage deal for you we recommend you seek mortgage advice.
Are mortgage rates going down?
Mortgage rates have mainly been rising in the past week, continuing the upward trend seen during much of February. The average rate on two-year fixed-rate mortgages increased to 5.15% in the week to 28 February, rising from 5.08% a week earlier, according to Rightmove. At the same time, the average rate on five-year fixed-rate mortgages increased to 4.80%, up from 4.72%.
Many of the big UK lenders have increased the cost of their fixed-rate mortgages in recent weeks. However, average rates remain lower than at the beginning of the year, due to the significant rate cuts seen during the mortgage rate price war in January.
Some experts are predicting that more mortgage rate rises may be on the way. This is mainly because of expectations that the Bank of England base rate may need to stay higher for longer, to get inflation down.
What are current UK mortgage rates?
The average two-year fixed-rate mortgage rate, if you have a 25% deposit or equity, increased to 4.99% over the past week, up from 4.90%, while the average rate on a similar five-year fixed-rate mortgage rose to 4.70%, from 4.61%. If you have a smaller deposit or equity of 5%, the average two-year fixed rate remained unchanged at 5.79%, while the average five-year rate increased to 5.38%, from 5.35%. All rates are according to Rightmove as at 28 February 2024.
Latest average two-year fixed-rate mortgage rates
Loan to value (LTV)
21 February 2024
28 February 2024
Week-on-week change
⇩ ⇧
60% LTV
4.50%
4.62%
+0.12%
⇧
75% LTV
4.90%
4.99%
+0.09%
⇧
85% LTV
5.08%
5.14%
+0.06%
⇧
90% LTV
5.31%
5.38%
+0.07%
⇧
95% LTV
5.79%
5.79%
No change
⇔
Latest average five-year fixed-rate mortgage rates
Loan to value (LTV)
21 February 2024
28 February 2024
Week-on-week change
⇩ ⇧
60% LTV
4.19%
4.30%
+0.11%
⇧
75% LTV
4.61%
4.70%
+0.09%
⇧
85% LTV
4.67%
4.73%
+0.06%
⇧
90% LTV
4.86%
4.93%
+0.07%
⇧
95% LTV
5.35%
5.38%
+0.03%
⇧
Data sourced from Rightmove/Podium. Correct as at 28 February 2024.
Average rates are based on 95% of the mortgage market and products with a fee of around £999.
What mortgage do I need?
If you’re looking for a mortgage, you’ll usually fall into one of the following categories of mortgage borrower.
If you’ve never owned a home before, you’ll usually need a first-time buyer mortgage. Knowing that you’re just starting out, the deposit requirements on most first-time buyer mortgages are generally small. You should also be able to find mortgage deals where upfront fees are kept to a minimum. However, mortgage rates for first-time buyers tend to be higher than if you’re already on the property ladder. This is because you’re likely to require a larger loan relative to the value of your property – so borrow at a higher loan-to-value (LTV) – making you a riskier proposition in the eyes of lenders. As it’s your first mortgage, lenders also have less to go on when trying to assess your reliability as a mortgage borrower.
If you already have a mortgage but want to switch to a new one, you are looking to remortgage. You may want to remortgage because your current fixed-rate or discounted term is at an end and you don’t want to move on to your lender’s standard variable rate (SVR), which may be higher. Other reasons you may remortgage include to raise funds to pay for home improvements, or because falling interest rates or a rise in the value of your home means remortgaging could save you money. If you’ve built equity in your property since taking out your current mortgage, it may be possible to borrow at a lower LTV for your new mortgage – and the lower your LTV, the lower mortgage rates tend to be.
If you already have a mortgage but are moving home, you may be able to take your current mortgage with you – this is called porting. Alternatively, you may want to arrange a new mortgage altogether, either with your current lender or a different one. Whichever option you’re considering, it’s important to weigh up the costs of either porting or exiting your existing deal, along with any potential fees you may need to pay on a new mortgage deal.
If you’re buying a property to rent out to tenants, you’ll be looking for a buy-to-let mortgage. You’ll normally need a larger deposit for a buy-to-let mortgage than you would for a residential mortgage, and buy-to-let mortgage rates tend to be higher too. Lenders will also want to see that the rental income you expect to receive will more than cover your monthly repayments.
How mortgage rates work
Mortgage rates are the interest rate you pay to a lender on the mortgage balance you have outstanding. The lower your mortgage rate, the lower your monthly mortgage repayments tend to be, and vice versa.
Different types of mortgage
The type of mortgage you take out can affect the mortgage rate you pay, and whether it may change going forward.
Fixed-rate mortgage
A fixed-rate mortgage guarantees that your mortgage rate, and therefore your monthly repayments, won’t change during the set fixed-rate period that you choose.
This can help with budgeting and means you are protected against a rise in mortgage costs if interest rates begin to increase. However, you’ll miss out if interest rates start to fall while you are locked into a fixed-rate mortgage.
Variable rate mortgages
With a variable rate mortgage, your mortgage rate has the potential to rise and fall and take your monthly repayments with it. This may work to your advantage if interest rates decrease, but means you’ll pay more if rates increase. Variable rate mortgages can take the form of:
a tracker mortgage, where the mortgage rate you pay is typically set at a specific margin above the Bank of England base rate, and will automatically change in line with movements in the base rate.
a standard variable rate, or SVR, which is a rate set by your lender that you’ll automatically move on to once an initial rate period, such as that on a fixed-rate mortgage, comes to an end. SVRs tend to be higher than the mortgage rates on other mortgages, which is why many people look to remortgage to a new deal when a fixed-rate mortgage ends.
a discount mortgage, where the rate you pay tracks a lender’s SVR at a discounted rate for a fixed period.
Offset mortgages
With an offset mortgage, your savings are ‘offset’ against your mortgage amount to reduce the interest you pay. You can still access your savings, but won’t receive interest on them. Offset mortgages are available on either a fixed or variable rate basis.
Interest-only mortgages
An interest-only mortgage allows you to make repayments that cover the interest you’re charged each month but won’t pay off any of your original mortgage loan amount. This helps to keep monthly repayments low but also requires that you have a repayment strategy in place to pay off the full loan amount when your mortgage term ends. Interest-only mortgages can be arranged on either a fixed or variable rate.
» MORE: Should I get an interest-only or repayment mortgage?
How rate changes could affect your mortgage payments
Depending on the type of mortgage you have, changes in mortgage rates have the potential to affect monthly mortgage repayments in different ways.
Fixed-rate mortgage
If you’re within your fixed-rate period, your monthly repayments will remain the same until that ends, regardless of what is happening to interest rates generally. It is only once the fixed term expires that your repayments could change, either because you’ve moved on to your lender’s SVR, which is usually higher, or because you’ve remortgaged to a new deal, potentially at a different rate.
Tracker mortgage
With a tracker mortgage, your monthly repayments usually fall if the base rate falls, but get more expensive if it rises. The change will usually reflect the full change in the base rate and happen automatically, but may not if you have a collar or a cap on your rate. A collar rate is one below which the rate you pay cannot fall, while a capped rate is one that your mortgage rate cannot go above.
Standard variable rate mortgage
With a standard variable rate mortgage, your mortgage payments could change each month, rising or falling depending on the rate. SVRs aren’t tied to the base rate in the same way as a tracker mortgage, as lenders decide whether to change their SVR and by how much. However, it is usually a strong influence that SVRs tend to follow, either partially or in full.
» MORE: How are fixed and variable rate mortgages different?
Mortgage Calculators
Playing around with mortgage calculators is always time well-spent. Get an estimate of how much your monthly mortgage repayments may be at different loan amounts, mortgage rates and terms using our mortgage repayment calculator. Or use our mortgage interest calculator to get an idea of how your monthly repayments might change if mortgage rates rise or fall.
Can I get a mortgage?
Mortgage lenders have rules about who they’ll lend to and must be certain you can afford the mortgage you want. Your finances and circumstances are taken into account when working this out.
The minimum age to apply for a mortgage is usually 18 years old (or 21 for a buy-to-let mortgage), while there may also be a maximum age you can be when your mortgage term is due to end – this varies from lender to lender. You’ll usually need to have been a UK resident for at least three years and have the right to live and work in the UK to get a mortgage.
Checks will be made on your finances to give lenders reassurance you can afford the mortgage repayments. You’ll need to provide proof of your earnings and bank statements so lenders can see how much you spend. Any debts you have will be considered too. If your outgoings each month are considered too high relative to your monthly pay, you may find it more difficult to get approved for a mortgage.
Lenders will also run a credit check to try and work out if you’re someone they can trust to repay what you owe. If you have a good track record when it comes to managing your finances, and a good credit score as a result, it may improve your chances of being offered a mortgage.
If you work for yourself, it’s possible to get a mortgage if you are self-employed. If you receive benefits, it can be possible to get a mortgage on benefits.
Mortgages for bad credit
It may be possible to get a mortgage if you have bad credit, but you’ll likely need to pay a higher mortgage interest rate to do so. Having a bad credit score suggests to lenders that you’ve experienced problems meeting your debt obligations in the past. To counter the risk of problems occurring again, lenders will charge you higher interest rates accordingly. You’re likely to need to source a specialist lender if you have a poor credit score or a broker that can source you an appropriate lender.
