Los Angeles Mayor Karen Bass’ homelessness team is looking to purchase a 15-story hotel in the city’s Westlake neighborhood, the latest big expenditure planned as part of her “Inside Safe” program.
In a memo sent to the council’s Budget, Finance and Innovation Committee, Bass and her team acknowledged they are seeking to acquire the 294-room Mayfair Hotel, which served for two years as interim homeless housing before closing its doors last summer. The building has been listed for nearly $70 million in recent months.
Bass and her team declined to say how much the city has offered, saying the price will be revealed when the transaction goes before the city’s municipal facilities committee next month. They said the hotel would serve as a critical tool in the city’s fight against homelessness, helping to reduce the leasing costs associated with Inside Safe, which has moved about 1,200 people off the street and into hotels, motels and other facilities.
If the city finalizes the purchase, the Mayfair would be a key part of the city’s effort to create “permanent interim housing” — city-owned residential buildings where homeless people can live for up to a year before finding their own apartments.
Under the proposal, the city would provide an array of services on the Mayfair’s ground floor — substance abuse counselors, mental health clinicians and public health workers, Bass said.
“There’s no shortcut to do this. You can warehouse people in a shelter if you want, and they’ll stay there for a couple of days and they’ll be right back out on the street,” Bass said. “We have to think outside of the box, and maybe a little bit outside of the boundaries of what the city is normally doing.”
A broker representing the Mayfair referred questions to Alex Moradi, an executive with the ICO Group of Companies. Moradi did not respond to several requests for comment.
However, Bass’ homelessness team confirmed that the city signed a nonbinding letter of intent with Mayfair Lofts, the hotel’s owner, three weeks ago. That company is affiliated with ICO, according to information provided by the county assessor’s office.
Bass has asked the council to allocate $250 million for Inside Safe, which has targeted encampments in Hollywood, Venice, South Los Angeles and other parts of the city, in next year’s budget. That figure does not include any money that would be needed to purchase the Mayfair. If the sale goes through, the cost of Inside Safe could exceed $300 million for the coming budget year.
Councilmember Katy Yaroslavsky, who serves on the council’s budget committee, endorsed the idea of purchasing hotels and motels, saying the city will need “thousands and thousands of units” to address its crisis.
Yaroslavsky said her office has tried repeatedly without success to lease hotels and motels in her affluent Westside district. But paying rent to motel owners is also “not a good long-term strategy,” she said.
“The logistics of trying to negotiate one-off [agreements] with hundreds of motel owners puts us in a bad bargaining position,” she said. “When we go one by one, we’re not optimizing our buying power.”
On Wednesday, Bass and Yaroslavsky went to the mayor’s 16th Inside Safe operation, located along a stretch of San Vicente Boulevard in L.A.’s Beverly Grove neighborhood, which is part of Yaroslavsky’s district. Nearly two dozen tents had taken hold on San Vicente’s median strips and other rights of way.
Jeremy Mosley, who had been living on one of those medians, said Wednesday he was ready to make the move. But he sounded unsure about relocating to a motel in South Los Angeles, more than a dozen miles away.
“I want to see what it’s like. Because this does look bad. I know it does,” he said, gesturing to the furniture, tarps and other possessions that occupied the median.
The mayor’s proposed homelessness budget for the coming year lists four separate line items for the acquisition of interim housing, which add up to $73 million. Bass’ team declined to say whether all or a portion of those funds would go toward the Mayfair.
Those funds are not included in the $250 million being requested for Inside Safe.
The Mayfair was the site of a $37-million renovation in 2018 and 2019, according to the property’s real estate listing. In 2020, it became one of several hotels across the city to participate in Project Roomkey, a federally funded program that moved homeless Angelenos off the streets as part of the nation’s response to the outbreak of COVID-19.
City leaders voted to end the Project Roomkey program last year. But several of the locations that participated in the program continue to serve as temporary housing for L.A.’s homeless population.
Last fall, the council voted to keep the Highland Gardens Hotel operating as temporary homeless housing at least through June 30. That facility, located in the Hollywood Hills, offers 72 rooms, or up to 143 beds.
City Administrative Officer Matt Szabo said the hotel will probably remain as interim homeless housing through 2025, at a cost of about $6 million per year. At that facility, leasing costs are about $4,550 per room per month, according to a report to the council. Once social services offered by PATH, or People Assisting The Homeless, are included, the monthly room cost exceeds $7,000.
Councilmember Nithya Raman, who represents the Hollywood Hills, worked to secure Highland Gardens before Bass took office. Bass, for her part, was closely involved in the effort to retain another Project Roomkey hotel, the L.A. Grand in downtown Los Angeles.
The L.A. Grand was originally slated to close as temporary homeless housing on Jan. 31. Bass’ team succeeded in leasing 481 rooms at that facility for an additional year. The monthly cost of a room, which includes not just lodging but also meals, is $154 per night, or nearly $4,700 per month, according to a memo provided to the council last month.
The council would need to sign off on a purchase of the Mayfair. Meanwhile, at least one former Mayfair resident is objecting to the proposed acquisition.
Cynthia “Mama Cat” Trahan, 62, who lived in the Mayfair for about four months, said Project Roomkey staff treated the hotel’s temporary guests with “very little respect,” searching them when they entered the building and sometimes going into their rooms without permission, she said.
Buying the hotel is “just not a good idea,” said Trahan, who now lives in an apartment in Glendale.
“We should be investing in putting people in apartments, not hotel rooms,” she said.
Watch L.A. Times Today at 7 p.m. on Spectrum News 1 on Channel 1 or live stream on the Spectrum News App. Palos Verdes Peninsula and Orange County viewers can watch on Cox Systems on channel 99.
Last Updated: May 27, 2023 BY Michelle Schroeder-Gardner – 47 Comments
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If you’re anything like me, then you probably LOVE the holidays. I enjoy the decorations, the food, the people, and everything that goes along with it.
However, I know not to get ahead of myself even though I love the winter holidays an incredible amount. Holiday spending can quickly get out of hand and it’s quite easy to destroy a holiday budget.
According to the National Retail Federation, the average family in the U.S. spent $730 on the winter holidays in 2013 (it hovers around this amount most years).
Holiday spending can quickly add up when you are paying for food, gifts, decorations, and more. Plus, if you plan on traveling then your holiday spending may be much higher than this $730 amount.
This high price tag sometimes causes families to put their holiday spending on a credit card.
This is a big problem because that debt will eventually need to be paid off. Plus, interest and other finance charges may be added to this amount, which may cause the small amount you may have put on your credit card to inflate into a much bigger number. This can then impact your credit score, your credit history, your debt to income ratio, and more.
These are all things that no one wants to experience, especially since the holidays are not about the money you spend – they are about spending time with your loved ones.
While sticking to your holiday budget at times may seem impossible, I want you to know that you can enjoy the holidays and not go into holiday debt.
Continue reading below to read more about the several ways to lower your holiday spending and stick to your holiday budget.
Create and stick to a holiday budget.
Before you start your holiday spending, you should create a holiday budget. Creating a holiday budget will help you analyze your spending so that you can spend less money and not go into any holiday debt.
You should look at how much money you have set aside for the holidays, how much you estimate you will spend, and possibly even add a little buffer just in case you go over your holiday budget.
Some of the things you may need to budget for include:
Food (such as if you are hosting or attending a holiday party)
Gifts and cards
Travel and transportation
Related: How To Live On One Income
Plan a group gift exchange.
Instead of swapping gifts with numerous people, you may want to do a gift exchange where everyone draws names and each person only has to get one person a gift. This can save a person a lot of money, plus more thought and time can go into each gift.
This is something that we do with my husband’s family. All the younger children still get gifts from everyone, but all of the adults just do an exchange. It makes it much easier and more enjoyable!
Earn extra money for your holiday spending.
You may want to look into ways to earn extra money for your holiday budget if you want to spend more money than you have saved.
There are many things you can do in order to earn extra money for your holiday spending. You could sell items from around your home, work additional hours at your job, find a part-time position (tons of places hire during the holidays!), freelance, and more.
Below are several posts that may help you find ways to make extra money for your holiday budget:
I know this might be a little difficult since it’s already November, but starting now is better than waiting until the last day.
I know some who start shopping almost a full year before the holiday they are celebrating. You may call them crazy, but I’m sure it saves them a lot of stress and money later.
The earlier you start shopping, the more money you are likely to save. This is because you won’t be in a rush to find what you need and you will be able to shop the sales as they come. When someone is low on time, they are more likely to buy items they may not need at a price that is higher than usual.
Find the best deals.
Prices can vary from store to store. Before you start any of your holiday spending, you may want to shop around and see what stores have the lowest pricing.
You can find the best deals by:
Shopping online. I like to shop online first. This way I don’t have to waste any gas driving around and I can save time by shopping at home as well. Amazon is definitely my favorite place to shop online.
Using a cash back website. I highly recommend using a cash back website (such as Ebates – signing up under my link will give you a free $10 gift card to a store of your choosing as well, such as Target), so that you can receive free cash back for the money you are already spending.
