Compound Interest

How to Harness The Power of Compound Interest

When asked what mankind’s greatest invention was, Albert Einstein replied: “Compound Interest”. He has also been quoted as saying that compound interest is the “eighth wonder of the world.”

In this article, I want to help explain the real power of compound interest, how you can take advantage of it, and what it could mean for your financial situation. But before we get there, let’s first understand what compound interest is.

What is compound interest?

There is no better way to explain compound interest than Benjamin Franklin’s quote: “money makes money. And the money that money makes, makes money.” Feel free to read that a few times over and really soak it in, and then let’s hop into an example.

Imagine you start with $100, and you have that money invested in an index fund full of different stocks. On average, the total world stock index returns 7% per year. So, at the end of the first year, your original $100 worth of index funds is now valued at $107. This is where the magic happens – in the second year you gain another 7%, but instead of gaining 7% of $100 (which would be another $7) you gain 7% of $107, which comes out to an additional $7.49.

It might seem like a minimal gain initially, BUT the real power of compound interest starts to shine over time. In this same example, after 30 years of compounding, your initial $100 is worth a whopping $761 compared to just $310 if your money was not compounding. That is more than doubling your end result with the power of compound interest! Add a couple of zeros to this calculation, and you can quickly see why this is the eighth wonder of the world.

Here is a nice graphic from the Visual Capitalist (with a couple more zeros) to help you visualize this example to highlight the power of compound interest.

Compound Interest

Created by Visual capitalist

As you can see, over time the interest, and the interest earned on the interest, really starts to add up.

I think it is worth explaining that when people say compound “interest”, it doesn’t always mean that you are earning “interest”. In this last example, you purchased an index fund that appreciated in value over time – you didn’t actually gain any “interest” on your index fund, but as it appreciated by 7% each year, that growth of 7% continued on the new, higher-value each year. Now let’s explore just how much of a difference compounding can make in your financial situation.

The power of compound excitement.

The true power of compound interest shows itself over time. To help understand the relationship between time and compounding, let’s look at another example from the Visual Capitalist.

Compound Interest

By Visual Capitalist

In this example, you have Jessica on the left and Newman on the right. Jessica starts saving ten years before Newman, at the age of 25. On the other hand, Newman waits until he is 35 to begin investing. BUT he invests twice as much as Jessica every year from when he starts to when they both turn 65. Any bets on who has more money when it is all said and done?

If you guessed Jessica, then you are CORRECT!

Despite having saved only half the amount that Newman did, Jessica still ends up with a larger investment balance simply because she got started ten years earlier and put compound interest to work on her behalf!

Compound Interest

By Visual Capitalist

I hope this is starting to help connect the dots.

The earlier you start saving and investing, the more powerful compound interest becomes.

So all that being said, what can you do to take advantage of the power of compound interest?

How to harness the power of compound interest?

This is as simple as it gets: start saving and investing TODAY. The sooner you start, the easier it is. I think one of the biggest areas that people fail with personal finance is thinking that they have to have everything perfectly figured out before they get started. This means they end up waiting a lot longer than they should to start investing. My challenge to you is to figure out what amount you could set aside right now to get started! Realize that the best time to start investing was yesterday, and the second-best time is today. By getting started now, you can harness the incredible power of compound interest and put your money to work. 

Think about this: you have to save nearly twice as much money to get to the same end result for every ten years that you wait to start investing. So put another way, the sooner you start, the less you need to save to reach the same level of wealth. 

To continue to drive home the point, here is another graphic from the Visual Capitalist. This shows how much money you would need to invest to end up with 1 million dollars at the end of each time period. The results are staggering. At the top, you can see that if you want to be a millionaire in 15 years, you will need to invest $33k PER YEAR. But what if you start when you are 20 years old and want to be a millionaire by 65? That gives you 45 years to let the power of compounding work on your behalf, and you would only need to invest $3k per year! 

Compound Interest

By Visual Capitalist

Now that you understand what compound interest is, the true power, and how to harness it. Let’s talk a bit about what it could mean for your financial situation.

What compound interest can do for your financial situation.

Armed with the knowledge of compounding, you start to see why it can be so powerful to start saving and investing while you are young. Referencing the graphic above, if you have 50 years to save and invest, you can become a millionaire by only investing $107,500. Contrast that with someone who delays saving for retirement and only has 20 years to save; they would need to invest $419,000 to reach that same $1 million mark. Plain and simple, start early, and the money will do the work for you. Start later, and you will need to do a lot of the work to get there.

Putting it all together.

To sum it all up, compound interest is the interest you earn on the interest that you have earned. It is a multiplying force that will propel you to financial independence and put your money to work on your behalf. By understanding the relationship between compound interest and time, you can see the real value in getting started young with your savings and investments. By delaying saving and investing, you lose some of the power of compounding. This will result in you having to put forth more of the effort rather than letting your money work on your behalf. Remember, the best time to start saving was yesterday, and the second-best time is today. Do not delay, and do not hesitate to share this with any young people in your life that are wondering if they should start investing now or if they should wait.

Compound Interest

How to Harness The Power of Compound Interest

When asked what mankind's greatest invention was, Albert Einstein…

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Do you need life insurance?

Should you buy life insurance? At some point in your financial journey, you are going to come across this question. Maybe you heard a friend or family member talking about the importance of life insurance. Perhaps you have heard someone talking about life insurance as an investment. Maybe you are even just curious how it should fit into your financial plan. Whatever the reason might be, in this post, I am going to help you crack the code of whether or not you need life insurance, what type of life insurance you should consider, and of course, how much? Before we dive into all of that, I want to first explain the purpose of life insurance.

What’s the point of history insurance?

The easiest way to answer this question is to ask yourself: does anyone depend on me for my income? If the answer is yes, then odds are you should have life insurance. If the answer is no, it might still make sense to purchase life insurance, but most of the time, it won’t be necessary, but more on that to come. Ok, so someone depends on you for your income – maybe you have a family and you and your spouse both work, perhaps you are the primary breadwinner for your household, or perhaps you support your parents or siblings. Whatever the case may be, if someone depends on you for your income and you were to pass away, they are truly left out to dry. That is where life insurance comes in. Life insurance is there to supplement your dependents by replacing the income you were making or merely covering the expenses after you are gone. Easy enough, right?

When to buy vs. not to buy

Let’s now exDo you Need life insurance?plore some of the nuances of when to buy vs. not buy life insurance. What if mom works full time as the primary breadwinner and dad stays home with the kids – who needs life insurance? Mom definitely needs life insurance because if she were to pass away, they would need to replace her income, but what about dad? Just because dad’s work in the home is not “Paid” does not mean that dad doesn’t need life insurance as well, because if dad were to pass away, mom would need to either cut back at work to take care of the kids, or hire help to come into the home, and both of those situations would cost them money. So yeah, mom and dad both need life insurance in this situation.

Now, what about a single person with no dependents – should they still buy life insurance? Ultimately, it is up to you, but you likely do not need life insurance unless you are planning to support someone in the future. For example, let’s say you have some nieces and nephews that you would like to help send to college – if you were to pass away, you wouldn’t be able to make that contribution, but if you had life insurance, you could make sure that some of the proceeds went towards helping them out with college costs. At the end of the day, who needs life insurance is an incredibly personal decision, but the best way to start the conversation is to think about who depends on you for your income, either now or in the future. Alright, now that you’ve decided whether you need life insurance or not, let’s talk about which type of life insurance.

What type of life insurance?