What mortgage can I afford?
Getting an agreement or decision in principle from a mortgage lender will give you an idea of how much you may be allowed to borrow before you properly apply. This can usually be done without affecting your credit score, although it’s not a definite promise from the lender that you will be offered a mortgage.
You’ll also get a good idea of how much mortgage you can afford to pay each month, and how much you would be comfortable spending on the property, by looking at your bank statements. What is your income – and your partner’s if it’s a joint mortgage – and what are your regular outgoings? What can you cut back on and what are non-negotiable expenses? And consider how much you would be able to put down as a house deposit. It may be possible to get a mortgage on a low income but much will depend on your wider circumstances.
» MORE: How much can I borrow for a mortgage?
Joint mortgages
Joint mortgages come with the same rates as those you’ll find on a single person mortgage. However, if you get a mortgage jointly with someone else, you may be able to access lower mortgage rates than if you applied on your own. This is because a combined deposit may mean you can borrow at a lower LTV where rates tend to be lower. Some lenders may also consider having two borrowers liable for repaying a mortgage as less risky than only one.
The importance of loan to value
Your loan-to-value (LTV) ratio is how much you want to borrow through a mortgage shown as a percentage of the value of your property. So if you’re buying a home worth £100,000 and have a £10,000 deposit, the mortgage amount you need is £90,000. This means you need a 90% LTV mortgage.
The LTV you’re borrowing at can affect the interest rate you’re charged. Mortgage rates are usually lower at the lowest LTVs when you have a larger deposit.
What other mortgage costs, fees and charges should you be aware of?
It’s important to take into account the other costs you’re likely to face when buying a home, and not just focus on the mortgage rate alone. These may include:
Stamp duty
Stamp duty is a tax you may have to pay to the government when buying property or land. At the time of publication, if you’re buying a residential home in England or Northern Ireland, stamp duty only becomes payable on properties worth over £250,000. Different thresholds and rates apply in Scotland and Wales, and if you’re buying a second home. You may qualify for first-time buyer stamp duty relief if you’re buying your first home.
» MORE: Stamp duty calculator
Mortgage deposit
Your mortgage deposit is the amount of money you have available to put down upfront when buying a property – the rest of the purchase price is then covered using a mortgage. Even a small deposit may need to be several thousands of pounds, though if you have a larger deposit this can potentially help you to access lower mortgage rate deals.
Mortgage fees
Among the charges and fees which are directly related to mortgages, and the process of taking one out, you may need to pay:
Sometimes also referred to as the completion or product fee, this is a charge paid to the lender for setting up the mortgage. It may be possible to add this on to your mortgage loan although increasing your debt will mean you will be charged interest on this extra amount, which will increase your mortgage costs overall.
This is essentially a charge made to reserve a mortgage while your application is being considered, though it may also be included in the arrangement fee. It’s usually non-refundable, meaning you won’t get it back if your application is turned down.
This pays for the checks that lenders need to make on the property you want to buy so that they can assess whether its value is in line with the mortgage amount you want to borrow. Some lenders offer free house valuations as part of their mortgage deals.
You may want to arrange a house survey so that you can check on the condition of the property and the extent of any repairs that may be needed. A survey should be conducted for your own reassurance, whereas a valuation is for the benefit of the lender and may not go into much detail, depending on the type requested by the lender.
Conveyancing fees cover the legal fees that are incurred when buying or selling a home, including the cost of search fees for your solicitor to check whether there are any potential problems you should be aware of, and land registry fees to register the property in your name.
Some lenders apply this charge if you have a small deposit and are borrowing at a higher LTV. Lenders use the funds to buy insurance that protects them against the risk your property is worth less than your mortgage balance should you fail to meet your repayments and they need to take possession of your home.
If you get advice or go through a broker when arranging your mortgage, you may need to pay a fee for their help and time. If there isn’t a fee, it’s likely they’ll receive commission from the lender you take the mortgage out with instead, which is not added to your costs.
These are fees you may have to pay if you want to pay some or all of your mortgage off within a deal period. Early repayment charges are usually a percentage of the amount you’re paying off early and tend to be higher the earlier you are into a mortgage deal.
Government schemes to help you buy a home
There are several government initiatives and schemes designed to help you buy a home or get a mortgage.
95% Mortgage Guarantee Scheme
The mortgage guarantee scheme aims to persuade mortgage lenders to make 95% LTV mortgages available to first-time buyers with a 5% deposit. It is currently due to finish at the end of June 2025.
Shared Ownership
The Shared Ownership scheme in England allows you to buy a share in a property rather than all of it and pay rent on the rest. Similar schemes are available in Scotland, Wales and Northern Ireland.
Help to Buy
The Help to Buy equity loan scheme, designed to help buyers with a smaller deposit, is still available in Wales, but not in England, Scotland and Northern Ireland.
Forces Help to Buy
The Forces Help to Buy Scheme offers eligible members of the Armed Forces an interest-free loan to help buy a home. The loan is repayable over 10 years.
First Homes Scheme
Eligible first-time buyers in England may be able to get a 30% to 50% discount on the market value of certain properties through the First Homes scheme.
Right to Buy
Under this scheme, eligible council tenants in England have the right to buy the property they live in at a discount of up to 70% of its market value. The exact discount depends on the length of time you’ve been a tenant and is subject to certain limits. Similar schemes are available in Wales, Scotland and Northern Ireland, while there is also a Right to Acquire scheme for housing association tenants.
Lifetime ISAs
To help you save for a deposit, a Lifetime ISA will see the government add a 25% bonus of up to £1,000 per year to the amount you put aside in the ISA.
How to apply for a mortgage
You may be able to apply for a mortgage directly with a bank, building society or lender, or you may need or prefer to apply through a mortgage broker. You’ll need to provide identification documents and proof of address, such as your passport, driving license or utility bills.
Lenders will also want to see proof of income and evidence of where your deposit is coming from, including recent bank statements and payslips. It will save time if you have these documents ready before you apply.
» MORE: Best mortgage lenders
Would you like mortgage advice?
Taking out a mortgage is one of the biggest financial decisions you’ll ever make so it’s important to get it right. Getting mortgage advice can help you find a mortgage that is suitable to you and your circumstances. It also has the potential to save you money.
If you think you need mortgage advice, we’ve partnered with online mortgage broker London & Country Mortgages Ltd (L&C) who can offer you fee-free advice.
Key mortgage terms explained
Loan to value (LTV)
Your loan-to-value ratio is the amount you wish to borrow through a mortgage expressed as a percentage of the value of the property you’re buying.
Initial interest rate
This is the interest rate you’ll pay when you’re still within the initial fixed-rate period of a mortgage deal.
Initial interest rate period
This is the period of time your initial interest rate will last, before your lender switches you over to its SVR.
Annual Percentage Rate of Charge (APRC)
The APRC is a single percentage figure designed to help you compare the annual cost of different mortgage deals.
Annual overpayment allowance (AOA)
This is the amount a lender will let you overpay on your mortgage each year without being charged a fee.
Early Repayment Charge (ERC)
This is a charge you may need to pay if you want to pay off some or all of your mortgage earlier than you agreed with your lender.
Mortgage term
A mortgage term is the full period of time over which the mortgage contract is taken out for – it should not be confused with the deal term. At the end of the term you will have paid off the full debt or all of the interest depending on what type of mortgage you took.
The current average rate on a five-year fixed-rate mortgage for a 10% deposit or equity is 4.93%, up from 4.86% a week earlier. For an equivalent two-year fixed-rate mortgage, the average rate of 5.38% has increased from 5.31%. If you have a 40% deposit/equity, the average five-year fixed rate is 4.30%, up from 4.19% a week earlier, while the average two-year fixed rate is 4.62%, rising from 4.50%. All rates are according to Rightmove as at 28 February 2024.
A mortgage rate is the interest rate a lender charges on the mortgage amount that you borrow. Mortgage interest rates may be fixed, guaranteeing that they will remain the same for a certain length of time, or variable, meaning it may fluctuate.
Mortgage providers regularly review the mortgage rates that they offer to take into account the costs involved with funding its lending activities, their latest priorities in terms of target borrowers, and wider conditions in the market. As a result, when searching for a new mortgage, it’s always a good idea to consider various lenders and take the time to compare different mortgages. Crucially, you need to bear in mind that a deal offering the best mortgage rate may not necessarily be the one that is most suitable for you. The mortgage rate is important, but at the same time, you need to consider other factors, such as the charges and fees attached to a mortgage, the type of mortgage that you need, and the mortgage term that you want.
While mortgage rates have been rising in recent weeks, many commentators still expect to see mortgage rates fall across 2024 as a whole.
The next move in the Bank of England base rate, which currently sits at 5.25%, is widely forecast to be down. But with inflation remaining unchanged in January, and wage growth easing by less than expected, some experts predict the first rate cut may not be made until September. Towards the end of 2023, some believed the rate could begin falling in March.
The uncertainty makes it even more difficult than usual to predict what may happen to mortgage rates next.