Finding coupon codes for the products you are buying. Before you buy something, type the store’s name plus coupon code into a search engine to see if any coupon codes will pop in. An example would be “Airbnb coupon codes.”
Buying discounted gift cards. There are many gift card companies online that sell “used” gift cards you can get for cheap. You could gift one of these or just do your shopping with them so that you are shopping on a discount.
Do you tend to stick to your holiday budget? How do you feel about holiday spending?
It’s time to give yourself a 10-second financial check-up: are all of your hard-earned dollars earning interest? Even your short-term savings that you’ll need in two years or so?
Savvy investors know that every dollar deposited at a bank, brokerage, or financial institution should be making money — and that includes your short-term savings, cash investment balances, even your checking account. If not, you should be looking for somewhere else to store your dollars.
Let’s look at where best to stash your short-term savings.
High-yield savings accounts
High-yield savings accounts pay up to 5x the national average savings rate and are convenient to open and manage. You can transfer money in and out electronically from your checking account or other bank accounts — a process that rarely takes more than two business days.
Most high-yield savings accounts have no fees or minimum balance requirements, so there’s no excuse for not using one for short-term cash reserves.
You can check out our full list of the best high-yield savings accounts, but here are three of our favorites that you may want to consider for short-term savings:
Aspiration Bank is a great bank if you love earning rewards. And, because this bank plants trees for you with your rounded-up change, you can pride yourself on taking care of the environment through your banking.
You only need a minimum balance of $10 in the account and can earn up to 5.00% APR, depending on the account you have — they have a free account and a subscription account (Aspiration Plus) that gives you access to more of their products as well as a higher APY.
Given these easy terms and high returns, the Aspiration Plus Savings Account can be a very lucrative place to stash your short-term savings.
Learn more/apply or read our full Aspiration Bank review.
Citi Accelerate® Savings
The Citi Accelerate® Savings has one of the highest APYs when it comes to high-interest savings accounts, coming in at 2.20% APY. And their monthly fee is waived if you have at least $500 in your account, so it’s a great option if you have a larger short-term savings goal in mind.
And since there’s no minimum opening deposit, they’re great for just about anyone who wants to start socking away money every month.
Unfortunately, the Citi Accelerate® Savings is only available in certain U.S. markets. If you live in California, Connecticut, Maryland, Nevada, New Jersey, New York, Virginia, Washington, DC, or select markets in Florida or Illinois, you’ll need to go with an alternate account option.
Capital One 360 Performance Savings
If you’re looking for a more full-service experience with your high-interest online savings account, consider Capital One 360 Performance Savings. They have plenty of services to help you out with your savings, and an APY of 3.00%. Plus, there are no minimums or monthly fees.
It’s a great option if you’re starting out with a low balance and you want to increase it until your short-term savings project is completed.
Read our full Capital One 360 Savings review.
Cash management accounts
A cash management account is an account that’s held by a robo-investor. It’s not a checking, savings, or investment account. Instead, the brokerage firm holds your money for you to use. They issue debit cards just like a checking account, but they have higher interest rates than those types of accounts.
These are a great option if you’re already using a robo-advisor for your long-term investments. You can find them at companies like Wealthfront, which has a cash account.
Short-term bonds are issued either by corporations or by the government. Each bond has different terms, so you’ll want to research what you’re signing up for before you make a purchase. But they’re overall low-risk investments.
But what is a bond? Good question. Bonds are basically IOUs that a company or government gives you on a debt. These groups are trying to fund something, but need capital, so they sell off bonds and tell you that after X amount of years, they’ll pay you Y in interest.
Read more: How does a bond work? A simple (and informative) guide
Treasury bills, or T-bills, are another great short-term savings storage plan. They work similarly to bonds — you buy them from the treasury, and then you wait until they mature. Once they mature, you sell them and receive your money back, plus any interest.
You can buy them in intervals of 1, 4, 8, 13, 26, and 52 weeks, so they’re great for short-term projects that take about a year for you to save for.
Money market accounts
Money market accounts, also known as MMAs, are similar to both checking accounts and savings accounts.
How does that work? Well, you have interest rates that are higher than checking accounts and more on par with savings accounts, but you’re able to get a debit card to access your funds like a checking account. However, there is a limit to how many transactions you can make a month.
Money market accounts are good for short-term savings because they have higher accessibility than a savings account, but are low-risk. As long as you keep money in the account — and stay below the monthly withdrawals limit — you’ll earn interest on the account.
Read more: Best money market accounts
Certificates of deposit
Savers who are looking for the best return on their money on a slightly longer-term basis (minimum three months) should take a look at a certificate of deposit. CDs have terms that typically run from a period of three months to five years. Rates increase as the CD term gets longer.
You can get the best rate on a CD by shopping online, as these tend to change quite often. Most CDs will have minimum deposits of $500 or more, and patient investors can get a higher rate the longer their term.
Browse today’s best CD rates.
To reap the benefits of long-term CD rates with short-term savings, check out this article on CD laddering, which explains how to build your own.
Should you invest your short-term savings?
When you save money in an FDIC-insured bank account, your money is guaranteed not to lose value. When you invest money, you’re taking on risk for the chance at a greater return. You might very well earn a much better return on your money than you could with a bank, but you could also end up with less money than you put in.
In general, you want to save money you’ll need in the short term and invest money you won’t need for a long, long time. That’s because the risk of losing money on an investment diminishes the longer you’re able to hold that investment. We all know the stock market is volatile. If you put your money in the day before a crash, you could lose a big chunk of value overnight. If you leave that money invested for 30 years, however, you’ll likely come out way ahead (despite the initial crash!)
Risk tolerance is a personal thing, but my philosophy is that I never invest money I’ll need in the next two years. If don’t need the money in the next two years but will need it in the next five years (for example, money I’m saving for a future car purchase), I might invest the money, but very conservatively.
If you’re looking for a simple way to save money for a short-term goal, but you’d rather take your chances investing it rather than parking it at a bank, check out the Acorns app. You just download the app, link a bank account, answer a few questions, and you’re an investor. You can connect the app to any number of debit or credit cards, and Acorns automatically rounds up each of your purchases and invests that amount on your behalf. While this won’t make you rich, it can help any first-time investor make a little extra cash.
The bottom line
For most people, the best place to put short-term savings is an online savings account that pays a fair interest rate.
But other options, like certificates of deposits, money market accounts, short-term bonds, T-bills, and cash management accounts are all good alternatives you may not have considered for saving up for a short-term goal.
Featured image: Julia Sudnitskaya/Shutterstock.com
If you’ve been comparing mortgage rates lately in an effort to save some money on your home loan, you may have noticed that refinance rates are higher than purchase loan rates.
This seems to be the case for a lot of big banks out there, including Chase, Citi, and Wells Fargo, which while enormous institutions aren’t necessarily the leaders in the mortgage biz anymore.
In fact, today Quicken Loans is #1, followed by United Wholesale Mortgage in the #2 spot, then a mix of these big banks and nonbanks, including loanDepot, Caliber Home Loans, and others.
So why is that some of the big guys list “purchase rates” and “refinance rates” separately, with different pricing, points, and APRs?
Well, for starters a home purchase is not the same as a mortgage refinance, though both processes are very similar, and the underlying loans themselves aren’t much different.
Ultimately, a home purchase loan is for someone who has yet to buy a property, whereas a mortgage refinance is for an existing homeowner who wants to redo their home loan.
We know they are different objectives, but if the underlying loans are both 30-year fixed mortgages with the same loan amounts, the same borrower credit scores, and the same property types, why should rates be any different?
Home Purchase Mortgages Default the Least
There are three main types of mortgages, including home purchase loans, rate and term refinances, and cash out refinances.
The first is self-explanatory and was already explained above, the second is simply redoing your current mortgage by obtaining a new interest rate and loan term, without changing the loan amount.
The third type results in a larger loan amount at closing because you’re pulling equity from your home, which a layman should assume would be the riskiest transaction.
After all, if a borrower now owes more debt, and maybe even has a higher monthly mortgage payment as a result, their default risk should rise.
Simply put, when you pull cash out of your home, you increase your outstanding loan balance, increase your loan-to-value ratio (LTV), and reduce your available home equity, that’s riskier.
This in theory should result in a higher mortgage rate to compensate for increased risk. And guess what – that is indeed the case. Cash out refinance rates are the highest, all else being equal, for basically all banks and lenders.
At least something makes sense around here…
A Rate and Term Refinance Sounds the Least Risky, Doesn’t It?
Now, a rate and term refinance should result in the least amount of default risk because the borrower is likely reducing their monthly payment in the process.
This happens via a lower interest rate and possibly a lower outstanding balance (paid down since origination) spread out over a brand-new loan term.
That leaves us with home purchase loans, which you’d think would be less risky than a cash out refinance, but not as risky as a rate and term refinance, since it’s ostensibly a first-time home buyer or someone in a new property.
If you were the bank, you’d probably want to give a new, cheaper loan to the seasoned homeowner who has been paying their mortgage for years as opposed to the first-time buyer or even a move-up buyer taking on more debt.
But for one reason or another, some banks and mortgage lenders offer the lowest mortgage rates on home purchase transactions.