When it comes to different types of life insurance, things can quickly get much more complicated than they need to. I am going to help keep it very simple and say this: the majority of the time, term life insurance is going to be the best fit. There is another type of life insurance called “permanent” that can be beneficial in very obscure situations with estate planning for high net worth individuals, BUT in the majority of cases, the costs and complexities of permanent life insurance far outweigh the benefits. Without diving too deep into the weeds – you might come across individuals who are really selling permanent life insurance and trying to convince you of the benefits, but at the end of the day, you need to realize that the only people really pushing permanent life insurance are those that earn a hefty commission from selling it. Take a good look at the incentive structures for these salespeople and take all of the advice with a grain of salt.

So all that to say, stick with term life insurance. It is very straightforward, you pay a premium each month to be insured for a specific amount and purchase it for a specified “term,” usually 20 – 30 years. The great thing about term life insurance is that it is cheap for younger individuals because your likelihood of passing away during that period is so low!

So to recap here – diving into the details of life insurance can get tricky and complex, but for the majority of people, term life insurance is the best fit.

How much life insurance do you need?

So you have decided you need life insurance, you have decided you are going to buy term life insurance. Now you are wondering: well, how much do you actually need?

There are a few different ways to calculate how much insurance you need. You can focus on replacing your exact salary, OR you can focus on covering the household expenses. Sometimes people focus on a combination of replacing income and then paying off a large debt such as the mortgage with a lump sum as well. Here are a few other things to think about as you are making this calculation:

  • Do you plan to send your kids to college in the future, and how much will that cost?
  • Do you want a lump sum set aside as an emergency fund?
  • How much income are you trying to replace each year?
  • Are there any lump sum payments you would like to make either towards an outstanding debt OR to a specific individual?

As you answer each of these questions, you will start to gain a clear understanding of what your total life insurance needs are.

Ultimately there is no right or wrong answer, as long as you are accounting for the needs of your situation. One of the best ways to figure out your exact needs is to use an online calculator to walk you through step by step.

Where to buy term life insurance?

Alright – you’ve decided you need life insurance, you know you want term, you know how much you need – the last step is putting the rubber to the road and purchasing a term life insurance policy.

Do You need life insurance?

We are so fortunate to live in a time where we have the ability to shop around, compare quotes from a number of different companies, and make the best decision with all the available information. A fantastic company that I highly recommend for purchasing insurance of any type is PolicyGenius. They are an insurance marketplace that makes the shopping process incredibly easy and competitive by bringing the business to you. You simply fill out a questionnaire, decide how much you are looking to purchase, and they help you compare quotes from a number of different providers, without any heavy lifting on your part. I highly recommend them for your life insurance needs.

Another great place to purchase term life insurance is from a company called Ladder. They do a great job of simplifying the entire process. They have some cool features as well where they allow you to increase or decrease the amount of life insurance you have very easily as life circumstances change. 

PolicyGenius and Ladder are two great places to purchase term life insurance, but there are a number of other options that could be a good fit as well. The biggest thing to look for is a competitive price and an easy to use website.

The recap:

To sum it all up: not everyone needs life insurance, but it is a conversation that everyone should have. Term life insurance will be the best fit for most people because of its low cost and simplicity. How much life insurance is a very nuanced question, as long as you consider the main points and using a good online calculator, you can land on the right amount for your situation. Lastly, there are many good options for where you can purchase term life insurance; just make sure you compare offers and get the best deal possible.

Drop a comment below if you have questions, and don’t hesitate to share this with anyone that it might help!

Compound Interest

How to Harness The Power of Compound Interest

When asked what mankind's greatest invention was, Albert Einstein…

Do you need life insurance?

Should you buy life insurance? At some point in your financial…
How to make money in bitcoin

How to Make Money with Bitcoin in 2020

In a recent article, we explored what cryptocurrencies were:…
How to make money in bitcoin

How to Make Money with Bitcoin in 2020

In a recent article, we explored what cryptocurrencies were: what they are, how they work, and why they are valuable. We honed in on Bitcoin, the most popular and most valuable cryptocurrency on the market right now. If you haven’t checked that post out but you’re interested in investing in Bitcoin, we recommend you start there. 

Never invest in something you don’t understand. That goes for Bitcoin just as much as it does for Real Estate or Mutual Funds.

But if you’re familiar with Bitcoin and are wondering how you can make money with Bitcoin in 2020, then this article is for you. Before we begin it’s always worth noting that, like any investment, investing in Bitcoin comes with risks. We always recommend you sit down with a certified professional before investing in anything.

With that out of the way, let’s dive in. Here are 3 simple ways to make money with Bitcoin.

1.) Invest in a Bitcoin Mining Farm

Mining Bitcoin is the most straightforward way of making some income from Bitcoin. In the late 00’s and early 10’s, many people were able to acquire tons of Bitcoin using their home office computer. But those days are long gone. 

Competition has increased dramatically since those days and an internal process, baked into the development of Bitcoin referred to as “halving” has greatly reduced the chances any one person strikes it rich with Bitcoin using their machine at home – even if it’s a high powered Workstation or Gaming PC.

How to invest in bitcoin 2020

So how can someone stand a chance at making a profit with Bitcoin in 2020?

Many people are turning to Cloud Computing as a cost-efficient way of entering the Bitcoin mining business. Companies like Genesis Mining have created massive warehouses full of machines, specially designed to mine Bitcoin. Genesis Mining then rents out these machines for individuals like you and me to use. Think of paying for storage space on Google or Apple Cloud, but instead, you get a certain amount of Bitcoin mining.

How much mining power do you get? That depends.

Just like Google and Apple offer tiered plans, based on the amount of storage you need in their cloud systems, cloud mining companies have tiered plans. You can get started mining for about a $200/30mo contract.

There is no guarantee you will strike Bitcoin gold, but if you do, you’d be in line for a great payoff.

2.) Buy Bitcoins and Hold Them

In December of 2017, Bitcoin reached its highest value to date at ~$20,000. Many people who started mining or investing in Bitcoin early became fast millionaires as the value per coin soared in 2017. Now some people are projecting another rise in the value of Bitcoin. One article in Forbes projects a huge swing in value up to $50,000 this year.

For this reason, many people are looking to purchase Bitcoin now, while the price is hovering around ~$19,000. If those forecasts still hold up, there’s a chance for a very large payout this year for investors or buy and hold Bitcoin until another peak occurs.

What if I don’t have $19,000?

You might be thinking, “Well that’s great for people with $9,000 laying around in a checking account, but that’s not me! Can I buy part of Bitcoin?” The answer is a resounding, “Yes!”

A single Bitcoin can be divided to the 8th decimal point (0.00000001). This is called a “satoshi” which might ring a bell – that’s the pseudonym for the anonymous creator of Bitcoin. That means that for $90 you can own 10% of a Bitcoin (numbers accurate as of 06/27/2020). 

If those investors are right, you’ll turn your $90 into $450 by the end of the year. That’s an insane ROI!

But before you go out and empty your accounts and invest it all into Bitcoin, remember, no one really knows what Bitcoin will be valued. Bitcoin is still relatively new and volatile. All we have to go on right now is a short history and some educated guesses.

That’s why our final suggested way of making money with Bitcoin comes with little to no initial financial investment.

How to make money in bitcoin 2020

3.) Complete Tasks or Jobs in Exchange for Bitcoin

Maybe you’ve heard of websites like TaskRabbit, Upwork, or Fiverr? If not, you should definitely become familiar with at least one of these sites. These are great websites for people who have extra time on their hands and are looking to start a side hustle. As one of our readers, you should definitely be working a side hustle. It’s one of the easiest ways to quickly gain some traction with your personal finances and build wealth.

These websites act as mediators between people with time and skills and businesses or individuals who need services done. This protects the interests of both parties. In exchange for the convenience and financial security, these companies take a little cut of all earned income. 