The interest rate is the percentage of a loan amount that a lender charges for borrowing money, whereas the APRC, or annual percentage rate of charge, is a calculation expressed as a percentage that takes into account both the interest rate and associated costs of a mortgage across its lifetime. The aim of the APRC is to help borrowers make meaningful comparisons between mortgage deals.
Taking the time to compare mortgage rates and deals, making sure your credit score is in good shape, saving for a larger deposit and paying off existing debts can all help improve your chances of getting a good mortgage deal.
When looking for a mortgage it is vital that you compare mortgage lenders and the rates and deals on offer. Taking the time to carry out a mortgage comparison can improve your chances of finding the best mortgage for your circumstances.
A mortgage is a loan you take out to help you buy a property you don’t have the money to pay for up front. You may be a first-time buyer, remortgaging, securing a buy to let, or moving to your next home. The amount you need to borrow will depend on the purchase price of the property, and how much you can put down as a deposit or already hold in equity in your current property. The mortgage is secured against the property, which means your home is at risk if you don’t meet the repayments.
With a capital repayment mortgage, your monthly repayments pay off your interest and some of your original loan amount each month, so that everything should be paid off by the time you reach the end of your mortgage term. The alternative to a repayment mortgage is an interest-only mortgage, where you will repay only the interest each month before needing to pay off your original loan amount in its entirety at the end of the mortgage term.
A mortgage term is the period of time you agree with a lender over which you intend to entirely pay off your mortgage and interest. A typical mortgage term in the UK is usually considered to be 25 years, but you may opt for a shorter period or a longer one, if allowed. Some lenders offer mortgage terms of up to 40 years. If you have a longer term, your monthly repayments will be lower, but you’ll pay more interest overall.
The cost of your mortgage will depend on many factors, including how much you borrow, the size of your deposit, the length of your mortgage term, the mortgage rate you’re paying, and whether you can afford to make overpayments. Your mortgage lender must provide you with the full cost of the mortgage before you apply.
» MORE: How much could your mortgage cost you?
Besides making sure your monthly repayments are affordable, there are many other costs associated with arranging a mortgage. These may include arrangement, survey, valuation and mortgage broker fees.
If you’ve previously owned a home and the property you’re buying is worth more than £250,000, stamp duty will be payable as well; if you’re a first-time buyer, stamp duty only becomes payable on properties worth over £425,000.
To get a mortgage as a first-time buyer you’ll usually need at least a 5% deposit and a regular income. Most lenders offer first-time buyer mortgages aimed primarily at those with smaller deposits. First-time buyers may also be able to secure a mortgage with the help of close relatives through a guarantor mortgage.
Some lenders offer buy-to-let mortgages that can be arranged on a property you want to rent out to a tenant, rather than live in yourself. You’ll usually need a larger deposit for a buy-to-let mortgage than for a residential mortgage, and interest rates are often higher. You may also need to already own your own home or have a residential mortgage on another property.
It may be possible to get a mortgage with bad credit but you’ll probably have fewer mortgage deals to choose from and need to pay higher mortgage rates.
You may want to consider remortgaging if your initial fixed-rate period is close to ending and you want to avoid moving on to your lender’s SVR. Choosing to remortgage has the potential to save you money if you find the right mortgage deal.
» MORE: How remortgaging works
It’s always important to think about your plans, particularly when it comes to choosing the type of mortgage that will suit you best. For instance, if you plan to move in perhaps two years, choosing a five-year fixed-rate mortgage may mean you have to pay early repayment charges if you need to get a new mortgage.
Getting an agreement in principle, or AIP, from a lender will give you an idea of how much you may be able to borrow for your mortgage without needing to formally apply. Getting an AIP usually involves a soft credit check, which shouldn’t affect your credit score. However, having an AIP does not guarantee that a lender will offer you a mortgage. An agreement in principle is also sometimes referred to as a decision in principle or a mortgage promise.
Yes, some providers offer halal or Islamic mortgages in the UK. These are compliant with Sharia law and allow people to borrow but not pay interest.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it.
Information on this page is a guide. It does not constitute advice, recommendation or suitability to your needs or financial circumstances. Seek qualified mortgage advice before proceeding with a mortgage product.
NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products and services are presented without warranty. When evaluating products, please review the financial institution’s Terms and Conditions.
Retirement is supposed to be a time for enjoying life after decades of work. Yet many women are in a financially precarious situation when it comes to the so-called “golden years.” In a 2023 SoFi survey, 57% of women said they aren’t saving for retirement. Similarly, 50% have no personal retirement savings according to a 2022 Census Bureau Report.
Given that women now outlive men by approximately six years, according to a recent study in JAMA, they need to save for an even longer retirement than their male counterparts. That makes the fact that they have fewer funds earmarked for retirement even more troubling.
Why aren’t women saving for the future? And how can they start financially preparing for retirement? Read on to learn about the retirement gender divide, why it exists, and some possible solutions for overcoming it.
A Look at Retirement Trends for Women and Men
There has long been a disparity in retirement savings for men and women. According to the U.S. Department of Labor, as women get older, their chances of living in poverty increase, a trend that has persisted for at least 50 years, when such data collection started.
Consider the current retirement savings divide between women and men today, as reported by respondents to the SoFi 2023 Ambitions Survey:
Retirement Savings for Women and Men in US
According to the survey of Americans ages 18 to 75, men have a median retirement savings that’s about $40,000 to $60,000 higher than women’s savings. In addition, 11% more women than men aren’t saving for retirement, and likewise 11% more women don’t know how much is in their retirement savings. In fact, 33% of women have less than $5,000 in retirement savings, the survey found.
Men
Women
Median Retirement Savings
$70,001-$80,000
$20,001-$30,000
% Not Saving for Retirement
46%
57%
% Who Don’t Know What Their Retirement Savings Is
45%
56%
*Source: SoFi Ambition Survey, 2023
This savings disparity typically begins early in adult life and accumulates over time. Employment, marriage, and motherhood all play a role.
💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
How Marriage and Children Impact Retirement
Women aged 55 to 66 who have been married once tend to have more retirement savings than women who have never been married, or those who have been married two or more times. According to a recent income survey from the U.S. Census Bureau, close to 37% of women married once have no retirement savings, compared to 41% of women married two or more times and 55% who never married.
Women, Marriage and Retirement Savings*
Women Married Once
Women Married Two or More Times
Women Who Never Married
36.7% have no retirement savings
40.9% have no retirement savings
54.5% have no retirement savings
11.8% have $1 to $24,999
11.8% have $1 to $24,999
11.7% have $1 to $24,999
14.9% have $25,000 to $99,999
13.6% have $25,000 to $99,999
13.6% have $25,000 to $99,999
36.6% have $100,000 or more
33.7% have $100,000 or more
20.2% have $100,000 or more
*Source: U.S. Census Bureau, Survey of Income and Program Participation
In a divorce, some couples may be required to split their retirement savings or one may need to transfer some of their retirement funds to the other, which could be one of the reasons why the percentage of those without retirement savings is lower among women married two or more times than those who never married.
Motherhood and Money
When women have children, they often take time off from the workforce and/or may work part-time, which can have an impact on their earnings. According to an analysis by the Pew Research Center, among people 35 to 44, 94% of fathers are active in the workforce while 75% of mothers are.
Motherhood is also a time when the wage gap comes into play. In 2022, mothers 25 to 34 earned 85% of what fathers the same age did, while women without children at home earned 97% of what fathers earned, the Pew analysis found. The less money women make, the less they have to save for retirement.
Earnings for Mothers 25-34
85% of what fathers earned
Earnings for Women 25-34 Without Children at Home
97% of what fathers earned
*Source: Pew Research Center, 2023
Earning less also affects the Social Security benefits women get in retirement. While men got $1,838 a month on average in Social Security in 2022, women received on average $1,484, according to the Social Security Administration.
Retirement Is a Top Priority for Women and a Bigger Concern
While saving for retirement is the top goal for women, they are also focused on, and perhaps feeling stress about, paying off credit card and student loan debt, according to the SoFi Ambitions Survey.
Overall, women tend to perceive financial goals and success quite differently than men do. Two-thirds of female survey respondents said their marker of success is being able to feed their families. By comparison, one-third of men said their marker of success is being seen as successful, while another one-third say it’s reaching a certain income bracket.
That divergence may help explain why men are far more likely than women to consider investing a top financial goal, which could help them build retirement savings. For women, investing is at the bottom of the list of their financial priorities, perhaps out of necessity.
Women’s Financial Goals vs. Men’s Financial Goals
Women’s Financial Goals
Men’s Financial Goals
Saving for retirement: 45% Paying down credit card debt: 41% Paying down student loans: 39% Continue Investing: 33%
Continue Investing: 52% Saving for retirement: 49% Paying down credit card debt: 33% Paying down student loans: 27%
*Source: SoFi Ambition Survey, 2023
Retirement is women’s number-one goal and it’s also one of their greatest worries. One in five female respondents to SoFi’s survey said they may not be able to retire.
Those Who Worry They Won’t Be Able to Retire
Women
Men
20%
15%
*Source: SoFi Ambition Survey, 2023
That means women are 33% more likely than men to believe that retirement may not happen for them.
