Car incentives nearly vanished during the past several years, thanks to pandemic-driven supply chain issues for auto manufacturers. As vehicle inventories dwindled and consumer demand outweighed supply, automakers had no reason to offer incentives like rebates or low-rate financing. The good news is that auto incentives, while still below prepandemic levels, are starting to return.
According to Kelley Blue Book, a Cox Automotive company, auto incentives — as a percentage of the average new-vehicle price buyers paid — reached 5.9% in February 2024. That’s compared with a general range of 10% to 11% before COVID-19 hit and 2% in fall 2022. In February, auto manufacturers spent an average of $2,808 per vehicle in incentives, up 88% from a year ago.
With inventories returning to normal and some auto manufacturers again sweetening deals to move vehicles, here’s how you can find and possibly save with car incentives.
Tips for saving with auto incentives
Although new car prices have declined since peaking in late 2022, the average price a buyer pays remains around $47,000. Incentives are one way to whittle down that price tag, and certain strategies can help maximize savings.
Be flexible about the vehicle you buy
Traditionally, auto dealers strive to have 60 selling days’ worth of cars in stock. As auto production has returned, some manufacturers — like Toyota — remain well below the 60-day mark, while others — including Ford, Nissan and Buick — are overstocked and more likely to offer incentives and discounts to move cars.
“The key right now is to be flexible about which vehicle you consider,” says Sean Tucker, senior editor for data company Cox Automotive. “If you had your heart set on something from Toyota, you’re probably not going to find a great deal. They just don’t have trouble selling cars right now.”
Auto manufacturer websites are a good place to research auto deals and incentives — including cash rebates, low-rate financing and lease deals — that are available for various makes and models. Such incentives often vary regionally, so you can usually narrow a search by ZIP code. Also, auto research companies like Edmunds maintain webpages with current car deals and incentives by carmaker.
Tucker suggests that incentives for leasing and electric vehicles are both good sources for saving in the current market. Auto dealerships are trying to restore the leasing cycle that feeds the used car market, so many dealerships are offering lease deals.
“It’s actually relatively easy right now to get a good lease on an EV,” Tucker says. “And that might even be a good idea just from a technology standpoint, because three years from now, when your lease is likely coming up, there may be far better EVs on the market.”
Know what incentives you qualify for
To ensure you receive every incentive available to you, know exactly which incentives you qualify for before engaging with a car dealer. Joseph Yoon, consumer insights analyst at Edmunds, recommends telling the dealer upfront what you expect in the way of incentives.
“The dealer is not going to offer it to you unless they’re deeply desperate to get the deal done,” Yoon says.
As part of your research, be aware of the different types of incentives available, because in some cases they can be combined.
Auto rebates provide a certain dollar amount to reduce your overall cost of buying, financing or leasing a vehicle. The rebate reduction should be on top of any other discount you’ve negotiated.
Low-rate financing is an incentive offered by automaker captive lenders — although you’ll need to have good or excellent credit to qualify and may be limited on loan length. As of March 5, 2024, Cox Automotive reported that 14.2% of new vehicle financing transactions had an APR of 3% or less. Only 3.2% of transactions had a 0% APR. While low-rate offers are available, they aren’t plentiful.
Loyalty incentives may be available if you have a certain car brand and want to buy or lease another one from the same manufacturer.
Demographic-focused incentives — for example, if you’re a recent college graduate, military member or educator — are also offered by some auto manufacturers and dealers.
Stacking more than one incentive, when possible, can help you take advantage of every dollar available to you. If you have to choose between multiple incentives, for example, either a rebate or low rate from the same manufacturer, use an auto loan calculator to run each scenario and see which will save you the most money in the long run. Also, consider whether taking a cash rebate at the dealer and financing elsewhere could save you even more.
About EVs, Yoon says auto manufacturers and dealers are motivated right now to offer savings on top of the federal incentive, because “there’s still a little bit of inventory left from 2023 that they really, really, really want to get rid of as the 2024 models [are starting to] hit.”
Plan to negotiate and comparison shop
If you know you qualify for a $1,500 car rebate, don’t assume that’s the best you can do — even if the dealer tells you it is. The ability to negotiate car prices for some models has also reappeared, and incentives should be in addition to any amount you negotiate off the manufacturer’s suggested retail price. You can use valuation tools on car-buying sites to see what people are paying for the car you want and whether negotiating a lower price is realistic.
Finally, if you can find more than one dealership with the vehicle you want, present the deal you expect to each and let them compete for your business. Dealers receive factory-to-dealer discounts to help move certain vehicles, usually slower-selling ones. They can choose whether to pass these savings on to you and may be more motivated to do so if they know you’re shopping for the same car elsewhere.
Yoon says if a dealership isn’t willing to “play ball,” you shouldn’t hesitate to walk away. “Cars cost literally more than they have ever cost the consumer, and so you should, rightfully so, fight for every dollar that you can save.”
Do you want to make money from your phone? I have been making money from my phone for many years now, and it’s a great way to make extra income or even a full-time income! Your phone can help you make money in many ways too. You can sell things you don’t need or use…
Do you want to make money from your phone?
I have been making money from my phone for many years now, and it’s a great way to make extra income or even a full-time income!
Your phone can help you make money in many ways too. You can sell things you don’t need or use your skills on freelance platforms. Answering surveys, selling photos, or being a virtual friend can also make you money, all from wherever you are comfortable.
Best Ways To Make Money From Your Phone
Below are the best ways to make money from your phone.
1. Answer surveys
You can earn money with your phone by answering surveys. Companies pay for your opinion, and you can do this whenever you have free time, such as when you’re just sitting on the couch watching TV with your phone in your hand.
Surveys are like a bunch of questions that companies ask to find out what you like or what you think about something. They might ask about the food you eat, the games you play, or even about your shopping habits.
You answer these questions, and in return, they give you money, points, or free gift cards (such as free Amazon gift cards) as a way to thank you for your time.
Some of the paid online survey companies I recommend are:
Here are 11 Paid Online Survey Sites if you want to learn more.
I have done many paid surveys over the years, and I love how I can answer them right from my phone and whenever I want. I can answer them while watching a video, during a lunch break, before or after work, and more.
2. Sell photos
You can use your phone to take pictures and make money. Selling stock photos is a fun way to make money through passive income without actively working for it.
Not all photographers need a fancy camera to start. Your phone can work perfectly and the newest smartphones can take great, high-quality photos. My phone can take great pictures and it wasn’t super expensive – it’s just a normal Android phone.
With stock photography, you can upload pictures you’ve taken with your camera or phone to a platform like Depositphotos. When someone buys one of your photos, you earn a commission.
Websites, companies, and blogs use stock photos for many reasons. Businesses use them to improve their content, websites, or overall appearance when they might not have the time to take all the photos they need.
I personally often use stock photos in my blog posts, and I know many others who do too. The pictures throughout this article (yes, the one that you are reading) are all stock photos.
Stock photography includes pictures of things such as:
Travel and landscapes
Business and finance, like laptops, offices, and people working
Family, such as parents and children
Household items, such as a living room and kitchen
Animals, such as pets and wildlife
Vehicles like cars and boats
Health and wellness, such as fitness-related images, healthy food, someone working out
Sports, from professional events to casual games
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
3. Instacart Shopper
Making money through your phone is possible with grocery and food delivery apps like Instacart. As an Instacart Shopper, you get paid to shop for groceries and deliver them to people who order online.
Getting groceries delivered is a service that lots of people are using more and more. I’ve used it a few times when I didn’t have time to go shopping or didn’t have a car.
With this job, you have the freedom to make your own schedule, and you can get paid pretty fast – sometimes the same day.
Delivering groceries is a popular side job, and all you need is a valid driver’s license, a car, and your cell phone.
You earn money for each delivery and get to keep all your tips. Platforms like Instacart and Shipt can help you make around $15 to $20 per hour.
Learn more at Instacart Shopper Review: How much do Instacart Shoppers earn?
4. JustAnswer
JustAnswer is a site where you can make money by using your phone to help others. If you have skills or knowledge in a particular area, you can answer questions and earn cash.
JustAnswer states that you can make $2,000 to $7,000 a month as an expert answering questions online on their site.
People ask questions, and the site matches them with an expert who can answer. For example, someone might ask how to change their oil or why their cat is sick. As an expert, you’ll be answering questions and giving personalized help through text chat.
There are experts in fields like mechanics, doctors, lawyers, veterinarians, home experts, appraisers, computer and tech experts, and more.
You can work whenever you want from your computer or cell phone, and you get to choose which questions you want to answer.
To get started, apply online on JustAnswer. They’ll verify your credentials (every expert on this platform is verified by a third party and needs to have licenses, education, or employment in their field of expertise). Once approved, you’ll have a quick meeting with the JustAnswer team to learn how to use the platform.
It takes about one week to become verified, and you can receive payments through direct deposit, PayPal, or Venmo.
Recommended reading: 28 Ways To Get Paid To Text
5. DoorDash
When you want to make money with your phone, DoorDash is one way you can do that. DoorDash is a gig app where you deliver food to people.
Working with DoorDash means you’re part of the gig economy, delivering restaurant meals to customers. You have the flexibility to pick your hours and decide when and where you want to work.
Depending on your location, you can deliver food with a car or by bike.
The app is your main tool for the job, and it shows you your orders, where to go, and how to get there.
Your earnings depend on each delivery. You can make $2 to $10 or more, plus tips.
Please click here to sign up for DoorDash.
6. Fiverr
Fiverr is a way to make money from your phone as it’s an online platform where people do all sorts of online work, like writing, designing, or making videos.
Some services you can sell to make money from your phone include:
Chat support customer service – Manage customer service for a business as a freelancer.
Social media posting assistant – Help clients schedule and post content on their social media platforms, such as Instagram and Facebook.
Virtual fitness coaching – You can give fitness coaching sessions or create personalized workout plans from your phone.
Online language lessons – Teach language lessons through video calls or voice messages.
Life coaching – Share motivational messages, life advice, or coaching sessions through your phone, such as in phone calls or texts.
Mobile app testing – Test and give feedback on mobile apps for developers.
When someone buys your service from your listing, they pay Fiverr. Fiverr takes 20%, and you receive 80% of the funds after a 14-day pending period.
Another popular platform somewhat similar to Fiverr for freelancers is Upwork.
7. RentAFriend
If you’re looking to make money from your phone, RentAFriend could be an interesting choice. This platform allows you to get paid for being a friend.
As a RentAFriend, you might respond to text messages and have phone conversations with the person. You can be a friend in person, over video chat, or through text messages, depending on your preference.
With RentAFriend, you set your own hours and the price for your time. Earnings can range from $10 to $50 per hour, depending on what you decide.
Here’s how it works:
Sign up on the RentAFriend website.
Create a profile that shows who you are and what kinds of activities you enjoy.
Once your profile is live, people can find you and request your friendship services.
People join this site to find a friend and someone to talk to, and that’s where you come in.
8. Papa app
Papa is a website where you can chat with older adults, help them around their house and with shopping, and more.
You’re simply giving them some extra support with their day-to-day tasks, and you can earn money right from your phone for some of these tasks.
As a Papa Pal, you get to set your own schedule. The amount you can earn per hour varies depending on your location.
9. BetterHelp therapist
If you’re a licensed therapist, you might like making money using your phone with BetterHelp. BetterHelp is an online platform where therapists help people.
You can work with clients by chatting, phone calls, or video calls. You’ll need good internet and a private place to talk.
As a therapist on BetterHelp, estimated earnings are around $100,000 per year for working 40 hours per week. You can also work part-time at around 5 to 15 hours per week and earn around $8,000 to $27,000 each year.
To join, they require at least 3 years of experience in therapy for adults, couples, or teens.
10. Play games on your phone
There are many money making apps where you can get paid to play games on your phone.