While these sites don’t accept Bitcoin as a form of payment, there are a growing number of websites that do. Sites like Cryptogrind allow you to trade your expertise and time for some satoshis or Bitcoin.

Each job is listed with both the USD and BTC (Bitcoin) offered. This is awesome because it allows you to properly price your time. A satoshi is a really small number and working out your rates every day (or hour) would be a huge pain.

This is a super convenient and low-cost way to begin investing in Bitcoin without pulling from any of your current savings or investments. Just remember you’ll need some kind of Bitcoin wallet to store those coins or else you can’t get paid.

If you need help choosing the Bitcoin wallet that best fits your life check out this awesome resource from Bitcoin.com.

Many Ways to Invest – What Will You Choose?

Investing in Bitcoin isn’t complicated and it doesn’t even have to be costly. You can get started today even if you’re not prepared to invest financially. As Bitcoin continues to grow in popularity there will be a growing number of businesses built around Bitcoin and the opportunities to invest will grow right along with them.

With so many ways to invest, what will you choose?
Or do you think Bitcoin is a fad that will be here today and gone tomorrow?

Let us know on social media. 

We’d love to hear from you!

401(K) or IRA

401(k) or IRA: Which do you need?

At the beginning of every investor’s journey comes the question: should I be investing in a 401(k) or an IRA? In this article, I am going to help you break it down step by step, and understand clearly where you should be saving, and why.

Clarification

But first, I want to clarify a few things:

IRA

IRA stands for Individual Retirement Account. This is a retirement account that you usually start on your own, outside of the workplace. It has Roth AND Traditional options. Roth means that the money goes in after you have paid taxes on it, and you never have to pay taxes on it again. Traditional means that the money goes in before you pay taxes on it, and then when you pull the money out in retirement, you pay taxes on it then. Depending on which custodian you use to set-up your IRA, you can pay zero in administrative fees, and have access to a wide range of investment options, with very low fees.

401(K)

A 401(k) is an employer-sponsored retirement plan, meaning it is offered through your work. It often comes with an employer matching contribution (free money!) Most 401(k)’s are pre-tax, just like a Traditional IRA. Still, oftentimes employers have an option to contribute to a Roth 401(k), which means that you have already paid taxes on the money that you are putting in, and you never pay tax on it again. 401(k) has a limited number of investment options, usually 20-30, and can sometimes have high investment and administrative fees.IRA or 401(k)

Why are these so great?

One of the coolest things about 401(k)’s and IRA’s is that while your money is growing, you don’t have to pay taxes on the dividends or interest earned along the way. Without diving too deep into this, it is a unique advantage that you get for saving in a retirement plan.

Which Do you need?

Okay, now that you are clear on the lingo, and a few of the benefits, let’s think through your situation. You have recently decided that you want to start saving and investing for retirement, but you aren’t sure where you should be saving. The first question I want you to answer is this: do you have the option to contribute to a 401(k) at work?

  • If the answer is no, then skip down to the section titled IRA’s.
  • If the answer is yes, proceed to the 401(k) section.

401(K) Benefits

Alright, before we hop in, I have another question for you: does your employer offer a matching increase?

An employer match equals free money. We like free money.

For example, a standard employer match is 3%. That means if you put 3% of your paycheck into your 401(k), your employer will match that contribution, and without doing anything, you have doubled your money, woo-hoo!

Now that is cool, but what if you don’t get an employer match, and what if you want to save more than the matching amount? Should you just continue saving in your 401(k), or does it make more sense to set up an IRA and contribute? The bottom line is this: it just depends. It depends on what the fees are like in your 401(k), and it depends on the investment selection – yes, I hate to break it to you, but there are going to be administrative fees AND investment fees in your 401(k). Some 401(k)’s have low fees, some have high fees, it all depends. Here are some fun facts for you: A recent study by TD Ameritrade found that while 95% of 401(k) participants were paying fees, one-third of all participants reported that they thought their 401(k) had no fees. But not you, now you know!

How much in fees are we talking about? On average, 401(k) participants pay .45% in fees, with some being higher, and some being lower. Compare that to set up an IRA at Fidelity or Vanguard, which has zero administrative expenses, and fund fees as low as zero for Fidelity, and .06% for Vanguard. All that to say, check the fees in your 401(k), know what you are paying, and if you are comfortable with the added expense, keep contributing above and beyond the match to reach your desired savings rate.

What about people who either don’t have access to a 401(k) OR their fees are so high that they are just getting the 401(k) employer match and looking to save additional amounts elsewhere? Let’s talk IRA’s.IRA or 401(k)

IRA Benefits

So, you are ready to save in an IRA – first things first – congratulations. This is a massive step towards financial independence, and your future self will be incredibly grateful. The first thing you are going to have to decide is where you should open your account. There are a lot of options to choose from. Some things to consider: are you confident in choosing which funds to invest in, are you okay with rebalancing your account when your asset mix gets out of alignment, OR are you looking for a very hands-off approach where you can just invest the money, and everything else happens automatically? There is no right or wrong answer, just be honest with yourself and the level of involvement you are hoping for.

If you are okay with more of a DIY approach and happy to pick your own funds and rebalance, then I recommend going with Fidelity or Vanguard to open your account. They both offer free IRA’s with no account minimums and have some very impressive, inexpensive funds to choose from. If the thought of selecting funds and rebalancing your accounts makes you want to turn and run, then I recommend checking out Betterment or Wealthfront. They are two amazing Robo-advisors that make the set-up process slick and smooth. Both charge for their services, but it is a minimal amount for what they do (.25% of everything invested). They will help you figure out which funds to use, how much to have in stocks vs. bonds, and help you rebalance along the way.

Alright, you’ve figured out where you are going to open the account, now comes the question, should you open a Traditional IRA or a Roth IRA? The answer to this question would take an entire article, so without diving too much into the weeds, I will help you make a decision. As a rule of thumb, if you are in the 22% tax bracket or higher, go with Traditional. If you are in the 12% tax bracket or lower, go with Roth. The thinking is that with a low tax rate now, you want to “lock that in” with the Roth contributions, and on the flip side, with a high tax bracket now, you want to contribute pre-tax (traditional), so you can take the money out in a lower tax bracket during retirement. Not sure which tax bracket you are in? Here you go:

Once you’ve decided Roth vs. Traditional – you are ready to set up the account, set up an automatic monthly contribution, choose your investments and let it roll! But wait, there’s more! Because IRA’s have special tax advantages, the IRS says that there is a limit to how much you can contribute! Make sure you check the limit for that year, and do not over contribute. For 2020 the limit is $6k per person, with an additional $1k for anyone over the age of 50.

Conclusion

To sum it all up, 401(k)’s and IRA’s are amazing places to save and invest money for your retirement. If you have a 401(k) with an employer match, you want to do everything you can to get the full match and take advantage of that free money! Once you get the free money, you can either continue saving in your 401(k) OR if the expenses are too high or the fund selection is too limited, you can set up an IRA (Roth or Traditional) with the provider of your choosing. The cool thing about this decision is that you really can’t go wrong – it’s like choosing between chocolate ice cream or vanilla ice cream, either way, you are getting ice cream! Sure, you can optimize and figure out where to save based on paying the least in fees and saving the most in taxes, but at the end of the day, the important thing is that you don’t get stuck trying to make a decision and that you get started saving and building towards your financial independence.

When you start your investing journey, one of the first questions you ask is whether you should invest in 401(k) or IRA. But what is the difference?

Compound Interest

How to Harness The Power of Compound Interest

When asked what mankind's greatest invention was, Albert Einstein…

Do you need life insurance?