Even if they can retire, there is no guarantee women’s savings will cover their expenses. In fact, women are approximately 10% more likely than men to say they are concerned about outliving their assets and having enough savings, according to a report from McKinsey Insights.
Recommended: When Can I Retire?
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Why Are Women Facing a Retirement Gap?
In addition to the financial impact of marriage, motherhood, and lower earnings, women also experience some additional barriers to retirement saving.
For instance, a report from the Global Financial Literacy Excellence Center found that women tend to score lower in financial literacy than men do. And women with lower financial literacy are less likely to save and plan for retirement, according to the research.
Women also lack confidence when it comes to investing. Only 33% see themselves as investors, according to a 2022 SoFi Women and Investing Insights analysis, and 71% of their assets are in cash, rather than in investments or a retirement account, where their funds might have the potential to grow.
Minding and Mending the Gap
So how can women and society at large move forward and start closing the retirement gap?
The first step is for everyone, across all genders and ages, to build confidence in their financial skills by learning about money, saving, and investing. Knowledge helps create strength and belief in oneself, and it’s never too early or too late to start learning.
There are numerous good resources on retirement planning, to help individuals determine how much they may need to save for retirement and strategies that could help them get there. They can also sign up for financial classes and courses, and they might even want to consult a financial advisor.
At work, employees can participate in their employer’s 401(k) plan or any other retirement savings plan offered. Because money is automatically deducted from their paychecks and placed in their 401(k) account, saving may be easier to accomplish.
💡 Quick Tip: Did you know that a traditional Individual Retirement Account, or IRA, is a tax-deferred account? That means you don’t pay taxes on the money you put in it (up to an annual limit) or the gains you earn, until you retire and start making withdrawals.
How to Start Saving for Retirement
No matter what your age, the time to kick off your retirement savings is now. Here’s how to begin.
Figure out your retirement budget.
To determine the amount you’ll need for retirement, think about what you want your life after work to look like. Do you want to move to a smaller, less expensive home? Do you hope to travel as much as possible? Having a clear picture of your goals can help you calculate how much you might need.
You can also consider the 4% rule, which suggests withdrawing 4% of your retirement savings each year of retirement so that you don’t outlive your savings. That could give you a ballpark to aim for.
Cut back on current expenses.
Take an honest look at what you’re spending right now on everything from rent or your mortgage to car payments, groceries, clothing, and entertainment. Find things to cut or trim — for example, do you really need three streaming services? — and put that money into your retirement savings instead.
Some savvy belt tightening now could help give you a more financially secure future.
Contribute as much as you can to your 401(k).
If you can max out your 401(k), go for it. You’re allowed (per IRS rules) to contribute up to $23,000 in 2024. If that much isn’t possible, contribute at least enough to get your employer’s matching contribution. That’s essentially “free money” that can help build your retirement savings.
Consider opening an IRA.
If you’ve contributed the max to your workplace retirement plan, a traditional or Roth IRA could help you save even more for retirement. You can contribute up to $7,000 in an IRA for 2024, or $8,000 if you’re 50 or older. IRAs offer certain tax advantages that may help you save money as well by lowering your taxable income the year you contribute (traditional IRA), or allowing you to withdraw your money tax-free in retirement (Roth IRA).
Diversify your portfolio.
Whatever type of retirement account you have, including a brokerage account, diversifying your portfolio — which means investing your money across a variety of different asset classes — may help mitigate (though not eliminate) risk, rather than concentrating your funds all in one area.
Just make sure that the way you allocate your assets matches your retirement goals and your risk tolerance.
The Takeaway
Women are far behind men when it comes to retirement savings, due to a number of factors, including earning lower wages, and motherhood, which can mean time away from work, costing them in lost earnings. There’s also an emotional component involved: Women are less confident about investing overall.
However, building financial strength, and educating themselves about retirement planning is a good way for women to start saving for their future. Cutting expenses and directing that money into savings instead, participating in their workplace retirement plan, and opening an IRA or investment account are some of the ways women can take charge of their finances and help position themselves for a happy and secure retirement.
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), mutual funds, alternative funds, 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.
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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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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how to utilize a tax advantaged 529 plan to help your or a friend’s children save for future education expenses.
This Week in Your Money: What are the risks of purchasing a home without an inspection? How can you plan for major expenses when healthcare providers can’t tell you how much their services will cost? Hosts Sean Pyles and Sara Rathner share their hot takes on unexpected financial challenges, with tips and tricks on handling surprise expenses, understanding the importance of home inspections, and dealing with healthcare industry inefficiencies.
Today’s Money Question: What are the benefits of a 529 college savings plan? Can you contribute to a friend’s 529 plan to support their child’s future? NerdWallet writer Elizabeth Ayoola joins Sean and Sara to discuss the essentials of 529 college savings plans. They discuss the types of educational expenses covered, the tax benefits associated with 529 plans, and the flexibility of choosing different state plans. They also answer a listener’s question about how to approach the sensitive topic of financial gifts for education with parents, sharing methods for contributing to a loved one’s 529 plan without overstepping boundaries. Then, they discuss the implications of the Secure Act 2.0 on 529 plans, methods for estimating necessary savings for a child’s education, and tactful ways to discuss educational contributions with parents.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sara Rathner:
Hey Sean, has money ever made you mad?
Sean Pyles:
Yeah, it has, especially when I get a bill that I don’t expect to pay but have to anyway. So yeah, why?
Sara Rathner:
Yeah. Yeah, those surprise major expenses are a huge pain. I just had to replace my washing machine because the fun never stops in my house.
In this episode, we are going to let off a little steam about what makes us mad in the world of money.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. Our job today is to help you be smarter with your money, one money question at a time. I’m Sean Pyles.
Sara Rathner:
And I’m Sara Rathner.
So listener, this show is all about you and your money questions. So, whatever financial decision you’re pondering, whatever’s making you mad about your money, let us know.
Sean Pyles:
Leave a voicemail or text the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or you can email your questions to podcast@nerdwallet com.
Sara Rathner:
In this episode, Sean and I answer a listener’s question about contributing to 529 accounts for your loved ones. But first, we’re going to yell into the void in our semi-regular Money Hot Takes segment.
Sean Pyles:
So here’s how this works. Sara and I just rail against whatever we feel like in the world of money. And let’s put, say, 100 seconds on the clock. That’s what? A second for every penny in a dollar. I don’t know, it’s just an arbitrary number really.
Sara Rathner:
That works for me. It’s a nice round number.
Sean Pyles:
All right, Sara, are you ready?
Sara Rathner:
Sean Pyles:
I’m starting my timer. Go.
Sara Rathner:
All right. I hate the trend where home buyers feel pressure to completely waive getting a home inspection before buying a property. That’s different from the type of waiver where you’ll still do the inspection, but then you’re assuming the cost of anything you find. It’s when you just do without the inspection entirely.
I live in a block of houses that are like 107 years old, and two houses on my block sold with waived inspections where the buyers had to put tens of thousands of dollars unexpectedly into problems in their house that they didn’t know about. I just had a neighbor text me asking for a roofer because the first time it rained since she moved in her house, it started raining on the inside of her house, which means that the seller just lived with that for however long before selling the house and passing the problem onto somebody else.
So especially if you’re a first-time home buyer, if you are going to drain your savings to buy your house, and then you’re not going to have much money left for repairs, be really careful about this. And as a society, can we just make inspections mandatory? That’s more consumer-friendly, honestly. People need to know what they’re getting into, and frankly, people should feel pressure to keep their houses well maintained before sale. There I said it.
Sean Pyles:
You’ve got 40 more seconds if you want to keep on railing.
Sara Rathner:
Oh man, I do? Well, if you haven’t bought a home yet, what’s nice about getting an inspector involved is they’ll look at all the major systems of the house, the appliances, the roof, all sorts of stuff, the electrical, the plumbing, and they will tell you the lifespan of some of those major things like a furnace or a boiler, your roof, your HVAC system. And even if something is going to go in the next year or two, at least you have this laundry list of things and when they’ll probably need to be replaced, and you can begin to budget for those replacements.
Sean Pyles:
Okay, that’s 100 seconds.
Sara Rathner:
Boom. All right, Sean, you got any reaction?
Sean Pyles:
Well, I totally feel that, because buying a house without knowing what’s wrong with it is very risky financially. Buying a house can be financially risky in and of itself, depending on how expensive the home is. But imagine getting into the house, it’s your first day, you’re super happy to be a homeowner, and then you realize, oh, it’s raining inside the house, or the crawl space is infested with termites. You don’t know what you’re getting into if you don’t have an inspection. And even if it may make you a more competitive buyer, it isn’t worth it, in my opinion, to get yourself into something like that because you just don’t understand the risks you could be taking on. And I’m all about mitigating risks as much as possible.
Sara Rathner:
All right, Sean, I have had my turn, and now it is your turn. I have set my timer for 100 seconds. And go.
Sean Pyles:
Okay. Today I am mad about industries that are designed to extract money from us while making our lives miserable or at least really frustrating. And I have one, maybe two, examples depending on how far 100 seconds takes me.
First step is healthcare. Americans spend far more on healthcare than other wealthy nations. Nearly 18% of our GDP in 2021 went to healthcare. And what are we getting for it? An incompetent extractive industry that exploits nearly everyone that engages with it. Among wealthy nations, the US has the highest rates of infant and maternal mortality and excess deaths, not to mention the daily indignities that come with trying to access healthcare.