The Lowest Mortgage Rates Are Offered on Home Purchase Loans
The reason boils down to DATA. Despite the fact that the actual loan characteristics (such as FICO score, LTV, and DTI) would indicate the lowest default rates on rate and term refinances, it is purchase loans that perform the best.
One possible reason why is because of faulty appraisals on refinances, which perhaps overvalue properties.
Regardless, purchase mortgages default the least, followed by rate and term refinances, and finally cash out refinances, the last of which actually makes sense.
Interestingly, the loan characteristics also indicate that cash out refis and purchase mortgages should default at about the same rate, yet they are priced the furthest apart.
And again, that’s because in real life, not expected default rates, purchase loans default the least and cash out refis default the most.
Lowest: Home purchase rates Slightly Higher: Rate and term refinance rates Highest: Cash out refinance rates
So when you compare mortgage lenders, you might often find that purchase rates are the cheapest, followed by rate and term refi rates, and finally cash out mortgage rates.
There’s no question cash out refinances cost the most – this is the norm amongst all banks and lenders to my knowledge.
But not all banks/lenders offer different rates for purchases and rate and term refis.
How Much More Expensive Are Refinance Rates?
Big banks tend to advertise higher refinance rates vs. purchase rates
Some lenders don’t differentiate between purchase rates and rate and term refi rates
Or simply charge slightly higher closing costs on refinance transactions
Rates may be .25% to .375% higher on refis but pay attention to points charged and loan assumptions
I looked around and found that Chase, Citi, and Wells Fargo offer lower home purchase rates, while Quicken Loans offers the same exact rates for purchases and rate and term refis.
Quicken even says this in their fine print: “Based on the purchase/refinance of a primary residence with no cash out at closing.”
In other words, a purchase or rate and term refi are priced the same.
Clearly this matters when shopping around for a mortgage, so take notice of who is charging more/less for certain transaction types and choose accordingly.
One last thing – pay attention to the assumptions lenders make when they list their rates. It could also be that you’re not comparing apples to apples, if there are different loan amounts, LTVs, credit scores, mortgage points, and so on.
But know refinance rates are higher because they default more than purchase loans, and that requires a higher price to compensate for heightened risk, plain and simple.
If you want more financial discipline you are probably looking to curb impulsive spending, save money, or maybe just achieve financial stability.
Building self discipline your financial decisions is an important part of building wealth over the long run.
Why is self discipline the key to becoming a good saver
Being a good saver requires self discipline since there is so much fun stuff to do and buy. You are exposed to more advertising than anyone in the history of the world, and the marketing companies know a lot about psychology and exactly how to get you to part with your money.
So it takes a lot of self discipline in order to fight those tactics and stay on course to meet your goals. You have to have a clear goal and know that meeting that goal is more important than anything you can buy.
It requires a lot of self discipline to overcome the temptation to delay gratification of spending money and to save it instead.
Steps to develop self discipline
Step 1: Set a goal – then break it down into regularly recurring actions
What exactly do you want to achieve? It could be to build a fully funded emergency fund, start investing, pay off your debt, or even achieve financial independence – or anything in between.
Write down exactly what your goal is and the date by which you want to achieve it. For example, you may want to pay off your credit card debt within one year.
Then break down exactly what actions you need to take on a regular basis. Make these actions as small and as regular as possible. A small daily action is better than a larger monthly action.
For example, if you owe $10,000 on your credit card you’ll need to pay $833.33 off each month. Is that doable? If your budget allows for that, great. If not, you’ll need to figure out what exactly you need to do make up the difference.
If your regular payment is $150 and you can pull an extra $200 per month from your monthly budget that means you’ll need to come up with an additional $484 per month. If you have time to walk dogs after work you may decide to pick up a dog walking client for a few walks per week. At $25 per walk you’d have to walk the dog 20 times per month to make up the $484 you need. If you picked up a client that needed the dog walked everyday after work, you’d have the full amount.
You now have a goal and an action plan to make that goal happen.
Here are a few examples of short, mid, and long-term goals, but feel free to fill in the blanks with your own personal financial goals.
Saving money each month towards your emergency fund
Going out to dinner with friends twice a month
Small household projects (planting a small indoor garden, painting a room, etc.)
Saving for a weekend getaway
Paying cash for your next car
Paying off your credit card debt
Down payment on a house
Paying off your student loans
Putting money away for retirement
Read more: How to prioritize and save for multiple goals at once
Step 2: Track your progress
You’ll want some way to visualize and track your progress. A lot of people find this extremely motivating.
Using the example of paying off your car above, you could make a thermostat and color in a section each time you make a payment, representing the amount of money you’ve paid off (or is left on the loan). Or cover a piece of paper with stars (or anything else) and color in a star every time you send in your payment, each star representing one payment or a set amount of money.
Hang your tracker on the fridge so you can see it every day to remind you of what you are working towards. Make it a little celebration each time you get to fill in more of your tracker.
You can also go digital with your goal tracking. Apps like Empower offer a few different services for investing and checking up on your financial health. But, in this instance, I’m referring to the free tools they offer to keep track of your net worth.
You can create an account with them without opening an investment account. The wealth management and planning tools are the ones that you will probably be most interested in to help determine where you are at currently.
You can connect all of your financial accounts within the tool. These will be things, such as:
Student loan account(s)
Auto loan account
Medical debt account(s)
Sometimes, it can be pretty scary to see what your actual net worth is vs. where you want to be.
But, I use this as a driving force to work harder every month to increase my overall net worth. Because the faster I can get my net worth up, the faster I can get to my long-term goals.
Step 3: Find your tribe
Find people in your life who are working towards similar goals. This will help build self discipline because you’ll have a community that is embodying the new behaviors you want to build.
If you meet regularly with others who are paying off debt, you’ll have more discipline to follow that same path. You’ll have someone to share your successes with and a friend who can help when you are struggling.
Contrast that to when your friends regularly encourage overspending. Just going out to have a meal or a drink with friends can end up costing $100 or more in some instances. Something that sounded so innocuous, has now completely derailed your goal.
This isn’t to say you need to replace your entire friend group – not at all. But it will be up to you set a budget for having fun and then stick to it.
For example, instead of having two-three drinks, only have one. Go out for lunch instead of dinner, or a matinee instead of a night movie.
All of these options still give you the freedom to hang out with your friends and enjoy your life, but it won’t cost you nearly as much. And when you stick to your budget, your future self will thank you for your discipline.
Read More: The Cost Of Friendship – How Your Friends Affect The Way
Tips to meet your financial goals
Determine your needs vs. your wants
Setting up your financial goals and a way to track them are the first steps. But staying on track can get tricky when life happens. This is where needs vs. wants come into play. There are things that all of us want to have. But these are the things that can throw us off track so fast it will make your head spin.
So keeping in mind if the item/service is a need or a want can help you have more financial disciplined. Just remember to think long and hard about any purchases before you pull the trigger. If it is a need, then go ahead and do it. But if the item is actually something you want instead, it’s usually best to hold off even for a bit to make sure you still really want it as much as you think you do.
Reduce, reuse, recycle
When it comes to purchasing wants, you have a few other options that can save you a ton of money. If there is an item that you are wanting to purchase, but it simply isn’t in the budget, what might be some other ways to achieve the same goal?
Reduce, reuse or recycle may just be the best option here. If you have things in your house that you can get rid of (and maybe even make some money off of their sale), then that is one way to get the potential want. Sell your old stuff and then use the proceeds to purchase the new want item.
Or, if you can reuse an item you have in your house already, paired with something else, in order to create a similar item, then why not do that? Sometimes, all a table or chair needs is a fresh coat of paint in order to feel like a completely new item. So get creative and think outside the box about things you already have at your disposal.
And if all else fails, recycle your old items. You may not make any money off of them, but you could potentially get a tax write-off. Plus, it declutters your space, which can make it feel like a completely new room. Sometimes, that is really all you need.
Make it automatic
No matter what you goal is you can probably automate at least some of it.
If you want to save more, schedule automatic transfers from your checking to your savings. If you want to pay off a certain amount of debt each month, set automatic payments to your accounts.
Having these transactions happen automatically will remove the friction that can be caused when you have to manually make that extra payment, or save that extra money. You can always go in and stop or change the automatic payment if you can’t swing it one month, but making it the default will cause it to happen more often than not.
Of course, don’t set yourself up for failure. Setting an automatic payment without a plan to make sure the money is available will cause more harm than good. Create a feasible plan and realistic goal, then set it up to run without any extra effort from you.
Read more: Put your money on autopilot
Put your emergency fund in a high yield savings account
If you are working on building your emergency fund – or already have a solid savings account – you’ll want to make sure you are getting the most interest possible. This will help grow your savings rate since you’ll be earning a little extra interest each month.
Interest rates on high-yield savings accounts are higher than they’ve been in years, and the difference between online accounts and those at your local bank are huge. So, while these high yield savings account rates may not be anywhere close to the average return you will get on investing your money, it’s still nice to make some interest on your savings.
The best high yield savings account, in my opinion, is the CIT Savings Builder.
Read more: How Much Should You Save Every Month?
CIT Bank Savings Builder
CIT Bank Savings Builder has a very competitive APY – compared to the pennies you get from a credit union account.