Game apps pay real money rewards because they earn money through ads and in-app purchases. To motivate you to keep playing their games, they share a portion of their earnings with you.
Here’s a quick list of the top game apps that pay real cash:
KashKick
Swagbucks
InboxDollars
When selecting gaming apps to make money, it’s important to check reviews and understand how you receive your earnings. Be cautious with apps that require payment to play or promise rewards that seem too good to be true. Also, keep track of the time you spend playing games to make sure it is worth it.
Recommended reading: 23 Best Game Apps To Win Real Money
11. User Testing
UserTesting is a way you can make money by trying out websites and apps. Companies will pay you for your honest thoughts on how easy they are to use.
To participate in tests, you’ll need a computer or a smartphone, an internet connection, and a microphone. Some tests may also require a webcam.
When you test websites, you look out for things that don’t work well or can be confusing. Your feedback helps companies improve as they want real opinions, not just quick answers.
Here’s how it works:
Sign up with a user testing site.
They’ll give you tasks, like finding something on a website. Most tests take about 15 to 20 minutes.
You record your screen and talk about what you’re thinking.
After you’re done, you send your feedback.
You get paid! You could earn around $10 per test.
Payments are usually made through online services like PayPal.
I have personally paid someone to do a UserTesting review on this site, Making Sense of Cents. It’s a great way to see what a stranger thinks of your website and they gave me tons of helpful tips and let me know what changes I should make to make my website better for readers.
12. Sell used items online
If you have stuff you don’t use anymore, selling it online can be a smart way to make some money. Your old phones, clothes, games, and books could be worth something to someone else.
And, you can do all of this right from your cell phone!
Whether you have old things around your home that you want to sell or if you want to start a reselling business, there are many apps that make it easy to sell stuff right from your phone.
Some of the best selling apps are Poshmark for clothing, Worthy for jewelry, Facebook Marketplace for local sales, and Decluttr for electronics.
I have personally sold many items over the years on various sites to make extra income. At one point, I even had a small reselling business. So, I understand firsthand how helpful these sites and apps can be!
13. Sell your data
You can earn money from your phone by selling your data through apps. These apps pay you for the data you don’t use. You might be concerned about safety, but in most cases, it is safe.
These apps usually operate in the background, helping companies understand how people use the internet. Data apps aren’t full-time jobs and you won’t get rich from them, but they can be easy side gigs.
Honeygain is one app where you can earn cash, and you get paid for data you’re not using. You just install the app, and it runs without you doing anything extra.
You receive payment based on the amount of traffic passing through your connection, with Honeygain paying $1 for every 10 GB of traffic.
14. Instagrammer
If you love sharing photos and videos, Instagram can be a great way for you to make some extra money with your social media accounts.
I have made income from Instagram over the years, and while it’s not my full-time income, it is a fun way to make money from my phone.
This is because you can start an Instagram on whatever niche you want, such as fitness, travel, fashion, family, and more. So, you may be able to have a lot of fun managing and growing your social media account.
Then, you’ll want to make sure you regularly share high-quality content, use relevant tags, post reels, and interact with your audience to steadily increase your follower count.
15. Get paid to walk
You can actually make money just by walking! There are apps that track your steps and reward you for staying active. You can download these to your phone, start walking, and watch your steps turn into rewards.
Sweatcoin is one app you might like. If you’re over 13 and have a smartphone, you can join. It changes your walking into points that you can use. You can get stuff like gift cards or even support charities.
Getting paid is easy:
Join an app – Sign up for an app that fits you.
Walk and collect – Carry your phone and collect points as you walk.
Earn rewards – Swap your points for things like money to PayPal or cool products.
Some apps might hook up to a fitness tracker. This way, if your phone isn’t with you, you won’t miss out on any steps.
Frequently Asked Questions
Below are answers to common questions about how to make money from your phone.
How can I use my phone to make money?
You can make money on your phone by selling things you no longer need on apps like Decluttr or through your own store on platforms like Shopify. You could also complete online surveys, sign up for market research, or perform tasks on gig economy apps.
How can I make passive income on my phone?
One way to make passive income from your phone is to sell stock photography. You could take pictures from your phone, and then sell them over and over again online!
How can teenagers earn money using mobile apps?
Teenagers can earn money from their phones in their spare time by taking online surveys, performing tasks, selling products online, or using apps that reward users for maintaining good habits, like staying active.
How can I make $100 a day on my phone?
There are many ways to make $100 a day from your phone, such as selling items online and signing up for gig jobs like Instacart.
What are the quickest ways to make money on your phone?
The fastest ways to make money with your phone include taking surveys, using cash back shopping apps (because you may shop online a lot already!), playing games that have real rewards, and delivering groceries or meals with gig apps.
How can I learn how to make money with my phone without any investment?
There are many ways to make money from your phone for free, such as answering surveys, selling items that you already own (such as old clothing that you no longer wear, CDs, DVDs, or old devices that you don’t use anymore), driving for Uber, delivering groceries with Instacart, and more.
What apps can I use to make money with my phone?
Apps like Instacart, Papa, and Uber are all good ways to make side hustle money with your phone. There are many other ways that I didn’t mention above that are good options, such as Fetch Rewards (scan your receipt from grocery shopping), Acorns (micro-investing app for your spare change), Ibotta (a grocery shopping app), Neighbor (rent out your storage), Lyft (drive others around), TaskRabbit (sell your handyperson services, such as building furniture), OfferUp (selling stuff that you no longer need), and Rakuten (get cash back on your online shopping).
These apps are available on both Google Play stores and the iOS app store.
How To Make Money From Your Phone – Summary
I hope you enjoyed this article on the many ways to make money from your phone.
As you can see from the above, there are many ways to make extra cash from your phone, from part-time gigs to full-time income. Whether you have an Android or Apple phone, there are many ways on the list above that you may want to try out.
What do you think is the best way to make money with a phone?
After I wrote a simple primer on Roth conversions a couple weeks ago, several readers reached out asking for more details. A few specific snippets of those questions include:
I see many articles like this about lowering your tax bracket when doing Roth conversions. But, what about the amount of money that can be made by not doing Roth conversions and letting the taxable [sic: qualified, or not taxable] money grow in an account like an IRA or 401K? Is that math too hard to explain?
Sure your RMDs will be higher and you will be taxed more, but how much more money will you make by letting that tax deferred money grow? You could assume a rate of return at 6% for the illustration.
Kelly M., Question 1
A wise man once said “never pay a tax before you have to.” Back around 2015 I had the owner of an income tax service try to convince me to convert all my traditional IRA money to Roth. He said tax rates were going to go up and he was converting all of his own personal traditional IRAs. Fast forward to 2017 and Congress actually ended up lowering tax rates. I wonder what he thought about his conversions after that.
Anonymous, Question 2
Even with my spouse still working, I don’t think we’ll hit the IRMAA limits while I do Roth conversions before I take Medicare. But, could Roth conversions now help me avoid the IRMAA thresholds when I’m taking RMDs in the future? Or, is it worth doing Roth conversions to avoid the IRMAA thresholds? I’d be interested in an article like that.
Anonymous, Question 3
To summarize those three questions:
Does the math of Roth conversions really work?
But since we don’t know future tax rates, how can we confidently convert assets today?
What about IRMAA (the income-related monthly adjustment amount), which is an additional Medicare surcharge on high-earners?
Let’s address these questions one at a time.
Does the Math of Roth Conversions Really Work?
Roth conversions involve many moving pieces, as you’ll see in this simple Roth conversion spreadsheet.
Reminder: you can make a copy of the spreadsheet via File >> Make a Copy
There are terrific financial planning software packages that take care of this math. I wanted to present 95% of the good stuff in a free format that you all can look at. Hence, Google Sheets.
Nuanced Tax Interactions
Especially important is the interaction between normal income (via Traditional account withdrawals), capital gains, and Social Security. These taxes interplay in nuanced ways. A simple example:
Let’s say a Single retiree’s annual income is:
$5000 in interest income
$5000 in long-term capital gains
$30,000 in Social Security benefits.
If you plug that into a 1040 tax return, you’ll find that:
None of that Social Security income is taxable.
All of the interest and capital gains are enveloped by the Standard deduction
Resulting in zero taxable income and a $0.00 Federal tax bill.
But if we copied Scenario A and added in $30,000 in Traditional IRA distributions, what happens? I think we all expect that the $30,000 distribution itself must have a taxable component, but you might not know that:
The IRA distribution affects Social Security taxability. Now, $22,350 of the Social Security income becomes taxable. That’s right. Simply by distributing IRA assets, you’ve now increased how much Social Security you pay taxes on.
The Standard deduction still helps, but there’s now a remainder of $48,500 in Federal taxable income.
Resulting in a $5584 Federal tax bill.
It’s not the end of the world. Taxes happen. They pay for our public shared interests.
But part of tax planning is understanding ahead of time what your future tax bills will look like. It’s important to understand how taxes interact. And this is just a simple example!
Measuring Roth Conversion Benefits
Going back to this spreadsheet, you’ll three tabs full of retirement withdrawal math. The Assumptions tab contains important information on our hypothetical retiree’s starting point (e.g. $2.9M in investable assets), their annual spending ($100K), their future assumed growth (5% per year, after adjusting for inflation), and other important numbers.
Note – this math takes place in “the convenient world” where inflation is removed from the math.
Then three tabs are presented with different Roth conversion scenarios, described below:
“Baseline Calculations“
This tab shows a retiree not focused on any conversions
They want to leave to their children both Roth assets (if possible) and taxable assets (on a stepped-up cost basis).
Therefore, they attempt to fund as much of their retirement using Traditional assets as possible
“No Trad Withdrawals”
This tab shows a “worst case” scenario, to help bookend the analysis. This retiree is not pulling any funds from their Traditional accounts (unless necessary). Thus, we’d expect them to have large RMDs and large RMD-related tax bills.
“Reasonable Conversions”
This tab shows a “reasonable” Roth conversion timeline, electing to convert $1.7 million throughout their retirement, while funding their lifestyle using a mix of Traditional, Roth, and taxable assets along the way.
By no means is this “optimized.” But it’s reasonable, and better than the first two scenarios, as we’ll see below.
Pros, Cons, and Results
The three scenarios end up similar in multiple ways.
Our retiree never has an issue funding their annual lifestyle. This is of utmost importance.
Our retiree reaches age 90 (“death”) with roughly $5M in each scenario.
But there are important differences (as we’d suspect).
The Baseline scenario ends with $5.00M. Of that, 27% is Traditional, 35% is Roth, and 34% is Taxable. They’ve paid an effective Federal tax rate of 20.7% throughout retirement.
The No Traditional Withdrawal scenario ends with $5.20M. Of that, 63% is Tradtional, 0% is Roth, 37% is Taxable. They’ve paid an effective Federal tax rate of 18.8% throughout retirement.
The Reasonable Conversions scenario ends with $5.17M. 18% is Traditional, 68% is Roth, and 14% is Taxable. They’ve paid an effective Federal tax rate of 13.9% throughout retirement.
The Same, But Different
These three scenarios share many similarities. All three result in successful retirements. But there are important differences.
Our Roth converter paid far fewer taxes and, ultimately, left a majority of their tax dollars to their heirs via Roth vehicles, and thus tax-free.
The No Trad Withdrawal retiree paid 28% effective tax rates in their final years (only going further up in the future) and left 63% of their assets in Traditional accounts with a large asterisk on them.***
***TAXES DUE IN THE FUTURE*** …unless you’re leaving the Traditional IRA assets to, for example, a non-profit charity. But if you’re leaving the Traditional IRA to your kids, they’ll owe taxes when they withdraw the funds.
Long story short: Roth conversions work to your benefit when executed intelligently.
Should You Worry About Leaving Behind Traditional Assets?!
