The Jefferson Avenue commercial district in Buffalo, New York, is anchored by a supermarket.
There are dozens of other businesses and services along the 12-block corridor — a couple of bank branches, a library, a coffee shop, gas stations, a small plaza with a dollar store and a primary care clinic and a business incubator for entrepreneurs of color.
But Tops Friendly Markets, the only grocery store on Buffalo’s vast East Side, is the center of activity. More than just a place to buy food, pick up medications and use an ATM, the store is a communal gathering space in a predominantly Black neighborhood that, for generations, has been segregated, isolated and disenfranchised from the wealthier — and whiter — parts of the city.
Which explains how it came to be the site of a mass shooting on a spring day in May of last year. On that Saturday, a gunman, who lived 200 miles away in another part of the state, drove to Jefferson Avenue and went into Tops, and in just a few minutes killed 10 people, injured three and inflicted mass trauma across the community.
It is a scenario that has sadly, and repeatedly, played out in other parts of the country that have experienced mass shootings. But this one came with a twist: The gunman’s intention was to kill as many Black people as possible.
To achieve that, he specifically targeted a ZIP code with one of the highest percentages of Black residents in New York state. All 10 who died that day were Black.
“The mere fact that someone can research, ‘Where will the greatest number of Black people be … on a Saturday morning,’ that’s not by chance,” said Franchelle Parker, a community organizer and executive director of Open Buffalo, a nonprofit focused on racial, economic and ecological justice. “That’s not a mistake. It’s a community that’s been deeply segregated for decades.”
The day of the shooting, Parker, who grew up in nearby Niagara Falls, was driving to Tops, where she planned to buy a donut and an unsweetened iced tea before heading into the Open Buffalo office, which is located a block away from Tops. The mother of two had intended to complete the mundane task of cleaning up her desk — “old coffee cups and stuff” — after a busy week.
She saw the news on Twitter and didn’t know if she should keep driving to Jefferson Avenue or turn around and go back home. She eventually picked the latter.
When she showed up the next day, there were thousands of people grieving in the streets. “The only way that I could explain my feeling, it was almost like watching an old war movie when a bomb had gone off and someone’s in, like, shell shock. That’s how it felt,” said Parker, vividly recounting the community’s collective trauma in a meeting room tucked inside of Open Buffalo’s second-story office on Jefferson Avenue.
Almost immediately following the May 14, 2022, massacre, which was the second-deadliest mass shooting in the United States last year, conversations locally and nationally turned to the harsh realities of the East Side and how long-standing factors that affect the daily life of residents — racism, poverty and inequity — made the community an ideal target for a white supremacist.
Now, more than a year after the tragedy, there is growing concern that not enough is being done fast enough to begin to dismantle those factors. And amid those conversations, there are mounting calls for the banking industry — whose historical policies and practices helped cement the racial segregation and disinvestment that ultimately shaped the East Side — to leverage its collective power and influence to band together in an effort to create systemic change.
The ideas about how banks should support the East Side and better embed themselves in the neighborhood vary by people and organizations. But the basic argument is the same: Banks, in their role as financiers and because of the industry’s history of lending discrimination, are obligated to bring forth economic prosperity in disinvested communities like the East Side.
I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.
Chiwuike Owunwanne, corporate responsibility officer at KeyBank
“Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that,” said The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity, a four-year-old enterprise focused on racial, geographic and economic health disparities. “But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.”
To be sure, banks’ ability to reverse the course of the community isn’t guaranteed — and there is no formula to determine how much accountability they should hold to fix deeply entrenched problems like racism. Several Buffalo-area bankers said that while the Tops shooting heightened the urgency to help the East Side, the industry itself cannot be the sole driver of change.
“There are a lot of institutions … that can certainly play a part in reversing the challenges that we see today,” said Chiwuike “Chi-Chi” Owunwanne, a corporate responsibility officer at KeyBank, the second-largest bank by deposits in Buffalo. “I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.”
A long history of segregation
How the East Side — and the Tops store on Jefferson Avenue — became the destination for a racially motivated mass murderer is a story about racism, segregation and disinvestment.
Even as it bears the nickname “the city of good neighbors,” Buffalo has long been one of the most racially segregated cities in the United States. Of the 114,965 residents who live on the East Side, 59% are Black, according to data from the 2021 U.S. Census American Community Survey. The percentage is even higher in the 14208 ZIP code, where the Tops store is located. In that ZIP code, among 11,029 total residents, nearly 76% are Black, the census data shows.
The city’s path toward racial segregation started in the early 20th century when a small number of job-seeking Black Americans migrated north to Buffalo, a former steel and auto manufacturing hub at the far northwestern end of New York state. Initially, they moved into the same neighborhoods as many of the city’s poorer immigrants and lived just east of what is today the city’s downtown district. As the number of Blacks arriving in Buffalo swelled in the 1940s, they were increasingly confronted with various housing challenges, including racist zoning laws and restrictive deed covenants that kept them from buying homes in more affluent white areas.
Black Buffalonians also faced housing discrimination in the form of redlining, the practice of restricting the flow of capital into minority communities. In 1933, as the Great Depression roiled the economy, a temporary federal agency known as the Home Owners’ Loan Corporation used government bonds to buy out and refinance mortgages of properties that were facing or already in foreclosure. The point was to try to stabilize the nation’s real estate market.
As part of its program, HOLC created maps of American cities, including Buffalo, that used a color coding scheme — green, blue, yellow and red — to convey the perceived riskiness of making loans in certain neighborhoods. Green was considered minimally risky; other areas that were largely populated by immigrant, Black or Latino residents were labeled red and thus determined to be “hazardous.”
“The goal was to free up mortgage capital by going to cities and giving banks a way to unload mortgages, so they could turn around and make more mortgage loans,” said Jason Richardson, senior director of research at the National Community Reinvestment Coalition, an association of more than 750 community-based organizations that advocates for fair lending. “It was kind of a radical concept and it has evolved over the decades into our modern mortgage finance system.”
The Federal Housing Administration, which was established as a permanent agency in 1934, used similar methods to map urban areas and labeled neighborhoods from “A” to “D,” with “A” considered to be the most financially stable and “D” considered the least. Neighborhoods that were largely Black, even relatively stable ones, were put in the “D” category.
The result was that banks, which wanted to be able to sell mortgage loans to the FHA, were largely dissuaded from making loans in “risky” areas. And Buffalo’s East Side, where the majority of Blacks were settling, was deemed risky. Unable to get loans, Blacks couldn’t buy homes, start businesses or build equity. At the same time, large industrial factories on the East Side were closing or moving away, limiting job opportunities and contributing to rising poverty levels.
“Today what we’re left with is the residue of this process where we’ve enshrined … a pattern of economic segregation that favors neighborhoods that had fewer Black people in them and generally ignores neighborhoods that had African Americans living in them,” Richardson said.
Case in point: Research by the National Community Reinvestment Coalition shows that three-quarters of neighborhoods that were once redlined are low- to moderate-income neighborhoods today, and two-thirds of them are majority minority communities.
Adding to the division between Blacks and whites in Buffalo was the construction of a highway called the Kensington Expressway. Built during the 1960s, the below-grade, limited-access highway proved to be a speedy way for suburban workers to get to their downtown jobs. But its construction cut off the already-segregated East Side even more from other parts of the city, displacing residents, devaluing houses and destroying neighborhoods and small businesses.
As a result of those factors and more, many Black residents have become “trapped” on the East Side, according to Dr. Henry Louis Taylor Jr., a professor of urban and regional planning at the University at Buffalo. In 1987, Taylor founded the UB Center for Urban Studies, a research, neighborhood planning and community development institute that works on eliminating inequality in cities and metropolitan regions. In September 2021, eight months before the Tops shooting, the Center for Urban Studies published a report that compared the state of Black Buffalo in 1990 to present-day conditions. The conclusion: Nothing had changed for Blacks over 31 years.
As of 2019, the Black unemployment rate was 11%, the average household income was $42,000 and about 35% of Blacks had incomes that fell below the poverty line, the report said. It also noted that just 32% of Blacks own their homes and that most Blacks in the area live on the East Side.
“Those figures remain virtually unchanged while the actual, physical conditions that existed inside of the community worsened,” Taylor told American Banker in an interview in his sun-filled office at the center, located on the University at Buffalo’s city campus. “When we looked upstream to see what was causing it, it was clear: It was systemic, structural racism.”
Banks’ moral obligations
As the East Side struggled over the decades with rampant poverty, dilapidated housing, vacant lots and disintegrating infrastructure, banks kept a physical presence in the community, albeit a shrinking one. In mid-2000, there were at least 20 bank branches scattered across the East Side, but by mid-2022, the number had fallen to around 14, according to the Federal Deposit Insurance Corp.’s deposit market share data. The 14 include four new branches that have opened since early 2019 — Northwest Bank, KeyBank, Evans Bank and BankOnBuffalo.
The first two branches, operated by Northwest in Columbus, Ohio, and KeyBank, the banking subsidiary of KeyCorp in Cleveland, were requirements of community benefits agreements negotiated between each bank and the National Community Reinvestment Coalition. In both cases, Northwest and KeyBank agreed to open an office in an underserved community.
Evans Bank opened its first East Side branch in the fall of 2021. The office is located in the basement of an $84 million affordable senior housing building that was financed by Evans, a $2.1 billion-asset community bank headquartered south of Buffalo in Angola, New York.
Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that. But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.
The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity
On the community and economic development front, banks have had varying levels of participation. Buffalo-based M&T Bank, which holds a whopping 64% of all deposits in the Buffalo market and is one of the largest private employers in the region, has made consistent investments in the East Side by supporting Westminster Community Charter School, a kindergarten through eighth-grade school, and the Buffalo Promise Neighborhood, a nonprofit organization focused on improving access to education in the city’s 14215 ZIP code.
Currently, Buffalo Promise Neighborhood operates four schools. In addition to Westminster, it runs Highgate Heights Elementary, also K-8, as well as two academies that serve children ages six weeks through pre-kindergarten. Twelve M&T employees are dedicated to the program, according to the Buffalo Promise Neighborhood website. The bank has invested $31.5 million into the program since its 2010 launch, a spokesperson said.
Other banks are making contributions in other ways. In addition to the Jefferson Avenue branch and as part of its community benefits plan, Northwest Bank, a $14.2 billion-asset bank, supports a financial education center through a partnership with Belmont Housing Resources of Western New York. Meanwhile, the $198 billion-asset KeyBank gave $30 million for bridge and construction financing for Northland Workforce Training Center, a $100 million redevelopment project at a former manufacturing complex on the East Side that was partially funded by the state.
BankOnBuffalo’s East Side branch is located inside the center, which offers KeyBank training in advanced manufacturing and clean energy technology careers. A subsidiary of $5.6 billion-asset CNB Financial in Clearfield, Pennsylvania, BankOnBuffalo’s office opened a month after the shooting. The timing was coincidental, but important, said Michael Noah, president of BankOnBuffalo.
“I think it just cemented the point that this is a place we need to be, to be able to be part of these communities and this community specifically, and be able to build this community up,” Noah said.
In terms of public-private collaboration, some banks have been involved in a deeper way. In 2019, New York state, which had already been pouring $1 billion into Buffalo to help revitalize the economy, announced a $65 million economic development fund for the East Side. The initiative is focused on stabilizing neighborhoods, increasing homeownership, redeveloping commercial corridors including Jefferson Avenue, improving historical assets, expanding workforce training and development and supporting small businesses and entrepreneurship.