You only need $100 to open an account and they charge no maintenance fees. To earn the highest APY, you need to get your account up to $25,000, or you need to deposit at least $100 monthly. See details here.
The CIT Savings Builder has a completely online platform, so everything can be done directly from your smartphone, just to make life simpler. They are also FDIC insured up to $250,000 per account type.
CIT Bank. Member FDIC.
Overall, it is extremely easy for our money to flow through our fingers like water. This is why you have to be cognizant of what you have and where you want to be with your finances.
If you want to avoid debt, save more money, or invest for your future then it’s important to develop self discipline in your finances.
Not sure what to buy for your loved ones this year? Still singing the recession blues? Consider buying nothing at all.
I didn’t buy anything on Black Friday, I didn’t buy anything today, and I won’t tomorrow. This holiday season, I won’t be going near a mall. Under our tree, there will be no plastic toys, no new clothes, and no last-minute matched set of leopard-print mugs for my sister when I panic on Christmas Eve because I have no idea what she wants. There also wont be any dipping into my savings accounts to buy gifts.
Thousands of families will be doing exactly the same thing this year as part of The Compact. The Compact has a simple premise: Everyone who signs on agrees to “buy nothing new” for one year.
Gifts for Kids
For tips on surviving a frugal holiday, I turned to the Non-Consumer Advocate, Katy Wolk-Stanley. Katy is coming into her third year on The Compact. And as a mom of two boys, she knows a thing or two about kids and holiday shopping.
“Christmas is a huge challenge for people who are trying to save money, and for people who are trying to minimize their garbage output and the low-quality stuff that comes into their family,” Katy says.
Here are her guidelines for giving to children during the holiday season:
Shopping is okay. Katy made it clear that “not buying new” doesn’t mean “no shopping”. She swears by Goodwill and consignment shops. Buying used, she points out, not only saves money, but it’s always a “greener” choice than buying a newly-manufactured item. Online, you can surf eBay or your local Craigslist for second-hand treasures.
Swapping is even better. “You could do a gift swap where people get together, bring the toys that aren’t being used, and swap,” Katy says. “You’d have to make it an evening without kids, which has its own benefits!”
Presentation matters. Some kids will be looking for “new” gifts under the tree, and new to them means boxes and brands. Katy suggests looking in higher-end kids’ consignment shops, where you can often find gifts still in their boxes. For kids and adults, Katy offers lots of creative wrapping ideas, like presenting movie tickets with a box of movie-theater candy. For families, try giving toddlers play silks (long pieces of colorful silk) as a gift, and then use the silks to wrap gifts each year for the kids as they grow older.
Santa buys second-hand, too. My kids still believe in Santa Claus. They’re expecting a pile of Stuff under that tree come Christmas morning. I ordered them a classic dollhouse from “Santa’s workshop” (read: eBay). They’ll get to spend the morning unwrapping each little piece of furniture, instead of a dozen different gifts.
Be creative. Last year, Katy gave each of her boys a kitten. Rather than put live kittens under the tree, she put some stuffed animals they already had under there with paper tags around their necks that said, “Please exchange me for a real kitten.”
Don’t be afraid. Chemicals like lead, BPA, and phthalates are common in older toys (even ones that were new last Christmas). Sharp edges and loose parts can cause accidents. A simple way to avoid these problems? Buy simple toys. Unpainted wood gifts, for example, are free of toxins regardless of their vintage. Another simple option: Don’t worry about it. You probably haven’t carefully researched every new toy that comes in the door. Today’s used toys are no more dangerous than last year’s new ones.
Talk to your relatives. “Just explain that you’re trying to decrease the number of gifts given to your children and talk about why you’re doing it,” Katy says. “Possibly offer some other ideas where a person can be creative and still do something special for a child that they love.” Easy for her to say. I’m a pansy when it comes to tough talks, so last year I sent mom a letter asking her to “tell Santa” what kinds of gifts would be most appreciated.
From the archives: Here’s a classic look at the four things children really want for Christmas.
Gifts for Grown-Ups
Toys, books, clothes and treats will take care of most children’s wish lists. But most of us have adults we’re expected to exchange gifts with too. From the office party to family festivities, we find ourselves shopping for friends and relatives.
Here are a few great ideas to replace the leopard-print mugs and bottles of wine you might have been handing out in past years:
Art. Art may technically be Stuff, but it’s a far cry from imported plastic junk. My most treasured gifts in the past year have been original art pieces by photographer Molly Tomlinson. These gifts can be surprisingly affordable. Many good-but-not-famous artists sell their work for $20 to $50 — no more than you’d spend on a Big Plastic Thing at the mall. To find good original art, go to holiday craft fairs, visit local studios, or search the listings on Etsy.
Time. Many people love gifts of time. You can offer to babysit, to come to their house and help with an organizing project, or to paint their dining room. Last year, my husband gave me a pretty card with a year’s worth of babysitting commitments from friends and family. I burst into tears on the spot, but I’ve been all smiles every month since when we drop our kids off and go out for an evening alone together.
Experiences. Movie tickets. A gift certificate to a favorite restaurant. Museum memberships. While a non-material gift may seem better suited to adults, even little kids can enjoy them. Last year, my mother presented my kids with a yearlong membership to the New England Aquarium. She took them there the day after Christmas, and they were also able to enjoy it several more times throughout the year.
Charity. Charities depend on holiday season donations to make their year-end numbers work. You can help them out and cross some items off your gift list in one blow by donating in a loved one’s name. Charities like Heifer International, Kiva and the Red Cross all make it fun and easy with “virtual gifts”. For example, Heifer lets you give a family in the developing world a cow on your mom’s behalf. Have a cow, Mom!
Fancy food. Who doesn’t love food? From baked goodies to homemade salsa, it’s hard to go wrong with tasty treats under the tree. Just be sure you know the giftee’s dietary restrictions. Anaphylactic shock is no one’s idea of a happy holiday.
Handcrafts. It’s a time-honored tradition to give your own handcrafts to loved ones during the holiday season. You probably don’t have time to knit sweaters for everyone on your gift list, but many lovely crafts are easy and quick. You can get your kids involved in making ornaments, ceramic handprints or other treasures for grandparents. Craft supplies themselves can get expensive, but if you have a skill like knitting you can make beautiful unique gifts.
From the archives: One of the most popular posts in GRS history features more than 30 homemade Christmas gifts you make yourself.
Nothing at all Do you have to exchange gifts with every adult in your family? With your coworkers? Your friends? Think carefully about who to put on your gift list, and who would be better served by a thoughtful card or a warm phone call.
Many people have probably done their shopping already, so it’s too late to change course. But there’s always next year. (Or, if you’re a last-minute shopper like J.D., there’s still this year.) And consider joining The Compact in January. You’ll have lots of company, and a whole year to work up to a non-consumer holiday in 2011.
What happens when a great opportunity comes along, but you don’t quite have the resources to take advantage of it? That’s what Greg wants to know. He and his wife have found their Dream House. They think they can buy the place — but only if they’re willing to take on some short-term debt in addition to the mortgage. Greg wants to know if this is a smart move. Here’s his story:
My wife and I are in our late twenties, no kids (yet), both safely employed and living very comfortably with a combined monthly income of around $5,000 after taxes. We currently have about $28,000 in student loans, and plan to pay them all off within the year. The original amount was $37,000 six months ago, so we’ve been making quick progress with them. One loan is in deferment while my wife is in school, another requires $80 a month for the payments, and the one we are aggressively paying off has no monthly payment due until 2014 because of our extra payments. Basically, we only need $80 a month to satisfy our loans for the next two years. We have no car payments, credit card debt, or anything other than the student loans.
Everything was going as planned until two weeks ago we found a house we absolutely loved. We’ve checked it out, and aside from minor cosmetic things, its move-in ready. It’s a foreclosure with an asking price around $136,000 (houses are cheap in the Houston area!). We’d plan to stay in the area a minimum of ten years, if not longer.
Given our situation, is it wise to scramble to get the minimum amount necessary to buy this house? We hadn’t planned to begin saving up for a house for another six months. Last week, my dad offered us a monetary gift to cover the down payment. We have the ability to pay for inspections, closing costs, insurance and everything else (about $7,000 total, assuming the seller won’t cover some of these costs), but it might mean wiping out our small savings and taking on some short-term debt. We’d also have to pay about $1,600 to break our apartment lease, but at least that can be spread out over three months.
Moving so quickly without any heavy financial preparation was not how we envisioned buying a house, but we don’t want to risk losing what amounts to our Dream House. Since it only recently came on the market, we don’t know if it will be something we can wait on or not.
Being the committed debt-haters that we are, the minor (non-mortgage) debts we’d have to incur to buy the house hopefully wouldn’t last very long anyway. Worst case scenario puts our monthly house/tax/insurance payments well within the range of affordability for us too. Our current loans would go on hold for maybe six months while the minor debt is paid off, then proceed at a slower pace due to the $1200 a month we’d be paying for housing instead of the the $600 we currently pay.
If you were in my position, what would you do? Jump on the chance for a Dream House? Or take a more financially conservative approach and risk losing out on it? Any and all opinions would be much appreciated!