I don’t want to freak you out. Your heirs will appreciate you leaving behind a 401(k) or Traditional IRA for them.
But it’s worth understanding that they’ll owe taxes on that money (usually). Let’s dive into an example with simple math: a $1 million Traditional IRA left to one person (e.g. your child).
That person will most likely set up an Inherited Traditional IRAand (via new-ish rules in the SECURE Act) will have to empty that account by the end of the 10th year after your death. The withdrawals can be raised and lowered during those 10 years. Much like with Roth conversions, it makes sense to take larger withdrawals during otherwise low-income years and vice versa.
But if the beneficiary is in the middle of their career, a series of 10 equal withdrawals makes sense. Some rough math suggests ~$135,000 per year is a reasonable withdrawal amount (based on account growth over the 10 years).
That withdrawal is taxed as income for the beneficiary. If they’re already earning $100,000 per year of normal income, then taxes will consume ~$41,000 of their annual $135,000 withdrawal. State taxes might take another bite.
Again – I don’t want anyone to cry over the prospect of inheriting $94,000 annually for 10 years. Where can I sign up?! But it’s also worth understanding that 30% of this inheritance is going to Federal taxes.
“Never Pay a Tax Before You Have To”
What about Question #2 from the beginning of the article? A reader wrote in and suggested one should “never pay a tax before you have to.”
While pithy, it’s false.
If you can reasonably front-load low tax rates to prevent later high tax rates, the math supports you. What we’ve covered so far today is clear evidence of that.
Now, in the reader’s defense: I’d rather delay taxes if thedollar amounts are exactly the same. That’s one argument behind the tax-loss harvesting craze: I’d rather pay $100 in taxes in the future than $100 in taxes today.
But Roth conversions work differently. Done well, Roth conversions allow you to pay a 22% tax on $50,000 today to prevent a 37% tax on $100,000 in the future. It’s apples-and-oranges compared to the tax-loss example.
And perhaps the bigger lesson: there are few universal rules in personal finance. The pithy rule that works in one scenario (“never pay a tax before you have to”) might fail miserably in another scenario. Let the math guide you.
What About IRMAA?
Irma used to only be a name you’d give to the great-grandmother character in your 11th-grade B-minus fiction story.
No longer! Today, IRMAA has been given new life (which, I bet, was covered by Medicare!)
IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare premium surcharge imposed on higher-income beneficiaries in addition to their standard Medicare Part B and Part D premiums. The amount of IRMAA is determined based on an individual’s modified adjusted gross income (MAGI) and can result in higher healthcare costs for those with higher incomes.
In plain English: high-earners pay more for Medicare.
Question #3 today asked if Roth conversions can be used to avoid IRMAA premiums. The answer is: yes.
But first, how painful are these IRMAA surcharges in the first place?!
Important note: you’ll see below that the 2023 IRMAA brackets are based on 2021 modified adjusted gross income (MAGI). That same 2-year delay holds for future years. Your 2024 Roth conversions (or lack thereof) will be important in determining IRMAA in 2026
If a married couple’s MAGI in 2021 was $225,000, they’d end up paying $231 per month (or, more accurately, $462 per month for the couple) as opposed to $330 for the couple if they earned less than $194,000. That’s a difference of $132 per month or $1584 for the year.
I’m of two minds here. Because:
Yes, I believe in frugality. A penny saved is a penny earned. Why pay $1584 extra if you don’t have to?
But if you’re earning $200,000in retirement, do you also need to stress over a $1500 annual line item?
Personally, I’ll be stoked if my retirement MAGI is $200,000. It’ll be a sign that my financial life turned out unbelievably well. I won’t mind the IRMAA.
The people most likely to suffer IRMAA are also best positioned to deal with it.
Will IRMAA Get You?
The 2-year delay in IRMAA math means you might get IRMAA’d early on in retirement.
Imagine retiring at the end of 2023. The peak of your career! You and your spouse earned a combined $300,000 and now you’re settling down to mind your knitting. Like all U.S. citizens, you sign up for Medicare just before you turn 65.
Come 2025, Uncle Sam and Aunt IRMAA are going to look back at your 2023 income and surcharge you.
But the good news, most likely, is that your 2024 income is quite low in comparison and IRMAA will drop off in 2026.
Can Roth Conversions Help?
Remember: RMDs are forced and count as income, and that has the potential of “forcing” IRMAA on retirees as they age.
So to answer our terrific reader question: yes, Roth conversions can help here. You can use Roth conversions to shift the realization of income from high years to low years, preventing or mitigating IRMAA in the process.
But once more, make sure the juice is worth the squeeze.
If a 75-year-old has a $200,000 RMD that kills them on IRMAA, ask yourself: where does a $200,000 RMD come from? Answer: it’s coming from an IRA of over $5 million. Should someone with $5 million be losing sleep over IRMAA? I don’t think so.
That’s A Lot of Numbers…
A long and math-heavy article. I hope this helped you out! We covered:
Roth conversions can be objectively helpful, decreasing taxes in retirement and shifting large portions of portfolios from Traditional accounts (with potential taxes for heirs) into Roth accounts (no taxes for heirs)
Taxes in retirement are nuanced and interconnected. In today’s example, realizing extra income (via IRA distributions) also triggered extra Social Security taxes.
It’s not bad to leave behind Traditional assets to heirs. They’re getting a wonderful gift from you. But there will be taxes, which should be planned for.
There are many scenarios where it makes sense to pay taxes before you “have” to.
IRMAA is a negative reality for many retirees, but the people most likely to suffer IRMAA are also best positioned to deal with it.
Roth conversions can be used to mitigate IRMAA over the long run.
As always, thanks for reading!
Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
Want to learn more about The Best Interest’s back story? Read here.
Looking for a great personal finance book, podcast, or other recommendation? Check out my favorites.
Was this post worth sharing? Click the buttons below to share!
Margin accounts give investors the ability to borrow money from a brokerage to make bigger trades or investments than they would have been able to make otherwise. Just as you can borrow money against the equity in your home, you can also borrow money against the value of certain investments in your portfolio.
This is called margin lending, and it happens within a margin account, which is a type of account you can get at a brokerage. Most brokerages offer the option of making a taxable account a margin account. Tax-advantaged retirement accounts, such as traditional IRAs or Roth IRAs, generally are not eligible for margin trading.
What Is a Margin Account?
As mentioned, a margin account is used for margin trading, which involves borrowing money from a brokerage to fund trades or investments.A margin account allows you to borrow from the brokerage to purchase securities that are worth more than the cash you have on hand. In this case, the cash or securities already in your account act as your collateral.
Margin accounts are generally considered to be more appropriate for experienced investors, since trading on margin means taking on additional costs and risks.
When defining a margin account, it helps to understand its counterpart — the cash account. With a cash brokerage account, you can only buy as many investments as you can cover with cash. If you have $10,000 in your account, you can buy $10,000 of stock.
Margin Account Rules and Regulations
When it comes to margin accounts, the Securities and Exchange Commission (SEC), FINRA, and other bodies have set some rules:
• Minimum margin: There is a minimum margin requirement before you can start trading on margin. FINRA requires that you deposit the lesser of $2,000 or 100% of the purchase price of the stocks you plan to purchase on margin.
• Initial margin: Your margin buying power has limits — generally you can borrow up to 50% of the cost of the securities you plan to buy. This means, for example, that if you have $10,000 in your margin account, you can effectively purchase up to $20,000 of securities on margin. You would spend $10,000 of your own money and borrow the other 50% from the brokerage. (You can also borrow much less than this.) Your buying power varies, depending on the value of your portfolio on any given day.
• Maintenance margin: Once you’ve bought investments on margin, regulators require that you keep a specific balance in your margin account. Under FINRA rules, your equity in the account must not fall below 25% of the current market value of the securities in the account. If your equity drops below this level, either because you withdrew money or because your investments have fallen in value, you may get a margin call from your brokerage.
Example of a Margin Account
An example of using a margin account could look like this: Say you have a margin account with $5,000 in cash in it. This allows you to use 50% more in margin, so you actually have $10,000 in purchasing power – you are able to actually make a trade for $10,000 in securities, using $5,000 in margin.
In effect, margin extends your purchasing power as an investor, and you’re not obligated to use it all. 💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
Increase your buying power with a margin loan from SoFi.
Borrow against your current investments at just 10%* and start margin trading.
Benefits of a Margin Account
For an experienced investor who enjoys day trading, having a margin account and trading on margin can have some advantages:
• More purchase power. A margin account allows an investor to buy more investments than they could with cash. That might lead to higher returns, since they’re buying more securities and may be able to diversify their investments in different ways.
• A safety net. Just as an emergency fund offers access to cash when you need it, so does a margin account. If you need funds but you don’t want to sell investments at their current price point, you can take a margin loan for short-term cash needs.
• You can leave your losers alone. In another scenario, if you need cash but your investments aren’t doing so well, taking a margin loan allows you to keep your securities where they are instead of selling them right now at a loss.
• No loan repayment schedule. There is no repayment schedule for a margin loan, so you can repay it at any rate you please, as long as your equity in the account maintains the proper threshold. Monthly interest will accrue, however, and be added to your account.
• Potentially deductible interest. There may be tax situations in which the interest in a margin loan can be used to offset taxable income. A tax professional will tell you whether this is a move you can consider.
Drawbacks of a Margin Account
Despite the advantages, using a margin account has risks. Here are some things to consider before trading on margin:
• You could lose substantially. While it’s possible that trading on margin can help realize greater returns if an investment does well, you will also see greater losses if an investment takes a dive. And even if an investment you’ve purchased on margin loses all of its value, you’ll still owe the margin loan back to the brokerage — plus interest.
• There may be a margin call. If your investments tank, it’s possible that you’ll have to sell securities or deposit additional funds to bring your account back up to the required margin threshold. It’s also possible for a brokerage to sell securities from your account without alerting you.
How to Open a Margin Account
Opening a margin account is as simple as opening a cash account, but you’ll likely need to sign a margin agreement with your brokerage. You may also need to request margin for your account, depending on the brokerage.
But there are some other things to keep in mind.
If you’re a beginner investor, a cash account gives you an opportunity to learn how to trade and invest, and there’s a low level of risk. If you’re a more experienced investor and fully understand the risks of trading on margin, a margin account may offer the opportunity to expand and diversify your investments.
Some financial advisors suggest that clients open margin accounts in case they need cash in a hurry. For instance, if you need money quickly, it takes time to sell investments and for the money to be deposited in your account. If you have a margin account, you can take a margin loan while your securities are being sold. Typically, margin accounts don’t carry any additional fees as long as you aren’t borrowing on margin.
You also need a margin account for short selling. With short selling, you borrow a stock in your brokerage account and sell it for its current price. If the price of the stock falls — which you’re betting will happen — you repurchase shares of the stock and return it to the original owner, pocketing the difference in price.
Like trading on margin, short selling is a strategy for experienced investors and comes with a large amount of risk.
Things to Know About Margin Accounts
Here are a few other things to keep in mind about margin accounts.
Margin Calls
Margin calls are a risk. If the equity in your margin account drops below a certain threshold, you may get an alert from your brokerage, called a margin call. This is meant to spur you to either deposit more money into your account or sell some securities to bolster the equity that’s acting as collateral for your margin loan.
It’s worth noting that if your investment value drops quickly or significantly, you may find that your brokerage has sold some of your securities without notifying you. Commonly, investors are forced by a margin call to sell investments at an inopportune time — such as when the investment is priced at less than you paid for it. This is an inherent risk of trading on margin.
Margin Costs
Investors should also know about relevant margin costs. When you borrow money from the brokerage to buy securities, you are essentially taking out a loan, and the brokerage will charge interest. Margin interest rates are different from company to company, and may be somewhat higher than rates on other kinds of loans.