In conjunction with the funding, a public-private partnership called East Side Avenues was created to provide capital and organizational support to the projects happening along four East Side commercial corridors. Six banks — Charlotte, North Carolina-based Bank of America, the second-largest bank in the nation with $2.5 trillion of assets; M&T, which has $203 billion of assets; KeyBank; Warsaw, New York-based Five Star Bank, which has about $6 billion of assets; Northwest and Evans — are among the 14 private and philanthropic organizations that pledged a combined $8.4 million to pay for five years’ worth of operational support, governance and finance, fundraising and technical assistance to support the nonprofits doing the work.
Laura Quebral, director of the University at Buffalo Regional Institute, which is managing East Side Avenues, said the banks were the first corporations to step up to the request for help, and since then have provided loans and other products and education to keep the program moving.
Their participation “is a signal to the community that banks cared and were invested and were willing to collaborate around something,” Quebral said. “Being at the table was so meaningful.”
Richard Hamister is Northwest’s New York regional president and former co-chair of East Side Avenues. Hamister, who is based in Buffalo, said banks are a “community asset” that have a responsibility to lift up all communities, including those where conditions have arisen that allow it to be a target of racism like the East Side.
“We operate under federal charters, so we have an obligation to the community to not only provide products and services they need but also support when you go through a tragedy like that,” Hamister said. “We also have a moral obligation to try to help when things are broken … and to do what we can. We can’t fix everything, but we’ve got to fix our piece and try to help where we can.”
In the wake of a tragedy
After the massacre, there was a flurry of activity within banks and other organizations, local and out-of-town, to respond to the immediate needs of East Side residents. With the community’s only supermarket closed indefinitely, much of the response centered around food collection and distribution. Three of M&T’s five East Side branches, including the Jefferson Avenue branch across the street from Tops, became food distribution sites for weeks after the shooting. On two consecutive Fridays, Northwest provided around 200 free lunches to the community, using a neighborhood caterer who is also the bank’s customer. And BankOnBuffalo collected employee donations that amounted to more than 20 boxes of toiletries and other items that were distributed to a nonprofit.
At the same time, M&T, KeyBank and other banks began financial donations to organizations that could support the immediate needs of the community. KeyBank provided a van that delivered food and took people to nearby grocery stores. Providence, Rhode Island-based Citizens Financial Group, whose ATM inside Tops was inaccessible during the store’s temporary closure, installed a fee-free ATM near a community center located about a half-mile north of Tops, and later put a permanent ATM inside the center that remains there today. And M&T rolled out a short-term loan program to provide capital to East Side small-business owners.
One of the funds that benefited from banks’ support was the Buffalo Together Community Response Fund, which has raised $6.2 million to address the long-term needs of the East Side.
Bank of America and Evans Bank each donated $100,000 to the fund, whose list of major sponsors includes four other banks — JPMorgan Chase, Citigroup, M&T and KeyBank. Thomas Beauford Jr., a former banker who is co-chair of the response fund, said banks, by and large, directed their resources into organizations where the dollars would have an immediate impact.
“Banks said, ‘Hey, you know … it doesn’t make sense for us to try to build something right now. … We will fund you in the work you’re doing,'” said Beauford, who has been president and CEO of the Buffalo Urban League since the fall of 2020. “I would say banks showed up in a big way.”
Fourteen months later, banks say they are committed to playing a positive role on the East Side. For the second year, KeyBank is sponsoring a farmers’ market on the East Side, an attempt to help fill the food desert in the community. Last fall, BankOnBuffalo launched a mobile “bank on wheels” truck that’s stationed on the East Side every Wednesday. The 34-foot-long truck, which is staffed by two people and includes an ATM and a printer to make debit cards, was in the works before the shooting, and will eventually make four stops per week around the Buffalo area.
Evans has partnered with the city of Buffalo to construct seven market-rate single family homes on vacant lots on the East Side. The relationship with the city is an example of how banks can pair up with other entities to create something meaningful and lasting, more than they might be able to do on their own, said Evans President and CEO David Nasca.
The bank has “picked areas” where it can use its resources to make a difference, Nasca said.
“I don’t think the root causes can be ameliorated” by banks alone, he said. “We can’t just grant money. It has to be within our construct of a financial institution that invests and supports the public-private partnership. … All the oars [need to be] pulling together or this doesn’t work.”
‘Little or no engagement with minorities’
All of these efforts are, of course, welcomed by the community, but there is still criticism that banks haven’t done enough to make up for their past contributions to segregating the city. And perhaps more importantly, some of that criticism centers on banks failing to do their most basic function in society — provide credit.
In 2021, the New York State Department of Financial Services issued a report about redlining in Buffalo. The regulator looked at banks and nonbank lenders and found that loans made to minorities in the Buffalo metro area made up 9.74% of total loans in Buffalo. Overall, Black residents comprise about 33% of Buffalo’s total population of more than 276,000, census data shows.
The department said its investigation showed the lower percentage was not due to “excessive denials of loan applications based on race or ethnicity,” but rather that “these companies had little or no engagement with minorities and generally made scant effort to do so.”
“The unsurprising result of this has been that few minority customers or individuals seeking homes in majority-minority neighborhoods have made loan applications … in the first instance.”
Furthermore, accusations of redlining persist today, even though the practice of discriminating in housing based on race was outlawed by the Fair Housing Act of 1968.
In 2014, Evans was accused of redlining by the New York State Attorney General, which said the community bank was specifically avoiding making mortgage loans on the East Side. The bank, which at the time had $874 million of assets, agreed to pay $825,000 to settle the case, but Nasca maintains that the charges were unfounded. He points to the fact that the bank never had a fair lending or fair housing violation, no specific incidents were ever claimed and that the bank’s Community Reinvestment Act exam never found evidence of discriminatory or illegal credit practices.
The bank has a greater presence on the East Side today, but that’s because it has grown in size, not because it is trying to make up for previous accusations of redlining, he said.
“Ten years ago, our involvement [on the East Side] certainly wasn’t what you’re seeing today,” Nasca said. “We were looking to participate more, but we were participating within our means and our reach. As we have grown, we have built more resources to be able to do more.”
Shortly after accusations were made against Evans, Five Star Bank, the banking arm of Financial Institutions in Warsaw, New York, was also accused of redlining by the state Attorney General. Five Star, which has been growing its presence in the Buffalo market for several years, wound up settling the charges for $900,000 and agreeing to open two branches in the city of Rochester.
KeyBank is currently being accused of redlining by the National Community Reinvestment Coalition. In a 2022 report, the group said that KeyBank is engaging in systemic redlining by making very few home purchase loans in certain neighborhoods where the majority of residents are Black. Buffalo is one of several cities where the bank’s mortgage lending “effectively wall[ed] out Black neighborhoods,” especially parts of the East Side, the report said.
KeyBank denied the allegations. In March, the coalition asked regulators to investigate the bank’s mortgage lending practices.
Beyond providing more credit, some community members believe that banks should be playing a larger role in addressing other needs on the East Side. And the list of needs runs the gamut from more grocery stores to safe, affordable housing to infrastructure improvements such as street and sidewalk repairs.
Alexander Wright is founder of the African Heritage Food Co-op, an initiative launched in 2016 to address the dearth of grocery store options on the East Side, where he grew up. Wright said that while banks’ philanthropic efforts are important, banks in general “need to be in a place of remediation” to fix underlying issues that the industry, as a whole, helped create. (After publication of this story, Wright left his job as CEO of the African Heritage Food Co-Op.)
Aside from charitable donations, banks should be finding more ways to work directly with East Side business owners and entrepreneurs, helping them with capital-building support along the way, Wright said. One place to start would be technical assistance by way of bank volunteers.
“Banks are always looking to volunteer. ‘Hey, want to come out and paint a fence? Want to come out and do a garden?'” Wright said. “No. Come out here and help Keshia with bookkeeping. Come out here and do QuickBooks classes for folks. Bring out tax experts. Because these are things that befuddle a lot of small businesses. Who is your marketing person? Bring that person out here. Because those are the things that are going to build the business to self-sufficiency.
“Anything short of the capacity-building … that will allow folks to rise to the occasion and be self-sufficient I think is almost a waste,” Wright added. “We don’t need them to lead the plan. What we need them to do is be in the community and [be] hearing the plan and supporting it.”
Parker, of Open Buffalo, has similar thoughts about the role that banks should play. One day, soon after the massacre, an ATM appeared down the street from Tops, next to the library that sits across the street from Parker’s office. Soon after the ATM was installed, Parker began fielding questions from area residents who were skeptical of the machine and wanted to know if it was legitimate. But Parker didn’t have any information to share with them. “There was no outreach. There was no community engagement. So I’m like, ‘Let me investigate,'” she said. “I think that’s a symptom of how investment is done in Black communities, even though it may be well-intentioned.”
As it turns out, the temporary ATM belonged to JPMorgan Chase. The megabank has had a commercial banking presence in Buffalo for years, but it didn’t operate a retail branch in the region until last year. Today it has four branches in operation and plans to open another two by the end of the year, a spokesperson said.
After the Tops shooting, the governor’s office reached out to Chase asking if the bank could help in some way, the spokesperson said in response to the skepticism. The spokesperson said that while the Chase retail brand is new to the Buffalo region, the company has been active in the market for decades by way of commercial banking, private banking, credit card lending, home lending and other businesses.
In addition to the ATM, the bank provided funding to local organizations including FeedMore Western New York, which distributes food throughout the region.
“We are committed to continuing our support for Buffalo and helping the community increase access to opportunities that build wealth and economic empowerment,” the spokesperson said in an email.
In the year since the massacre, there has been some progress by banks in terms of their interest in listening to the East Side community and learning about its needs, said Nicholas. But he hasn’t felt an air of urgency from the banking community to tackle the issues right now.
“I do experience banks being a little more open to figuring out what their role is, but it’s slow. It’s slow,” said Nicholas. The senior pastor of the Lincoln Memorial United Methodist Church, located about a mile north from Tops, Nicholas is part of a 13-member local advisory committee for the New York arm of Local Initiatives Support Coalition, or LISC. The group is focused on mobilizing resources, including banks, to address affordable housing in Western New York, specifically in the inner city, as well as training minority developers and connecting them to potential investors, Nicholas said.
Of the 13 members, seven are from banks — one each from M&T, Bank of America, BankOnBuffalo, Evans and KeyBank, and two members from Citizens Financial Group. One of the priorities of LISC NY is health equity, and the fact that banks are becoming more engaged in looking at health disparities is promising, Nicholas said. Still, they have more work to do, he said.
“I need them to think more on how to strengthen and build the economy on the East Side and provide leadership around that, not only to provide charitable things, but using sound business and banking and community development principles to say, ‘OK, if we’re going to invest in this community, these are the types of things that need to happen in this community,’ and then encourage their partners and other people they work with … to come fully in on the East Side.”
Some bankers agree with the community activists.
“Putting a branch in is great. Having a bank on wheels is great,” said Noah of BankOnBuffalo. “But if you’re not embedded in the community, listening to the community and trying to improve it, you’re not creating that wealth and creating a better lifestyle for everyone.”
What could make a substantial difference in terms of banks’ impact on the community is a combination of collaboration and leadership, said Taylor. He supports the idea of banks leading the charge on the creation of a comprehensive redevelopment and reinvestment plan for the East Side, and then investing accordingly and collaboratively through their charitable foundations.
“All of them have these foundations,” Taylor said. “You can either spend that money in a strategic and intentional way designed to develop a community for the existing population, or you can spend that money alone in piecemeal, siloed, sectorial fashion that will look good on an annual report, but won’t generate transformational and generational changes inside a community.”
Banks might be incentivized to work together because it could mean two things for them, according to Taylor: First, they’d have an opportunity to spend money in a way that would have maximum impact on the East Side, and second, if done right, the city and the banks could become a model of the way to create high levels of diversity, equity and inclusion in an urban area.
“If you prove how to do that, all that does is open up other markets of consumption all over the country because people want to figure out how to do that same thing,” Taylor said.