Should you buy life insurance? At some point in your financial…
How to make money in bitcoin

How to Make Money with Bitcoin in 2020

In a recent article, we explored what cryptocurrencies were:…
Investment types

Different Types of Investments that Could Make You Millions.

How will you become a millionaire?

What is a millionaire? Some would tell you that a millionaire is someone who makes a million dollars a year, but that could not be farther from the truth. A millionaire is someone who has a million dollars in assets or, in other words, investments. Your next-door neighbor could be a millionaire, and you don’t even know it. You might be wondering now how you can become a millionaire too? The answer is simple “Invest.” No one can become a millionaire without investing—even people who become millionaires from the lottery invested in a lottery ticket. I’m not suggesting you invest all your money in the lottery. Instead, you will see all the different types of investments almost guaranteed to bring you returns.

Stocks

Stocks are the most common investment and preferred by most because it is simple and the easiest to get started. A stock is a piece of ownership of a company. Since it requires time to earn a profit, you need to understand the worth of the company and the possibility of liquidation before investing your hard-earned dollars. There are two types of stocks; preferred and common. Preferred shareholders enjoy most privileges. For instance, they are compensated first in case of liquidation and attend special meetings too. This means your investment is relatively secure. 

On the other hand, common stock owners have fewer preferences, and during liquidation of a company, are compensated last. However, common stocks are entitled to the right to vote. Note, it is essential to avoid putting all your eggs in one basket. It is vital to diversify your investments. Consider investing in an index fund to diversify your portfolio. Stocks can either be bought directly from a company or using a stockbrokerThe easiest way to get started investing is just by downloading an investing app straight to your phone. Check out helpful Jack’s top pics for investing apps Investment Typesif you aren’t sure which one you should use.

Pros

  • The value increases over time, earning more profit.
  • Easiest to get started with and requires little start money.
  • It is the easiest investment that you can turn into cash quickly.

Cons

  • The stock market can be Volatile
  • Markets can crash

Options

An option is a contract that gives you the right to buy or sell an asset at an agreed-upon price for a specific time. Now that might sound complicated, but let’s break it down. There are two main options you need to know.

  • Calls Options- gives you the right to buy at an agreed-upon price. For example, say you agree to buy a car for 15K if you decide to buy it. You give a premium of $300, and at the end of the contract term you choose to buy the car, the seller must sell it to you for 15K.
  • Puts Options- Puts are similar to calls but focuses on selling. Think of car insurance for this. Your insurance agrees to buy your car at 15K regardless of what shape it in. If you were in a wreck and it was total, you have the right to have your insurance buy it at 15K.

An Option is often for stocks or purchasing a house. Let’s focus on the stock aspect. Look at Call options if you pay a premium of 100 for the right to buy 100 shares at $10. A week later, you see that the stock has gone up to $15 a share; you call for your right to buy at $10. You go right around and sell it for $15, you have made a $400 profit.
$10X100 – 100= $1,100 total buying $15*100= $1,500 selling.

Pros

  • Your risk is mitigated to only the premium you paid.
  • Fewer government regulations required.
  • Your returns are unlimited.

Cons

  • The biggest con is time itself. Stock options contain a deadline, and if you aren’t where, you want or need to be to make a profit.

Bonds

These are loans issued by the government or private companies. Bonds are considered the safest type of investment since the U.S government backs most bonds. There are three basic types of bonds: U.S treasury, municipal, and corporate. Each brings different benefits and tax benefits. You want to focus more on bonds when you are close to retirement since they are much safer than stocks, and they have a fixed income that you will receive every year. However, even if you are young, you want a small percentage of your portfolio in bonds.

Pros

  • It’s one of the safest investments out there.
  • They can act as a lifetime investment. 
  • You get the principal back at the end of the loan.

Cons

  • More often than not, it bring in lower returns than stocks.

Exchange-Traded Funds (ETF)

An ETF is similar to mutual funds, in which the ETF pools other investors money and diversify the investors’ money. ETF can vary in what type of investment it chooses. You can find an ETF for just about anything. For example, you can find an ETF that focuses solely on stocks that pay dividends that focus on growth stocks, follow the S&P 500, or only invest in socially conscious companies. An ETF price is determined similarly to how a stock is. You purchase ETFs like you would any other stock.

Pros

  • Helps diversify investment 
  • Cost less than mutual funds
  • Low Expense ratio

Cons

  • Depending on the ETF fee, it could drastically lower your returns.

Cryptocurrency

Cryptocurrency is a form of virtual currency. The first Cryptocurrency ever created was Bitcoin back in 2009. There is more than just bitcoin out there. However, Bitcoin is by far the most popular and most valuable Cryptocurrency out there. The world of Cryptocurrency is still relatively new but has brought much attention from both investors and everyday people. Cryptocurrency is commonly used for secure payments. When investing in Cryptocurrency, the best way to invest is to buy low and sell; even then, you won’t know what low is.

Pros

  • Potential for massive returns
  • Have high liquidity 

Cons

  • High volatility 
  • Cryptocurrency is still new, and there is still much we don’t know about it or what its future might holds.

Types of Investments

Mutual Funds

Mutual funds are somewhat similar to ETFs but have a few key differences. These funds pool investors’ money to purchase securities ranging from stocks, bonds, real estate, and other assets. However, an ETF is priced like stock, while a mutual fund value changes only at the end of the day, depending on the Net Asset Value (NAV).

Pros

  • Advanced Portfolio management 
  • Reduces risk since your money is spread out through an entire portfolio.
  • You can afford stocks you could never afford on your own.

Cons

  • Has higher expense fees than ETFs

Certificate of Deposit

A certificate of deposit (CD) is a federally insured savings account with a fixed interest rate and a set date of withdraws. The main difference between CD’s and savings accounts is that traditional savings accounts let you withdraw and deposit freely. The lengths can vary from few days to entire decades.

Pros

  • Very safe form of investing since the federal government insures it.
  • The interest rates are fixed.

Cons

  • You can’t easily access your money once it is in the account, and if you try to withdraw early, it will lead to penalties.
  • While they are much higher than traditional bank accounts, they still don’t provide as good returns as other investments.
  • Taxes could eat away at the little profits you do get.

Peer to Peer Lending

We have all lent money to friends, but wouldn’t it be nice to make money off the money you lent? That is where peer to peer lending comes in. Peer to peer is where you and other investors pool together money and loan it out to someone. That person then pays interest on the loan, and you get that interest plus your original investment. The best two choices for peer to peer lending are Lending Club and Prosper. Neither Lending Club or Prosper are approved in all 50 states. Make sure to check and see which is approved in your state.

Pros

  • Can provide good and steady returns
  • You can efficiently diversify your money to multiple loans at once.

Cons

  • You are responsible for your investments. Unlike other platforms, you have to find the investment yourself and decide whether it is a safe investment. If you leave money in the account, it will be eaten away by inflation and gain zero returns. 
  • You are the bank in this situation and are subject to the same risk as other banks. If the borrower doesn’t pay back the loan, you lose your investment.

The Bottom Line

You know, investing is one of the most important things you need to be doing right now. Time is money, and a single day could mean the difference between you and a few thousand dollars. Don’t think these investments will get you rich quick. All good investing is long term. Do not expect to turn your $100 to a million overnight. If you start now, I can guarantee that someday you will have a million in investments, and you’ll be happy that you didn’t wait to start investing. Learn these different types of investments and you will be ahead of 99% of the population.

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The best investing apps

The Best Investing Apps of 2020 (Top 8)

Investing used to be a complicated matter and even more complicated to figure out what your returns were. Not too long ago, you would have to call or email your financial advisor to see how your investments were doing. However, today all you have to do is click a few buttons to see how your assets are doing. If you think that is easy, it’s even easier to start investing. The hardest choice you’ll make is which investment app you should use.