Consider interest costs when you’re thinking about your margin trading plan. If you use margin for long-term investing, interest costs can affect your returns. And holding investments on margin means the value of your securities must hold steady. 💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
How to Manage Margin Account Risk
If you decide to open a margin account, there are steps you can take to try to minimize the amount of risk you’re taking by leveraging your trading:
• Skip the dodgy investments. Trading on margin works if you’re earning more than you’re paying in margin interest. Speculative investments can be a risky portfolio move, since a swift loss in value can result in a margin call.
• Watch your interest costs. Although there is no formal repayment schedule for a margin loan, you’re still accruing interest and you are responsible for paying it back over time. Regular payments on interest can help you stay on track.
• Maintain some emergency cash. Having a cushion of cash in your margin account gives you a little wiggle room to keep from facing a margin call.
The Takeaway
A margin account is an account that lets you borrow against the cash or securities you own, to invest in more securities. As with other lending vehicles, margin accounts do charge interest.
While margin accounts do come with risk — including the risk of losing more money than you originally had, plus interest on what you borrowed — they also offer benefits including more purchasing power and a safety net for short-term cash needs. If you’re unsure about using a margin account, it may be worthwhile to discuss it with a financial professional.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
Is a margin account right for me?
A margin account may be a good tool for a specific investor if they’re comfortable taking on additional risks and investment costs, but also want to extend their purchasing power.
How much money do you need to open a margin account?
Before opening a trading account, investors will need a minimum of $2,000 in their brokerage account, per regulator rules.
Is a margin account taxable?
Any capital gains earned by using a margin account will be subject to capital gains tax, and the ultimate rate will depend on a few factors.
Should a beginner use a margin account?
It may be best for a beginner to stick to a cash account until they learn the ropes in the markets, as using a margin account can incur additional risks and costs.
Who qualifies for a margin account?
Most investors qualify for a margin account, granted they can reach the minimum margin requirements set forth by regulators, such as having $2,000 in their brokerage account.
What’s the difference between a cash account and a margin account?
A cash account only contains an investor’s funds, while a margin account offers investors additional purchasing power by giving them the ability to borrow money from their brokerage to make bigger trades.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
Inside: Secure your financial future with insights into the top appreciating assets. Find the best appreciating assets and learn how to grow wealth with strategic investments.
Asset appreciation isn’t just an economic term; it’s the fuel that powers wealth creation. Think of appreciating assets as the golden geese, steadily laying valuable eggs that grow in size over time.
This is a crucial concept that triumphs and what you own can become the cornerstone of your financial success.
Asset appreciation isn’t just a buzzword; it’s the driving force behind significant wealth accumulation.
Whether you’re just starting or looking to expand your portfolio, understanding the role appreciation plays can mean the difference between mediocrity and staggering success.
Now, let’s dig in and help move your net worth higher.
What Are Appreciating Assets?
Appreciating assets are the golden geese of the investment world. They are the powerful engines that drive your net worth higher over time.
When you invest in assets like real estate, stocks, and even fine art, you’re placing a bet on their future value.
Unlike the car that loses value the moment you drive it off the lot, these assets typically gain worth, supernova-style, expanding your financial universe with every passing year.
How do assets appreciate in value?
Appreciation, at its core, is an asset’s journey from ‘worth X’ to ‘worth X and beyond’. But how does this magical wealth-building happen?
Several factors can give assets a financial boost.
For starters, the traditional law of supply and demand plays a huge role—if more people want it and there’s not enough to go around, the value goes up.
Toss in the influence of interest rates, economic growth, and geopolitical stability, and you have a mix that can push asset value into new echelons.
Even inflation can be a friend to assets, increasing their nominal value over time.
Remember, appreciation isn’t a given; it’s a hopeful trajectory bolstered by market forces and wise decision-making. You want to hop onto the appreciation train with assets that offer the promise of increasing in value, not just for now, but well into the future.
How to increase net worth with appreciating assets
Increasing your net worth with appreciating assets is like laying bricks for a financial fortress—it requires strategy, patience, and a mix of assets that have a history or strong potential for growth.
Start by assessing your current holdings and considering where you can diversify with assets that shine in appreciation prospects. It’s a game of balance, where you mix higher-risk, high-reward options with stable, gradual growers.
Make a habit of routinely re-evaluating your assets, keeping in mind economic trends and your personal goals. Sometimes, this may mean letting go of underperformers in favor of assets with brighter horizons.
Consider leveraging tax-advantaged accounts and investment strategies to maximize your wealth growth.
Most importantly, ensure liquidity so you can capitalize on new opportunities. Having liquid assets means you won’t miss out when the next big appreciating asset comes knocking.
Top 5 Appreciating Assets You Must Own
#1 – Stocks with High Growth Potential
Stocks are the daredevils of the investment world, particularly those brimming with high growth potential. They’re the kind that can catapult your net worth to the stratosphere if chosen wisely.
Tech giants like Nvidia, Microsoft, Google, Amazon, and Meta are testament to this—their growth over the decades has turned modest investments into fortunes.
Investing in high-growth potential stocks is like spotting a gem in the rough – if you spot the right ones, your financial prospects could shine brightly. You must learn how to invest in stocks for beginners.
Personally, I cannot stress how important it is to learn how to invest in the stock market as I can attest this is how you quickly grow your net worth.
Best For: Investors with a higher risk tolerance who are aiming for greater returns or dividend stocks and have the patience to weather market fluctuations.
#2 – ETFs to Streamline Investments for Optimal Performance
Exchange-Traded Funds (ETFs) are the investment world’s multitaskers, pooling the potential of various assets for optimum performance. By offering a diversified portfolio within a single share, they allow investors to spread their risk while reaping the growth benefits of different markets and sectors.
ETFs provide an easy and efficient way to diversify investments, reducing risk while still offering growth opportunities. They’re especially game-changing for those who prefer a “set and forget” strategy, as many ETFs are designed to passively track indexes or sectors. Many track the S&P, so you can easily invest in the overall market.
They’re cost-effective, often having lower fees than traditional mutual funds, and are accessible to investors with varying levels of experience.
Best For: Both beginners and experienced investors looking for a blend of simplicity, cost efficiency, and diversification in their investment strategy.
#3 – Real Estate: A Staple in Appreciating Assets
Real estate has long stood as a bulwark in the investment community, a reliable appreciator that doubles as both a tangible asset and a potential home. It’s a market marked by stability and a historical uptrend in value, making it a classic choice for those seeking long-term wealth growth.
Owning property is synonymous with the very concept of asset growth, with the power to withstand economic ebbs and flows. Location continues to be the drumbeat to its rise in value – a prime spot can transform a simple parcel into a gold mine.
Plus it is a tangible asset that provides utility and can serve as a hedge against inflation.
Whether it’s through REITs, crowdfunding platforms like Fundrise, or direct ownership, real estate can anchor your investment strategy on solid ground.
Best For: Investors seeking a tangible asset with a dual aim of long-term capital appreciation and passive rental property income. Ideal for those ready to manage properties or hire management, and for those who can handle the responsibilities of ownership.
#4 – Your Own Business: Betting on Your Entrepreneurial Spirit
Your own business isn’t just a job, it’s a reflection of your passion and an opportunity to control your financial destiny. When successfully executed, a business can become one of the most valuable appreciating assets, offering unparalleled autonomy and potentially substantial economic rewards.
Starting a business can lead to exponential wealth growth as the company expands and becomes profitable.
Your business’s value can significantly increase over time, making it a formidable asset in your net worth.
Owning a business is not just about the profits; it’s a journey of personal growth, resilience, and the triumph of turning passion into paychecks. It’s a path that can lead to great wealth, especially when one approaches it with clear strategy and unquenchable enthusiasm.
Best For: Individuals with entrepreneurial spirit, a viable business idea, and the readiness to invest time and capital into a long-term venture. Suitable for those who are tenacious and willing to face the challenges of entrepreneurship head-on.
#5- Self-Investment: The Ultimate Asset with Infinite Returns
Investing in yourself is like planting a seed that grows into a sturdy, towering tree, sheltering your financial future.
This investment can unlock doors to better opportunities, higher incomes, and greater job satisfaction. Whether it’s through education, health, or personal development, the returns on self-investment can be limitless.
Personal development often correlates with higher levels of personal and financial success.
Remember, when you invest in yourself, you become capable of crafting a life that not only brings in wealth but also contentment and a deeper sense of success.
Best For: Any individual seeking to enhance their career trajectory, entrepreneurship potential, or personal satisfaction. This approach is ideal for those who are committed to lifelong learning and self-improvement.
Other Examples of Appreciating Assets You Can Own
The Role of Bonds in a Diverse Securities
Bonds, those steadfast soldiers of the investment world, offer a buffer of safety amid the high-flying volatility of other assets. In a diversified portfolio, bonds contribute stability and predictable income, making them an essential element for many investor’s strategies.
They provide a fixed income stream with less volatility than stocks, acting as a cushion in economic downturns.
Bonds can offer a balance in investment holdings, mitigating risk and providing steady returns. Just make sure the returns are higher than an interest-bearing money market account.
Best For: Investors seeking to balance their portfolio with a lower-risk asset or those nearing retirement who prioritize income and stability over high growth.
Cryptocurrencies: The Digital Gold of Tomorrow?
Cryptocurrencies have emerged as the mavericks of appreciating assets, offering a wild ride with the allure of high-stakes jackpot payouts. As the “digital gold” of the modern era, they encapsulate the spirit of decentralization and technological innovation.
While their volatility can stir up investor heartbeats, their dramatic price appreciation stories make them impossible to ignore for those seeking the thrill of potentially explosive gains.
Even as the cryptocurrency markets continue to ebb and flow, they offer a unique proposition in wealth growth strategies—a high-risk, high-reward horizon that has many gazing toward the future with wallets in hand.
Best For: Tech-savvy investors with a high risk tolerance, seeking to diversify with a modern asset class that has considerable growth potential.
Fine Art and Collectibles: Value Beyond Beauty
Fine art and collectibles are not just a feast for the eyes; they’re also a banquet for your investment portfolio.
These assets bring value that transcends their aesthetic appeal, becoming cherished as cultural treasures and financial boons alike. With the intrinsic charm of rarity and historical significance, art pieces and collectibles can appreciate substantially over time, especially when curated with an expert eye.
For instance, this rare portrait of George Washington is expected to fetch $2.5 million at an upcoming auction.1
Best For: Connoisseurs with a passion for the arts or history, and investors looking for long-term, value-holding assets that also serve as cultural and personal investments. Ideal for those with substantial capital ready to navigate the less liquid markets.
Precious Metals: Why Gold and Silver Remain Attractive
Gold and silver aren’t just the treasures of lore—they’re enduring staples for those looking to fortify their wealth. Their allure lies in their history, intrinsic value, and the stability they can provide when economic tides turn tumultuous. Gold and silver are known for their resilience during economic downturns and inflationary periods. As such, learn how to invest in precious metals.
They are tangible, finite resources with universal value, often resulting in consistent demand.
Best For: Investors looking to hedge risks or seeking a stable store of wealth.
Prospects of Private Equity in Upcoming Markets
Private Equity (PE) forms the backbone for the next wave of market disruptors and innovators. Investing in private companies, especially in emerging markets, can yield substantial capital appreciation as these businesses grow and mature, sometimes well before they hit the public sphere.
This has significant potential for appreciation as companies scale up their operations and increase their market footprint.
Best For: Sophisticated investors with a high-risk tolerance and a long investment horizon. They typically have a significant amount of capital to invest and are looking for opportunities outside of public markets to achieve potential high returns.
Venture Capital’s Role in Shaping Future Wealth
Venture Capital (VC) is the financial catalyst that turns innovative startups into tomorrow’s industry leaders. By injecting capital into early-stage companies, VC not only generates the potential for staggering returns but also plays a critical role in shaping future markets and consumer trends.