This is a tough call. Folks like Dave Ramsey would say, “Don’t do it.” Ramsey would argue that Greg and his wife should first repay all of their student loan debt and then save enough for a substantial down payment. (Or even enough to pay for the house in cash.)
I’m not nearly that prescriptive. Absolutely, the prudent financial choice is to wait. Dream Homes are problematic — dreams change, and Dream Homes are often more common than buyers believe. Plus, when you have to scrape money together to buy a house, you leave yourself vulnerable to unexpected disasters. By exercising deferred gratification, Greg and his wife could reduce their debt and/or build enough savings to make a substantial down payment.
That said, personal finance is as much about emotions as it is about money. And heaven knows, Kris and I have made a pair of impulse home-buying decisions:
In 1994, we bought our first home. We didn’t really have a reason for buying a house; it just seemed like the adult thing to do. A mortgage broker crunched the numbers, told us what we could afford, and we started shopping. We didn’t shop for long. Within a week, we’d found a house we liked. Two days later, we’d made an offer and had it accepted. Looking back, we rushed things, but it turned out okay because we bought less home than we could afford.
In 2004, Kris and I bought our Dream House. We hadn’t intended to move, but when one of Kris’ co-workers brought in a sale flyer for an old farmhouse, we acted quickly. Within 48 hours, we’d made an offer (and had it accepted). In retrospect, this was a poor financial decision. On paper, we could afford the place, but in reality, my debt-load made things tough. If I could give my younger self advice, I’d say, “Don’t do it!” Things have worked out for us, but they could easily have turned sour.
If Greg and his wife are willing to unwilling to pass up this opportunity, they should at least take steps to mitigate the possibility that things will go wrong.
Take out a small mortgage with a low interest rate. Banks will grant mortgages with housing-expense ratios of 33%. That is, they’ll let borrowers spend up to 33% of their gross (pre-tax) income on housing, including taxes and insurance. But what’s good for the bank isn’t necessarily good for you. Greg and his wife can make things easier by trying to keep their monthly expenses below 25% of their gross income.
Make debt reduction a priority. If they buy this house, Greg and his wife have to be willing to make some short-term sacrifices: cheap vacations, a reduced restaurant budget, and so on. They have to give up a lot of the little everyday pleasures in order to attack their non-mortgage debt. All purchases require trade-offs, and big purchases require big trade-offs.
Build a big emergency fund — ASAP. Speaking from experience, owning a home is expensive. One rule of thumb is that it costs 1% of the home’s value every year for maintenance and repair. This seems accurate to me. Greg and his wife should work hard to create a home repair fund, one that’s separate from their everyday emergency fund.
What do you think? Should Greg and his wife jump at the chance to buy their Dream Home? Even if doing so means carrying more debt than they’d planned for a few years? Or should they wait until they know they’re financially prepared? Share your personal experience so Greg and his wife can make an informed decision!
Note: Upon reading this post, Kris made an interesting observation. “You’re missing an important point,” she said. “Are they looking at a one-of-a-kind home? That makes a difference. Maybe their Dream House is a converted fire station or an old farmhouse in a sea of cookie-cutter homes. If that’s the case, they should take it. But if it’s similar to a lot of other homes, they should wait.”
Update: This has been a great discussion. Thanks for contributing. Here’s a response from Greg, answering many common questions. (And here’s another.)
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Investing in stocks can seem like a daunting task.
There are so many things to consider when it comes to investing, and the stock market is constantly moving.
Stock market investing is a popular option to increase net worth and make money.
Many people are looking for ways to invest their money, with the number of individual investors increasing rapidly in recent years.
This guide covers many important factors for how to invest in stocks for beginners.
Starting out as a newbie trader can be scary and overwhelming… don’t worry, all seasoned traders had to start at the beginning too!
Let’s take away that quell those thoughts and focus on why you want to learn to invest in stocks.
This guide will give you everything you need to know about how to invest in stocks as a beginner investor!
What Are Stocks?
In the most basic form, stocks are a form of investment. When you own a stock, you have a piece of ownership in the company’s equity.
The stock market is a real-time financial market in which investors buy and sell stocks and other securites. The stock market is made up of many companies and individuals who are actively investing in stocks.
Stocks are an excellent way for companies and individuals to invest in a company and receive a share of the company’s profits.
Many of the growth stocks (FAANG stocks) are those who investors want their stock price to increase over time. Thus, increasing their overall portfolio’s net worth.
FAANG Stocks is an acronym for: Meta (formerly known as Facebook), Amazon, Apple, Netflix, and Alphabet (formerly known as Google).
Some companies like Chevron (CVX) pay out a dividend each quarter to their investors.
There are thousands of stocks available to trade.
What Can You Invest In The Stock Market?
There are many investment opportunities in the financial market, so it is important to be informed about what you can invest in. Below are some of the places where you can invest your money:
Now, we are going to look at the most common.
Individual stocks are a type of investment that you can make yourself.
You can choose how many shares of a certain company you want to purchase.
For example, you like Tesla for how they are innovative in the electric car space. You can choose to invest 20 shares of their stock.
As a long-term investor, you want to hold a portfolio of 10-25 stocks. Find a list of beginning stocks to build your portfolio.
Individual stocks can be bought or sold as a way to dip your toe into the stock-trading waters.
As a short-term investor, you are looking to make money as the stock price increases or decreases.
Mutual funds are managed portfolios of stocks.
As a result, mutual funds typically have load fees equal to 1% to 3% of the value of the fund.
One of the most popular mutual funds is VTSAX because of its expense ratio is .04%
Mutual funds are a clear choice for most investors because of the simplicity to invest in the market. This can be a good investment for both novice and experienced investors, as they offer decent returns with lower risk.
They tend to rise more slowly than individual stocks and have less potential for high returns. Mutual funds are a great way to diversify your portfolio and gain exposure to a variety of different securities.
All mutual funds must disclose their fees and performance information so that you can make an informed decision about whether or not to invest.
Exchange traded funds (ETFs)
Exchange traded funds (ETFs) are a type of exchange-traded investment product that must register with the SEC and allows investors to pool money and invest in stocks, bonds, or assets that are traded on the US stock exchange.
They are inherently diversified, which reduces your risk.
This is a good option for beginner investors because they offer a large selection of stocks in one go.
ETFs have a lower minimum to start investing, which is a draw for many investors starting out with little funds. Plus there are many different types of ETFs to choose from.
ETFs are similar to mutual funds, but trade more similarly to individual stocks. With ETFs and Index Funds, you can purchase them yourself and may have lower fees.
Why Stock Prices Fluctuate
Stock prices fluctuate because the financial markets are a complex system. There are many factors that can affect the price of a stock,
There are a number of factors that can influence stock prices, including:
Economic indicators like GDP growth, inflation, and unemployment rates
Company earnings reports
The overall health of the economy
Political and social instability
Changes in interest rates
War or natural disasters
Supply and demand,
Actions of the company’s management
Short squeezings like what happened with GME or AMC
The volatility in the stock market is the #1 reason most people stay out of investments. However, on average, the stock market has moved up 8-10% a year.
What is the best thing to invest in as a beginner?
The best thing to invest in as a beginner is your time.
You need to learn how the stock market works. Just like you would get a certification or degree, you should highly consider an investing course.
Learn and devote as much time as you can to investing in stocks.
How To Invest In Stocks For Beginners?
Investing in the stock market can be a great way to make money! If you’re looking for ways to make money or grow net worth, investing in a stock is a smart choice.
With online access and trading being easier now than ever, it can be easier than ever to start buying stocks.
Let’s dig into how to invest in stocks like a pro.
FYI…You should do your own research before investing.
Step #1: Figure out your goals
Figure out your goals to help with setting an investing strategy.
What are you trying to achieve with stock market investing? Is it supplemental income? A certain level of wealth for retirement? Are you looking for short-term or long-term gains?
Once you know what you’re aiming for, it will be easier to find the right stocks and make wise investment decisions.
Your reason to invest in stocks will be different than everyone around you.
Some people want to supplement their weekly income.
Others want to invest in companies for the long term.
My goal is to make weekly income from the stock market. That is my investment strategy for non-retirement accounts.
You need to spend time understanding WHY you want to buy stocks.
Knowing this answer will help you define what type of trader you will be.
Step #2. Decide how you want to invest in the stock market
When you decide to invest in the stock market, you need to choose what you want to invest in.
You can invest in stocks, which are shares of ownership in a company, or you can invest in bonds, which are loans that a company makes. There are also other options like mutual funds and exchange-traded funds (ETFs), which are collections of stocks or bonds.
Also, you can expand this to what types of investments will you have in various retirement or brokerage accounts. For example, you may invest in mutual funds with your 401k, ETFs with your Roth IRA, and stick with individual stocks for your taxable account.
This is a personal decision.
Many people when they are first starting to trade stocks choose to limit purchasing stocks with a limited percentage of their overall portfolio.
Step #3. Are you invest in stocks for the short term or long term?
The buy and hold investor is more comfortable with taking a long-term approach, while the short-term speculator is more focused on the day-to-day price fluctuations.
Once again, this is a personal preference.