All the apps on the list are the best investing apps you can be using. The only question you need to ask is, what is your goal with investing? Is it to save money for college, retirement, vacation, wedding, have money in savings, or something else? There are many different types of goals you could have, and each app could help you reach that goal.

NOTE these are not in any specific order; each app is a great choice, but each have different calculated benefits

TD Ameritrade

TD Ameritrade has been around since 1975 and is one of the country’s biggest online brokerage companies. More likely than not, you have heard about or have seen its bank somewhere in your city. If you are new to the world of stock investing or trading, then this is a place you want to consider starting. 

What Makes TD Ameritrade a great place to start is its vast Educational videos. The moment you create an account, you have access to all their educational resources, making it an excellent place for any starting investor. However, don’t that let that fool you TD is excellent even for the most experienced investor. TD offers all types of tools to help you out and making sure you can find out anything you need to about a specific investment.

Understand TD is best for those of you who are ok with being hands-on with your investments. If you don’t invest your money, it will just be sitting in your account losing value due to inflation.

Important Notes

  • Minimum Starting amount- $0
  • Fee- $0
  • Best for hands-on investors

The best investing apps

Acorn

If you are someone who struggles to save, then you might want to consider using Acorn to help you save and invest. Acorn has gained much popularity in the past couple of years, especially among young people. 

Acorn is a Robo-advisor investing platform that designs a portfolio based on your risk level. They have five modes of investing on their platform Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and aggressive, making it an excellent choice for a wide range of investors. If you don’t know, Robo-advisors are computers that use algorithms and advanced software to build and manage your investment portfolio.

What makes Acorn so great is that it helps make investing automatic. By connecting it to your debit card, it rounds up all your purchases. If you purchase a coffee for 4.30, Acorn will round it up to $5.00 and invest that $0.70 into your account. Now while there are many positives to Acorn, there is one thing that should be known. The fee can range from $1 to $3 a month. Now that might not seem like a lot, however, if you spent 12 dollars on fees a year with only a $100 investment, that is a 12% fee. 

Important Notes

  • Fee $1-$3
  • Minimum starting $0
  • Best for those who don’t want to think about their investments

Robinhood

Chances are, if you have been doing any investing, there is a good chance that you have been using Robinhood. Robinhood gained popularity by being the first investing platform to offer a complete free trading platform. Unlike TD, there aren’t any fees for any trading that you do. The only downside is that you won’t be able to have access to retirement accounts, meaning you’ll mix out on tax benefits.

Robinhood is perfect for those of you who want an easy platform to use for trading and investing and even better for those of you who want an app that is user friendly, and you can start in a matter of minutes this is the app for you. Note that this app requires you to be hands-on with your investments. If you don’t have all your money invested in something, it will just be sitting in your account, not gaining anything.

Important Notes

  • Fee $0
  • Minimum starting $0
  • Best for those who are hands-on, but also want a simple software they can learn in just a few minutes

Fundrise

Real Estate is considered one of the best investments someone can make. It often brings much higher returns than any stock. While a real estate stock can be a good investment, it doesn’t bring the returns direct real estate investment brings. Used to, it was difficult to get into real estate deals unless you had thousands of dollars to invest. But now, thanks to platforms like Fundrise, that is no longer the case.

Fundrise is one of the biggest names out there when it comes to crowdfunding real estate deals. On average, investors get a 9.11% return on investment with them, and the best part of it all is they manage all your investments. Meaning that if you prefer hands-off investing Fundrise is the right choice for you.The best investing apps

Fundrise offers three different investment choices.

  • Supplemental income
  • Balance investing
  • Long term growth

Important Notes

  • Fee 1% annually
  • Minimum starting $500
  • Best for those who want to get started investing in real estate and don’t want to have to think about it too much.

Wealthfront

If you are serious about investing, then Wealthfront might be the best choice for you. Like Acorn, Wealthfront uses Robo-advisors to help create an investment portfolio for you. They offer four investment choices, depending on your specific goal.

  • Homeownership
  • Retirement 
  • Time off for travel
  • College 

Something great about Wealthfront is the college investment account they offer. Their college plan provides a 529 program to help better save for college. The money in this account is for anything that qualifies as higher educational expenses, which could include tuition, room and board, and books. And like a retirement account, the 529 plan has tax advantages that help keep more of your savings.

Important Notes

  • Fee 0.25% annually
  • Minimum starting $500
  • Best for those who have specific goals or want to start investing for retirement and get tax benefits.

Ally

If you haven’t checked out the article on online banking vs. traditional baking, you’ll want to check it out now to understand better why Ally might be the right choice for you. Wouldn’t it be nice if you could access your savings, checking, and investing all on the same app or site? If your answer to that last question is yes, then Ally might be the right choice for you.

What makes Ally such an excellent place to invest is that you have the opportunity to either do the investing yourself or give your money to managed by someone else. Making it beneficial to both hands-on and hands-off investors.

If you choose to have your money invested for you, there are four great portfolios to select.

  • Core 
  • Income 
  • Tax Optimized
  • Socially Responsible

Important Notes

  • Fee $0 for managed, and some fees apply to some trades
  • Minimum starting amount- self-managed $0 and managed accounts $100
  • Best for those who want to invest in the same place they do their banking.

Invstr

This list would be incomplete if Invstr weren’t listed. Invstr trading platform is similar to Robinhood. Invstr app is for those of you who want to be hands-on with their investment. One key difference between Invstr and Robinhood is that Invstr lets you buy a fraction of shares. Simply put, if you can’t afford a whole stock of Amazon, you could instead just buy a fraction of a share. Another notable difference is that Invstr offers a great learning program, so if you’re new to investing, they offer great educational material for you.

Even though the Invstr trading platform is excellent and their educational content is top-notch, neither of those are the reason Invstr is on this list. The reason Invstr made this list is because of their Fantasy Finance. Similar to Fantasy Football, you compete against friends, and whoever gets the highest return at the end of the month wins. Invstr also does monthly public competitions, and the top ten at the end of each month wins a cash prize. Learning a new skill like investing is always more fun with friends to do it with, and by helping each other figure out what you might be doing wrong, your skills will multiply faster than if you did it alone.

Important Notes

  • Fee $0.99 when trading fractions of shares and $2.99 for whole shares.
  • Minimum starting amount $1
  • Best for those who want to start with simulations and or want to learn how to invest with friends.

Betterment

If you are serious about investing and are in it for the long run that Betterment is the right choice for you. Betterment is similar to Wealthfront and Acorn in that Betterment uses Robo-advisors to help create your portfolio. Though one big positive compared to Wealthfront is that your required starting amount is $0 instead of $500. What make’s Betterment stand out among other investing platforms is that they give you access to Certified Financial Planners 24/7

Betterment offers a wide range of accounts that you can find one that meets your needs and goals. The accounts they offer are;

  • Roth IRA
  • Traditional IRA
  • SEP IRA
  • Trusts
  • House Down Payment Saving
  • Education Saving (NOTE this isn’t a 529 account, so there are no tax advantages.)

Like Ally, Betterment now also offers a checking and savings account that easily connects to your investment accounts, making it a perfect one-stop location for all your money needs.

Important Notes

  • Fee 0.25% to 0.40%
  • Minimum starting amount $500
  • Best for those who want to invest in the same place they do their banking or want to start preparing for retirement.

Which is best for you?

As you have seen, there are no shortages of investment apps, and the ones listed here are only a few of the hundreds out there. No one can choose for you; you have to ask yourself what are your goals, and do you want to be hands-on or have someone do all the investing for you? If you want to learn more about investing and where to start, check out our article on how to start investing.