It plays a critical role in shaping the business landscape of tomorrow by investing in innovation today. With its penchant for high-risk ventures, VC remains an appealing asset class for those with a futuristic vision who are keen to be part of the next big thing.
Venture capital isn’t merely about capital gains; it’s an embrace of progress, a stake in the evolution of industries, and a partnership with the brightest minds of a generation.
Best For: Investors who have a deep understanding of emerging markets and technologies, a high-risk tolerance, and the patience for long-term investment. Also ideal for those who wish to actively participate in the entrepreneurial process and impact the future direction of new businesses.
The Thriving Market for Vintage Automotive Collectibles
Vintage automotive collectibles are revving up the collectibles market with a roar.
Car enthusiasts and investors alike recognize that certain classic models don’t just retain their charm; they accelerate in value over time. The emotional connection, the engineering legacy, and the nostalgia factor turn these vehicles into appreciating assets with a personal touch.
Plus they offer a tangible investment that can be appreciated both visually and through the driving experience.
Best For: Auto enthusiasts who appreciate the craftsmanship of vintage models and are prepared for the hands-on involvement required. Most may see them as a collectible rather than an investment.
Sports Memorabilia as Lucrative Investments
Sports memorabilia takes you on a trip down memory lane, connecting you to pivotal moments and legends of the past. This nostalgia mixed with exclusivity propels their value, making them sought-after assets in the realm of investing.
The emotional and sentimental value tied to sports icons and historical moments can drive considerable investment interest and demand.
Best For: Sports fans who want to combine their passion with investment potential and like to show off their memorabilia.
Land: The Original Real Estate Investment
Land is the progenitor of all real estate investments, offering a blank canvas for potential development or holding value as a scarce resource. With an appeal that has stood the test of time, land remains one of the most fundamental appreciating assets in the investment portfolio.
It is a finite resource; they’re not making any more of it, so demand can only go up as supply remains constant.
Increases in development, population growth, and changes in land zoning can significantly enhance land value over time.
Best For: Investors seeking to hedge against inflation and looking at long-term growth prospects. Land is best for those who have the capital to invest without the need for immediate returns and can wait for the right opportunity to maximize their profits.
Commodities: A Staple in Diverse Investment Portfolios
Commodities offer a slice of the global economic pie, essential for their role in everyday life—from the grain in your breakfast cereal to the petroleum powering your car. As tangible assets, commodities can provide a buffer against inflation and diversify investment portfolios. A similar case could be made for trading currencies.
Commodities, including metals, energy, and agricultural products, often increase in value with inflation and global demand. They provide an investment route less correlated with the stock market, adding portfolio diversification.
Best For: Diversification seekers and those comfortable dealing with market fluctuations who understand global economic trends. Ideal for investors who wish to hedge against inflation and have an interest in tangible or sector-specific assets.
Navigating the High-Yield Savings Landscape
High-yield savings accounts have emerged as essential vehicles for preserving and modestly growing wealth.
In 2022-2024, with interest rates eclipsing their traditional counterparts, these accounts are more relevant than ever for savvy savers seeking to keep pace with inflation. They provide a safe haven for emergency funds or short-term financial goals while offering better returns than a typical savings account.
They provide a low-risk option to grow savings with the added convenience of liquidity. Just like certificates of deposit or CDs.
Best For: Individuals aiming for a secure, accessible place to save money with a better yield than traditional banking products. Especially well-suited for those starting to build their emergency funds or setting aside cash for near-term expenses.
Peer-to-Peer Lending – A Trend to Watch for Asset Growth
Peer-to-peer (P2P) lending shakes up traditional banking by directly connecting borrowers with investors through online platforms. This asset class is gaining traction, providing a novel way to potentially generate higher returns compared to traditional fixed-income investments.
P2P lending platforms offer higher returns on investment over standard savings, as you’re effectively acting as the bank.
It’s a cutting-edge way to diversify your investment portfolio beyond traditional stocks and bonds.
Best For: Investors looking for alternative income streams and who are comfortable with the risk associated with lending money.
Intellectual Property and Patents: An Overlooked Avenue for Wealth Creation
Owning the rights to an invention or unique creation can lead to a wealth of opportunities, with patents often being a gold mine for inventors and savvy investors alike.
Patents, in particular, hold the promise of a decade-long fruitful life, offering the potential for significant monetary returns through licensing or sales.
Best For: Inventors, entrepreneurs, and investors who are versed in industries where innovations are rapidly commercialized. It’s well-suited for those able to navigate the intricacies of patent law and capable of investing in the enforcement and marketing of their IP.
Alternative Investments: Unique Opportunities for Accredited Investors
Accredited investors have the advantage of accessing a broader range of alternative investments that may not be available to the general public, offering potentially higher returns and portfolio diversification. These can include private equity, hedge funds, and exclusive real estate deals.
It’s crucial, however, for accredited investors to conduct thorough due diligence and assess their risk tolerance when allocating a portion of their portfolio to these alternative assets.
Best For: Seasoned investors looking for diversification and higher risk-reward ratios and qualify as an accredited investor.
Luxury Goods: When Opulence Equals Investment
Luxury goods are not only symbols of status and opulence but can also solidify your investment game. High-end watches, designer handbags, and exclusive jewelry collections often see their value climb, defying the usual wear-and-tear depreciation.
They resonate with collectors and enthusiasts, transforming personal indulgence into a viable investment strategy.
Best For: Investors with a penchant for the finer things in life and enthusiasts looking to blend personal enjoyment with financial gain.
Secrets of the Antique Trade: Seeking Out Hidden
The antique trade is akin to a treasure hunt, where seasoned savvy meets the thrill of discovery. Unearthing hidden gems within flea markets, estate sales, and auction houses not only provides a historical connection but can also reveal investment diamonds in the rough.
Antiques carry the potential for significant bottom line appreciation due to factors like rarity, provenance, and desirability among collectors.
Like finding this antiquated nautical map at an estate sale and now listed for $7.5 million. 2
Best For: Collectors with a passion for history and an eye for value.
What If You Have A Depreciative Asset?
If you’re holding onto a depreciative asset, it’s like grasping a melting ice cube: time can whittle away its value.
Consider selling to repurpose the capital into something that appreciates, upgrading to a more efficient model, or simply using it fully before its value dips too low. Each depreciative asset requires a tailored strategy, balancing between cutting losses and extracting maximum utility.
It’s a strategic financial dance — knowing when to hold on and when to let go of depreciative assets can ensure they serve your bottom line more than they hurt it.
FAQs
Appreciating assets are financial powerhouses that grow your wealth over time. They combat inflation and can provide additional income streams.
By increasing in value, they enhance your net worth, creating a more robust financial foundation for your future endeavors.
Appreciating assets are typically categorized based on their nature and the way they generate value. Common categories include tangible assets like real estate and collectibles, financial assets like stocks and bonds, and intangible assets like patents and copyrights.
The assets that don’t often depreciate include real estate, precious metals like gold and silver, and certain collectibles such as fine art or vintage cars. These assets maintain value or appreciate over time, resistant to the typical wear and tear or technological obsolescence that affects other assets.
Which Asset that Has Appreciation in Value Interests You
In conclusion, adding appreciating assets to your portfolio is a strategic move towards achieving financial security and building long-term wealth.
These assets combat inflation by potentially increasing in value over time, providing an opportunity to earn returns that exceed the average inflation rate.
However, these assets are not considered to be part of your liquid net worth. With all appreciating assets, you must consider the potential taxes on your various investments.
To facilitate this wealth-building strategy, it’s vital to practice saving diligently—consider automating your savings, cutting unnecessary expenses, and increasing income streams. By consistently setting aside funds, you can gradually invest in diverse appreciating assets such as stocks, real estate, or retirement accounts.
This is how you start forming a life consistent with financial freedom.
Source
Barrons. “Rare Portrait of George Washington Could Fetch $2.5 Million at Auction.” https://www.barrons.com/articles/rare-portrait-of-george-washington-could-fetch-2-5-million-at-auction-e2f19134. Accessed February 20, 2024.
Los Angeles Times. “A $7.5-million find: Overlooked Getty estate sale map turns out to be 14th century treasure.” https://www.latimes.com/california/story/2023-10-25/map-dealer-discovers-14th-century-portolan-chart-getty-estate-sale. Accessed February 20, 2024.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
With the electric car industry growing and electric vehicle (EV) sticker prices coming down, you may be asking yourself if it’s the right time to go all-electric. Add to that government tax incentives and states like California committing to zero-emissions vehicles by 2035, and it seems like electric is the way to go. This decision isn’t that easy, as you want to make sure you pick the right car for your needs and budget. Here’s how electric vs. gas cars stack up.
How do electric vs. gas cars function?
Before getting into the full comparison, you’ll want to make sure you understand the basic mechanical differences between electric and gas cars. Here’s a simplified version:
Electric cars have no tailpipe because there are no gas emissions. These cars use alternating electric currents, which are electrical currents that move in many directions, to power the vehicle. The car converts direct electrical currents (electricity that only moves in one direction) from the battery to alternating currents using an inverter and induction motor. Then, the induction motor turns the currents into a magnetic field that moves the wheels. Unlike gas cars that have multispeed transmissions, electric cars have a single-speed transmission that sends the power from the motor to the wheels, which causes them to turn. This means there’s only one gear in an electric car in addition to reverse and park.
On the flip side, gas cars use an internal combustion engine to make the car move. Here’s how it works: The engine pulls a combination of gas and air into the engine’s piston, the piston then compresses the mixture and an electrical spark ignites the mixture. The energy from the combustion forces the piston to the bottom of the engine cylinder and the connecting rod at the bottom of the cylinder transfers the energy to the crankshaft, which rotates the wheels. Then, the piston returns to the top of the cylinder, pushing out exhaust from the combustion mixture and releasing the exhaust through the tailpipe. Gas cars use multiple engine cylinders. Oil is used to lubricate the parts, and coolant along with a radiator are used to keep the engine from overheating.
Now that you have a general idea of the different functionalities, let’s get into the full electric cars vs. gas cars comparison.
Electric vs. gas car costs
The cost of owning a vehicle is more than just its sticker price; you’ll also need to factor in long-term expenses like repairs, maintenance, fuel and whether you can offset expenses with tax credits. Here’s how gas and electric vehicles compare:
Upfront costs
On average, electric cars are more expensive to buy than gas vehicles. According to automotive data company Kelley Blue Book, $55,353 was the average price paid for new electric cars in January 2024. For comparison, Kelley Blue Book reported $47,401 as the average price of a new gas car in January 2024 — that’s $7,952 less than a new electric car. But EV prices have been coming down steadily, and the price gap between electric and gas cars continues to narrow. For example, new electric cars cost $66,645 in July 2022 while the average price of a new gas car in July 2022 was $48,182, according to Kelley Blue Book.
When you look at the least expensive vehicles in each category, however, the price difference still feels pretty dramatic. Some new EV models now have starting prices under $30,000, which is substantially higher than the sticker price of the cheapest available new gas cars, a few of which start at under $20,000. Additionally, if you opt for a Level-2 home charger for faster charging, the charger itself will run you $500-$1,000. Its professional installation can add as much as $2,000 to your upfront expense, although your state or electric company may offer incentives to offset that cost.
Winner: Gas cars win for upfront cost.
Fueling/charging costs
Driving a gas vehicle means you’re subject to the fluctuating price of gasoline, which on average, ranged between about $3.25 and $3.95 in 2023. Because electricity tends to be cheaper than gas — and electric vehicles tend to be about three times more efficient than gas vehicles, according to the U.S. Department of Energy — opting for an electric vehicle could offer big savings in fueling/charging costs
. In fact, driving an electric vehicle instead of a similar gas model over 15 years could save motorists as much as $14,500, as discovered by the U.S. Department of Energy’s National Renewable Energy Laboratory and Idaho National Laboratory.