One of the most common themes of many investing gurus is, “Remember that stock prices can go down as well as up, so it’s important to stay invested for the long term.”
However, this full-time trader wants to make money on those highs and lows.
Knowing your overall investment horizon will help you decide how much time you plan to hold onto your investments to reach your financial goal.
Also, you can choose different time horizons for different accounts.
Step #4: Determine your investing approach
Passive and active investing are two main approaches to stock market investing.
Passive investing does not involve significant trading and is associated with index funds.
Passive investing is a way to DIY your investments for maximum efficiency over time.
Thus, you would contribute to your investment account on the xx day of the month with $xx amount of money.
This happens with consistency regardless of where the market stands on that day.
You are less warry of where the stock market will go and focused on overtime it will continue to go up.
Active investing takes the opposite approach, hoping to maximize gains by buying and selling more frequently and at specific times.
Active investing is when an investor is actively acquiring, selling, or holding bought stocks.
This could be with day trading or swing trading.
You may hold stocks for less than a day, a few days, or a couple of weeks.
The purpose of having active investing is to make profits.
In the stock market, investors make efforts to increase their net worth over time or to make income off the market.
Step #5: Define your investment strategy
When it comes to investing in the stock market, there are a few key factors you need to take into account: your time horizon, financial goals, risk tolerance, and tax bracket.
Do you want to be an active trader or stick with passive investing? What kind of investor am I?
There is no right or wrong answer as this is a personal preference.
Ultimately, you want returns to be greater than the overall S&P 500 index for the year.
Once you’ve figured these out, you can start focusing on specific investment strategies that will work best for you.
Be aware of any fees or related costs when investing. Fees can take a bite out of your investments, so compare costs and fees.
Step #6: Determine the amount of money willing to lose on stocks.
Trading stocks online is inherently risky.
You want to consider what your “risk tolerance” is. Simply put, how much are you willing to lose in stocks before you want to quit?
The biggest reason most people quit trading stocks is that they do not know their risk tolerance and fail with risk management.
You will lose on trading stocks. The goal is to lose a small amount on some of the trades and gain a greater amount of more of your trades.
How much risk you can reasonably take on given your financial situation?
What are your feelings about risk?
What happens when your favorite stock drops 25%?
Understanding your risk tolerance and how much you are willing to lose will help you keep your losses small.
Start with a small amount of money when investing in stocks. Also, make sure you have enough money saved up so you can handle any losses that may occur.
How to Start Investing in Stocks
There are a variety of ways to start investing in stocks. Some methods include getting a small account balance and then buying shares, creating an investing club with friends, or researching the companies you want to invest in.
Now, that you have determined how and why you want to invest in stocks. Let’s dig into the nitty gritty of how to manage a stock portfolio.
On the other hand, if you don’t invest enough, you could miss out on potential profits. Try starting with an amount you’re comfortable losing if the stock market does go down.
1. Open an investment account
There are a few things you need to do in order to start investing in the stock market.
The first is to open an investment account with a broker or an online brokerage firm.
There are different types of accounts you can open:
Taxable accounts like an individual or joint brokerage
Retirement accounts like IRA or Roth IRA
These are the most basic investment accounts, here is a list of types of investment accounts.
If you plan to hold EFTs or mutual funds, Vanguard is a great place to start.
If you plan to be an active trader, I would look at TD Ameritrade or Fidelity. Be wary of Robinhood or WeBull.
2. Saturate yourself in Stock Market Knowledge
On the simplest level, it can be incredibly easy to begin your investing career with little-to-no knowledge, research, and expertise.
If you have even a remote understanding of stocks, then learn what you need from an easy-to-find YouTube video, followed by watching some of your favorite TV shows to learn more about the market and its secrets.
With that said, you need to be digesting the basics from start to end of getting your first investment started.
As the title reveals, investing can seem intimidating and complicated. Thus, stock market knowledge is invaluable.
3. Consider an Investing Course
A typical investing course would teach how to invest in stocks (and possibly other investments).
As a beginner trader, it is unlikely you will know the full extent of how the stock market works. There are many intricacies you must learn and understand.
Beginners should learn about stock investing basics, such as diversification and investment criteria.
Many investing courses offer a platform on how to make money by trading stocks.
Personally, I highly recommend buying this investing course.
If you choose not to follow my advice, that is fine. Come back when you have lost more money in the stock market than the price of the courses.
I CAN NOT STRESS ENOUGH… how important it is to have a solid foundation and practice in a simulated account before you use your real money.
4. Research the companies you want to invest in
When you’re ready to start investing in stocks, it is important that you do your due diligence and research the companies you want to invest in.
Look for trends and for companies that are in positions to benefit you.
Consider stocks across a wide range of industries, from technology to health care. It’s also important to remember that stock prices can go up or down, so always consider this before making any investment decisions.
5. Choose your stocks, ETFs, or mutual funds
Next, you have to decide what fits your investing strategy. Are you looking to buy:
Regardless of which type of investment you make, you must look for companies that have attractive valuations and growth prospects. In the case of index funds or ETFs, which fund has the companies you find attractive.
Most importantly, you should also take into account the company’s financial health and its prospects for future growth.
Make sure you understand the risks associated with holding a particular stock, including possible price fluctuations and loss of value.
7. Take the Trade
This is the hardest step for most people is to take their first trade.
Thus, why learning to trade stocks is great to learn a simulated account using fake money. Then, move to a LIVE account using your real money.
At some point, in your investing in stocks journey, you must press the buy button.
For many the investment platform may be overwhelming to use, so check out your brokerage’s YouTube videos to help you out.
8: Manage your portfolio
Managing your portfolio is important to keep your investments in good shape.
If you are a long-term investor, diversify your portfolio by investing in different types of investment vehicles and industries.
If you prefer to swing trade or day trade, then you want to make sure you always have cash on hand and are rotating your portfolio to take profit.
Investing can be difficult for beginners who often lack knowledge about the stock market.
It is important to remember to keep investing money and rebalance your portfolio on a regular basis. This will help ensure that you stay on top of your investments and achieve the desired result.
9. Selling Stocks
For most investors, it is harder to sell their stocks than to purchase them. There are a variety of factors for that. But, you must sell your stocks at some time to realize your gain.
Don’t panic if the market crashes or corrects – these events usually don’t last very long and history has shown that the market will eventually rebound. Most people tend to panic sell when stocks are low and FOMO buy when the market is at highs.
When you are ready to sell, aim to achieve a percentage return on your investment.
This will require some focus on your time horizon and the stocks you want to invest in.
Also, you need to consider any taxes that may be owed on the sale of stock.
If you’re new to stock investing, consider using index funds instead of individual stocks to gain broad market exposure.
10. Journal & Analyze your Trades
Journaling is a way of recording the important decisions you make during trading to help yourself remember what happened in your trades. It can be used as a tool for reflection, learning from mistakes, and reviewing your strategy.
Analyzing your trades means looking back on your trading history with the goal of improving it.
This is the most overlooked step of the investing process.
When it comes to buying and selling stocks, journalling what is happening in the market is an important part of being a successful investor.
Stock Market Investing Tips for Beginners
Ask any seasoned trader, and they will have a list of investing tips for beginners.
They have made plenty of trading mistakes they do not want to see newbies do the same thing.
When starting to invest in the stock market, beginner investors often seek out consistent and reliable investments.
This allows them to slowly learn about the stock market and take calculated risks while also earning a return on their investment. Over time, as they gain experience, they can expand their portfolio to include riskier but potentially more rewarding stocks.
1. Invest in Companies That You Understand
An investor should know the company they are investing in and have an idea of what type of return they expect.
When you are starting out, it is best to invest in stocks of companies that are easy to understand and have a proven track record.
Do NOT invest in stocks based on the advice of friends, what you read in the news, or on a whim – these can be risky moves. Be wary of the popular stocks you can find on the Reddit Personal Finance threads.
2. Don’t Time the Market
In the world of investing, there is one rule that no investors should ever break: do not time the market.
By following this rule, you will always be on top of your investments and will be able to reap the rewards.
There are times to buy stocks and sell stocks. This is something you will learn when investing in a high-quality investing course.
As an average investor, trying to time the market will leave you frustrated by your minimal returns or great losses.
3. Avoid Penny Stocks
Penny stocks are the lowest-priced securities on the market, and they don’t offer any significant upside potential to their investors. While you may hit a home run return on some, many penny stocks tend to trend sideways.
The risk is not worth the return.
If you plan to invest in stocks, avoid penny stocks and focus on healthy companies.
4. Consider Buying Fractional Shares
Fractional share investing lets investors buy less than a full share at one time. Many times, you may not be able to afford the price of a full share.
For example, buying a share of Amazon (AMZN) may cost you upwards of $2800 or more. Thus, you can invest a smaller amount with a fractional share.
You would have to check if your brokerage company allows the purchase of fractional shares.
5. Stay the Course
In order to be successful, a trader must stay the course and maintain their focus. By staying focused, they will have less chance of making mistakes that may lead to big losses or overtrading.
When you’re starting out in the stock market, it’s important to be disciplined with your buying. Don’t try to time the market, because you’re likely to fail. Instead, buy shares over time and stay the course.