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How to get a high credit score

How to Get High Credit Score in College

One of the most critical things in this world today is your credit score. You have to have it for housing loans, credit cards, car loans, school loans, etc. Your credit score impacts almost everything in life. Often, a problem facing college students is getting a good credit score, or even for that fact, getting credit history can be difficult for them. The average credit score of people between the ages of 18 and 24 is 630, which, while is not a bad score, it still isn’t good either. Another challenge is that it is probably one of the most dangerous things you carry in your wallet. Without even realizing it, you could take on thousands of dollars of debt and bury yourself in unnecessary debt.

My Journey to Good Credit

When I first got to college, I decided I wanted to apply for one, and after learning how I was able to get one. But I knew I had to be careful; I didn’t want to end up with a mountain of debt and accumulate thousands of dollars worth of interest on it. So I had to make a plan for how I was going to use it. While I did make a few mistakes along the way, I was always able to pay off the card at the end of the month. Because of that continued focus on making sure I paid off everything on it, I ended up with a credit score of 733 by my senior year. I am now on track to a credit score of 800, by following the steps down below.

How to get a high credit score

Warning

Understand before you can take on this challenge that getting a credit card is a heavy responsibility. It isn’t free money, you will have to pay it back, and if you pay it back late frequently, you will find that interest on credit cards aren’t your best friend. You can look up horror stories of students piling on credit card debt with their student loan debt. Those people at the credit companies are not your friends. Those points won’t help you; more than likely, you will never use them. These will require discipline and self-restraint. But if you do this right, it will help you greatly in the future, and you will be happy you did it.

How is your Credit Score Determined?

To get a high credit score, you have to understand how your credit score is determined. Your credit is broken down into several categories that are each weighted differently. If you can understand each of these categories, you are on your way to getting a higher credit score.

Payment History

Credit companies will look into past payments. They will see if you have paid your debts on time consistently or if you have a history of paying them late or even not paying them at all. 

Amount Owed

You are a liability to the company, and the more you use, the more liable you become. That’s why they will lower your credit score if you use more than a certain amount of your available credit. A lot of times, you will find that magic number to be 25%. So remember, never pass 25% of your available credit.

Length of Credit History

Someone who has a 20-year record of paying their bills on time will have a better history than someone who has been paying their bills early the past two years. How long you have had your credit accounts, then they might look at the age of it and see how much you use it. There is no getting around this part. Creating a good credit score and history is just a waiting game.

How to get a high credit score

Credit Mix

FICO will look at a combination of your credit, ranging from car payments, mortgages, installment loans, etc. Any time you paid things with debt or a payment plan, they are going to look at to see whether or not you paid back what you owe.

New Credit

Every time you apply for credit, that company will open up your credit history. (They will look at different things for college students, which may vary depending on the card you apply for.) Be Careful, and if you apply for another credit card and fail, your credit score could go down. Can be especially damaging if you get rejected multiple times.

Categories Impact

Each area has a different percentage of how important each category is in determining your credit score.

  1. 30% goes to amounts owed
  2. 10% goes to new credit
  3. 15% Length of Credit history
  4. 35% goes to payment History
  5. 10% goes to credit mix

Credit Scores

Your Credit Score can range from 300 to 850

  1. Excellent Credit 750+
  2. Good Credit 700-749
  3. Fair Credit 650-699
  4. Poor Credit: 600-649
  5. Bad Credit: below 600

Apply for a Credit Card

Applying can be tricky, especially in college. You’re just now entering the real world and just figuring out how to be a somewhat functioning adult. Now you are trying to adult even more by applying for a credit card.

Thanks to the Card Act of 2009, credit card issuers are effectively banned from offering merchandise on campus. Also, Adults between the ages of 18 and 21 now have to show a way of repaying any loans they might accumulate before they are given a credit line. 

Look for secured credit card lines with as little as $49 and no more than $200; you can open a credit card line up. The cash you give the company acts as collateral.

What are you going to put on your credit card?

If you use that card on everything, you will end up spending more than you have, and that’s what we want to avoid here. Figure out one or two things that you will put on the credit card. Some good ones to consider are gas and groceries. But one thing I did that helped a lot was when I wanted to make a big purchase. I would save up the money for the product, and once I had it in cash, I would put it on the credit card and pay it off the very next day. 

Determine out the max amount you will put on your card.

Figure out what your max is and what you are willing to put on the card. It shouldn’t be your credit limit. In fact, you want to try to avoid using more than 25%; companies will penalize you for that and end up affecting your card. I would budget to use around 20% of your credit card at max to leave some safety areas for you. Figure out what the number is and declare that you will not spend a penny over the decided max you have created. 

Please note if you have multiple credit cards, then you are going to want to budget it differently. Say you have three credit cards (which if you are in college, you really shouldn’t), and you have a total of $5,000 credit limit altogether, then you never want to pass $1,250 between the three cards. If you do so, it is more than likely your credit score will drop significantly.

Always have cash ready to pay off your card

Make sure that by the end of the month, every month, you have the money to pay off that credit card. In reality, you want to have the money set aside for this at the start of every month. That way you don’t have to worry, but if you can’t do that, it’s ok. Just make sure you budget for it properly and get prepared to pay it off by the end of the month. If you don’t know how to budget check out this article here.

Final Thoughts

Finally, remember that a credit card is a double-edged sword. It can help you more than you can ever imagine, but at the same time, it can destroy you without a moment’s notice. Many lives have been destroyed because of credit card debt. However, if you follow these steps in this article, you’ll never have to worry about that problem.

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pros and cons of online banking

Pros and Cons of Online Banking (2020)

We live in the digital age, almost everything we do takes place online. Whether it’s sharing our photos, reading books, watching the news, or even talking face to face, all of it takes place online. So then why shouldn’t you bank online too? Are there any benefits to it, or rather any cons to it? There is no simple yes or no answer to it all; there are plenty of benefits to both online and traditional banks. What you need to figure is what is best for you. One way might be better for someone else but not for another. In this article, you will gather a greater understanding of what an online bank is and how it might differ from more traditional banks. By the end of it, you will know the pros and cons of online banking.

What is Online Banking?

Online banking is precisely as the name says, everything you can do at a regular bank you can do online as well. Now while most banks have some online tools, the big difference here is that full online banking businesses have no brick and mortar locations. They are 100% online, which brings many pros and cons to online banks.

Pros

Lower Fees and Better Rates

Online banks don’t have nearly the same overhead cost most traditional banks have. Online banks can cut back the fees on their savings and checking accounts. Traditional bank fees can range from $5 up to $20 depending on the type of account you have and the bank you choose, and the amount you have in the account. While online banks generally have no maintenance fee at all.

Now a big difference between online and traditional banking is the annual rate you’ll get. For most traditional banks, you can expect an Annual Percentage Yield (APY) of 0.01%, while online banks can have rates up to 2.25%. While that doesn’t seem like a big deal, think of it like this. If you had $100,000 in a traditional bank with 0.01 for ten years, you would have gained only a $100, that doesn’t even include the fees you might pay. While with a 2.24% rate, you will have made $25,000, and I don’t need to tell you how big of a difference that is. What is a bonus of having a higher interest rate is that, while you won’t be beating the market, you will be safe against inflation.

pros and cons of online banking

Opening An Account is Quick and Easy

If you have ever opened a bank account before you know that it can take some time. Especially when you have to factor the drive there, waiting for someone to be available, fill out the paperwork. Then finally, deposit the cash, then drive home and deal with traffic all over again. While with online banks, you can as quickly start an account right from your phone while you are sitting at Starbucks. Note it doesn’t matter what type of account you want to start; it will be as simple as 1,2,3.