Some of that is already happening, at least on a bank-by-bank case, said KeyBank’s Owunwanne. Through the KeyBank Foundation, the company is able to leverage different relationships that connect nonprofits to other entities and corporations that can provide help.
“I see this as an opportunity for us to make not just incremental changes, but monumental changes … as part of a larger group,” Owunwanne said “Again, I say that not to absolve the bank of any responsibility, but just as a larger group.”
Downstairs from Parker’s office, Golden Cup Coffee, a roastery and cafe run by a husband and wife team, and some other Jefferson Avenue businesses are trying to build up a business association for existing and potential Jefferson-area businesses. Parker imagined what the group could accomplish if one of the banks could provide someone on a part-time basis to facilitate conversations, provide administrative support and coordinate marketing efforts.
“In the grand scheme of things, when we’re talking about a multimillion dollar [bank], a part-time employee specifically dedicated to relationship-building and building out coalitions, it sounds like a small thing,” Parker said. “But that’s transformational.”
During the first couple of years of the COVID-19 pandemic, Los Angeles tenants were able to skip their rent payments as renters lost their jobs and businesses shut down, but the first deadline for that unpaid rent is Tuesday.
Eviction protections that were in place at the start of the pandemic expired earlier this year, which means that tenants could face evictions if they’re not able to pay their landlords their unpaid rent from the first 19 months of the pandemic by the Aug. 1 repayment deadline.
What does the deadline mean for me?
If you have rental debt accumulated from March 1, 2020, through Sept. 30, 2021, you have to pay that unpaid rent to your landlord, or possibly face eviction.
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However, the Los Angeles City Council and Mayor Karen Bass approved a minimum threshold for evictable rent debt, which means that if you owe less than one month of unpaid rent, you can’t be evicted on the basis of late rent, according to a statement by Bass’ office.
The deadline for rent debt owed from Oct. 1, 2021, through Jan. 31, 2023, is Feb. 1, 2024.
Are there any exceptions?
People who owe rent from March 1, 2020, to Aug. 31, 2020, can’t be evicted if they provided their landlord with a form declaring financial hardship due to COVID-19 within 15 days of receiving the form from the landlord.
Also, tenants who provided that same form by the 15-day deadline and paid 25% of their rent owed from Sept. 1, 2020, through Sept. 30, 2021, will also not face eviction.
However, their landlord can pursue action in small claims court for the unpaid rent.
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Are there any resources available for me?
Bass said her office is working to prepare resources for people who may be affected by the deadline.
“We will continue to lock arms with our partners to solve this crisis so that everyone in Los Angeles has a safe place to sleep at night and that no one is sleeping on the streets,” Bass said at a news conference Monday.
Her office plans to propose using money from a tax passed last year on the sales of properties over $5 million — known as Measure ULA — to fund rental assistance programs, such as short-term emergency assistance programs, a tenant outreach and education program and a protections from tenant harassment program, Bass said Monday. The plan will come before the City Council’s Housing and Homelessness Committee the day after the deadline.
The Mayor’s Fund for Los Angeles’ program “We Are LA” has also been reaching out to at-risk tenants to help them access legal services and other assistance they may be eligible to receive.
The outreach teams have connected with more than 40,000 people already, according to Bass.
The city will also be reaching out to people who receive eviction notices to help them understand what it means, help them file a response if their landlord filed an unlawful detainer and make sure that they are aware of any resources available to them, Councilmember Nithya Raman, chair of the council’s housing and homelessness committee, said at the conference Monday.
If people receive an eviction notice, they need to respond within five days, Bass’ statement said.
Raman added that the city has partnered with the courts to help make sure that tenants have access to all the resources and services that are available to them, as well as encouraging people to go into mediation or other pathways for alternative resolutions.
Bass’ office along with Raman also recommended tenants reach out to the city’s housing department. Renters can do so by scheduling an appointment at one of the agency’s public counters or calling at (866) 557-7368.
There are also more resources for tenants available on the Tenant Power Toolkit and StayHousedLA website, which can provide information about tenant rights and the eviction process.
At the conference Monday, Bass said there is also help on the way for landlords through rental assistance, which provides money to the landlord for the back rent.
“To address this problem, you need to protect the tenants, but you also need to protect the landlords as well,” she said.
Times staff writer David Zahniser contributed to this report.
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Updated: March 15, 2022
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Do you really need to get life insurance quotes from lots of companies?
I have seen so many clients who ask this question. If you want to save money, then my answer is a definitive yes!
Not all life insurance policies are the same (nor are the companies who offer them). For this reason, you should absolutely get a lot of quotes all at once to see what is actually going to be the best decision.
Did you know there are hundreds of life insurance companies who offer coverage, and each of them has their own pricing model?
Below, learn how you can get free life insurance quotes and secure the best coverage for your family’s needs.
Reasons to Buy Life Insurance
Here are the most common reasons people buy life insurance:
Some people buy whole life policies as an investment strategy. Others, like small business owners, might even purchase life insurance to secure a loan. With such a policy, you could pursue collateral assignment of the life insurance policy’s proceeds.
The possibilities are endless. Regardless of the reason for obtaining life insurance, you need to consider how much coverage to buy.
Who Needs Life Insurance
If you read my blog regularly, you know I took out a $2.5 million policy on myself so if anything happens to me, my wife (who is my life insurance beneficiary) will be able to spend her time mourning and keeping the kids lives in order as much as possible.
She will not have to think about how the mortgage gets paid or how to make ends meet. Designating a beneficiary ensures they’ll be taken care of financially in the event of your death.
You can even establish a contingent beneficiary in case your primary beneficiary is unable to claim your benefits.
A lot of people buy life insurance for their children to provide additional protection. Whether you are purchasing a policy for yourself or want to get life insurance on someone else in your family, the protection of a life policy can be invaluable.
If you don’t have someone who is directly dependent on your income then you will want a small policy which will make it easy to take care of any financial obligations you may have. This will make it easier for the executor of your estate to clear up any final expenses.
Do You Need Life Insurance?
It depends. If you’re wondering about life insurance for millennials, and you have zero debt or dependents, you may be safe without a policy. But if you have transferrable debt or loved ones depending on you, you could benefit from life insurance.
How Much Life Insurance Do You Need?
All the time, I get questions about life insurance, but especially this one, and the answer is always, “It depends.”
It depends on how much you are making, what your financial obligations are, and how much debt you have (among other things).
As a rule of thumb, most people will get about ten times their annual income.
This will typically leave enough money for a spouse to get the finances straightened out and still have plenty left over to replace your income. There is a wide range of options for life insurance for married couples tailor-made to meet your goals.
Factors that Might Impact Your Policy Amount
Debt: If you have large amounts of debt, you may want to increase the number to make sure you wipe out all the debt your family has and still have a sizable nest egg for your family.
Kids: Pregnancy affects life insurance and the amount of it you need, as does raising children. If one person in your family is a stay at home parent, you will need a decent size policy on them just to cover the cost of all the duties they take care of. If you’re looking for cheap life insurance for moms, you can rest assured that there are plenty of options out there for you. I frequently see families get between $250,000 and $500,000 of coverage on a non-income producing spouse.
Divorce: If you’re facing a divorce, you should also take that into consideration as you choose which type of policy and what amount to purchase.
Final expenses: Finally, if your personal obligations are small and you just need to make sure your estate and final expenses are taken care of, you can look at a policy which is tailored to just your needs. I have seen people purchase as low as $10,000 worth of coverage just to tie up any loose ends.
Whether you buy a life insurance policy through your employer or with a life insurance agent, knowing your policy options is a crucial first step. You can listen to my podcast about life insurance through your employer for my thoughts on work policies.
What Types of Policies Are Available?
Overall, there are still two primary types of life insurance which are available in the marketplace today: Term and Permanent.
There are actually several other types within each of these two types, but we’ll get to that in a minute.
Term Life Insurance
With term life insurance, the policy consists of pure death benefit coverage in return for the payment of a premium.
These particular policies do not contain any type of cash value or investment component. This is why term life is considered to be the most basic form of life insurance there is.
It is also typically the most affordable – especially for those who are young and in good health.
In fact, for individuals who wish to obtain a large amount of death benefit for a low premium cost, term policies can be a very good option.
As the name suggests, term life is sold for specific time periods, or “terms.”
Term Lengths
These are usually:
Although there are some term life plans which are sold for as short as 1-5 years, and for as long as 40.
Term Considerations
When a term policy expires – provided the insured has held the policy throughout its entire length – and if the insured still wants coverage, he or she will need to re-qualify for another policy at their then-current age and health condition.
Because they will be older – and they may also possibly have an adverse health condition – the new policy’s premium will likely be higher. If the individual has been diagnosed with various health conditions, they may be deemed as uninsurable and may not be able to obtain future coverage.
Because a term policy is considered to be “temporary” coverage, it is often times thought to be a good way to cover temporary needs.
As an example, this type of insurance may be a good way to cover the cost of a child’s future college education if a parent or grandparent were to pass away before the child turns age 18.
Likewise, term life insurance can also be a good way to ensure a 15 or a 30-year home mortgage will be paid off if a breadwinner passes away while there is still a balance to be paid off.
Term Life Insurance Quotes
The premiums for term life insurance plans are typically lower than those for whole life insurance – especially for applicants who are young and in good health. These policies can provide a great way to purchase a high amount of death benefit coverage for a very low price.
In fact, if you’re looking for the cheapest life insurance you can buy, it better be a term policy.
In some cases, term policies may include a conversion rider which will allow the policy to convert over into a permanent policy after a certain period of time.
When looking at your first set of term life insurance quotes the premiums may vary greatly. Some policies are medically underwritten, requiring an attending physician statement from your doctor, while others are true no exam policies. Whichever option you choose will have an impact on the premiums you pay.
Types of Term Life Insurance Policies
There are several different types of term policies which are available in the marketplace today:
Renewable – This type of term coverage is able to be renewed by the insured after each time period – or “term” – has elapsed. This is allowed without the need to complete a new application for coverage or to pass a new medical examination. Just understand, the price will rise.
Convertible – With convertible policies, the insured is able to convert from a term policy over to a permanent life insurance policy in the future. Provided the conditions of the policy have been met and the premium payments have continued to be made, there will be no medical exam required in order to do so.
Decreasing – With a decreasing term policy, the amount of the death benefit will decrease over time, until it gets to zero. At that time, the policy ends. These tend to be matched to something like a mortgage, for example, and matches the decreasing amortization table.
Because there are so many different types of term life insurance on the market today, applicants can pick and choose which will work best, based on their specific coverage needs and goals, essentially allowing them to “customize” their coverage.
Permanent Life Insurance
This type of life insurance will include both a death benefit and a cash value component. The cash value in a permanent policy is allowed to grow on a tax-deferred basis.
This means there are no taxes which are due on the gain until the time the money is withdrawn. This can essentially allow the cash to grow and compound on an exponential basis.
Unlike term life insurance, permanent life policies do not have any type of set duration of coverage, but rather they last indefinitely.
Those who purchase permanent coverage will typically plan to keep their coverage for the “whole” of their lives. These plans are usually intended to cover longer-term needs, as well, and they are oftentimes used in estate planning.
Permanent life is also often purchased on younger individuals and then kept for many years. This way, the person has life insurance coverage, along with a savings vehicle which grows tax-deferred over time.
Types of Permanent Life Insurance
There are three main types of permanent life insurance:
Whole Life – the most common permanent policy. It has the standard death benefit and uses a savings account as its investment piece. Along with deposits from your regular premiums, the savings account grows from dividends the insurance company pays into the account. To help you get a better understanding we did an entire write up on whole life insurance.