On a yearly basis, charging an electric vehicle could cost as much as almost 50% to 60% less than going to the gas pump, provided most of that charging is done at home. If you frequently use public charging stations, like Electrify America, costs could begin to approach the price of going to the gas pump.
Winner: Electric cars win for fueling/charging costs.
Maintenance and repair costs
As previously noted, electric cars have simple mechanics compared to gas cars, with fewer fluids to change and fewer parts to replace. Their electrical systems themselves don’t require much maintenance either. This means you should expect to spend less on maintenance and repairs for an EV than you would with a gas car. Even an EV battery, which is expensive to replace, is expected to last 12 to 15 years.
Because of these factors, maintaining an electric vehicle may be as much as a third less expensive than maintaining a gas vehicle over the first five years — and as much as one-half less expensive overall. Over 15 years, an average American driver of an EV might spend as much as $8,000 less on maintenance overall than a driver of a comparable gas model.
Keep in mind that opting for an EV doesn’t mean that you won’t need any routine maintenance at all. Among other things, you’ll still need to maintain your tires, headlamps, wiper blades and brakes (although regenerative braking reduces wear and tear). In fact, EVs often require new tires more often because of the regenerative braking as well as the weight of the vehicle.
On the flip side, gas cars require quite a bit of maintenance, including regular oil changes, routine maintenance (rotate tires, replace air filter, etc.) and special service when the mileage gets to a certain amount.
Both electric and gas cars also have as-needed costs, meaning you’ll have to replace or repair problems as they arise.
Winner: Electric cars win for maintenance and repair costs.
Tax credits
Receiving a substantial tax credit for your new car can go a long way toward relieving the burden of its sticker price. Certain new all-electric vehicles (and some plug-in hybrids) now qualify for a federal tax credit as high as $7,500.
Be aware, however, that these tax credits are not offered for the purchase of any gas vehicles.
Winner: Electric cars win for tax credits.
Environmental concerns
Although cost is usually the biggest factor in deciding what car someone buys, environmental concerns can also play a factor. Here’s how electric and gas cars compare.
Emissions and efficiency
Electric cars are generally more efficient than gas vehicles, converting over 77% of electrical energy received from the grid into operating power at the wheels, according to the U.S. Department of Energy
. Traditional gas vehicles, on the other hand, only convert between 12% and 30% of the energy stored as gasoline into power at the wheels. Be aware that the individual emissions and efficiency of any electric cars you drive will vary, depending on where you live, the vehicle you purchase and how your electricity is sourced.
In terms of emissions, electric cars also tend to be kinder to the planet. The average EV sold in the U.S. produces the equivalent emissions of a theoretical gas car that gets 91 mpg. In fact, in all U.S. locations, the average electric car produces less emissions than the average gas car.
It may seem surprising that electric cars produce any emissions at all, since they have no tailpipe emissions. Instead, electric car emissions are calculated from two other sources: the processing and materials used in their manufacturing, and the electricity used to charge these vehicles.
The one hiccup with electric car emissions is battery recycling, or what happens to the battery when it dies. Battery recycling is in its infancy. While the current process can’t keep up with future EV demand, we will likely see some major developments in the coming years.
Winner: Electric cars win for environmental concerns.
Convenience
Electric cars come with higher upfront costs and lower maintenance costs, are there any trade-offs with convenience? Here’s how the two compare in some daily driving areas:
Charging/filling up
When it comes to gas cars, most drivers don’t worry much about range. After all, the infrastructure is well-established and gas stations are easy to find almost everywhere. In addition, gas cars can go an average of about 400 miles on a tank.
Drivers may be reluctant to purchase an electric car because of “range anxiety” — the worry of getting stranded somewhere with nowhere to charge up. However, although the EV charging station infrastructure isn’t as developed as it is for gasoline fill-ups, it’s been growing. More workplaces are making outlets available to their employees (and visitors), or installing Level 2 charging units, according to the U.S. Department of Energy
. And the US. Department of Energy reports there are now more than 72,000 public charging stations across the country — some of which are DC Fast Charge units.
Depending on the type of driving you do and where you live, the availability of public charging stations may not turn out to be that much of an issue. The majority of available electric cars can go between 110 and 300 miles before needing to charge up, and it’s not unusual for an electric car to have a range of 200 to 300 miles. Use this locator tool to find out if there are public charging stations in your local area — or in distant locations where you plan to drive your electric vehicle — before buying an EV.
Beyond charging or gas station availability, something else to be aware of is the time it takes to charge or fuel up. It can take 5 to 10 minutes to fill a gas tank, while electric cars take up to 12 hours with a Level 2 charger and 30-45 minutes with a Level 3 charger (like one you’d find at a public charging station).
Winner: Gas cars win for charging/filling up convenience.
Towing
Both gas and electric vehicles can be used for towing, however towing a heavy load will decrease efficiency in both cases.
For gas vehicles, how much your miles per gallon diminishes depends on how much weight you’re towing, as well as the increased wind resistance. In general, the heavier your load, the worse your gas mileage will be.
Electric cars also suffer decreased range when towing heavy loads. That range reduction was shown to be dramatic in recent tests performed by Consumer Reports, with EVs consistently performing below the estimated reduced range for a tow. Because public charging stations aren’t as plentiful as gas stations yet and because charging takes more time than gassing up, EVs may not be practical for long-distance towing, although they may be well-suited to short-distance tows.
Winner: Gas cars win for towing.
Availability
Visit any new car dealer and you’ll find a wide variety of gas vehicles to choose from. Buying a new electric car isn’t always so easy. Demand for environmentally friendly electric cars is rising faster than dealerships have been able to keep up. In fact, a 2023 Sierra Club study found that 66% of American car dealers didn’t have a single electric car (or plug-in hybrid) for sale. Additionally, some dealerships didn’t want to carry electric vehicles, with 45% of the dealers in the study who didn’t have available electric cars stating that they wouldn’t choose to offer them. In such instances, you’d have to find a dealer with electric cars in stock or order one directly from the carmaker.
Winner: Gas cars win for availability.
Closing thoughts
Both gas and electric cars come with their own set of advantages and disadvantages. EVs are the clear winner environmentally, as well as for fuel efficiency, maintenance costs and tax incentives. However, electric car range is very strongly affected during towing, charging takes longer than gassing up and it can be difficult to find new EVs at dealerships. Gas vehicles come out on top when it comes to sticker price, range, long-distance towing and fueling convenience while lacking in fuel efficiency, maintenance costs and environmental impacts. Ultimately, you should choose the vehicle that best fits your budget and lifestyle.
Earning returns can be exhilarating. But it’s important to remember that they don’t necessarily represent the money that goes in the bank. Commissions, taxes, and other fees impact the returns any investor makes on their investment.
Just how big a bite these investment expenses take out of an investor’s assets isn’t always instantly clear. But by understanding the fees they pay, and the taxes they’re likely to owe, investors can better plan for the money they’ll actually receive from their investments. And they can also take concrete steps to minimize the effects of fees and taxes.
Investment Expenses 101
There are a few different types of investment expenses an investor may come across as they buy and sell assets. Here are the most common ones.
Fund Fees
Mutual funds are a very popular way for investors to get into the market. They’re the vehicles that most 401(k), 403(b), and IRAs offer investors to save for retirement. But these funds charge fees, starting with a management fee, which pays the fund’s staff to buy and trade investments.
Investors pay this fee as a portion of their assets, whether the investments go up or down. (With employer-sponsored retirement accounts, the employer may cover the fees as long as the account holder is employed by the company.) Management fees vary widely, with some index funds charging as little as .10% of an investor’s assets. But other mutual funds may charge more than 2%.
In addition to the management fee, the fund may also charge for advertising and promotion expenses, known as the 12b-1 fee. Plus, mutual fund investors may have to pay sales charges, especially if they buy funds through a financial planner, or an investment advisor. While the maximum legal sales charge for a mutual fund is 8.5%, the common range is between 3% and 6%.
One way to understand how much of a bite these mutual fund fees take out of an investment on an annual basis is to look at the expense ratio. 💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
Advisor Fees
Investors may also face fees when they hire a professional to help manage their money. Some advisors charge a percentage of invested assets per year. More recently, some advisors have simplified the cost by simply charging an hourly fee.
Broker Fees and Commissions
Even investors who want to manage their own portfolios typically pay a broker for their services in the form of fees and commissions. These fees and commissions may be based on a percentage of the transaction’s value, or they may be rolled into a flat fee. Another factor that may influence the fee: whether an investor uses a full-service broker or a discount broker.
How to Minimize the Cost of Investing
No matter how an investor approaches the market, they can expect to pay some fees. It’s up to each individual to decide whether or not those fees are worth it. For some, paying a professional for hands-on advice is worth the extra annual 1% fee (or more) of their invested assets. For others, minimizing costs may be a priority. Among many options, there are a few investing opportunities that stand out as relatively low-cost.
Index Funds
When investing in mutual funds, one type of fund has established itself as the least expensive in terms of fees: Index funds. That’s because these funds track an index instead of paying analysts and managers to research and trade securities. When it comes to index funds vs. managed funds, proponents typically cite the lower fees.
Automated Investing Platforms
People seeking investing advice or guidance who don’t want to pay typical fees might want to explore automated investing platforms, also known as “robo-advisors.” Some of these platforms charge annual advisory fees as low as .25%. That said, these platforms often use mutual funds, which charge their own fees on top of the platform fees.
Discount Brokerage
Investors who manage their own portfolio may opt for a discount or online brokerage. These brokers tend to charge flat fees per trade as low as $5, with account maintenance fees also often as low as $0 to $50 per account.
How Taxes Eat into Investing Profits
There are typically two kinds of taxes that investors have to worry about. The first is income tax, and the second is capital gains tax. In general, income taxes apply to investment earnings in the form of interest payments, dividends, or bond yields. Capital gains, on the other hand, apply to the returns an investor realizes when they sell a stock, bond, or other investment. (The exception: The IRS taxes short-term investments, which an investor has held for less than a year, at that investor’s marginal income tax rate.)
By and large, capital gains tax rates are lower than income tax rates. Income tax rates for high-earners can be as high as 37%, plus a 3.8% net investment income tax (NIIT). That means the taxes on those quick gains can be as high as 40.8%—and that’s not including any state or local taxes.
The taxes on long-term capital gains are lower across the board. For tax year 2023, for investors who are married filing jointly and earning less than $89,250, the capital gains tax rate is 0%. It goes up depending on income, with couples making between $89,250 and $553,850 paying 15%, and those with income above that level paying 20%.
For tax year 2024, those who are married and filing jointly with taxable income up to $94,050 have a capital gains tax rate of 0%. Couples making between $94,050 and $583,750 have a rate of 15%, and those with income above that have a tax rate of 20%. 💡 Quick Tip: Automated investing can be a smart choice for those who want to invest but may not have the knowledge or time to do so. An automated investing platform can offer portfolio options that may suit your risk tolerance and goals (but investors have little or no say over the individual securities in the portfolio).
Strategies to Minimize Taxes
There are a few ways an investor can minimize the impact of taxes on their investments. One popular way to take advantage of the tax code is by investing through a retirement plan, such as a 401(k), 403(b), or IRA. All of these plans encourage people to save for retirement by offering attractive tax breaks.
For tax-deferred accounts like a 401(k) or traditional IRA, the tax break comes on the front end. Retirees will have to pay income taxes on their withdrawals in retirement. On the other hand, retirement accounts like a Roth 401(k) or Roth IRA are funded with after-tax dollars, and money is not taxed upon withdrawal in retirement.