I have a recent example that is a microcosm of these larger issues. I recently got a bill in the mail for some regular lab work, and the thing is, I have these labs done every few months, and they’re always covered by my insurance. But this time I got a surprise bill for nearly $200, and I’d already had an expensive month with some car repairs, and I was not excited about the prospect of an additional $200 to cover. So I called my doctor, and they said, “Oh yeah, the company that does the lab work just messed up. Oops, just disregard the bill.”
So if I hadn’t called my doctor, I would have been on the hook for this bill. This was a relatively small bill as far as medical bills go, and it was fairly easy for me to clear up. I’m obviously very fortunate in this case, but for so many people, especially those with chronic illnesses or complex medical conditions, the onslaught of navigating insurance, verifying that you’re being billed correctly and then somehow coming up with the money to cover bill after bill is just totally exhausting and can make achieving financial goals nearly impossible.
So why am I going on and on about things that we already know too much about?
Sara Rathner:
Just so you know, you’re over time.
Sean Pyles:
Oh, God. I’m going to keep going. I’m almost done.
Sara Rathner:
Keep going, Sean. Let’s do this.
Sean Pyles:
All right. I am going on and on about this because I think it’s important to remind people that it does not have to be this way. We are in an election year, people, so I don’t know, let’s try to do something about it.
Okay, Sara, how many seconds was that?
Sara Rathner:
Oh, well I stopped timing it the second it hit the clock, so that might’ve been just an extra 10 seconds, honestly.
Sean Pyles:
Okay. It’s hard to fit so much into such a small amount of time.
Sara Rathner:
You know what? Your rage is such that it cannot be fit into a tiny container and that is valid. It’s okay to let the rage out and give it some more space.
I agree with you. What’s annoying is, for example, this past year I had a baby, and that is expensive to the tune for me of $7,000 out of pocket after insurance. Hi. $7,000 is a lot of money, people.
And what was annoying about that, and this is something for anybody who maybe is facing a planned medical procedure like a surgery or childbirth or anything like that, or who takes medication for chronic illnesses, I tried to call the billing department at the hospital to talk to my insurance company to say, “Can you at least give me an idea of how much money I will be out?” I knew going into it that I would be having a C-section. So I could say, “I’m having a C-section, that means I have to work with an anesthesiologist, which is an extra expense. Can you tell me ballpark, even if you’re off by a grand, how much should I budget for this?” And everyone’s like, “We don’t know.” Shrug emoji.
Then the bills just fly in for months and you think you’re done. So you’re like, “Okay, we’re done paying for the hospital bill. Now we can put our money into other stuff.” And then you get another bill for like, $1,100.
Sean Pyles:
And you have to question, was this billed correctly? Was it coded correctly? You don’t know. And it just flies in the face of all the things that we try to talk about in the personal finance space, which is around anticipating big expenses, budgeting for it, saving up for it if you can. It’s impossible when you don’t know what you’re going to be paying.
Sara Rathner:
Right, and if you’re facing surgery, what, are you just going to not have anesthesia to save money? Do not recommend.
Sean Pyles:
That is not a money-saving tip that we would recommend. No.
Sara Rathner:
No, that’s a place where you should spend good money, get good and numb.
But really it is an extra expense. And that’s so, so frustrating because you are not only out a lot of money, but you’re feeling kind of vulnerable because you’ve just gone through some medical stuff, even if it’s just blood work or something, and you want to take good care of your health, and it’s sometimes financially impossible to do that.
Sean Pyles:
Yeah. Not to mention completely demoralizing.
Sara Rathner:
Yeah, and some people just don’t go to the doctor because of the cost, or the dentist. And then years later, they’re faced with really serious health issues because they’ve been neglecting their health because of the cost.
Sean Pyles:
Yeah. I don’t know, it’s really tough in this space to talk about medical expenses because at NerdWallet and in the personal finance realm, we try to give actionable advice, and a lot of the time the advice is reactive. If you get a medical bill, you do have to ensure that it’s coded correctly. Maybe try to work out a payment plan with your medical office if you can’t cover the bill in one go. But it’s so hard to be proactive like you were just describing and understand what you’re going to have to pay if you want a routine procedure like blood work or something more significant like having a baby, makes me want to yell into the void all day every day.
Sara Rathner:
Yeah. Well, we took more than 100 seconds about this. If you have a body, then this is something that affects you, and it is really hard to deal with those extra unexpected costs.
Sean Pyles:
All right, so that is what we are mad about this week, listener. I know there’s a lot to be mad about in the world of money, so do not keep it in. Let us hear what you’re mad about, and we might just share it on a future episode.
You can text your Money Hot Take to us or leave a voicemail on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or you can email it to podcast@nerdwallet com.
Sara Rathner:
All right, I don’t know about you, but my heart rate is starting to come down from all of that. Ooh, deep breaths, everyone. This episode’s money question is up next. So calm down too and stay with us.
Sean Pyles:
This episode’s money question comes from Lauren, who wrote us an email. Here it is.
“Hi nerdy Nerds. I’m not a parent. I’m never going to be a parent. Because of that, I have made it part of my financial plan to contribute to the 529 plans of kids around me. Because I don’t have nieces and nephews, I’m contributing toward the savings of my friend’s three-year-old. How much needs to go into a 529 starting at age two or three to cover a four-year private college?”
“I got the details on this kid’s 529 plan from his dad and started contributing about $100 a month. We didn’t talk about it. I intend to keep chipping in until the kid is done getting formal education 20 to 25 years from now. How do I talk to the parents? I want to understand if I’m helping enough without becoming privy to their private financial details. I also don’t want to make it seem like I have any vote whatsoever in how the kid charts an educational path. How do I broach this with the parents?”
Sara Rathner:
To help us answer this listener’s question, on this episode of the podcast, we are joined by NerdWallet writer Elizabeth Ayoola. Welcome.
Elizabeth Ayoola:
Hello, and hi.
Sean Pyles:
Elizabeth, so good to have you on.
So let’s start by setting some groundwork. Can you please describe what a 529 college savings plan is, how they work, and why they’re such a big deal?
Elizabeth Ayoola:
A 529 plan is a huge deal indeed to me anyway. I wish I had one when I went to college because I was left with a huge bill. But anyways.
529s are tax advantaged college savings plans, and they allow people to save and invest money for education expenses. So, with that said, the money gets to grow, and it gets to compound, which can mean beneficiaries have a nice education pot to pull from when they need the money. And for those who don’t know what compounding is, it’s essentially when your interest earns interest.
Sara Rathner:
It’s the eighth wonder of the world.
Elizabeth Ayoola:
Sara Rathner:
So you mentioned education expenses and that’s what the purpose of this account is, but what kinds of education expenses can you use a 529 to fund?
Elizabeth Ayoola:
Funds in a 529 account can be used to cover a vast range of qualified expenses, and that can range from tuition to computers and education related equipment. The expenses can also be used to pay for education needs of your beneficiaries. And the good thing that I like is that the beneficiaries can be in anywhere from kindergarten through grade 12. So that said, it’s not only for college students.
Sean Pyles:
Right, that is a really good point because people hear about 529 accounts, and they think they may be specifically for people going through a traditional four-year education, but people can also use the funds in the 529 college savings plan to cover things like trade schools too. So it really isn’t only for that traditional four-year higher education route.
Sara Rathner:
So earlier you mentioned that 529s are tax advantaged accounts. Can you talk a little bit about the tax treatment of them, and what should people know when they’re considering opening a 529?
Elizabeth Ayoola:
Well, one thing that I personally like about these accounts that some people don’t know also is that some states offer a tax deduction if you contribute to their plan. And when I say their plan, I mean the state that you live in. But there is no federal tax deduction for a 529 contribution. So it’s only at a state level. The tax deduction is usually capped. So no, you can’t just deduct your entire contribution. The deduction amount varies from state to state. So it’s best that you check in your state what the amount may be, if they offer it.
And a little bit off-topic, but I also like that the IRS doesn’t set a cap on your contributions to a 529 account, although some states do set a limit.
Sean Pyles:
And I’ll call out two other tax benefits of 529 college savings plans. The first is that investment growth in this account is tax-free, and second, distribution for qualified expenses like tuition or books are also tax-free.
Elizabeth, another important thing to know about 529 college savings plans is that each state has their own, and you don’t have to choose the 529 plan from the state that you live in. And this can all get a little bit confusing because there are so many states to choose from. So, at a high level, can you outline the main differences between a 529 from one state to the next, and how would someone go about choosing which state’s 529 plan to use?
Elizabeth Ayoola:
One of the major differences that people should know and a reason that people may cheat on their state’s 529 plan is lower fees. I personally have a 529 from a different state than my current home state for that very reason. So people should consider shopping around and comparing fees before opening an account. Ultimately, the goal should be to do some math and see whether the deductions and the credits that you’re going to get in the state that you live in are worth more than the lower fees that you could get in another state in the long term.