Universal or Adjustable Life – These policies offer a greater amount of flexibility than standard whole life policies. Many offer you the opportunity to increase your death benefit after passing a new medical examination. These policies will also let you pay your premiums from your cash balance. This can be a useful feature in times where your personal finances are stretched. Get a better understanding of our article on universal life insurance policies.
Variable Life – Similar to whole life except you can take the money in your savings account and invest it in stocks, bonds, mutual funds, and money market accounts. This comes with more risk so make sure you have a good grasp on those risks before purchasing a variable life insurance policy.
Permanent Life Insurance Quotes
Permanent life insurance quotes will be higher than term life quotes for a comparable amount of death benefit coverage on an individual.
However, this is typical because, with permanent coverage, the policyholder is not just purchasing death benefit coverage, but also the cash value component within the policy.
In addition, unlike term life insurance, a permanent policy will not expire after a certain number of years. Rather, provided the premium continues being paid, the permanent policy will continue indefinitely.
How Do You Know You Are Using A Good Company?
All the life insurance quotes on this site are from top rated carriers, meaning they pass standards for financial stability and for fulfilling the claims necessary.
There are four nationally recognized rating agencies in the country: A.M. Best, Standard & Poor’s, Fitch, and Moody’s
They assign ratings to insurance companies based on a wide spectrum of data points, both looking forward and looking back. These ratings are based on factors such as the financial strength of the company, claims payout, and reputation in the industry.
In most cases, these ratings are letter grades similar to those on a report card. It is important to stick with insurance carriers who have high grades in the “A” range.
For most people, it is hard to understand what it actually means to be secure, so I also put together a list of who I consider to be the 10 best life insurance companies.
Keep in mind the life insurance quotes you get here may include some other more localized companies when you get your own quotes, so your results might vary.
How Are Life Insurance Quotes Determined?
When determining the price of a life insurance policy, there are several key criteria which go into coming up with the final quote.
1. Type of Policy
One of the biggest factors in coming up with the premiums is what type of coverage you are purchasing.
For example, will the coverage be term or permanent? In most cases, especially if an applicant is young and in good health, a term quote will be lower – at least initially. However, over time, as an applicant gets into the older ages, whole life insurance can become more competitive.
2. Face Amount
The face amount refers to the amount of death benefit coverage you are purchasing.
This, too, will be a primary factor in the amount you will be quoted for life insurance. As with most other types of goods or services, the higher the amount of coverage you are purchasing, the higher the quote will be.
3. Riders
There are many different riders which may be included on a policy to help in customizing it more towards the insured’s needs and goals.
These “add on’s” can add to the overall price of the policy.
4. Age of the Applicant
The applicant’s age is another key criteria in how much the insurance quote will be. A big part of the cost of life insurance is based on a person’s life expectancy.
Therefore, your age at the time you apply will certainly factor into the price of your coverage.
5. Applicant’s Health Condition
Life insurance underwriters consider many different factors when pricing coverage – as well as deciding whether or not an applicant will even qualify for coverage at all.
Some of the main components regarding a person’s overall health and body which are considered include his or her age, height and weight, overall health history, and family health history. Also considered is whether the person smokes and/or drinks alcohol (and if so, how often).
6. High Risk Factors
Many companies will require a urine analysis as part of the application process.
In addition, other criteria will also be examined such as whether the applicant participates in any type of dangerous or “risky” hobbies or occupations, takes prescriptions, or has financial issues.
All of these criteria will be considered in order to determine the person’s overall risk to the insurance company.
7. Insurance Company
When comparing insurance rates, individuals will find policies have very similar – or even the same – benefits, yet will have drastically different premium quotes.
For this reason, it is always a good idea to compare three or more quotes prior to making your final decision on a term or a whole life insurance policy.
When reviewing an insurance company, it is always important to take a look at the financial strength of the insurer. This is because you will want the company to be there in the future when it is time for the claim to be paid out.
NOTE: Just because you are given a certain quote does NOT mean you are approved at that rate! You still have to qualify.
Get A Quote Now
With the information from this post in hand, you can confidently shop for rates and get excellent life insurance for you and your family.
Life insurance is one of the most foundational pieces to your financial plan you can put into place, and a key part of any insurance portfolio. Don’t wait another day to secure protection for your loved ones.
About the Author
Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.
Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.
While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.
Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.
Have you ever considered taking out a personal loan to invest? If so, you aren’t alone.
When you hear about the ability to make money in the stock market, it can be tempting to find a way to start investing today. This is true even if you don’t have any available cash.
Want to invest, but don’t have cash? Find a personal loan with Fiona
If you’re trying to get ahead, it may seem tempting to take shortcuts to get there faster. Unfortunately, some alternatives are a very bad idea. This includes taking out a personal loan to invest in the stock market in the vast majority of cases.
There may be a very rare time when it makes sense to take out a personal loan to invest. However, I don’t think I would ever do it. Here’s what you need to know.
What’s Ahead:
How personal loans work
Personal loans have a couple of key characteristics that are important to understand.
Personal loans are unsecured debt
First, they are unsecured loans. This means the lender can’t foreclose on your home or repossess your car if you don’t make payments.
Unsecured loans, such as personal loans, have higher interest rates than secured loans. This makes sense because there is nothing the lender can directly seize if you default on your loan. It is riskier for the lender.
Personal loans have a fixed term
Next, personal loans are fixed-term loans. This means you have a set number of months or years to repay the loan after you take it out.
Based on your balance, interest rate, and term, you’ll have to make a payment each month that results in paying off the loan at the end of the term.
This is unlike a credit card where you can carry a balance from month to month and make minimum payments.
This is important if you’re considering investing the money. It means you have to make a fairly decent monthly payment each month. You can’t pay the minimum and pay the rest off at the end of the loan.
Can I use a personal loan to invest?
Unless your lender specifies otherwise, a personal loan can be used for anything you want. This includes investing in the stock market.
That said, some lenders will offer you lower personal loan interest rates if you use the money for certain purposes. That’s because some uses may result in a lower risk to the lender than others.
For instance, personal loans for debt consolidation may require the funds to be disbursed directly to the loans you’re consolidating. Read the terms of your loan to understand if there are any restrictions on the money.
Why would someone take out a loan to invest?
A person may be tempted to take out a personal loan to invest if they see an opportunity to make money. If a person could earn higher returns investing the money they borrow than they pay in interest, they could come out ahead.
This can be very tempting after a stock market crashes and then starts rebounding. In some cases, you may see sharp gains for a few days or weeks that would exceed the costs of some personal loans over a year.
When would this be worth it?
Taking out a personal loan to invest only makes sense when you’re very confident your investment gains will exceed the costs of the loan.
For instance, let’s say you can take out a personal loan with an 11.99% interest rate. It would only make sense to use this money to invest if your returns could exceed that 11.99% cost.
Investing is volatile, though. Nothing is guaranteed. It probably wouldn’t make sense to take out an 11.99% personal loan to earn 12% by investing. Due to taxes and the minimal amount you’d gain, you wouldn’t come out ahead.
In order for the risk to be worth it, you’d likely have to get returns that greatly exceed the interest rate you pay on your personal loan.
There are other types of investments other than the stock market. Some of these investments may make more sense to use a personal loan for.
For instance, let’s say you have the opportunity to invest in your small company that has a huge profit margin. Unfortunately, you can’t get access to cash any other way than a personal loan for whatever reason.
If you put in $10,000 but could earn $20,000 from that investment in three years, it may make sense to take out a personal loan to invest.
Why it may be a good idea to take out a personal loan to invest in the stock market
Taking out a personal loan to invest in anything, including the stock market, only makes sense in one scenario. This scenario is when you know with a relative degree of certainty that your returns will exceed your costs.
Investing in the stock market at any rate of return is far from certain. I personally do not believe it is ever a good idea to take out a personal loan to invest in the stock market.
Why it may not be a good idea to take out a personal loan to invest in the stock market
There are several reasons why taking out a personal loan to invest in the stock market is a bad idea.
Personal loans have fixed terms
First, personal loans have fixed terms that are usually relatively short. Personal loan terms typically don’t exceed seven years, although they can be longer in some cases.
Short terms are a problem because most investments vary in returns greatly from year to year. The returns average out over the long run, but the short-term returns are very unpredictable.
While seven years seems like a long time, it isn’t in the grand scheme of the stock market.
High interest rates
Personal loans don’t offer low interest rates like car loans and mortgages do. While you may see low personal loan rates advertised, such as 5.99% APR, people rarely qualify for them.
These low rates are usually for funds for a specific use, such as debt consolidation. Additionally, they’re typically for the shortest term loan, such as 24 months. Finally, you normally have to have impeccable credit to qualify for these rates.
To make matters worse, the longer the loan term is, the higher your interest rate will be, too. In order for you to invest for a long enough period to have investment returns be less volatile, it would cost you even more in interest payments. This could cut down on your potential profit.
You have to make monthly payments on your loan
Personal loans require you to make equal monthly payments. When you’re invested, you don’t want to have to sell portions of your investment to make payments.
Doing so would lower your return. It could also cause you to sell when your investment is performing poorly, resulting in locking in a loss.
Other types of investments that have greater returns may not be as liquid. This means you can only sell them at certain times. If you can’t get your money out to make your monthly payment, you could default on your loan.
Who should consider taking out a personal loan to invest?
In my opinion, only people with investments that have guaranteed returns and very little to no risk should take out a personal loan to invest. These investments rarely exist.
The risk isn’t worth the relatively low amount you’ll earn over the interest costs of the loan in the vast majority of cases.
This means most people should avoid taking out a personal loan to invest.
It’s about risk and return – here’s an example
Let’s say you take out a five-year personal loan for $10,000 to invest in the stock market. There is no origination fee, so you get the full $10,000 upfront. Interest rates from these loans vary, but you get an 11.99% APR for the purposes of this example.
Your investment has a break out period and you get an incredible 15% return on your investment each year. In this case, it might make sense to take out a personal loan to invest. Unfortunately, you’d only know this after the fact.
At the same time, your interest is not tax-deductible. You would have to pay income taxes on the gains on your investments. This would reduce your profits.
Even without taxes, you’d only theoretically earn a 3.01% difference between the loan APR and the return from the investment.
Once you consider the fact that you’d have to make a monthly payment of about $222, things get trickier. You’d have to have cash on hand to make this monthly payment or you’d have to sell some of your investment each month to make your payments.
If your investment varies in price, you may end up having to sell low to make your monthly payment. This could reduce your future returns below the 15% per year the investment would have returned if you left the money in the investment the entire time.
Let’s now look at an example with a more reasonable rate of return for the stock market. Let’s assume you earn an 8% return each year.
In this case, you’d be paying 3.99% per year to invest. This makes no sense. You wouldn’t take out a personal loan to invest because it’d cost you money to do so.
Personal loan providers you may want to consider
If you happen to have an investment opportunity that would likely result in a higher return than the cost of the loan, here are a few lenders you may want to consider.
Fiona
Fiona doesn’t directly offer personal loans, but they do help you find a personal loan lender. Once you pick the type of loan you want, you input a few details about your situation. In the case of personal loans, you input your credit score range, zip code, loan purpose, and the amount of the loan you’re requesting.
Based on this information, Fiona will display several lenders that may match your needs. They show you estimated terms, APRs, and monthly payments. If you find an offer you like, click continue. You’ll be directed to input information to get personalized loan offers for your situation.
Find a personal loan lender with Fiona.
Monevo
Monevo is another personal loan aggregator website. You’ll just some basic information about yourself and the purpose of your loan to get quotes from more than 30 different lenders. The process won’t affect your credit score, and you’re under no obligation to accept any of the offers.
If you want to get a feel for the lenders and rates being offered, you can browse a list before you even start the quote process. Loans are available in amounts up to $100,000, with rates range between 1.99% – 35.99% APR. If you like one of the offers, you’ll then progress to the full application.