That way, you’ll be more likely to see a profit in the long run.
6. Avoid Emotional Trading
In order to be successful in the stock market, you have to maintain a level head.
Responding emotionally will only lead to bad decision making. Instead, stay the course and trust your research and analysis.
Know your weaknesses as well as your strengths.
7. Do Your Research
When you’re ready to start investing in the stock market, it is important to do your research so you can make informed decisions.
There are a lot of stocks to choose from, and it can be tempting to invest in them all.
But remember, you don’t want to spread yourself too thin. Invest in stocks that you believe in and that have a good chance of making you money.
8. Build Wealth
Stock market investing is one of the best ways to grow your money over time.
For long-term investing, you buy stocks in companies and hold them for a period of time, typically years. Over time, as the company grows and makes more money, so does your stock. This is one of the most common ways to build wealth over time.
The other way with short-term investing is to consistently take profit and grow your account over time.
Stock investing FAQs
Here is a list of the most common questions and answers on stock investing.
Q: What is the difference between investing and trading?
Trading is buying or selling financial products with the goal of making a profit. This is normally a day trader or swing trader.
Investing, on the other hand, refers to the process of putting money into an investment with the hope that it will grow. Someone who is focused on the long-term.
Q: Do you have to live in the U.S. to open a stock brokerage account?
No, you do not have to live in the U.S. to open a stock brokerage account. You must find a brokerage company in your area of residence abroad.
Q: How much money do I need to start investing?
The very common question of, “How much should you invest in stocks first time?”
It is recommended to start investing with $500 or more. However, you can start with Acorns with as little as $5.
Check out this investor’s story by starting with a small account of $500 and growing it over $35k in less than 6 months.
It is best to grow your account with your growth or profit.
Q: Do I have to pay taxes on the money I earn from stocks?
Yes, you will be required to pay taxes on the money you earn from stocks.
Q: What are the best stocks for beginners to invest in?
The best stocks for beginners to invest in are those that have a history of staying consistently on an uptrend. These companies’ stock prices have typically risen over the course of the year.
Find a list of beginning stocks to build your portfolio.
Q: How do beginners buy stocks?
Above, we outlined this in detail. In order to buy stocks, there are a few different steps that you should follow in order to maximize your chances of success.
The first step is making sure you have an account. Once you have an account, the next step is to decide which stocks you want to invest in. Then, you must buy your stock. Finally, you must decide when you want to sell your stock for a realized gain or loss.
Q: How many stocks should you own?
The best answer is it depends on your investing strategy.
As a short-term investor, you can only manage a smaller number of trades.
As a long-term investor, you need a more well-rounded portfolio. of15-25 stocks.
More likely than not, the short answer is “as many as you can afford.”
Q: What is the best thing to invest in as a beginner?
The best thing to invest in as a beginner is an index fund.
Indexes are great because they diversify across many different types of investments and don’t require much effort on the part of the investor to maintain. Index funds are also less risky than other investments, especially in the beginning stages of an individual’s investing career.
Q: How do we make money?
Traders make money in many ways. They can trade stocks, bonds, futures, and options on equities. They can go long when the market goes up and short when the market goes down.
Traders also use trading systems that are usually automated to manage the trades they make to maximize profit.
Trading is a risky investment and it’s not uncommon for traders to lose money. In order to keep losses small, many traders use the trading strategy based on minimizing risk in order to get the desired return.
Learn how fast you can make money in stocks.
Q: Why is Youtube Option Trading So Popular?
Video on how to trade options is very popular on Youtube. This is because of the high volume of interest on this topic.
For many people, learning options is an advanced strategy that takes more time and knowledge to learn.
This is my favorite youtube option trading channel as well as an overall investing strategy.
Additionally, traders are able to get a much higher return on motion trading versus going long or short on stocks.
Q: What is volume in stocks?
Volume is a measure of the number of shares traded in a given period, usually trading days.
This is an important metric if you plan to exit your trade to know there are enough buyers to buy your stock.
Q: How to invest in penny stocks for beginners?
Penny stocks are shares of a company that typically trade for less than $5 per share, which is also known as penny stock trading.
Investing in penny stocks can be a lot of fun and the highest risk, and there are many ways to get involved. For anyone who is new to the world of investing in penny stocks, it can be intimidating to know where to start.
However, there are a few things that you should keep in mind before diving into the world of penny stocks. One of these is researching what types of companies you want to invest in. Many of these penny stocks are not healthy companies and burning through cash.
It is important to always be careful when investing in penny stocks. Keep in mind that the risk of losing money is high and you should invest only what you are willing to lose.
Q: How to invest in stocks for beginners robinhood?
Robinhood is a stock brokerage company that allows users to invest in stocks without paying any fees. It also provides real-time quotes and charts. To invest, the user must have an account with Robinhood that holds at least $0.
Most major brokerage companies have zero commission fees on trading stocks as well.
Beware, Robinhood is known for stopping to trade various stocks during times of volatility whereas other’s brokers do not.
Q: What is a good price to buy at?
This is a hotly debated question as every investor sees the market from their view.
More often than not, people wonder the best time to buy stocks.
As such, you can read is now a good time to buy stocks?
Ready for Stock Market Investing?
If you are new to investing in stocks, there are a few things you take into consideration before diving into the market.
For starters, it is important to understand how stock markets work. You should also know the difference between a stock and an investment.
Investing in stocks can be a bit complicated, but this guide walked you through the basics of how to invest.
Before you invest in stocks, it is important that you understand your investment strategy. That way, you can make informed decisions about where to put your money and how much risk you are willing to take on.
Most people shy away from learning how to actively trade stocks because of the movies about Wall Street they have watched.
You will get a deeper understanding of investing in stocks the longer you educate yourself on the concept.
Overall, it is wise to diversify your portfolio and don’t put all your eggs in one basket.
So, what is your next move to start investing?
One of the best ways to improve your personal finance situation is to increase your income.
Here are the best investing courses to guide your path. With time and effort, you can start enjoying the lifestyle you want.
Learn how to supplement your daily, weekly, or monthly income with trading so that you can live your best life! This is a lifestyle trading style you need to learn.
Honestly, this course is a must for anyone who invests. You will lose more in the market than you will spend this quality education – guaranteed.
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Learn how to reach a six figure net worth in 5 to 10 years, even if you have a massive amount of student loans.
This beginning investment course will help you pay off debt and start your path to six figures.
After taking a second job as a driver for Amazon to make ends meet, this former teacher pivoted to be a successful stock trader.
Leaving behind the stress of teaching, now he sets his own schedule and makes more money than he ever imagined. He grew his account from $500 to $38000 in 8 months.
Check out this interview.
Know someone else that needs this, too? Then, please share!!
I asked, as I sometimes do, what personal finance question my friends and Twitter followers had for me. It was a slow day on the internet and the responses flooded in.
My friend Neil asked, “what do you think about real estate?” A broad question, indeed, and I got him to clarify. “You know… should I buy a house? Why not just rent?”
Why not indeed.
The Dream of Home Ownership I too bit off and gulped down the dream of home ownership when just a small lass. When I graduated from college, I moved to a Southern U.S. city — Charlotte, North Carolina — and like any young professional often in the company of older, established professionals — saw immediately that they all owned houses. And that this was very good.
What they had, I wanted: the houses with the staircases and the pretty backyard decks and the grand old trees in the back and the guest bathrooms with bowls of little colored soaps. I wanted a kitchen, with wide countertops and an arching clamp-hose faucet over the deep sinks and big drawers for flour and pot lids and recycling bins. And art on the walls, and a king-sized bed, and a walk-in closet, and a master bath.
My dream was only made more intense while shopping for condos in New York City, then in Reston, Virginia, with my 20s-era boyfriend. When he went to sign his first title, I went too, and we went out to lunch afterward at a restaurant on 54th street; we spent $112 and when I ate the tiny plate of tiny after-lunch sweets (a little cheesecake, a little truffle, a little gelee), I felt I’d arrived.
Years later, after the boyfriend, I became pregnant and my now-husband and I shopped for homes. My stories of those searches are intense and full of longing and stress; but by my fourth month of pregnancy I was living in house all my own. I vowed to never move.
Tip: Compare mortgage rates from multiple lenders for new home loans and mortgage refinance loans.
Other People’s Dreams I am — I was — the classic case for home ownership. I live in a small city and, when I bought the house, prices were reasonable; my mortgage payment is now less than many pay for renting an apartment. I love working on the yard and painting walls and I even tiled my bathroom myself (with lots of structural help from my father and husband). My husband is handy, and can run wiring and solder plumbing and he built a whole room in the basement. We’re the home ownership success story (though admittedly we have a lot more work to do, and no walk-in closet, no master bath).
But for many people, home ownership should remain the stuff of other people’s dreams.
I think my friend Neil is a good example. His ex-wife longed to buy a home in Los Angeles, where they had made a home after Neil’s upbringing in New York City. The situation was probably even more intense for her than for me in Charlotte; their friends and colleagues owned expansive ranch-style show-homes and sweet artsy bungalows, in neighborhoods where the price-per-square foot probably neared four digits at the peak of the market. The mortgage on those homes would require all of one middle-class salary.