Another approach some investors may want to consider is tax-loss harvesting. This strategy allows investors to take advantage of investments that lost money by selling them and taking a capital loss (as opposed to a capital gain). That capital loss can help investors reduce their annual tax bill. It may be used to offset as much as $3,000 in non-investment income.
The Takeaway
Fees and taxes typically do have an impact on an investor’s returns on investments. How much they eat into profit varies, and is largely dependent on what the investments are, how they are being managed, and how long an investor has had them. Other factors include the investor’s income level, and whether they’ve also lost money on other investments.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Invest with as little as $5 with a SoFi Active Investing account.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
Fund Fees If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.
Mutual funds and index funds are similar in many ways, but there are some key differences that investors need to understand to effectively implement them into an investment strategy. Those differences might include investing style, associated fees and taxes, and how they work.
The choice between an index fund and an actively managed mutual fund can be a hard one, especially for investors who are unsure of the distinction. The differences between index funds and other mutual funds are actually few — but may be important, depending on the investor.
What’s the Difference between Index Funds and Mutual Funds?
Index funds and mutual funds are similar in many ways, but they do differ in some others, such as how they work, associated costs, and investment style. 💡 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.
How They Work
Index funds are a type of mutual fund, interestingly enough. Index funds are distinguished by their investing approach: Index funds invest in an index, and only change the securities they hold when the index changes, or to realign their holdings to better match the index they invest in.
Rather than rely on a portfolio manager’s instincts and experience, an index fund tracks a particular index. There are benchmark indexes across all of the different asset classes, including stocks, bonds, currencies, and commodities. As an example, the S&P 500® Index tracks the stocks of 500 of the leading companies in the United States.
An index fund aims to mirror the performance of a given benchmark index by investing in the same companies with similar weights. With these funds, it’s not about beating the market, it’s about tracking it, and as such, index funds typically follow a passive investment strategy, known as a buy-and-hold strategy.
A mutual fund is an investment that holds a collection — or portfolio — of securities, such as stocks and bonds. The “mutual” part of the name has to do with the structure of the fund, in that all of its investors mutually combine their funds in this one shared portfolio.
Mutual funds are also called ’40 Act funds, as they were created in 1940 by an act of Congress that was designed to correct some of the investment abuses that led to the Stock Market Crash of 1929. It created a regulatory framework for offering and maintaining mutual funds, including requirements for filings, service charges, financial disclosures, and the fiduciary duties of investment companies.
To get people to invest, the portfolio managers of a given mutual fund offer a unique investment perspective or strategy. That could mean investing in tech stocks, or only investing in the fund manager’s five best ideas, or investing in a few thousand stocks at once, or only in gold-mining stocks, and so on.
[embedded content]
Fees and Taxes
There may be different associated costs with index funds and mutual funds as well.
Mutual-fund managers generally charge investors a management fee, which comes from the assets of the fund. Those fees vary widely, but an active manager will generally charge more, as they have to pay the salaries of analysts, researchers, and the stock pickers themselves. Passive managers of index funds, on the other hand, simply have to pay to license the use of an index.
An actively-managed mutual fund may charge an expense ratio (which includes the management fee) of 0.5% to 0.75%, and sometimes as high as 1.5%. But for index funds, that expense ratio is typically much lower — often around 0.2%, and as low as 0.02% for some funds.
Investing Style
The two also differ on a basic level in that index funds are a passive investing vehicle and mutual funds are typically actively managed. That means that investors who want to take a hands-off approach may find index funds a more suitable choice, whereas investors who want a guiding hand in their portfolio may be more attracted to mutual funds.
Mutual Funds vs. Index Funds: Key Differences
Mutual Funds
Index Funds
Overseen by a fund manager
Track a market index
May have higher associated costs
Typically has lower associated costs
Active investing
Passive investing
Index vs Mutual Fund: Which is Best for You?
There’s no telling whether an index or mutual fund is better for you — it’ll depend on specific factors relevant to your specific situation and goals.
When deciding how to invest, everyone has their own unique approach. If an investor believes in the expertise and human touch of a fund manager or team of professionals, then an actively managed fund like a mutual fund may be the right fit. While no one beats the market every year, some funds can potentially outperform the broader market for long stretches.
But for those individuals who want to invest in the markets and not think about it, then the broad exposure — and lower fees — offered by index funds may make more sense. Investing in index funds tends to work best when you hold your money in the funds for a longer period of time, or use a dollar-cost-average strategy, where you invest consistently over time to take advantage of both high and low points. 💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
The Takeaway
Index funds and mutual funds are similar investment vehicles, but there are some key differences which include how they’re managed, costs associated with them, and how they function at a granular level.
The choice between index funds and other mutual funds is one with decades of debate behind it. For individuals who prefer the expertise of a hands-on professional or team buying and selling assets within the fund, a mutual fund may be preferred. For investors who’d rather their fund passively track an index — without worrying about “beating the market” — an index fund might be the way to go.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
Do index funds outperform mutual funds?
Actively-managed funds, such as mutual funds, tend to underperform the market as a whole over time. That’s to say that most of the time, a broad index fund may be more likely to outperform a mutual fund.
Do people prefer index funds over mutual funds, or mutual funds over index funds?
The types of funds that investors prefer to invest in depends completely on their own financial situation and investment goals. But some investors may prefer index funds over mutual funds due to their hands-off, passive approach and lower associated costs.
Are mutual funds riskier than index funds?
Mutual funds may be riskier than index funds, but it depends on the specific funds being compared — mutual funds do tend to be more expensive than index funds, and tend to underperform the market at large, too.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
I don’t usually dive into odd niche topics like this, but I just spent 12 hours car shopping over the weekend. That’s a lot of test drives and awkward conversations with over-enthusiastic salespeople. Sorry, Clayton, I can’t picture myself driving this car off the lot today…why do you ask?
Long story short, I’ve compared tons of cars recently. Hybrids, as you might know, are always more expensive than their all-gas counterparts. But…aren’t hybrids cheaper to operate? Which means…could they save us money in the long run?! This got my finance brain whirring to life.
I wrote an article in 2020 and updated it in 2023 that covers the real, total cost of car ownership. The cost of car ownership can be broken down into 6 main categories:
Purchase/Depreciation
Financing
Maintenance and Repair
Fuel
Registration/Inspection
Insurance
Financing rates, registration costs, and inspection costs are universal for all cars. There’s no difference between a traditional gas car and a hybrid on those axes.
But we know (or at least suspect) purchase costs, maintenance, fuel, and insurance costs will vary between hybrids and all-gas cars.
A Bird in the Hand…
Aesop wrote in 600 BC that “a bird in the hand is worth two in the bush.” Or, in modern terms, “I’d rather have a dollar in my hand today than two dollars in 20 years.”
Money today is worth more than money in the future. This is called discounting. And we’ve used this idea before to analyze mortgage costs.
We’re faced with a similar problem today.
When we buy a hybrid car, we spend more on the purchase price today. But, ostensibly, we save operating costs each year we own the vehicle. However, those future savings are worth less than the extra dollars spent today.
Do we save enough on long-term operating costs to compensate for the differences in sticker price and depreciation? That’s the question!
To answer it, we need to:
Understand the differences in costs between gas cars and hybrids (sticker cost, depreciation, fuel costs, insurance costs, maintenance costs).
Determine an appropriate discount rate for this analysis and apply it.
An Appropriate Discount Rate
As of 2022, the average age of all cars on American roads is 12.5 years. That said, the average car owner has their vehicle for 8 years before (most often) selling it or (less often) it breaks down completely.
Therefore, a happy medium duration for today’s analysis is 10 years. We’re going to look at the differences between hybrids and gas cars over a 10-year life.
How much less valuable is a dollar in 2034 than a dollar today?
Warren Buffett uses U.S. Treasury bond rates as his discount rate. I’m inclined to agree with him. It’s “the risk-free rate.” In any analysis, we can ask ourselves, “Would I rather pursue [this risky option], or simply invest my money in U.S. Treasury bonds for a decade or two?” Good enough for Warren, good enough for me.
As of February 2024, the 10-year Treasury rate is 4.3%. The table below shows how to apply that discount rate to future savings.
Example: I could take $74.47 today, invest it in a 4.3% annual interest bond, and I’d have $100.00 in seven years. Thus, if a hybrid car saves me $100 in 2031, it’s precisely the same as having $74.47 in my pocket today in 2024. A bird in the hand…
How Much Does a Hybrid Save Us?
We need an example of two cars to analyze. Since Kelly and I are currently active car market participants (we’re soon to have a “Baby on Board”…by the way, what’s the deal with those stickers?), I’ve been researching the Kia Sorento. Let’s dig into the details of the all-gas Sorento vs. the hybrid Sorento.
All these details I’m about to share with you are shown mathematically in this spreadsheet. Please feel free to make a copy and play around yourself.
To make a copy of a Google Sheet: File –> Make a Copy
Sticker Price and Depreciation Rate
The gas Sorento starts at $31,990. The hybrid Sorento starts at $36,990.
According to iSeeCars, both vehicles will depreciate 53% in their first 5 years.
Gas Expenses
To calculate estimated gas expenses, we need to understand:
how far we drive
our miles-per-gallon efficiency of the cars
and the cost of gas
Depending on your source, the average American drives between 13,000 and 15,000 miles per year. We’ll use 14,000 miles per year for this article.
The Kia Sorento hybrid gets 35 miles per gallon (we’re looking at the all-wheel drive model, thanks to snowy Rochester winters). The all-gas Sorento gets 24 miles per gallon.
Average American gas prices are currently $3.27 per gallon.
We combine those numbers to find out:
The Sorento Hybrid incurs $1308 of gas expenses per year.
The all-gas Sorento incurs $1907 of gas expenses per year
Insurance Costs
The average “full coverage” auto policy costs $2000. Your miles may vary (#carjoke).
Insurance is very personal in that nature. Your driving history and desired coverage level significantly affect the insurance premium.
Nevertheless, we’ll use $2000 per year for the all-gas Sorento. Hybrid insurance costs, on average, 7% more than all-gas models; the Sorento Hybrid will cost $2140 per year.
Maintenance
Most sources cite that hybrid maintenance costs are lower than all-gas engines, as hybrids use regenerative braking (fewer brake replacements), don’t use alternators or starters, and tend to have simpler transmissions.
Unfortunately, I cannot find any sources that provide hard numbers to support this claim! If you find something, please let me know.
Therefore, I’m using an average figure of $600 per year for repairs and maintenance and biasing those dollars towards the end of the cars’ lives. Newer cars break down less and are covered by various levels of warranty.
All-In Costs: Hybrid vs. All Gas
Over our 10-year analysis period, the Kia Sorento Hybrid would cost us $55,662(depreciation + gas + insurance + maintenance), as measured in 2024 dollars.
The all-gas model would cost us $56,491.
Pretty darn close, but it’s a slight nod to the hybrid model. Category-by-category, the results are:
The hybrid costs $3000 more in depreciation costs.
The hybrid saves $4997 in gasoline costs.
The hybrid costs $1167 more in insurance.
And while I’m focusing only on dollars and cents here, there’s an environmental argument too. I won’t dive into the details. But you should probably place a value on environmental costs and benefits (albeit a difficult value to define in dollars and cents).
Of course, this is a perfect example of “average pilot syndrome.” Averages are useful in theory but rarely in practice. You must re-run this analysis for your unique scenario. The first questions that come to mind are:
Which specific model are you looking into? It might not be the Kia Sorento.
What are the miles per gallon ratios of the all-gas and hybrid models?
What are insurance rates like? Not only for your preferred car, but for you?
What are the typical maintenance costs of your desired car?
How does your car depreciate over time?
Should you adjust the discount rate? (PS – you can play around with the spreadsheet yourself, and you’ll see that the discount rate does not change the outcome significantly in this case.)