By shopping multiple lenders at once, you’ll save time and increase your chances of getting great rates. Whether you go with one of the quotes offered or not, you’ll get a great idea of the rates and terms you can expect.
Get personal loan rate quotes from Monevo.
Credible
Credible is another personal loan aggregator. They allow you to check your personal loan rates without impacting your credit. Since it doesn’t hurt your credit, it doesn’t hurt to check to see if they have any offers the other aggregator sites don’t that may offer you a better rate.
Credible is so confident in their ability to offer the best rates that they’ll give you $200 if you find a lower rate. Of course, terms apply so look at the details of the offer. See Terms*. Even with this guarantee, it still makes sense to shop around to ensure you’re getting the best rate.
Get personal loan quotes from Credible.
Credible Credit Disclosure – Requesting prequalified rates on Credible is free and doesn’t affect your credit score. However, applying for or closing a loan will involve a hard credit pull that impacts your credit score and closing a loan will result in costs to you.
Places to consider investing if you decide the potential returns are worth the risk
If you decide to take out a personal loan to invest, here are a few of the options you may consider.
Robo-advisors
Robo-advisors manage your money on your behalf by using technology instead of human financial advisors. Based on your risk tolerance, robo-advisors generally set up a well-diversified portfolio.
Robo-advisors usually charge a fee for their service, which will cut into your returns. Since robo-advisors typically take a diversified approach, you aren’t likely to hit a home run and get amazing returns.
Self-directed brokerage accounts
Self-directed brokerage accounts allow you to pick what you want to invest in. You could invest in several options including individual stocks, mutual funds and ETFs.
Self-directed brokerage accounts allow you to have a better chance of getting returns that exceed a personal loan’s interest rate. At the same time, they can also result in a larger loss.
ETFs
Exchange-traded funds (ETFs) are a basket of investments that help you diversify. When you buy an ETF, you’re normally purchasing several investments. Some ETFs are as large as the S&P 500 index while other ETFs only follow a small sector or industry.
If you want to bet on a particular industry with an ETF, there is a chance your returns could be high enough in the short term. If you bet wrong, your losses could also be massive.
Mutual funds
Mutual funds also allow you to invest in a basket of investments. Rather than trading live throughout the day, mutual funds settle all trades and reprice once per day after the markets close.
Like ETFs, you can use mutual funds to purchase a very diversified basket of investments or a small portion of investments such as a certain industry.
Real estate crowdfunding
Real estate crowdfunding is a much talked about investment option. Here are two companies that may offer investments you could be interested in.
Roofstock
Roofstock currently offers two main services. The first allows you to buy rental properties from around the country. Personal loans normally won’t provide enough cash to invest in most of these properties, so it isn’t really an option to invest personal loan proceeds.
What may be an option is Roofstock’s Roofstock One offering. This allows you to buy shares of a rental property rather than the whole thing. Only accredited investors can invest in Roofstock One, though. Most people taking out a personal loan to invest don’t likely fall into this category.
Learn more about Roofstock.
Fundrise
Fundrise is a real estate crowdfunding option that doesn’t require you to be an accredited investor. Rather than let you invest in individual properties, you invest in a portfolio of properties Fundrise sets up. They have a starter portfolio as well as three other portfolios you can choose from depending on your goals.
Unfortunately, Fundrise displays its historical annual returns (8.7% to 12.4%) on the front page of its website. These returns aren’t high enough to allow significant profit after taking out a personal loan, so it isn’t a good idea in most cases.
Learn more about Fundrise.
This is a testimonial in partnership with Fundrise. We earn a commission from partner links on MoneyUnder30. All opinions are our own.
Summary
Ultimately, it almost never makes sense to take out a personal loan to invest in the stock market. In rare cases, it may turn out to be profitable if you get lucky.
Even so, the profit probably won’t be very large compared to the risk you’re taking.
It’s not hard to see why North Dakota claimed 14th place for the best states to live. Its scenic natural landscapes range from the vast expanses of the Great Plains where bison roam to the stark beauty of the Badlands in Theodore Roosevelt National Park. Its multicultural cities and towns are full of friendly, Midwestern locals, with vibrant arts scenes, diverse dining, good schools and strong economies. While the summers bring warm weather, winters here bring abundant snow for outdoor fun.
On top of all that, the cost of living in North Dakota is affordable. You’ll find low rents in even its biggest cities and reasonable prices for everything from utilities to food. Knowing more about how the cost of living in North Dakota varies by city can help you find the right city for your budget.
North Dakota housing prices
One of the benefits of living in North Dakota is the affordable housing costs. You can find one- or two-bedroom apartments in the state’s top cities for less than $1,000. In Fargo, the state’s most populous city, the average rent for a one-bedroom is $783. The low rents in this famous, unique city make it one of the cheapest cities in the nation. Smaller cities or towns offer even more affordable options.
Let’s look at the average rent and housing costs in several major North Dakota cities to see how prices vary around the state.
Grand Forks
Located in northeastern North Dakota on the border with Minnesota, Grand Forks is a lively city of 58,781. It’s the third-most-populous city in the state. As the home of the University of North Dakota, it has a charming college town atmosphere, as well as all the trappings of a college town like cultural activities, fun dining and shopping. One of the best features of Grand Forks is the riverfront parks and Greenway paths along the Red River, offering outdoor recreation right in town.
Housing costs in Grand Forks are 8.7 percent below the national average. One-bedroom apartments are available for an average of $845 a month, up 7 percent from last year. You can rent a two-bedroom apartment for $945 a month, up 1 percent from last year.
Minot
With a population of 47,789, Minot is the fourth-most-populous city in North Dakota. Located in the north-central part of the state, it’s best known for being the home of the Minot Air Force Base. It’s also the home of the State Fair. Nearby nature areas like the Bison Plant Trail offer opportunities for outdoor recreation. Around town, residents can explore the city’s Scandinavian roots at the Scandinavian Heritage Association, enjoy the Roosevelt Park Zoo or hang out in city parks.
In Minot, you can find one-bedroom apartments for an average monthly rent of $875 and two-bedroom apartments for $965 a month. These rates are up 1 and 2 percent from the previous year. Overall, housing costs here are 19.1 percent below the national average
North Dakota food prices
Thanks to its diverse immigrant population, dining in North Dakota is a truly globe-trotting experience. You’ll find kuchen from Germany, lefse from Scandinavia and the Russian-Germanic dish fleischkuekle. Many dishes are also centered around local ingredients like walleye fish or the abundant wheat grown here. For those long winters, you’ll find comforting Midwestern staples like knoephla soup and hotdish.
Perhaps due to its remote location, food costs in North Dakota are higher than the national average. Total grocery costs are 2.1 percent above the national average. North Dakotans spend between $233 and $266 per person a month on food. That comes out to between $2,801 and $3,200 a year. That’s about the same as what residents of California and New York spend on food annually.
Depending on where you live in North Dakota, your total food costs are above or below the national and statewide averages:
Grand Forks is 5.3 percent below the national average
Minot is 4.1 percent above the national average
Minot is the more expensive city for food prices. A dozen eggs cost $1.74 there compared to $1.44 in Grand Forks. A half-gallon of milk in Minot is $2.69. In Grand Forks, it will only set you back $2.40. But Grand Forks does sometimes have higher food prices. You’ll pay more for ground beef in Grand Forks with a price tag of $4.92 compared to $4.68 in Minot.
North Dakota utility prices
Paying for utilities like electricity and water in North Dakota are close to or below the national average. Although over half of North Dakota’s electricity comes from coal-powered power stations, the state also utilizes renewable energy sources like wind energy and hydroelectric power. The Missouri River is the state’s biggest supplier of water.
Looking at total utility costs, here’s how these cities compare to the national average:
Grand Forks is 3.2 percent below the national average
Minot is 0.3 percent below the national average
Grand Forks is the least expensive of the two cities when it comes to energy costs. Residents of Grand Forks will pay around $162.41 for total energy costs each month. In Minot, average energy bills are higher at $171.25.
Water bills in North Dakota are low compared to the national average. While the average water bill nationwide is $68, North Dakota residents pay an average of $24 a month.
North Dakota transportation prices
While expenses for personal vehicles are extremely variable, the good news is that many cities and counties in North Dakota offer public transportation. Every county in North Dakota has some form of mass transit, primarily bus service. Bigger cities generally have more extensive systems with more frequent service. But rural routes are also available for those in outlying counties or towns. Not only does public transportation provide a vital link between communities, but it can help riders save money and it reduces traffic. It’s also more environmentally friendly.
When it comes to transportation costs, you pay above or below the national average depending on where you live in North Dakota:
Grand Forks is 4.1 percent below the national average
Minot is 11.5 percent above the national average
Let’s take a closer look at the mass transit options in these two cities:
City Transit in Minot
Consisting of a fleet of buses, City Transit operates six different bus routes around the city of Minot. The buses only run on weekdays, with no weekend service. A one-way ride costs $1.50 and a day pass is $5. You can also purchase 10-ride passes for $10 and a monthly pass for $36. Transfers are free, and reduced rates are available for eligible riders like senior citizens.
With limited bus routes and service, you may need to have your own car to efficiently and easily get around Minot. With a walk score of 32 and a bike score of 35, it’s also not the most walk- and bike-friendly city. Luckily, drivers don’t have to worry about paying tolls. North Dakota doesn’t have any tolled routes.
CAT in Grand Forks
The Cities Area Transit system provides bus service to Grand Forks and the neighboring city of East Grand Forks in Minnesota. It offers routes around the University of North Dakota campus, and staff, faculty and students of the university ride free on all CAT buses. Riders have 13 different routes to choose from around the two cities. Single-ride, one-way fares cost $1.50. A monthly pass costs $35. Transfers are free and reduced fares are available for K-12 students and other eligible riders.
As a college town, the city is slightly more accessible to pedestrians and cyclists. Grand Forks’ walk score is 52 and its bike score is 61.
North Dakota healthcare prices
Living in North Dakota, you’re likely to pay above the national average for healthcare. While the location is a contributing factor to healthcare costs, so is your personal health. When viewing average healthcare costs in a particular city or state, it’s important to note that they’re very subjective. It’s difficult to calculate average healthcare costs since these costs vary by person. Some people may pay more for healthcare due to factors like pre-existing conditions. Your personal healthcare costs may vary from your city’s average depending on your health needs.
But to give a ballpark figure of what to expect cost-wise, here’s the average cost to go to the doctor’s office in these cities:
Minot: $154.40
Grand Forks: $190
While Grand Forks is the most expensive for general doctor’s check-ups, it’s the opposite for dental care. It costs $80 to go to the dentist in Grand Forks. But in Minot, it costs $102.
Although neither city offers especially low rates, Minot’s total healthcare costs are higher than the national average:
Grand Forks is 6.8 percent above the national average
Minot is 12.6 percent above the national average
At the very least, you’ll receive good quality care for the higher prices. North Dakota ranks 27th in the nation for its healthcare. It has good marks for healthcare access, quality and general public health. While its rankings aren’t stellar, they’re solid and point to a functional, accessible healthcare system.
North Dakota goods and services prices
Although paying for the occasional haircut or buying a pizza may seem like small purchases, it does add up over time. Miscellaneous goods and services are an important category to account for in your monthly budget. It covers common items or services you need on a regular basis. This can range from going to the movies to buying toothpaste.
Depending on where you live in North Dakota, you may pay more or less than the national average for miscellaneous goods and services:
Grand Forks is 10.5 percent below the national average
Minot is 2.2 percent above the national average
As Minot is above the national average, some prices there are higher. It costs $19 to get a haircut there as opposed to $18 in Grand Forks. Want to go out to the movies? Expect to shell out around $13.29 in Minot for tickets. But in Grand Forks, movie tickets are only $7.56. Buying a pizza will set you back $10.59 in Minot but only $10.49 in Grand Forks. As you can see, for some items the price difference is small, meaning that Grand Forks isn’t necessarily always significantly less expensive for goods and services.