Even for the more economic choices, prices were high and there was no clear benefit to buying over renting; in fact, most mortgages would be more than the cost to rent a nice (and low-maintenance) apartment.
Neil wasn’t good with a hammer or a chop saw, nor did his wife have any desire to keep a fine vegetable garden. There was no dad around to rip out old bathroom floors or teach Neil to solder copper pipes. Neil had no dreams of living in his home forever with his growing family; to date, he has no children and he’s now divorced; he’s not sure if he’ll stay in LA for the rest of the year, let alone the decade. For him, home ownership is someone else’s dream.
Should I Buy a Home? For me, Neil’s question was easy. “No,” I said finally. “I don’t think you should buy a home.”
“But isn’t that the goal?” he asked me. “Isn’t that what you’re supposed to do?”
Well, maybe. But I’ve found my own definition of “getting rich slowly” is often made up of doing few things that one is “supposed” to do; for me, living a double income, office job lifestyle is one such “supposed to” I’ve discarded. For Neil, I prescribed letting go of that “supposed to” of buying a home.
How to Know When You’re Neil Are you Neil? That is to say, should you too avoid adopting the dream of home ownership? Here are a few signs you may be Neil:
You are still a transient. Of course, we know I don’t mean “homeless person.” I believe many of us today graduate college (or high school, if college wasn’t the path for you) as transients, expecting to live in one place for a few years before trying out another, and another, and another, until one feels like home (or until you fall in love with someone who’s rooted to a place, giving you a graft and rooting you, too). If you’re not sure yet if this place is going to be your home for more than the next few years, home ownership is not for you. With closing costs and the uncertainties of the real estate market, it’s very difficult to come out of a two-year home ownership transaction without losing money as compared to renting.
You have no desire to engage in home and garden upkeep. While some such people might hire gardeners and contractors to fill in the holes in their handy skills and passions, most of those who don’t care to pick weeds or fix fences or mow lawns or plant apple trees are better off with an apartment. Purchasing a condo might be an option, if you don’t say “yes” to any of the other items in the “are you Neil” list.
The market in your favorite neighborhood doesn’t make sense. If the cost of a monthly payment on a mortgage would be greatly higher than the price of a two-bedroom apartment or other rental suitable for your family’s needs — say, more than 25 or 30% higher — it’s probably not a good time to buy. While indeed mortgage interest deductions and home buyer credits and the time value of money might be squished around to make the comparative cost similar, do remember that life is uncertain and markets fluctuate and maybe you should wait a bit — or look around for a more sensible neighborhood — before buying something.
You’re not sure about your career or your job. Maybe you’re considering going back to school to become a sommelier. Maybe you’re pretty sure your boss wants to retire and sell the company. Maybe you just don’t love your job and you’re looking around for something new. If you’re not fairly confident your next few years won’t include a significant change in income, it’s probably not a good time to engage with the home ownership dream.
Your relationship with your partner is rocky. I’ve been watching several of my friends deal with the tough decision over what to do with the family home when a relationship is over. In one case that worked out for the best — the family made a nice profit from the sale. But that was a rarity. If you’re married, you might end up having to sell and take a significant loss, even if you’d rather stay in the house solo; if you’re not married, things could be even more wonky. One woman I know lost her grandmother’s home after a pre-marriage breakup (with someone who obviously turned out to be enough of a jerk to keep her grandmother’s home, though that analysis is one-sided and second-hand, so take it with salt). Be honest with yourself, and know that, much like puppies and babies, houses do not fix broken relationships.
You would have to cash in retirement or emergency savings to buy the house. A home buying fund should be separate from those savings for emergencies and retirement. You’ll have more emergencies, in all likelihood, with a home than without. And you know how we feel about retirement savings. If your dream is that intense, then you can use your intensity to fuel your frugality while you save up for the down payment.
It also makes sense to run the numbers through a rent vs. buy calculator to see if the results would influence your decision one way or another. Have you struggled with the decision to rent or buy? Where did you come out on the Neil/not Neil spectrum?
In life, you and your marriage partner may find yourselves facing many troubles and situations. While many of these are easier when together, that is not always going to be the case.
There are times when life is taken from a person quickly, leaving the partner without them. You never know what’s going to happen tomorrow.
You can’t predict the future, but you can prepare for the worst. Nobody wants to think about losing their spouse, but it’s a conversation that you should have
To soften the blow of this, insurance is often used to offer financial stability when the cost of the funeral, hospital stay, and bills are too much to handle alone. The cost of a funeral alone can easily add up to $10,000 or more. This can be a heavy bill to leave behind for your family to pay.
When the surviving partner dies, though, that same insurance might not be enough. For many, a survivorship life insurance policy is the go-to for coverage, security, and stability when it comes to dealing with everything left behind.
Common Use for Survivorship Life Insurance Policies
Most insurance policies work by providing money to a specific person after the one who was insured passes. This helps to ease the financial burden left behind by a death, which includes several expenses and more stressful bills that are without that extra paycheck.
With survivorship life insurance, though, two people are covered to pay for the costs associated with an estate. Unlike your ordinary life insurance, this only pays out when both parties have passed, as the name would suggest. It is mostly to cover the taxes and expenses with an estate so that the heir does not have to pay.
An estate comes with costs that could otherwise ruin its value, or at least drop it dramatically. When passing this to an heir, those costs could cause them to receive far less than promised.
Depending on the situation for which this person is receiving the estate that can be damaging. Not only that, but you would also not be giving the person as much as you had hoped. There is a reason they were chosen to receive your estate, obviously, and not giving them the full amount was probably never your plan. With this, you can ensure that they receive as much of the full amount as possible.
There are thousands of families members that find themselves with drastically less heritage than they assumed they would receive because of unpaid expenses, taxes, fees, and much more. If you want to leave your legacy with your children or loved ones, a survivorship insurance policy will protect your savings and allow your inheritance to reach its full potential.
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Estate Planning with Life Insurance
Having any type of final expense insurance is not difficult.
In fact, it is often easier than your average life insurance because it can be issued as a no medical exam life insurance policy. These policies are exactly what they sound like, you’ll be able to get the insurance coverage that you need, regardless of your health or any pre-existing medical conditions.
This can help you to insure your estate without issue so that whoever is receiving it is not stuck with massive bills that chip away at the overall amount. The ease of getting it also makes it easier on you, obviously. While other types of life insurance have stresses and because you to go through several steps to finally be insured, this makes it easier. When going for this type of insurance, it is possible to get it and get out without becoming stressed, worried, or bothered by what must be done.
With the importance of your estate, it is necessary to ensure it goes to your chosen heir in a complete amount. Having survivorship life insurance is the option to keep your estate at full value and help your heir get it without spending large sums of money.
It’s always best to meet with a trusted estate planning attorney to see if you are in need of a survivorship life insurance policy. There are a lot of different factors that you have to consider when deciding if you need a survivorship life insurance policy or a traditional plan. An estate planning attorney can help walk you through the process and make the best decision for you and your family.
Advantages and Disadvantages of Survivorship Life Insurance
Because there are so many different life insurance options, it’s important to understand the pros and cons of each option. Life insurance is one of the most vital purchases that you can make for you and your family, you should make well informed and educated decisions.
Not having the right type of policy, or not having a policy at all, is one of the worst mistakes that you can make. It could leave your loved ones with a mountain of debt and no way to pay for it. That’s not the inheritance that most people want to leave behind after they pass away.
One of the advantages to these survivorship life insurance policies is the standards that most companies used to issue them. If you go with a plan that uses medical underwriting, it’s going to be very different from a traditional term life insurance policy, because it’s based on the health of two people instead of just one.
This means that even if one person doesn’t have perfect health, you’ll still be able to get coverage as long as the other person is in good health. For anyone with any serious health complications or any pre-existing conditions, this can be extremely beneficial.
Another major advantage to these policies is the monthly premiums. In most cases, a survivorship life insurance policy is going to be cheaper than buying two separate policies for each person. These plans will give you life insurance coverage for less expensive monthly payments.
Just like other life insurance plans, there are disadvantages to these policies. The biggest disadvantage is obvious, you won’t receive any payment for the loss of your spouse.
When the first person dies, the surviving spouse will be left with all of the funeral expenses, medical bills, unpaid debts, and much more, but they won’t receive any funds from the life insurance policy. For a grieving spouse, it can be difficult to pay for all of these expenses.
This is where a traditional policy is an excellent tool. One alternative to the survivorship life insurance is purchasing a traditional term life insurance policy for both you and your spouse. These policies only cover one party instead of two.
In most cases, a term policy is much less expensive than most applicants think. Aside from how affordable they are, it’s also much more beneficial when your spouse dies, it will leave you with the money you need to pay off any debts or pay for any funeral expenses.
Just like with most other policies, you can always go with a no medical exam term life insurance plan. They are easy to apply for, and you can get insurance coverage quickly. In some cases, it can be as quick as a couple of days.
Getting Life Insurance
It’s easy to see why everyone should have a quality life insurance policy, but getting an affordable plan can be a long and stressful process. There are hundreds of companies that offer dozens of different insurance products.