Also, note that you can open multiple 529 accounts. I have multiple 529 accounts. I recently opened a second one in my home state, Florida, because my son was awarded a grant and it could be transferred to a 529 account, but the catch was it had to be a Florida 529 plan.
Sara Rathner:
So 529s have some flexibility, which we talked about before, not just for four-year educations, but also for trade schools and for K to 12 expenses as well. And interestingly enough, 529s were just made even more flexible. Can you talk about recent changes around the ability to roll 529 funds into a Roth IRA, and what that means for folks who maybe aren’t considering going to college?
Elizabeth Ayoola:
The Secure Act 2.0 was recently passed, and if I can be honest, that’s what motivated me to open up my first 529 account, and I just opened it last year. I was always on the fence and only saved money in a brokerage account because I was afraid of what would happen if my son decided not to go to college in 15 years. He’s six, by the way.
I decided to get off the fence when the Secure Act 2.0 made it possible for people to roll at least a portion of the unused funds into a Roth account. However, you do have to wait until 15 years after you’ve opened the 529 account before you can roll those funds over. And you can also only roll up to a certain limit starting in 2024. It may be ideal to read the IRS’s rules, they have a lot of fine print around the conversion or speak to a finance professional about it.
I think Roths are also awesome because they aren’t subject to required minimum distributions and withdrawals. They’re also tax-free when you meet certain requirements like waiting until 59-1/2, amongst other rules.
Sara Rathner:
All right, well thank you for that great summary of the tax rules surrounding this new change. We just want to let you all know that we are not investing or tax professionals, and if you have any specific questions to your own situation, definitely consult a professional who can give you guidance.
Now let’s turn to the fun stuff. The math, Sean. I know that you are in the midst of your certified financial planner coursework. I have slogged through that myself. It is a lot. It is a lot of math.
Sean Pyles:
Sara Rathner:
And now that you know how to do it, I’m sure you’re eager to show off your chops. So are there any insights you can share that will help our listener figure out how much they need to save every month or every year to help their friends reach their savings goals?
Sean Pyles:
As a matter of fact, yes. And you’re right, I have been waiting for an opportunity to show off what I’ve been learning about because often I’m just doing calculations in silence and this is a time for me to be loud and proud about hitting buttons on a calculator. So let’s do it.
I’ll spare you and our listeners the specifics of the calculation, but I plugged the listener’s situation into a time value of money calculation and got a rough estimate for how much they will need to save.
Sara Rathner:
All right, drum roll. What’s the number?
Sean Pyles:
For our listener to meet the savings goal that they outlined in their question, remember, they want to save for four years of education at a private college starting now-ish and saving until the kid finishes school. They would need to save around $8,000 per year. Obviously, that’s a lot of money to contribute to a 529 account, no less for a kid who isn’t your own. And this is why 529s are often just part of the picture when it comes to paying for college, which usually includes some combination of scholarships, grants and loans and generous gifts from family friends.
Sara Rathner:
That is definitely more than a hundy a month.
Sean Pyles:
Yeah, that’s for sure.
All right, so all of that math out of the way, I want to talk about the other part of our listener’s question. They seem to be concerned about how much they should contribute and also how to talk about this with their friends. I am not a parent, so I would love to hear from both of you who are parents, how you would approach the situation if you had such a generous friend. Would you welcome the money, or say get out of my business? Or if you are going to accept this money, if you want to have this conversation with your friend, how would you want them to communicate that with you?
Elizabeth Ayoola:
Honestly, I would welcome the money, especially because I’m a single mama. So as a matter of fact, my friends always contribute to my son’s savings account in London for his birthdays or holidays and I really, really appreciate it. It can be a better gift to me than toys that stab me in the foot within a few days.
Sean Pyles:
Elizabeth Ayoola:
I would also appreciate a friend asking me what my savings goals are, so they know how to support that goal. However, I do think, for the sake of boundaries, I would like my friend to ask me my comfort level with the topic before they dive in and start trying to give advice.
I think it’s also important to note that not everyone is comfortable discussing money or financial goals. But with that said, here’s an example of maybe how somebody could say it. So you may say, “Hey, I want to help you reach John’s college savings goal. Are you comfortable discussing that target number you have in mind, and can you tell me how I can support that?” Or another option could be you saying, “Hey, would you like to do the math yourself and then let me know how I can support that goal?” So those are just a couple of options.
Sara Rathner:
Yeah, I mean, I’m not going to look a gift horse in the mouth. College is expensive now, and it’s only going to become even more expensive in the future. Even in-state tuition, where I live in Virginia, is often over $20,000 a year. That used to be the economical way to get a four-year degree, and now it’s also very, very expensive. So what’s it going to be like by the time my kid’s in college? I don’t know. A lot.
Sean Pyles:
I think we can confidently say more money.
Sara Rathner:
Confidently, we can say a whole lot more money.
I would want my friends to decide for themselves what they feel comfortable giving, because I don’t feel comfortable telling another person how they should allot their money because they have other competing financial goals and obligations. And I never want to tell another person what they can do with their money unless they specifically ask me to tell them what to do with their money, which nobody ever asks me.
Sean Pyles:
And you also don’t want to give the impression that your friends can’t look after their own family’s finances, right? That’s a bit of the awkwardness underlying the question, is you want to help someone that you care about and this child that you’re seeing grow up in the world, but you don’t want to impose your will upon them. It seems like our listener is being very thoughtful about that. And you don’t want to make it seem like you think they aren’t doing enough.
Sara Rathner:
Right, or you think their kids should go to a four-year private university because that’s what you value, but maybe the parents have other values that they want to impart upon their child as the kid grows up, and then the kid will go off and do their own thing as a young adult.
In my case, we have a 529 for our son. We have family members who’ve contributed money. They’ve just written checks to us, and then we deposit it into our account that is tied to our 529 and then deposit the money into the 529.
Ultimately, when you contribute, you do go through the account owners, and that’s oftentimes parent or guardians. You are going to have to communicate with them because they’re ultimately the gatekeeper of that account. They are the owners, and then the child is the beneficiary.
Sean Pyles:
That actually brings up something that I wanted to talk about, which is who would own this account? The listener could in theory open up a 529 account on their own for this kid. But long-term, it’s probably going to be easier if the parents are the owners of the account, because that way when the kid is eventually ready to go to college or trade school or what have you, the parent can be the one managing those distributions.
Personally, I know as a friend, as much as I love my friends and my friends’ kids, I don’t want to have to manage that down the road. So that’s something else that they should think about when they’re talking about this with their friends.
Sara Rathner:
I definitely agree with talking to the parents and ultimately contributing to an account that the parents or guardians are in charge of.
Sean Pyles:
Well, Elizabeth, do you have any final thoughts around 529s and helping your friend’s kids afford college?
Elizabeth Ayoola:
I think we have given some very juicy tips here and only two more things come to mind, which is one, while it’s noble to contribute to your friend’s kids or loved one’s kids’ 529 account, please take advantage of any state income tax deductions that you might be eligible for. The rules around this can be muddy. And I know the original listener who asked this question lives in a different state than where he’s contributing, but sometimes you’re able to get a deduction depending on the state that you live in. So if you can get money back, I mean, why not?
My second thing that I’ll say is that if your loved one doesn’t have a number in mind, guide them to a college savings calculator or run the numbers together over coffee if they’re open to doing that.
Sean Pyles:
Great. Well, thank you so much for coming on and talking with us.
Elizabeth Ayoola:
I loved it. Thank you for having me.
Sean Pyles:
And that is all we have for this episode. If you have a money question of your own, turn to the Nerds and call or text us your question at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected].
Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate, and review us wherever you’re getting this podcast.
Sara Rathner:
This episode was produced by Sean Pyles and myself. Kevin Berry and Tess Vigeland helped with editing. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all of their help.
And here’s our brief disclaimer:
We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles:
And with that said, until next time, turn to the Nerds.
Middle-income Americans who are 75 and older are at serious risk of a retirement crisis, according to a new research brief from the National Opinion Research Center (NORC) at the University of Chicago.
“Our cumulative research has projected an impending crisis without a clear policy solution: a majority of middle-income older adults will be unlikely to afford needed care and housing in the next decade, potentially challenging their ability to age with dignity, choice, and independence,” the researchers stated.
Financial disparities are also varied across a series of racial and ethnic groups, the researchers found. Cohort members who are also people of color typically face larger disparities than their white counterparts. In 2020, people of color represented about 12% of the middle-income older adult population in the U.S., a figure that is expected to more than double to 25% by 2035.
“The largest shift in composition is among Hispanics, who will comprise nearly 11 percent of the middle-income group in 2035 — nearly a three-fold increase from 2020,” the researchers found.
Compounding the concerns about housing this population could face are the kinds of assets that older, middle-income people of color typically have.
“Black and Hispanic older adults tend to hold fewer liquid assets than white older adults,” the brief states. “Holding fewer liquid assets makes it more difficult to access the housing and care options that align with their preferences.”
For this analysis, researchers examined the asset portfolios of middle-income older adults. They found that those “who do not qualify for Medicaid often must rely on other sources of income, such as pensions or retirement accounts, to afford the care and housing options they need or want.”
Having more liquid assets could make housing and health care easier and more affordable for them, but that’s not necessarily an easy transition for many to make — especially among people of color, the researchers found.