Taxes in North Dakota
Since high taxes can have an impact on your spending and income, it’s important to know what the tax rates are in your state.
North Dakota has a statewide sales tax rate of 5 percent. For every $1,000 you spend in North Dakota, you’ll be paying a minimum of $50 in sales tax on top of that. You may have to pay even more in sales tax because some cities and counties add their own local sales tax as well:
Minot has a combined tax of 7.5 percent
Grand Forks has a combined tax of 7.25 percent
Both Minot and Grand Forks have similar sales tax rates, but Minot is slightly more expensive. Living there, you’ll pay $75 in sales tax for every $1,000 spent. In Grand Forks, it’s slightly less at $72.50.
Ranging from 1.1 percent to 2.9 percent, North Dakota’s income taxes are among the lowest in the country.
How much do I need to earn to live in North Dakota?
Overall, the cost of living in North Dakota is close to the national average. Its affordability makes it accessible to a wide range of budgets. But exactly how much do you need to make to afford to live here?
It’s recommended that you only spend 30 percent of your gross monthly income on rent. North Dakota’s average rent is $917. In order for that to only be 30 percent of your gross monthly income, you need to make a minimum of $3,056 a month or $36,672 annually. North Dakota’s median household income is $65,315 and salaries here range from $28,794 to $97,188. So, while households with multiple inhabitants should comfortably afford housing, people living alone that work lower-paying jobs may need to spend more than 30 of their monthly income on rent.
Our handy rent calculator can help you figure out what you can afford to pay in rent based on factors like income, expenses and location.
Living in North Dakota
The low cost of living in North Dakota is a major plus to living here, but it’s far from the only one. Along with affordable rents, this rugged state is ready to impress with its beautiful landscapes, fun cities and abundance of things to do.
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of August 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
Undertakings for Collective Investment in Transferable Securities (UCITS) are a category of investment funds designed to both streamline and safeguard investment transactions. UCITS are usually structured like traditional mutual funds, exchange traded funds, or a money market fund.
The European Union (EU) regulates UCITs, but they are widely available to non-EU investors. U.S. investors, for example, can buy shares of UCITS through U.S.-based fund managers, although local, EU-based money managers run the funds. Because they undergo a high level of regulatory scrutiny, many view UCITS as a relatively safe investment.
What Is a UCITS Fund?
UCITS funds are a type of mutual fund that complies with European Union regulations and holds securities from throughout the region. They emerged as part of an effort by the European Union to consolidate disparate European financial investments into one central sector, governed by the EU, with a “marketing passport,” that enables financial services firms across the EU to invest in multiple countries under a common set of rules and regulations.
The EU launched UCITS for two primary reasons:
1. To structure a single financial services entity under the EU umbrella that allowed for the cross-sale of mutual funds across the EU, and across the globe.
2. To better regulate investment asset transactions among all 28 EU member countries, giving investors inside and outside of the EU access to more tightly regulated investment funds.
Fundamentally, UCITS funds rules give EU regulators a powerful tool to centralize key financial services issues like types of investments allowed, asset liquidity, investment disclosures, and investor safeguards. By rolling the new rules and regulations into UCITS, EU regulators sought to make efficient and secure investment funds available to a broad swath of investors, primarily at the retail and institutional levels.
For investors, UCITS funds offer more flexibility and security. Not only are the funds widely viewed as safe and secure, but UCITS funds offer a diversified fund option to investors who might otherwise have to depend on single public companies for the bulk of their investment portfolios. 💡 Quick Tip: The best stock trading app? That’s a personal preference, of course. Generally speaking, though, a great app is one with an intuitive interface and powerful features to help make trades quickly and easily.
A Brief History of UCITS
The genesis of UCITS funds dates back to the mid-1980’s, with the rollout of the European Directive legislation, which set a new blueprint for financial markets across the continent. The new law introduced UCITS funds on an incremental basis and has been used as a way to regulate financial markets with regular updates and revisions over the past three decades.
In 2002, the EU issued a pair of new directives related to mutual fund sales — Directives 2001/107/EC and 2001/108/EC, which expanded the market for UCITS across the EU and loosened regulations on the sale of index funds in the region.
The fund initiative accelerated in 2009 and 2010, when the Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 clarified the use of UCITS in European investment markets, especially in coordination of all laws, regulations, and administrative oversight. The next year, the European Union reclassified UCITS w as investment funds regulated under Part 1 of the Law of 17 December 2010.
In recent years, “Alt UCITS” or alternative UCITS funds have grown in popularity, along with other types of alternative investments.
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How Does a UCIT Fund Work?
Structurally, UCITS are built like mutual funds, with many of the same features, regulatory requirements, and marketing models.
Individual and institutional investors, who form a collective group of unit holders, put their money into a UCIT, which, in turn, owns investment securities (mostly stocks and bonds) and cash. For investors, the primary goal is to invest their money into the fund to capitalize on specific market conditions that favor the stocks or bonds that form the UCITS. UCTIS funds may provide one way for American investors to get more international diversification within their portfolios.
A professional money manager, or group of managers, run the fund, and they are singularly responsible for choosing the securities that make up the fund. The UCITS investor understands this agreement before investing in the fund, thus allowing the fund managers to choose investments on their behalf.
An investor may leave the fund at any point in time, and do so by liquidating their shares of the fund on the open market. American investors should know that the Internal Revenue Service may classify UCITS as passive foreign investment companies, which could trigger more onerous tax treatments, especially when compared to domestic mutual funds. 💡 Quick Tip: How to manage potential risk factors in a self directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
UCITS Rules and Regulations
UCITS do have some firm regulatory and operational requirements to abide by in the European Union, as follows:
• The fund and its management team are usually based on a tax-neutral EU country (Ireland would be a good example.)
• A UCITS operates under the laws mandated by the member state of its headquarters. After the fund is licensed in the EU state of origin, it can then be marketed to other EU states, and to investors around the world. The fund must provide proper legal notification to the state or nation where it wants to do business before being allowed to market the fund to investors.
• A UCITS must provide proper notice to investors in the form of a Key Investor Information Document, usually located on the fund’s website. The fund must also be approved.
• A UCITS must also provide a fund prospectus to investors (also normally found on the fund’s web site) and must file both annual and semiannual reports.
• Any time a UCITS issues, sells, or redeems fund shares, it must make pricing notification available to investors.
The Takeaway
As discussed, Undertakings for Collective Investment in Transferable Securities (UCITS) are a category of investment funds designed to both streamline and safeguard investment transactions. Note that while UCITS are usually structured like traditional mutual funds, exchange traded funds, or a money market fund.
UCITS may be an interesting type of investment for U.S. investors looking to diversify their portfolios. As with any investment, investors must conduct thorough due diligence on the UCITS, which should include a review of fund holdings, past performance, management stability, fees, and tax consequences.
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Take a closer look at some different types of savings accounts and how you can use them to reach your goals
July 31, 2023
Savings accounts allow you to safely store your money while earning interest on it over time. They’re an important component of your overall financial plan, specifically designed to help you safely and steadily achieve your financial goals.
Saving money regularly in a savings account can help you make progress toward a number of goals, such as a down payment on a home or a secure retirement. A savings account can also serve as your emergency fund when unexpected expenses like home repairs or medical bills pop up. Different types of savings accounts can help you meet different goals, however, and you can even use multiple savings accounts to keep them all on track.
But how do you know which types of savings accounts make the most sense for your life and your goals? The first step to figuring that out is to learn more about the seven options and how each one can fit into your financial plans.
Online savings account
As the name implies, online savings accounts offer a digital account that can be accessed through your computer, phone, or tablet. Without the overhead costs associated with brick-and-mortar banks, these accounts can provide customers higher interest rates and other benefits. Simply put, online savings accounts provide a safe and easily accessible way to build up your emergency fund and put money toward other goals.
Benefits of online savings accounts
They typically offer higher interest rates than traditional savings accounts. For example, the Discover® Online Savings Account features rates more than five times the national average.1
They often have lower fees and smaller minimum balance requirements than traditional savings accounts. (For example, the Discover Online Savings Account has no monthly fees and no minimum opening deposit.)
Features can include robust mobile banking capabilities and 24/7 access to your accounts.
Other considerations
Some online banks don’t have dedicated ATMs, which may result in ATM fees. However, online banks like Discover partner with nationwide networks for convenient, no-fee ATM access.
Traditional savings account
Traditional savings accounts typically offer brick-and-mortar bank branch locations where you can speak in person with a representative during bank hours. However, interest rates offered for traditional savings accounts can be less competitive than the typical interest rate for online savings accounts.
Benefits of traditional savings accounts
You can walk into a bank branch for face-to-face customer service.
Dedicated ATMs may not charge ATM fees.
Other considerations
Bank branches have limited operating hours, so they’re not always open when you need them.
It takes more time to visit a branch than to bank online.
They typically have higher fees and offer lower interest rates than online savings accounts.
High-yield savings account
High-yield savings accounts offer significantly higher interest rates than the national average, so your money can grow more quickly. What’s more, virtually all high-yield savings accounts are also online savings accounts, which means you can manage your money from your phone or other device at any time. These accounts work well for emergency savings, big-ticket purchases like a home theater, and longer-term savings goals like buying a car.
Benefits of high-yield savings accounts
Higher interest rates allow you to accelerate earnings.
Easy access to your money when you need it.
Other considerations
Some banks have minimum deposit requirements for high-yield savings accounts.
Make sure your high-yield savings account doesn’t include fees that can eat into your interest earnings.
Money market account
Money market accounts combine some of the benefits and functionality of checking and savings accounts. They pay interest like savings accounts and, in some cases, can offer debit cards and checks like checking accounts. Some, such as the Discover Money Market Account, offer higher interest rates when the account balance is over a certain amount. Money market accounts are great for stashing money so it can grow over time while still providing access to the funds.
Benefits of money market accounts
They can be FDIC insured.
You have easy access to your money when you need it.
They can offer competitive interest rates, though often not as high as online savings accounts.
Other considerations
They may require a higher minimum deposit to open the account, sometimes as much as $5,000 or $10,000. (Discover has a $2,500 minimum initial deposit.)
The number of withdrawals and transfers allowed by your financial institution may be limited, so check for any account restrictions.
Certificate of deposit (CD)
Certificates of Deposit offer a guaranteed, steady interest rate on the money you agree to leave in the account for a specified term, usually ranging from three months to 10 years. If you don’t require access to your funds during the CD term and you’re looking for a secure way to increase your savings, these accounts are ideal. Be sure to understand how CDs work, so you can use them to enhance your savings over time.
Benefits of CDs
You often earn a higher interest rate with a CD than with a savings account.
Your rate is locked in and guaranteed for the full CD term, no matter what happens in the markets.
CDs can be FDIC insured.
Other considerations
CDs often have higher minimum deposit requirements than savings accounts. (Discover has a $2,500 minimum for CDs.)
If you take the money out before the CD term ends, you may face early withdrawal penalties. For that reason, savings accounts are better options for emergency funds.
IRA CD
Choose your term, lock in your rate, and watch your CD grow
Discover Bank, Member FDIC
Owning a CD within your IRA gives you the best of two worlds: the high interest rate of a CD with the tax advantages of an IRA. That adds up to a bigger win for your long-term financial planning. IRA CDs can give you peace of mind knowing that your money will be there for you in the future, and they also offer a way to reduce risk while living in retirement.
Benefits of IRA CDs
You receive guaranteed returns on your money.