More User-friendly Sites

It shouldn’t come as too much of a surprise that online banks often have much more user-friendly websites than traditional banks. Often you will find that the online bank has both a user-friendly site and mobile app that will help you stay connected wherever you are and help to manage all your accounts. Most traditional banks make this type of customer service an afterthought since they are still focused on the brick and mortar locations. However, that has begun to change; traditional banks are starting to understand the importance of an online presence in an online world.

Cons

Websites can fail

Like everything in life, there can be many goods to something but one big set back. Unlike traditional banks where if one closed down, you could go to another one of their offices nearby. However, the same can’t be said about online banks, if they need to redo their site, or it just completely breaks, then you are kind of stuck. You won’t be able to access your account online, but don’t worry, you will still be able to use a debit card and pay for things.

No relationships

One benefit is that you don’t have to drive to open an account up, but that comes with a set back as well. If you have questions or need help with your account or with a loan, you won’t be able to just go to a branch office and talk to someone. Which if you are looking for a loan can be very difficult. Even with the growth of online banking, most people still prefer to take loans out at traditional banks.

Depositing Cash Can be Tricky

With traditional banks, you just go to their office and drop off cash, and you are good to go. With online, you will need to go to an ATM that will let you deposit some money and is connected to your online bank. But often there is a fee for doing that, but if you do some research, your online bank might reimburse you. You can also have another bank account at one of your local banks and open an account there and just transfer money from there to your online bank account. There are several other ways you can do it, but will save that for another article.

pros and cons of online banking

Which Should You do?

While no one can answer that for you, it’s good to look at and figure out where you are and look at your needs, and figure out what online bank is best for you. While there are many benefits to having online banks, it might still be good to have an account with a local bank as well. So that if anything were to happen, you could easily access some cash. Yet, if you find yourself in a place where you don’t often going go to the traditional bank locations, then you might be better of saving yourself the time and just stick with online banking. It comes down do you prefer to do everything in person or online from anywhere? As you can see there plenty of pros and cons to online banking.

Hopefully, you have found this blog to be helpful and that you are now able to make an informed choice on what you should do. If this blog has helped you today, consider sharing it, and help us to continue our mission of helping people get control of their finances.

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Ways to Invest money while in College

How to Invest While in College

Investing is one of the most important things you need to do. It is the only way to defend against the silent killer inflation, and it’s the only way you will be able to retire well off in this world. If someone tells you, you can live off from social security; they are lying to you. There is no better time to start investing than right now. If you are a college student right now, you might be thinking, “I can’t do that; I don’t have any money to invest.” Let me tell you if there’s a will, there’s away. You’ll also be shocked to realize you don’t need that much money. Also understand, this is the best time to learn and make these mistakes. It’s better to make mistakes with your investments while your young and not when you are close to retirement.

Let me show you how important it is to start now. These two investors both invested $200 a month. However, investor A began to invest five years earlier than investor B. Those five years made over a $600,000 difference.

How to invest while in College

Robo Advisors

More than likely, you have heard of financial advisors but not so much Robo Advisors. There are many benefits to having financial advisors. However, if you are the average college student, you don’t have that much money to invest, making financial advisors a little harder to work with since their fees are often more than a college student can afford. However, once you are out of college, highly consider talking to one. While their fees might add up, the advice and help they can give you is worth the fees. 

As for Robo Advisors, they are similar to financial advisors, but instead of meeting a real person, you go online, and they automatically create an investment portfolio for you. What makes this best for college students is the low fees. You can find ones with an annual of .25%. Meaning if you have an account of $10,000 every year, you will pay $25 a year while a financial advisor could cost 1%, which would be $100 a year. And that can add up over time. 

Another benefit is that most in-person financial advisors require a lot more startup money than a Robo-Advisor. The minimum for some Robo advisors is $0, meaning you can start with whatever you have. Check out some of the Investing apps here.

Invest in S&P 500 index Fund

First, you should know that the S&P 500 is an index that measures 500 large-cap U.S companies’ stock performance. It represents the market’s performance by reporting the risk and returns of the biggest companies. This index is the benchmark for investors to see how their investments compared to the market. 

Warren Buffet once said, “A low-cost index fund is the most sensible equity investment for the great majority of investors. My Mentor, Ben Graham (writer of the intelligent investor), took this position many years ago, and everything I have seen since convinced me of its truth.” If the most successful investor in modern-day history supports them this much, why shouldn’t you?

Be warned, don’t invest all your money in it at once. I would suggest investing a certain amount every month to buy it for different prices. Over the long run, you maintain a good average, therefore helping provide better returns.

5 Ways to Invest in College

Invest 10% of everything you make

his is one of the most important steps to take to start investing in college. Whether you have a paycheck or a monthly allowance, your parents give you, take 10% of that total, and put it away in a savings account or investments. 10% might seem like a lot, but you will never notice that it is missing, and over time that 10% can build up. Make sure that 10% is put somewhere that you can’t easily access or accidentally spend. That way, you don’t mix it with your everyday funds, or you’ll end up losing it.

Building this habit in college will benefit you greatly since when the day comes you are making a better salary, you will be in the habit of taking away 10% and investing it for a better future. Think of it like this, right now, you are living like no one else so that one day you can live like no one else can. You are investing for the long run, don’t just look at this as a short term plan. It can be hard to think long-term while you are living it up in college, but remember, one day, your friends will regret not having developed these disciplines while they were young. While they are trying to establish those disciplines, you have already done so and living the life you desire. 

Investing apps

You live in a time where investing has never been easier. Just go to the app store and type in investing, and you will get hundreds of results. Most require as little as $5 to get started. You will want to spend some time and figure out which ones are best for your specific wants. Some of the most popular ones are Acorn and Robin hood apps. There is a slight difference between the two; Acorn will invest for you and create a portfolio designed to your risk and wants for investments. Robinhood, you are left to figure out which stocks you should buy and which investments are best for you.

Another thing to note is that Acorns will help you find extra money. By linking Acorn to your debit card every time you use your card, it will round the rest of your change to the nearest dollar and invest it for you. It can be beneficial to those who have a hard time setting money aside themselves.

Look For Different Types of Investments

You’ll notice that most of the investments suggested have focused on stock market investments. Even with Robo Advisors, they often focus on stocks, and it’s the same with investment apps. However, there are plenty of other choices you could make. Some favorites of mine are Fundraise and Peer to Peer lending.

Most people think you need a crazy amount of money before you can start investing in real estate, but thanks to places like Fundrise, that is no longer the case. Funrise helps you to invest in real estate deals so that your returns are higher than if you had just invested in real estate stocks directly. My first year with Fundrise was great; after one year, I received a 10% return on my investments. The only thing that can be hard for a college investor is that the minimum starting investment is $500.  

We have all lent money to friends, but wouldn’t it be nice to make money off the money you lent? That is where peer to peer lending comes in. Now peer to peer lending isn’t a website but rather a way of investing. Peer to peer lending is where you and other investors pool together money and loan it out to someone, and that person pays interest on the loan, and you get that interest plus your original investment. Be aware that you don’t put all your money towards one loan but rather scatter it across different ones as a way to lower your risk. The only thing that you should be aware of is that you are responsible for your investments. No one makes the investment for you; it is all your responsibility. having money sitting in the bank, it will gain no interest and is being eaten up by inflation.

How to Invest money While In College

There are only two choices for Peer-to-peer lending; Lending Club and Prosper. The one you choose will depend on your preference and whether they are approved in your state. Neither are approved in all 50 states. 