“33 percent of Black and Hispanic older adults’ asset portfolios comprise transportation items like a personal vehicle,” the brief said. “Liquidizing a vehicle is both inconvenient and impractical as it eliminates a source of independence in a society increasingly dependent on private vehicle access.”
Investing has become much easier over the years thanks to the popularity of robo-advisors. Rather than working with a human financial advisor, a robo-investing uses algorithms to make a wealth management plan for each investor.
There are many advantages to using these services. Robo-advisors are typically less expensive than hiring a financial advisor. They allow you to start investing in the stock market even if you don’t have much money to start with.
So if you’re looking for an easy, inexpensive way to get started with investing, a robo-advisor could be a great option for you.
10 Best Robo-Advisors: Uncovering the Standout Performers
Here is an overview of our top picks for the best robo-advisors, as well as a brief explanation about what we like about each one:
1. Personal Capital
Key Features:
Hybrid robo-advisor with access to human financial advisors
Advanced investment strategies including tax optimization
Comprehensive financial planning tools
Retirement and savings goal tracking
High minimum balance requirement
Who it’s best for:
Personal Capital is ideal for more advanced investors with higher account balances, as well as those who seek a combination of automated investing with human financial advisor support.
Its comprehensive planning and retirement tracking features make it a powerful platform for long-term wealth management.
2. Wealthfront
Key Features:
Diversified portfolios with 11 different asset classes
Tax-loss harvesting for all investment accounts
High-interest cash account
Automatic rebalancing and portfolio optimization
College savings plan (529) support
Who it’s best for:
Wealthfront is a strong option for investors seeking a fully automated robo-advisor with a focus on tax efficiency and diversified investments.
Its high-interest cash account and college savings plan support make it an attractive choice for those looking to cover various financial goals.
3. Betterment
Key Features:
Goal-based investing tailored to personal milestones
Automatic rebalancing and tax-efficient strategies
Socially responsible investing options
Access to human financial advisors (with premium plan)
No minimum account balance
Who it’s best for:
Betterment is a great choice for beginners and experienced investors alike, who want a goal-oriented approach to investing.
With its socially responsible investing options and access to a licensed advisor (with the premium plan), it provides a well-rounded platform for a variety of investors.
4. Ally Invest
Key Features:
Low account minimum and no trading commissions
User-friendly online platform
Various research-based tools
No advisory fees for managed portfolios
Integration with Ally Bank for seamless banking and investing
Who it’s best for:
Ally Invest is an excellent option for new investors looking for a low-cost, user-friendly platform with no trading commissions.
Its integration with Ally Bank makes it a convenient choice for those who want to manage their banking and investing under one roof.
5. Vanguard
Key Features:
Hybrid robo-advisor with access to Vanguard personal advisor services
Low-cost, diversified investment options
Retirement and college savings plans
Strong reputation and established history
Higher minimum investment compared to other robo-advisors
Who it’s best for:
Vanguard Digital Advisor is ideal for investors seeking a trusted, established provider with a focus on low-cost, diversified investments.
Its hybrid model offers the benefits of automated investing along with access to a human advisor, making it a strong option for those with larger account balances.
6. M1
Key Features:
Fractional share investing
Customizable portfolios or pre-built expert portfolios
No management fees or commissions
M1 Borrow feature allows borrowing against your portfolio
M1 Spend feature integrates banking and investing
Who it’s best for:
M1 Finance is well-suited for investors who want a high level of customization with their portfolios, allowing them to create their own investment “pies” or choose from pre-built expert portfolios.
As a cost-effective solution, it appeals to budget-minded investors who appreciate the opportunity to leverage their portfolio through borrowing or take advantage of integrated banking services.
7. Ellevest
Key Features:
Focus on socially responsible investing
Gender-specific investment advice
Goal-based investing approach
Access to career coaching and financial planners
Low fees
Who it’s best for:
Ellevest is an excellent choice for investors who prioritize socially responsible investing and seek a platform tailored to the unique financial challenges faced by women.
Its goal-driven approach, coupled with access to career coaching and financial planners, makes it a comprehensive platform for value-oriented investors.
8. Facet
Key Features:
Comprehensive financial planning services
Access to dedicated Certified Financial Planner (CFP)
Flat-fee pricing model
No account minimums
Not fully automated
Who it’s best for:
Facet Wealth is ideal for individuals who want personalized investment management services but can’t afford the fees associated with traditional financial advisors.
Its flat-fee pricing model and access to a dedicated CFP provide a high level of personalization and support, making it a valuable option for those seeking a more hands-on approach to wealth management.
9. SoFi Automated Investing
Key Features:
No management fees
Low minimum balance requirement
Automatic rebalancing
Access to certified financial planners
Robust customer service
Who it’s best for:
SoFi Automated Investing is an excellent option for investors seeking a low-cost, accessible platform with strong customer support.
With no account fees and a low balance requirement, it’s a great choice for those just starting their investment journey or those who want access to financial planning resources without paying high fees.
10. Blooom
Key Features:
Focus on retirement savings (401(k)s and IRAs)
No minimum account balance requirement
Flat yearly management fee
401(k) analysis and optimization
Auto rebalancing and investment recommendations
Who it’s best for:
Blooom is a standout option for investors looking to optimize their retirement savings, specifically in 401(k)s and IRAs.
With its flat yearly management fee and no minimum account balance requirement, it’s an accessible platform for those who want to improve their retirement investment approach and maximize their long-term returns.
A Side-By-Side Comparison of the Best Robo-Advisors
Listed below is a side-by-side overview of what each robo-advisor has to offer.
BROKER
FEES
PROMOTION
ACCOUNT MINIMUM
Ally Invest
0.0%
No promotions offered
$100
Personal Capital
0.49%-0.89%
No promotions offered
$100,000
Wealthfront
0.25%
$5,000 in assets managed for free
$500
Betterment
0.25%
A year of free management
$0
FutureAdvisor
0.50%
Three months of free management
$10,000
Vanguard
0.30%
No promotions offered
$50,000
Bloom
$10 per month
$10 off first year
$0
M1 Finance
0.0%
No promotions offered
$0
Ellevest
0.25%
Possible $750 cash bonus
$0
Facet Wealth
$480 per year or more
No promotions offered
$0
SoFi Automated Investing
0.0%
Free career counseling and loan discounts
$100
Wealthsimple
0.40%-0.50%
$10,000 in assets managed for free
$0
How do robo-advisors work?
A robo-advisor is a specialized software that provides automated investment portfolios based on your goals and risk tolerance. Your risk tolerance is based on your answers to the questions provided.
Robo-advisors use algorithms to choose the right asset allocation based on your risk tolerance, investment goals, and time horizon, providing a customized and efficient approach to portfolio management. Some services give you access to human advisors as well.
Robo-advisors are a viable option for anyone who wants to start investing but can’t afford a portfolio management firm. Or if you just want a hands-off approach to investing, robo-investing is a great choice for diversifying your investments. These services typically have low management fees and require low account minimum balances.
So if you don’t have tens of thousands of dollars at your disposal but still want to start building an investment portfolio, using a robo-advisor has a much lower barrier to entry. There are many online services available on the market, but the ones listed above stand out from the pack.
How to Choose the Right Robo-Advisor for Your Needs
Selecting the right robo-advisor requires considering your investment goals, risk tolerance, and personal preferences. Here are some factors to help guide your decision-making process:
1. Determine your investment goals
Before choosing a robo-advisor, it’s essential to outline your financial goals. Are you saving for retirement, building an emergency fund, or working towards another specific milestone? Understanding your objectives will help you find a robo-advisor that aligns with your needs and offers relevant services.
2. Assess your risk tolerance
Risk tolerance refers to your comfort level with the potential fluctuations in the value of your investments. Some investors prefer a conservative approach, while others may be willing to take on more risk for potentially higher returns. Choose a robo-advisor that offers investment options aligned with your risk tolerance and provides suitable recommendations based on your preferences.
3. Compare fees and account minimums
Fees and account minimums are crucial factors to consider when selecting a robo-advisor. Some platforms charge a percentage of your assets under management, while others may have a flat fee.
Additionally, account minimums can vary widely, ranging from no minimum to tens of thousands of dollars. Choose a robo-advisor with a fee structure and minimum investment requirement that suits your financial situation.
4. Review available investment options
Different robo-advisors offer varying investment options, including individual stocks, bonds, ETFs, and mutual funds. Some platforms may also provide access to socially responsible investments or other specialized options. Ensure the robo-advisor you choose offers options that align with your goals and values.
5. Consider additional features and services
Many robo-advisors offer added features and services, such as automatic rebalancing, tax-loss harvesting, and access to human advisors. Some platforms may also provide banking services or wealth management tools. Assess which additional features are important to you and select a robo-advisor that meets your requirements.
6. Evaluate the user experience
The user experience, including the platform’s ease of use, customer support, and educational resources, is an essential aspect of choosing a robo-advisor. Look for platforms with intuitive interfaces, responsive customer service, and helpful resources to guide you through the investment process.