Taxes on earnings are deferred, so you can grow your savings faster. (Make sure you know the difference between Traditional IRAs vs. Roth IRAs: Traditional IRAs allow you to deduct your contributions from your taxable income now, but you have to pay taxes on distributions in retirement. Roth IRAs allow you to contribute after-tax funds to your account now, and you don’t have to pay taxes on distributions in retirement.)
They can be FDIC insured.
Other considerations
If you take the money out before the CD term ends, you will usually face early withdrawal penalties.
Taking withdrawals from retirement accounts before age 59½ can result in a tax bill and IRS penalties.
IRA savings account
An IRA savings account combines the security and steady earnings of a savings account with the tax benefits of an IRA. Whether you have a Traditional IRA or a Roth IRA, your earnings in an IRA savings account grow as your money compounds, allowing you to build a larger nest egg without risking it in the stock market. As a result, it can be a convenient spot to park rollovers, like a 401(k) from an old job, or to safely grow your money while in retirement.
Benefits of IRA savings accounts
A market crash won’t affect your retirement savings.
You can move money in and out of it—just be sure to check with your bank about any withdrawal limits.
They offer dependable, tax-deferred growth.
Other considerations
Taking early withdrawals from retirement accounts can result in a tax bill and IRS penalties.
Some banks may charge monthly maintenance fees.
Choose the right savings accounts for you
Now that you know all about the different types of savings accounts, you can figure out which savings accounts best suit your goals and where to open a savings account for yourself.
Once you’ve made those decisions, you’ll set up your savings accounts. Though there may be slight differences, most banks have similar steps for how to set up a savings account:
Complete an application that includes personal information such as your address, phone number, and Social Security number.
Select the type of account you want to open.
Deposit money into the account.
There’s no limit on the number of savings accounts you can have, so you can even use different types of savings accounts to customize your personal financial plan.
If you’re ready to take the next step toward a more secure financial future, check out the benefits of a Discover Online Savings Account today.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
1 The Annual Percentage Yield (APY) for the Online Savings Account as of 07/01/2023 is more than five times the national average APY for interest bearing savings accounts with a balance of $500 as reported by Curinos as of 07/01/2023. National average is based on information regarding the top 50 banks (by deposit size) and may not include information from variations in regional pricing at such banks or information from products that may not be widely available to their customers. Rates were obtained from Curinos, who relies on the data from the banks it tracks and such information cannot be guaranteed. APYs are subject to change at any time.
Before I delete the GRS forums, I’m moving the best posts here. Last month I shared Vintek’s introduction to mutual funds. Here he explains index funds.
In my previous discussion of mutual funds, I mentioned index funds:
Along came index funds, and this was hailed as the ultimate in investing. You’d invest not in just a basket of stocks, but in the entire market. Since the manager wasn’t required to do research and pick stocks (all he had to do was buy it all and hold it), his fee was reduced to a fraction of an actively managed fund’s fees (about 0.2%). Yes, you could have years of losses (2000, 2001 and 2002 were the most recent), but studies show that the market always recovered, even if some of the companies in the index didn’t. If you wanted put your investing on autopilot and be assured of a long-term (any 20 year period since the 1920s had an average gain of 10% per year) winner, this was the way to go.
That’s the basic introduction. Now let’s talk about what it all means.
What’s an index? In most cases, an index is just a group of financial instruments (mostly stocks, but also bonds, REITs and other things) designed to represent something. The index is typically used as a baseline against which a person’s investments can be measured. For example, the S&P 500 is supposed to be the 500 biggest stocks on the market, per Standard & Poor. The DOW is a collection of 30 stocks that are supposed to represent American industry as a whole. The Wilshire 5000 is supposed to represent all of the stocks currently being traded over the stock market. Ditto the Russell 3000. Interestingly enough, the Russell 3000 is broken into two parts: the Wilshire 1000 (kind of the Wilshire counterpart to the S&P 500), composed of the biggest 1000 stocks on the market, and the Wilshire 2000, composed of everything else.
What’s an index fund? An index fund is exactly what it sounds like. It’s a fund that’s designed to follow an index. For example, if you bought into an index fund that tracked the S&P 500, you’d be buying into every stock listed in the S&P 500. Because that fund covers the largest of the stocks (by capitalization) on the market, it would be considered a large-cap fund index fund. By contrast, a fund following the Russell 2000 would be considered a small-cap index fund. The really interesting thing is that the large caps stocks are so big that they overwhelm everything else by comparison. For example, if you singled out the companies that comprise the S&P 500, they would comprise about 70% of the Wilshire 5000! 70%!
What makes an index fund such a good choice? Good question. Well, we know that the market always recovers from downturns and goes up in the long term. Stocks and (managed) funds don’t always recover. We know that if we hold an index fund, there won’t be a lot of trading because a manager won’t be jockeying for the best performing stocks. He’d just hold stocks according to the index. As a result, this keeps trading costs (and therefore expenses) on the fund low. Furthermore, an index fund is tax-efficient because it doesn’t trade much. If it doesn’t trade much, you won’t have to pay very much in capital gains taxes. Still, there is a small amount of trading every year, as most indexes are re-evaluated on an annual basis.
That’s it for now. In the future, I’ll talk a bit about market capitalization (big cap vs. mid-cap vs. small cap) and why it’s important to know the difference. I’ll also talk about what index funds I own and why I own them.
Thanks to Vintek for allowing me to repost this information.
The excitement and bustle of the Northeast. The friendliness and livability of the Midwest. Pittsburgh is a city with a foot in each. It’s no longer the smoggy, industrial steel and coal city of the past. Today’s Pittsburgh is a gleaming city of high-tech jobs, beautiful parks and plentiful entertainment. It’s a modern city full of families and young professionals. But, is it pricey like the Northeast or affordable like the Midwest?
We dissected the Council for Community and Economic Research’s data for the cost of living in Pittsburgh for 2022. Also, we compared the overall cost of living for the city to the national average, as well as to similar Pennsylvania cities. Then, we analyzed the differences in prices from this time last year. And, broke down the numbers for several important economic and consumer categories. We also studied the costs for rent and real estate in Pittsburgh.
The overall cost of living for Pittsburgh is 99.8, with a score of 100 reflecting the national average. That means that the cost of living is just 0.2 percent below, making Pittsburgh an affordable large city. And it’s only getting cheaper. That’s a decrease in the cost of living of 4.41 percent a year ago.
Pittsburgh housing prices
Geographically Northeast but culturally Midwest, Pittsburgh rent prices straddle the line in cost. Prices remain relatively Midwestern low but have seen some Northeast-type increases.
A studio in Pittsburgh averages $1,420 a month. While the cheapest apartment type, it’s seen the steepest year-to-year increase, up 17 percent. A one-bedroom rents for $1,650 on average monthly, up 15 percent from last year. A two-bedroom leases for $1,986, up 7 percent from this time last year. With an increase of just 5 percent, three-bedroom units now average only $1,965, less than a two-bedroom.
Many of Pittsburgh’s most popular neighborhoods, of course, also carry the highest rent. South Oakland, on the Monongahela’s north shore, leases the highest rents of any neighborhood for studios and one-bedrooms. A studio will average $2,175 a month, with $2,375 for a single. The Strip District, along the Allegheny, offers studios at $1,800, one-bedrooms at $1,871 and two-bedrooms at $2,520, making it the second-most expensive neighborhood.
Downtown is the priciest area of Central Pittsburgh. Studios run $1,505, one-bedrooms average $1,800 and two-bedrooms $2,117. Studio units rent for $1,572 on the North Side overall, with singles at $1,960 and doubles at $2,303. On the South Side, studios come in at $1,560, one-bedrooms $1,810 and two-bedrooms $2,327.
The cost to buy a home in Pittsburgh is also up from last year. The median sale price of all homes in the city is $259,900. That’s a 4 percent year-to-year increase. Single-family homes are the most expensive, with a median of $260,000, up 4 percent. Townhomes are up the most of any type, an increase of 9.7 percent to $252,250.
Think outside the city
Those looking to save some money may consider other cities in the Pittsburgh region. These smaller cities and bedroom communities tend to offer lower rent prices. But, that comes with the cost of fewer amenities and a further drive into Pittsburgh. These are a few examples, based on two-bedroom unit rent:
Pittsburgh food prices
Pittsburgh is an eater’s paradise. It’s home to Heinz ketchup, the Big Mac and Klondike Bars. Homes have chipped chopped ham, fried zucchini and smiley cookies. But, are groceries here more expensive than elsewhere?
Yes, a bit. The cost of living for groceries in Pittsburgh is 5 percent above the national average. But the good news is that costs are down nearly 3.25 percent from last year.
Those figures, by comparison, are close to on par with other cities around the state. Scranton matches with an equal 5 percent above. Its sister city, Wilkes-Barre, is a bit higher at 8.9 percent over. Philadelphia, the priciest in the state, exceeds the national average by 18.4 percent. On the flip side, several other cities rank lower. Erie, to the northwest, is just one percent higher, while Allentown is 2.7 percent below the national average. Just across the border in Morgantown, WV, the index is a low 4.5 percent under.
Going grocery shopping
What do costs for individual grocery items in Steeltown look like? Pittsburghers love potatoes. Pierogis and fries on sandwiches and salads are staples. But there’s a cost. A five-pound bag of potatoes averages $4.64, over $1.30 more than the national average. Put that on your Primanti’s.
It’s also a meat-eaters town. Ribeye steak runs $16, and ground beef is $4.59. Sausage costs $4.93 and frying chicken $1.73. All those are per pound, and all are higher than the national average, as well. Put it all on some whole wheat bread, which sells for $4.19 a loaf, about 60 cents above the average.
On the other hand, a half-gallon of milk sells for $2.09, a dozen eggs at $1.41 and a five-pound bag of sugar runs $1.98. Those are all lower than the national average. But a two-liter Coke will set you back $2.32, 38 cents higher than the rest of the nation.
But maybe dining out or grabbing take-out is on the menu. The average meal at an inexpensive restaurant costs $15, on par with the national average. However, a three-course meal at a mid-range spot runs $57.50, $7.50 less than nationally. If quick and cheap is more your style, a combo meal at McDonald’s averages $9, a buck more than the rest of the country.
Pittsburgh utility prices
Pittsburgh doesn’t just have a deep history in the steel industry. Western Pennsylvania is also a historically-important fossil fuel region, for both coal and oil. It has always been a key energy region. But it’s also become pricey over the years.
Utility prices, in total, have a cost of living of 26 percent over the national average. And that marks a significant increase of 6.15 percent in the last year.
While all are above the national average, Pennsylvania cities like Erie, Scranton, Wilkes-Barre and Allentown are all cheaper than Pittsburgh and have all decreased in the last 12 months. Even expensive Philly only exceeds it by 12.2 percent.
Total monthly energy costs in Pittsburgh run $238. That’s significantly higher than the $171 average nationwide. Monthly charges for an average phone bill are $194. That’s six bucks more than nationally.
Pittsburgh transportation prices
Pittsburgh is a transportation hub. Known as the city of bridges, there are nearly 450, with 40 near downtown alone. Four vehicle tunnels pass through hills and under rivers, as well. And, up those hills, climb two of the world’s most famous funicular inclines.
The cost of living for transportation in Pittsburgh is 8.7 percent higher than the national average. On a positive note, that’s down nearly 3 percent from a year ago. Erie, Allentown and Wilkes-Barre all exceed the national average, but sit lower than Pittsburgh. Meanwhile, Philadelphia over-indexes by 13 percent and Scranton under-indexes by 1.4 percent. Erie and Allentown are both down over 8 percent from last year, with Scranton down over 12 percent.