Keep learning different ways to Invest While In College

Hopefully, this has given you a sense of direction on where to start and how you can begin to multiply your money. Know that you never want to work for all your money, but instead, you want your money to work for you and make more money for you. Money shouldn’t control you and never will if you learn early on how to utilize it in the best way. Above all else, never forget to live like no one else right now so that someday you can live like no one else can.

 

 

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How to make money online

22 Ways to Make Money Online (2020)

Want more money? Wouldn’t it be nice to be able to make money online, even with this pandemic running amuck? Well, I have some good news for you. It has never been easier to start making money online. You have the whole world at your fingertips. Some of these could become full-time jobs, as long as you put in the time and effort for them. These are some of the best ways to make money online in 2020.

Freelance

You have a skill in high demand? Good, then freelancing might be the thing for you. It doesn’t matter what you do; there is some type of freelancing job out there for it. The most popular sites to hire freelancers are Upwork, Fiver, and Freelancer. If you want to be serious about this, consider making your site and business cards to help your business grow.

Blogging

One of the most popular ways to make money online is by starting your blog. You can start blogging about anything you are passionate about. However, if you want to make money off your blog, consider writing in a popular niche that is known to be profitable. There is no limit to how to monetize your blog, and this can become more than just a side hustle but can become your full-time job if you treat it like a business.

Affiliate Marketing

For those of you who already have an excellent social presence online, you might want to consider Affiliate marketing. Affiliate marketing is where you promote companies, products, services, and other offers online. You have a custom link given to you by your affiliate, and if people sign up through your link, you will earn a commission from your affiliate.

Writing an eBook

Not too long ago, publishing a book took a lot of time and a lot of rejections. You had to get a publishing company that would help you publish your book, and then hope that your book would sell and you would earn some portion of a sell. But thanks to eBooks, all you have to do is write something people require to read and get it published. If you have been needing a sign to start writing that book you have always dreamed of, this is it.

Dropshipping

Dropshipping is a way to sell products without ever needing inventory. How it works is someone places an order through your website, and once their order is complete, you order the product from a third-party site. The third-party will send the product to the customer and say it is from you. If this sounds interesting to you, then the site you want to get started at is Shopify. It is known for its dropshipping and easy to build websites.

Consulting

Another great to make money online is consulting. If you are an expert in a field or know more than the average person, it is the perfect job for you. Companies hire consultants to help them solve a problem, or they might know how to do it but don’t have the time or resources to do it. Even if you don’t have a skill or expertise right now for a field, consider finding something that is in high demand and learn as much as you can about it and then put yourself out there. Clarity is a good site to find consulting work.

Best ways to make money online 2020

Web Designing

While this could fall under freelancing, this is something that I feel should have a spot of its own. Web designing has become a high demand product. It doesn’t matter whether you choose to take the freelancing path or the traditional path; both are great options. You will want to have your own site to help show your talents, but think about putting yourself out there on the top freelancing sites as well. If you don’t know how or want to learn, there are unlimited options to choose from when it comes to learning how.

Peer to Peer

If you have taken out a loan and had to pay it back, you know that banks are making pretty decent money off of you. Wouldn’t it be nice if you could make money like that? Well, good news, you can make money by lending it. Peer to Peer lending has become popular in recent years. There are many choices for Peer-to-Peer lending, but the best two options are; Lending Club and Prosper. You will have to double-check to make sure the one you choose is allowed in your state.

Sell your photos

Do you have a camera? Good, your halfway there to make money online selling your photos. The two great sites to sell your photos are ShutterStock and iStockPhoto. This method is a great way to create passive income since you make money every time your photo used. If you want to take it a step further, market yourself to do weeding, engagement, or any other life events. While that isn’t specifically online, it is still a great way to make some extra money.

Etsy

Do you have an artistic side that just needs to be expressed, but find it hard to express yourself since you also have to pay bills? Then look no further than Etsy. Similar to Shopify, but Etsy is for handmade, vintage, or craft supplies. It is a place made by creative people for creative people. If you are already getting a lot of compliments or people asking for some of your art, then why not market it?

Social Media

Have you ever thought about having thousands of followers on Instagram or Twitter or create a popular Facebook page? Why not do it, and why not make some extra cash from it? Companies are continually promoting their new products on social media to spread the word about their product. Why shouldn’t you tape into that market too?

Youtube

If you aren’t comfortable with writing a blog, then Youtube might be the best choice for you. All you have to do is create a channel and began uploading videos. Once you have enough views and subscribers, you can start monetizing your channel. Make sure to pick the right niche, and don’t try to reinvent the wheel, instead find out what the successful YouTubers in your niche are doing and do what they are doing. Then once you have an idea of how to do it well, do something that sets you apart from the competition.

Podcasting

If being in front of a camera makes you uncomfortable or you simply don’t like it, then you are in luck, welcome to the world of podcasting. It doesn’t have to be complicated. All you need is a microphone, laptop, and free recording software. The most straightforward way to make money is by sponsorships, but there are plenty of different ways to monetize it.

Completing Survey

You bring in a decent amount of side income by taking online surveys. Though, don’t expect to be making bank from this. The majority of sites aren’t going to pay more than a couple of dollars for each survey you complete. The most popular site for this is Swagbucks.

Create an online course

If you want to go a step further than Ebook or help bring more profits to your blog, creating a course is the right way to go. Creating an online course can be a great way to generate passive income. If you don’t have a site, but want to create an online course, there is an excellent choice for you too. Udemy is one of the most popular online course sites out there. They have thousands of courses on about every subject imaginable.

Best ways to make money online

Online Stock trading

If you have a good understanding of stocks or have always wanted to learn, now would be an excellent time to learn. Stock trading is different from investing since you are only keeping the stock from a couple of days to months but never more than a year. If you are just starting and what to practice trading beforehand, check Invstr and use their practice portfolio. That will help get your feet wet and better understand what your doing.

Online Tutor

You used to be limited to how many students you could tutor or where you could tutor. However, thanks to the internet that has changed forever. You can now tutor from anywhere in the world. You might want to consider dusting off your old textbooks and start reviewing them. What you charge will depend on your experience and the subject you are teaching. Consider using sites like Tutor.com or Care.com. You could also go down to local schools and community centers to advertise your services.

Virtual Assistant

Virtual assistants are business administrative support. Some of the major work could include phone calls, email, research, data entry, bookkeeping, marketing, and the list goes on and on. You can either join a company, post on a freelance site, or start your own Virtual Assistant business. All three are great opportunities. Figure out what you would best at or be most interested in learning.

Investing

Investing is very similar to trading, but instead of only keeping your stock for a short amount of time, you are investing for the long run. The best person to think of when thinking about investing is Warren Buffet. There is no shortage of platforms you could use to start investing. Consider checking out the top investing apps for 2020.

Become a Translator or Interpreter

Do you speak another language? If so, then you have hit the jackpot of in-demand skills. With all things considered, people have transitioned to virtual meetings being the new norm. You can find job postings or freelance jobs that need someone to translate another language. Popular sites to find such work are Gengo and Smartling are great places to start.

Transcriber

If you have a knack for typing, then this is one of the easiest ways to earn some extra cash. You are often paid by the audio hour, so the faster you can transcribe audio recordings, the more you make. The average transcriber can type 75 to 100 words per minute. If this does interest, you check out Rev, one of the top places for transcriber work.

Conclusion

There is an insane amount of ways to make money online. This article only scratches the surface of ways you can make money. If you have a hobby or skill, you can bet you can make money using it somehow. You sometimes just have to be a little creative when it comes to your profit. However, if there is one thing we have learned from this pandemic is that you can’t rely solely on your job to provide for yourself. The only person you can rely on is yourself.

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