7. Read reviews and testimonials
Researching reviews and testimonials from current users can provide valuable insight into a robo-advisor’s performance, customer satisfaction, and any potential issues you may encounter. Look for reviews from reputable sources and users with similar objectives and investment preferences to ensure the robo-advisor is the right fit for your needs.
What should you look for in a robo-advisor?
When researching robo-advisors, it’s crucial to know what features and qualities are essential for a successful investment experience. Here are five things you should keep in mind when you’re considering different services.
Management fees: Most robo-advisors will charge an annual fee. This is usually calculated as a percentage of your total assets. You should make sure you understand the management fee structure because this will cut into your earnings.
Types of accounts offered: You should make sure you have a general understanding of the different accounts offered. For instance, retirement accounts like Roth IRAs and 401(k)s will have limits on how much you can contribute each year. Make sure you understand the difference between a taxable investment account and tax-deferred or tax-free accounts offered and how they benefit your financial goals.
Investments: It’s a good idea to familiarize yourself with the types of investments offered. For instance, many robo-advisors offer low-cost index funds, mutual funds, and ETFs. You should make sure that you like the accounts being offered and that they are fairly low cost.
Rebalancing: Since your investment portfolio will fluctuate, over time, it’s easy for it to become out-of-sync with your overall investing goals. You should look for a company that offers automatic portfolio rebalancing.
Access to financial advisors: And finally, one of the benefits of using a robo-advisor is that it’s a hands-off approach to investing. But some robo-advisors offer access to financial planners, and this offers many benefits. Having a financial planner involved brings a human element to your portfolio and makes it more personalized.
An Explanation of the Different Investment Options Available through Robo-Advisors
Robo-advisors provide investors with a variety of investment options to create a well-diversified portfolio tailored to their risk tolerance and financial objectives. Understanding the different options available can help you make informed decisions about your portfolio. Here are some of the most common options offered by robo-advisors:
1. Exchange-Traded Funds (ETFs)
ETFs are a popular investment option among robo-advisors due to their low costs and broad diversification. An ETF is a collection of securities, such as stocks, bonds, or commodities, that tracks a specific index or sector. ETFs trade on stock exchanges, just like individual stocks, and offer investors exposure to a wide range of asset classes, industries, and regions.
2. Index Funds
Index funds are mutual funds that track the performance of a specific market index, such as the S&P 500 or Nasdaq Composite. Like ETFs, they provide broad diversification and have low management fees. By investing in an index fund, you’re essentially buying a small piece of every company within that index, reducing the overall risk in your portfolio.
3. Mutual Funds
Mutual funds pool the investments of multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are less common in robo-advisor portfolios due to their higher fees compared to ETFs and index funds, some robo-advisors still include them as an investment option, particularly for specific sectors or strategies.
4. Bonds
Bonds are debt securities issued by governments, corporations, or other entities to raise capital. When you invest in a bond, you’re essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at the bond’s maturity. Bonds are typically considered less risky than stocks and can provide a steady income stream, making them a popular choice for conservative investors or those nearing retirement.
5. Real Estate Investment Trusts (REITs)
REITs are companies that own, operate, or finance income-producing real estate properties. They allow investors to gain exposure to real estate investments without the need to buy or manage properties directly. REITs can provide diversification and income potential to a portfolio, as they typically pay regular dividends from the rental income generated by their properties.
6. Socially Responsible Investing (SRI) and Environmental, Social, and Governance (ESG) Funds
SRI and ESG funds focus on investments in companies that meet specific ethical, environmental, social, or governance criteria. These funds allow investors to align their investment portfolios with their values and support businesses that have a positive impact on society and the environment. Some robo-advisors offer SRI and ESG options to cater to the growing demand for responsible investing.
7. Target-Date Funds
Target-date funds are designed to simplify long-term investing, particularly for retirement planning. These funds automatically adjust their asset allocation over time, gradually shifting from higher-risk investments like stocks to more conservative investments like bonds as the target retirement date approaches. This helps investors maintain an age-appropriate risk level in their portfolios without needing to make manual adjustments.
Tips for Monitoring and Adjusting Your Investment Strategy with a Robo-Advisor
While robo-advisors are designed to automate much of the investment process, it’s essential to periodically review your investment plan and make adjustments as needed. Here are some tips for monitoring and adjusting your strategy when using a robo-advisor:
1. Regularly review your risk tolerance and investment goals
Your risk tolerance and investment goals may change over time due to personal circumstances or market conditions. Ensure you update your robo-advisor profile to reflect any changes, as this will help the platform adjust your portfolio to align with your current objectives and risk appetite.
2. Monitor your portfolio performance
Keep an eye on your portfolio’s performance and compare it to relevant benchmarks or other investment options. This will give you an idea of whether your robo-advisor is effectively managing your investments and meeting your expectations. If your portfolio consistently underperforms, it may be time to consider other investment strategies or try a different robo-advisor.
3. Rebalance your portfolio as needed
While many robo-advisors automatically rebalance your portfolio, it’s still a good idea to review your investments periodically. If you notice significant deviations from your target allocation or if your investment goals change, you may need to adjust your portfolio accordingly.
4. Stay informed about market trends and developments
Even though robo-advisors handle most of the investment decisions for you, it’s essential to stay informed about market trends and developments. This will help you better understand your portfolio’s performance and make more informed decisions about any adjustments you may need to make.
5. Evaluate the robo-advisor’s features and offerings
Periodically review the features and offerings of your robo-advisor to ensure they still align with your needs and preferences. Some robo-advisors may introduce new investment options, tools, or services that could benefit your investment strategy. If you find a different robo-advisor that better suits your needs, don’t hesitate to switch.
6. Consider seeking professional advice
If you have concerns about your investment approach or need help understanding complex financial situations, consider consulting a certified financial planner or other financial professional. While a robo-advisor can be an excellent option for many investors, there may be times when personalized advice from a human advisor is necessary.
Bottom Line
Robo-advisors are an excellent solution for investors seeking a low-cost, user-friendly approach to growing their wealth. They provide the advantages of professional portfolio management and access to diverse investment options without the hefty fees typically associated with traditional financial advisors.
As you embark on your investment journey, remember to consider your long-term goals, risk tolerance, and personal values when selecting a robo-advisor. Make sure to evaluate management fees, account types, and available investment options to ensure your chosen platform aligns with your investment strategy.
Keep an eye on your portfolio and leverage the tools and features offered by your robo-advisor to maximize returns, optimize asset allocation, and stay on track to achieve your financial goals.
By understanding the full potential of robo-advisors and making informed decisions about your investments, you can confidently take charge of your financial future and reap the rewards of a well-managed, diversified portfolio.
First date etiquette: How much should you spend? Who should pay? And can you talk about money?
By Emily Mee, Money team
Money isn’t the sexiest topic on a first date.
No one would say the best part was when their date leaned over, looked into their eyes and said: “Shall we split the bill?”
So if you want to save awkward vibe killer conversations, it might be worth thinking about money before you even set out for your date.
Can you talk about money?
TV presenter and dating coach Anna Williamson told the Money blog: “Typically as Brits we’re brought up to not talk about money – but I think there is a real sweet spot around being open and transparent in a respectful way around finances.”
If money is tight, she suggests the best way to make sure you’re not caught out is to take hold of arrangements, casually suggesting something low cost such as coffee, a museum, or a walk.
Just don’t get into this situation
Sexual health and relationships educator Lalala Letmeexplain agrees, and says low-cost first-dates avoid situations like this…
“I went for a first date with someone I’d never seen or met before and we booked in for a three-course meal. Right from the starter I knew that I didn’t fancy him and it was such an awful situation to be in because I was like, ‘Shit, we’ve got to get through the main and dessert’.”
Who should pay – the do’s and don’ts
As much as society has moved on, the old-fashioned view that, on heterosexual dates, the man should pay lingers on. A 2019 survey conducted by online dating site Elite Singles found 63% of men believed they should be the ones to pay on the first date – and 46% of women surveyed agreed.
If you’re not expecting a second date, Lalala says it’s often considered fair to split the bill – but if you’ve “got a bit of a vibe going on” and want a second date, you might want to suggest paying.
She adds that although there is no “hard and fast rule”, she would take a man’s offer to pay as a hint he is interested.
“If he’d paid for me the first date, I’d be more than happy to pay the next time,” she adds.
But while it can be flattering for someone to splash out on you, those who pay shouldn’t create a situation where “the other person feels that they are indebted or that they owe them something”.
“If someone spent £200 on the first date and you didn’t ask them to and it’s completely their choice, are you then put a position where you feel like you have to sleep with this guy or see him again because he’s gone all out?” she says.
“Be honest – don’t let somebody splash out on you if you know you don’t want to see them again.”
There is no objective answer here
Lalala says the question of how much you should spend on a first date depends on who you’re talking to.
“I think you have some people who feel like, ‘if you’re going to take me out on a date, I want to see you’re invested in that – that you’re buying me dinner or whatever’ – and then there are other people who are like, ‘You really don’t need to spend a penny and I’m absolutely happy to just go for a walk’.”
According to a Sky News poll for the Money blog, the majority of people (40%) believe it’s reasonable to spend roughly £20-50 between two people on a first date.
Another 39% say it’s reasonable for people to spend £50 to £100 (the total cost for both parties)…