Transportation options
Pittsburgh Regional Transit operates a light-rail system known as the “T,” split into three lines. It also runs four bus route lines, and the two funicular inclines. In 2017, PRT eliminated zone-based rates. All rides now cost $2.75 per trip. Those using the ConnectCard transit pass then have an additional three-hour free transfer period. Seniors, people with disabilities, law enforcement, municipal employees and children under 5 rides free. Children 6 to 11 ride half-price. A day pass costs $7, a week pass $25, a monthly pass $97.50 and an annual pass $1,072.50.
The Pennsylvania Turnpike (I-76), the only toll road in Western Pennsylvania, runs from east of the city to north of the city. It does not pass through Pittsburgh. No Pittsburgh bridge carries a vehicle toll.
Pittsburgh has some of the highest parking rates in the nation for a city its size. The median hourly parking lot and garage rate Downtown are $7, the 16th-highest in the country. Median daily rates are $18 and $225 monthly. Meters run from 50 cents to $4.00 hourly depending on location. Street parking is free after 6:00 pm and on Sundays.
The city achieves above-average but not great transportation scores. Pittsburgh carries a 69 (out of 100) walk score, 58 bike score and 61 transit score. And to put the driving costs in perspective, an average tire balance costs $59.99. That’s almost $7 above the national average.
Pittsburgh healthcare prices
Unlike many other categories, Pittsburgh under-indexes the national average for healthcare. Despite a negligible 1 percent rise year to year, the cost of healthcare in the ‘Burgh is 4.3 percent below the country as a whole. That falls relatively in line with other primary cities around Pennsylvania, if not slightly more affordable. Compare that to Morgantown. The city just 90 minutes to the south now sits at 2.5 higher than the national average, a staggering increase of nearly 16 percent from last year.
You can see affordability in individual services. The average cost for a doctor visit is $101.50, $17 below the national average. Same for an optometrist, nearly $15 below nationally at $95.80. A trip to the dentist runs $103.50, about a buck more than the national figure. An average over-the-counter medication like ibuprofen is just a few cents above the national average, and prescription drugs like insulin can index around $20 over.
Please note prices for healthcare will vary by individual depending on specific healthcare situations.
Pittsburgh goods and services prices
Miscellaneous goods and services in Pittsburgh also index below the rest of the country. That includes everything from haircuts and dry cleaning to new clothing and toiletries. The cost of these items in Pittsburgh is 4.5 percent below the national average. That s a similar figure to most other larger cities statewide. Other Keystone State cities also saw a decrease of around 4 percent.
Some varied items fall well below the national figure. A trip to the beauty salon averages $37, three dollars less. A man’s dress shirt is a full $10 below, at $21.09. And a typical washer repair will run $75, $6 under the national average. The cost of going to a movie, taking your pet to the vet or digitally subscribing to a local news outlet run very close to the national average.
The cost to enroll a child in a full-day private preschool or kindergarten in Pittsburgh is $1,091.67. A year in an international primary school runs $11,800.
Taxes in Pittsburgh
The sales tax rate in Pittsburgh is 7 percent. The city itself collects no taxes, which is good news for the cost of living in Pittsburgh. But the Pennsylvania sales tax rate is 6 percent, plus a 1 percent addition by Allegheny County. There’s no sales tax on items like groceries, candy, clothing, prescriptions and heating fuel. If you spend $1,000, expect to pay $70 in sales tax.
Pittsburgh city residents pay 3 percent in earned income tax. That’s 1 percent in city tax and 2 percent in school tax. That’s in addition to a 3.07 percent income tax from the state.
How much do I need to earn to live in Pittsburgh?
Many experts say Americans should spend no more than 30 percent of pre-tax income on housing. That’s good news for Pittsburghers. Rents for an average one-bedroom fall well within recommended prices based on the local average wage.
The average monthly lease for a Pittsburgh one-bedroom is a reasonable $1,597. Extrapolated to a full year, that’s $19,164. At 30 percent of total income, that’s an affordable rate for someone earning $63,880 a year.
According to Payscale.com, the average yearly salary in Pittsburgh is $68,000, over $4,000 more than needed to rent an average one-bedroom unit. In fact, a Pittsburgh resident making the average salary could afford an apartment leasing for $1,700 at 30 percent expenditure.
Want to find out how much an affordable apartment is for you based on your income? Check out Rent.’s handy Rent Calculator.
Living in Pittsburgh
Part East Coast, part Midwest, Pittsburgh is a great place to live, and quite affordable compared to other cities its size. The cost of living in Pittsburgh is close to the national average in many categories. But is it the right city for you?
If all the information above makes Pittsburgh sound affordable to you, it’s a great place to find your next home. Check out all the great apartments available in Pittsburgh right now at Rent.
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of August 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
The “Greeks” in options trading — known as delta, gamma, theta, and vega — are metrics that help traders understand the value and pricing of a given options contract.
Because options are derivatives, the value of each contract — the premium — depends on a complex interaction of different factors, including time to expiration, price volatility, and changes in the value of the underlying security. Each of these factors is represented by a Greek letter.
While there are a number of options Greeks to explore, delta, gamma, theta, and vega are the four main Greeks in options trading.
Options Greeks may sound like a foreign language, but to options traders the Greeks are essential to understanding how, or if, they’re making any money, since it can be so difficult to understand the true value of an option.
A Quick Look at Options
“Options” is short for “options contracts,” which are a type of investment that traders buy and sell much like stocks and bonds. But options are derivatives — that is, they aren’t really assets in and of themselves. Instead, their value (or lack thereof) derives from another underlying asset, typically a specific stock.
Traders buy different types of options, when they think that stock prices will go up (a call) or down (a put). They also use options to hedge or offset investment risks on other assets in their portfolio.
Recommended: How to Trade Options: A Beginner’s Guide
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In a nutshell, though, traders typically buy options through an investment broker. Those options give investors the option, but not the obligation, to buy or sell a security at a later date, and at a specific price. Investors can buy an option for a price, called a premium, and then buy or sell that option.
So, while an option itself is a derivative of another investment, it can gain or lose value, too. For example, if an investor were to buy a call option on Stock A — basically, a bet that Stock A’s share price will increase — the value of that call option would go up if Stock A’s price goes up.
But the opposite would be true if an investor purchased a put option on Stock A, betting that Stock A’s price would go down. Similar to shorting a stock, the investor would effectively lose their bet (and see the value of their option fall) if Stock A’s share price increased. 💡 Quick Tip: Options can be a cost-efficient way to place certain trades, because you typically purchase options contracts, not the underlying security. That said, options trading can be risky, and best done by those who are not entirely new to investing.
What Are Option Greeks?
Options traders use these letters to describe their option positions and make their best guess as to what might happen next with those positions as they relate to the underlying stocks.
In short, the Greeks look at different factors that could impact the price of an option. Calculating the Greeks isn’t an exact science. Traders use a variety of formulas, usually by a mathematical model. Because of that, these measurements are usually all theoretical.
Here’s a look at the most common Greeks used by traders.
Recommended: Options Trading Terms You Need to Know
Delta
Delta measures how much an option’s price will change if the underlying stock’s price changes. Specifically, it measures the option’s price change in relation to every $1 change in the underlying stock. It’s usually expressed as a decimal, like “0.50,” for example.
So, if an option has a delta of 0.50, in theory, that means that the option’s price will move $0.50 for every $1 move in the stock’s price. Another way to think of delta is that it gives an investor an idea as to the probability that they’ll make money from an option. If delta is 0.50, for example, that can equate to a 50% chance or so that an option will expire in the money — that an investor’s bet will have paid off.
Gamma
The second Greek, gamma, tracks the sensitivity of an option’s delta. If delta measures how an option’s price changes in relation to a stock’s price, then gamma measures how delta itself changes in relation to a change in the stock’s price.
Think of an option as a car going down the highway. The car’s speed would be its delta. The car’s acceleration would be its gamma, as acceleration is measuring the change in speed. Gamma is also typically expressed as a decimal. If we go back to our earlier example — that delta is 0.50 — and delta changes to 0.6, then gamma would be 0.1.
Theta
Theta measures an option’s sensitivity to time. It gives investors a sense of how much an option’s price decreases the closer it gets to expiration.
Similar to the “car on a highway” analogy, it may be useful to think of an option as an ice cube sitting on a countertop. The ice cube melts away — or, the option’s time value diminishes — and the melting becomes more rapid over time.
Theta is typically expressed as a negative dollar amount, and represents how much value an option loses each day as it approaches expiration. 💡 Quick Tip: The best stock trading app? That’s a personal preference, of course. Generally speaking, though, a great app is one with an intuitive interface and powerful features to help make trades quickly and easily.
Vega
Finally, vega is a measure of an option’s sensitivity to implied volatility.
Markets are volatile, and securities (and their derivatives) are subject to that volatility. Vega attempts to measure how much an option’s price will change as it relates to the underlying security’s volatility.
Volatility refers to the turbulence a security’s value experiences. We don’t know what level of volatility a security or option will experience in the future, however, so there’s a certain amount baked into the mix — that’s implied volatility. It’s the expected future level of volatility.
Changes in stock volatility can change an option’s value. That’s what vega is measuring — not volatility itself, but the option’s sensitivity to volatility changes.
And like delta and gamma, vega is expressed as a number, rather than a dollar figure.
5 Main Options Greeks: Overview
In summary, here’s how an investor may use this data when analyzing the risk and reward of an options contract.
Name
Symbol
Definition
How investors might think about it
Delta
∆
Measures the sensitivity of an option’s price to a change in the price of the underlying security.
For example, if the delta is 0.50 means that the option’s price will move $0.50 for every $1 move in the stock’s price.
It can also indicate a 50% chance or so that an option will expire in the money right now. This probability may change over time and isn’t a guarantee.
Gamma
γ
Measures the rate of change for delta. It tells you how quickly delta will change as the stock price changes.
Think of an option as a car on the highway with its speed (delta) and acceleration (gamma, often expressed as a decimal). A stock trading at $10 with a delta of 0.4 and gamma of 0.10 means that a $1.00 increase in the stock’s price will adjust the delta by 0.10, increasing it to 0.50 and vice versa with a $1 decrease it will decrease delta to 0.3 impacting how quickly the value of the option will increase or decrease with further price movements.
Theta
θ
Measures the sensitivity of an option’s price to the passage of time.
An option’s theta is like an ice cube melting on a countertop – the time value diminishes as it melts and the melting becomes more rapid over time. This is expressed as a negative dollar amount. For example, a theta of -1 indicates that the option will lose $1 per day until it reaches the expiration date.
Vega
ν
The change in an option’s value as implied volatility goes up or down by 1 percent.
Measures the sensitivity of an option’s price to a change in interest rates.
If an option has a rho of 1.0, a 1% increase in interest rates leads to a 1% increase in value. Options most sensitive to interest rate changes are those at-the-money or with the longest time to expiration.
Other Options Terminology to Know
The specific options (a call versus a put, for example) and the underlying stock’s performance determines whether an investor comes out ahead on their bet. That brings us to a few other key options terms that are important to know:
In the Money
A call option is “in the money” when the strike price is below the market price. A put option is “in the money” when the strike price is above the market price.
Out of the Money
A call option is “out of the money” when the strike price is above the market price. A put option is “out of the money” when the strike price is below the market price.
At the Money
The option’s strike price is the same as the stock’s price.
The Takeaway
There’s no getting around it: Options, and the Greeks, can get complicated, and may not be the best investment strategy for beginners. But experienced traders, or those willing to spend time to learn how to understand options, find them a valuable tool in creating an investment strategy.
Qualified investors who are ready to try their hand at options trading, despite the risks involved, might consider checking out SoFi’s options trading platform. The platform’s user-friendly design allows investors to trade through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.
Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors.
Invest with as little as $5 with a SoFi Active Investing account.
Photo credit: iStock/photolas
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