Was It Worth It?
We’ve covered a lot of conjecture and “what if” questions, made some assumptions, and created a spreadsheet. Is it all worth it?
First, I think I’m directionally accurate. Will the real world play out as I’ve modeled here? Of course not. For all I know, an asteroid will blast our car into smithereens on its first night in the garage (it’ll be a new kind of hybrid; half shrapnel, half vapor). But I think I have a better factual understanding now than I did before. I hope you agree.
This was ~2 hours of work (mainly on the writing, not the math) to optimize an $800 decision. And because I’ve discounted those future dollars, that’s $800 as measured today. Not bad! For some hybrids, this is likely to be a multi-thousand dollar difference. Nice!
Time to unplug, fill up, and peel out.
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
Want to learn more about The Best Interest’s back story? Read here.
Looking for a great personal finance book, podcast, or other recommendation? Check out my favorites.
Was this post worth sharing? Click the buttons below to share!
Precious metals have captured the attention of investors for centuries, not only for their alluring beauty but also for their potential as a valuable asset. Whether you’re intrigued by the gleam of gold, the sheen of silver, or the rarity of metals like platinum and palladium, the world of precious metals investing offers a diverse and captivating landscape to explore.
While investing in precious metals may seem intimidating at first, understanding the basics can help you make informed decisions about your investment strategy. From the different types of precious metals available to the various investment vehicles and strategies, this beginner’s guide will provide you with a solid foundation to begin exploring this captivating investment opportunity.
Precious metals have held an allure for thousands of years, treasured not only for their beauty but for their unique physical properties. The high economic value of these metals, coupled with their distinct characteristics, makes them essential in various sectors, including the jewelry industry, electronics, industrial products, and the computer industry.
Gold
Gold is perhaps the most well-known precious metal, treasured by civilizations across history for its malleability, beauty, and resistance to tarnish. Today, gold is not only used in jewelry but also in electronics and other industrial applications due to its excellent conductivity.
Silver
Silver, while less expensive than gold, is highly valued for its unique properties. It has the highest electrical and thermal conductivity of all the elements, making it indispensable in the electronics industry. Silver is also used in solar panels, batteries, and various industrial applications.
Platinum and Palladium
These are part of the platinum group metals, prized for their exceptional resistance to heat, chemical attack, and electrical erosion. They are used extensively in the automotive industry, jewelry making, and numerous industrial applications.
Investing in precious metals provides several potential benefits, making them an enticing addition to any personal finance strategy.
Hedge against Inflation: Precious metals, particularly gold, have been used as a hedge against inflation for centuries. When fiat currencies are losing value due to inflation, gold prices often rise, preserving the purchasing power of the investor’s capital.
Wealth preservation: Precious metals, being tangible assets, have been used for wealth preservation across history. Unlike paper money, physical gold or silver cannot be devalued by government actions or economic downturns, making them a valuable asset in times of economic uncertainty.
Market volatility buffer: Precious metals often move counter to the stock market, making them an ideal investment for mitigating risk during times of turbulence.
Investing in precious metals can provide balance to your portfolio, potentially offering protection and positive performance during periods of economic stress.
There’s more to investing in precious metals than buying gold bars or silver coins. Here are some of the ways you can add precious metals to your portfolio:
Physical Bullion
Physical bullion includes gold and silver coins, bars, and rounds. When you buy physical precious metals, you’re making a direct investment and gaining ownership of a tangible asset. This option appeals to many investors who appreciate the security of holding their wealth in a physical form that has intrinsic value.
However, owning physical metals comes with considerations such as storage and insurance costs. You’ll need to secure your investment either in a home safe or a deposit box at a bank or private facility, each option with its advantages and disadvantages.
Precious Metal ETFs and Mutual Funds
Precious metal exchange-traded funds (ETFs) and mutual funds offer a way to gain exposure to the precious metals market without the need to physically store the metals. These funds typically track the price of a specific metal or a group of metals.
Mining Stocks
By buying shares in a mining company, you’re investing in the operation that extracts the precious metals from the ground. Mining stocks can offer higher potential returns than investing in physical metals or metal-tracking funds, but they also come with greater risk.
These risks include operational risks at the mining site, geopolitical risks in the countries where mines are located, and market risks related to fluctuations in the prices of the underlying metals.
Futures Contracts and Other Financial Instruments
Futures contracts allow you to buy or sell a specific amount of a precious metal at a predetermined price at a set date in the future. These instruments can be used to hedge against price fluctuations or to speculate on future price movements.
Other financial instruments, such as options and certificates, can also be used to invest in precious metals, but these can be complex and are typically recommended for more experienced investors.
Buying and Storing Precious Metals
When it comes to buying precious metals, the process can be as simple as visiting a local coin shop or making a purchase online. However, there are several key factors to consider:
Choosing a Dealer
Reputation is critical when choosing a dealer for your precious metals purchase. Look for businesses with a long track record, positive customer reviews, and a commitment to transparency in their pricing. Keep in mind that while precious metals themselves are not subject to counterfeiting, the products made from them can be, so it’s essential to buy from reputable sources.
Understanding Premiums Over Spot Price
When you buy precious metals, you’ll often pay more than the current market price, or “spot price,” of the metal. This difference is known as the “premium” and covers the dealer’s expenses and profit margin. Premiums can vary depending on the product; for example, a gold bullion coin may have a higher premium than a gold bullion bar of the same weight due to the additional cost of minting the coin.
Buying Process
Depending on the dealer, the buying process may involve placing your order online or over the phone, followed by payment through bank transfer, check, or credit card. Be aware that using a credit card may involve additional fees. After payment, the dealer will ship your precious metals to you, with the shipping method and insurance coverage varying by dealer.
Storage Options
If you’re investing in physical precious metals, you’ll need to consider where to store them. At home, a high-quality safe can provide protection, but it may also make your home a target for thieves. Storing your precious metals in a bank deposit box provides an extra level of security, though access to your metals is limited to the bank’s hours, and the contents of the box may not be insured by the bank.
Private storage facilities, sometimes called private vaults or depositories, offer another option. These facilities offer high-security storage for precious metals, often with 24/7 monitoring, insurance coverage, and the option to visit and inspect your holdings.
Selling Precious Metals
Knowing when and how to sell your precious metals is just as important as knowing how to buy them. Here are a few points to keep in mind:
Timing Your Sale
While there are many theories about the best time to sell precious metals, the reality is that the optimal timing depends on your individual circumstances and financial goals. It can be helpful to set a target price or return percentage at which you’ll sell your metals and to review this strategy regularly based on market conditions and your financial situation.
Finding a Buyer
Most precious metals dealers also buy metals, and selling to a dealer can be a convenient option, particularly if you’re selling a common product like a gold coin. However, dealers will typically offer to buy your metals at below the spot price, as they need to account for their costs and a profit margin when they resell the metals.
Online marketplaces and auction sites can offer another way to sell your metals, potentially allowing you to reach a larger pool of buyers and secure a higher price. However, these platforms also involve fees and potentially longer transaction times.
Tax Implications
In many jurisdictions, selling precious metals can trigger capital gains tax implications. The tax treatment can depend on several factors, including the type of metal, the form of the metal (coin, bar, etc.), how long you’ve held the metal, and your total gain or loss on the sale. It’s essential to consult with a tax professional to understand the potential tax implications of your sale.
Risks and Challenges in Precious Metal Investment
While investing in precious metals can offer several benefits, it also comes with its own unique risks:
Price volatility: Like other commodities, precious metals can experience significant price fluctuations. While these fluctuations can offer the potential for high returns, they can also lead to substantial losses.
Lack of cash flow: Unlike stocks that may pay dividends or bonds that pay interest, precious metals do not generate cash flow. Any return on your investment will come from selling the metal at a higher price than you paid for it.
Storage and insurance costs: If you choose to invest in physical precious metals, you’ll need to consider the costs of storing and insuring your metals. These costs can eat into your returns, particularly if you’re investing a small amount.
Counterfeit products: Although it’s rare, there is a risk of counterfeit products in the precious metals market. This risk can be mitigated by purchasing from reputable dealers and having your metals tested by a professional if you’re unsure of their authenticity.
Despite these challenges, many investors find that the potential benefits of investing in precious metals make them a valuable addition to a diversified investment portfolio.
Precious Metals in Portfolio Diversification
Precious metals can play a key role in a diversified investment portfolio. Their tendency to move independently of other asset classes can provide a buffer against market volatility. While the percentage of precious metals in a portfolio can vary greatly depending on individual investment objectives and risk tolerance, some financial advisors suggest an allocation of between 5-15% towards precious metals.
It’s important to remember that diversification does not ensure a profit or protect against a loss, and past performance of precious metals is not indicative of future results. It’s always a good idea to consult with a financial advisor to help determine the most appropriate asset allocation for your individual circumstances.
Precious Metals and Global Industry
The demand for precious metals extends beyond individual investors and central banks. These metals play a crucial role in various industries globally.
Gold, for instance, is highly valued in the electronics industry for its excellent conductivity and resistance to tarnish. Silver’s unique properties make it indispensable in the production of solar panels, batteries, and various industrial applications. Platinum and palladium are critical in the automotive industry for their use in catalytic converters, helping to reduce harmful emissions.
As technological advancements continue, the industrial demand for precious metals may potentially increase, influencing market prices.
Precious Metals and Retirement
Precious metals can also play a role in retirement planning. Certain types of Individual Retirement Accounts (IRAs) allow for the inclusion of physical precious metals, known as “Gold IRAs” or “Precious Metals IRAs.”
These IRAs can provide a way to gain the potential benefits of precious metals while enjoying the tax advantages of an IRA. However, there are specific rules and regulations regarding which precious metals can be included in these IRAs, and how they must be stored.
Before adding precious metals to a retirement account, it’s important to understand the potential risks and rewards and to consult with a financial advisor and a tax professional.
Final Thoughts
Investing in precious metals can be a valuable part of your overall financial strategy. As with any investment, it’s crucial to do your research, understand your investment objectives, and consider consulting with a financial advisor.
In the ever-evolving world of precious metals, continual learning and staying abreast of market trends is key. While no investment is risk-free, these rare metals, with their rich history and diverse industrial uses, offer unique opportunities for those willing to pursue their lustrous allure.
Whether it’s the glint of gold, the shine of silver, or the rarity of other metals like platinum and palladium, the precious metals market offers a fascinating way to diversify your portfolio. And they can potentially protect against volatile markets and inflation, and invest in a tangible asset with enduring value.
In the end, the choice to invest in precious metals is a personal one. It’s about understanding the market, acknowledging your risk tolerance, and aligning your investment strategy with your financial goals. The key to investing in anything successfully lies in knowledge, diversification, and patience.
No matter your interest rates or cash flow, your retirement account or your credit risk, the world of precious metal offers a robust platform for investment purposes. Remember, past performance is not indicative of future results, and every investment strategy comes with its own unique risks. But with careful planning and wise decision-making, you can make the most of what precious metals have to offer.
Whether you’re buying gold bars, investing in mining companies, tracking the gold industry, or just diversifying your portfolio with a valuable asset, there’s a place for you in the world of precious metals investing.
From gold coins to silver prices, from market volatility to economic uncertainty, the precious metals sector offers a world of opportunities. And as the world continues to evolve, so too will the role of precious metals in our lives and in our portfolios.
Investing in precious metals is not just about protecting against potential economic collapse, but also about participating in the growth and technological advancements of global industries. It’s about owning a piece of history, a tangible asset that has served as a symbol of wealth and power for thousands of years.
So, as you contemplate whether to invest in precious, remember the words of ancient Greek playwright Aristophanes, “Gold bestows honor, gold inspires deeds, gold characterizes the highest.” May your journey into investing in precious metals be a golden one.