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How to Dine Al Fresco Year-Round: 7 Outdoor Kitchen Design Tips for 2021
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The coronavirus pandemic has brought about a new appreciation of backyards and other outdoor spaces. With many of us spending hours and hours at home, we’re all looking for places to relax other than the living room sofa and kitchen. If you have a yard with ample space for you and your family, consider yourself blessed.
But in 2021, outdoor space owners might want to consider taking it up a notch with one of the most sought-after features: an outdoor kitchen.
âI looked at this as an investment our family would enjoy for the next 20-plus years,â says lifestyle expert Evette Rios, who recently embarked on her own outdoor kitchen project.
For people who dream of spending even more time cooking outside and enjoying their backyard, an outdoor kitchen is a must. And now’s the time to get to work to ensure your kitchen is ready when the warm, sunny days arrive.
Take a look at the tips below from experts who have successfully completed outdoor kitchen projects of their own.
1. Set a budget
Outdoor kitchens are not a cheap investment, but the price range is really broad. The cost of an outdoor kitchen ranges from $5,406 to $21,699, according to HomeAdvisor.com. Therefore, there are many ways to tailor your kitchen to your budget.
That being said, you should always prioritize durable materials in an outdoor kitchen.
âInterior furnishings afford a bit more leeway on where you splurge and save,â says HGTV star Laurie March. âBut for outdoor kitchens and living spaces, performance and durabilityâwhen it comes to cabinetry and appliancesâwill always be worth it.â
2. Seek out American-made products
Photo by Brown Jordan Outdoor Kitchens
March says COVID-19 has caused major global supply chain interruptions, which has made acquiring building materials and appliances difficult. But sourcing for your outdoor kitchen might be easier if you opt for American-made products.
âI selected Brown Jordan Outdoor Kitchens, which are manufactured in Connecticut. It made the process so much easier,â says March.
She says it wasnât only about convenience, but also craftsmanship, quality, and the company’s established history.
3. Order appliances early in the planning process
Appliances are what will make your outdoor kitchen shine. But youâll want to order them sooner rather than later because some companies have long lead times or backordered items.
March advises finalizing appliance picks first and ordering as quickly as possible.
âItâs easier to store them until youâre ready to install rather than have to wait for them to arrive, which can add substantial time to your project,â she says.
4. Design with four seasons in mind
Photo by Chicago Green Design Inc.
Rios highly recommends designing your outdoor kitchen for year-round enjoyment. For example, in her outdoor kitchen, she knew she wanted durable, high-quality cabinets to keep contents dry even in rain or high humidity.
âHeating elements in different zones of the outdoor space are also crucial,â says Rios. âIn the kitchen, our pizza oven helps keep us warm during food prep, and the fire pit is a cozy spot for guests to gather.â
If you have a covered outdoor space, she recommends planning and budgeting for ceiling-mounted heat lamps, or invest in one or two free-standing, mobile heating units.
5. Find the right people for the job
March says homeowners should do their homework and hire the right professionals to guide them through their vision, flag any potential pitfalls, and elevate the overall aesthetic.
âFor me, bringing a landscape designer onboard brought the whole vision for our outdoor kitchen and yard together,â says March.
Rios says itâs also important to lock in a trusted contractor and installer to ensure the vision and layout for your outdoor kitchen is doable and within your budget.
6. Have fun with color
Photo by DeGoey Designs
Rios says an outdoor kitchen is the perfect space to have fun with color, whether taking cues from the surrounding landscape or going bright and bold.
âBlues and greens can so easily play off of surrounding elements outdoors. Iâm over the all-white kitchen, and I think outdoor kitchens are the perfect opportunity to embrace brighter hues,” says Rios, who used a beautiful juniper-green, powder-coat finish on her outdoor kitchen cabinetry.
7. Design based on how youâll use your space
âAsking yourself the right questions as you think through design options can provide a lot of helpful guidance,â says March. âHow do you want to live outdoors? Whatâs not working with your current or past space, and how could it rise up to meet you a bit better?â
She says itâs also important to consider whoâs going to use the outdoor kitchen space. Does it need to be wheelchair-accessible or suitable for pets and kids?
âThese details will dictate so much of your design,â says March.
For her space, she envisioned how it could pivot from a space to cook to a space to entertain. The big, open shelf she installed, for example, serves as additional landing space for items she brings out from the indoor kitchen.
The post How to Dine Al Fresco Year-Round: 7 Outdoor Kitchen Design Tips for 2021 appeared first on Real Estate News & Insights | realtor.com®.
Source: realtor.com
What Are Mutual Funds? Understanding The Basics
If you’re one of those investors with very little time to research and invest in individual stocks, it might be a good idea to look into investing in mutual funds.
Whether your goal is to save money for retirement, or for a down payment to buy a house, mutual funds are low-cost and effective way to invest your money.
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What is a mutual fund?
A mutual fund is an investment vehicle in which investors, like you ad me, pool their money together. They use the money to invest in securities such as stocks and bonds. A professional manages the funds.
In addition, mutual funds are cost efficient. They offer diversification to your portfolio. They have low minimum investment requirements.
These factors make mutual funds among the best investment vehicles to use. If you’re a beginner investor, you should consider investing in mutual funds or index funds.
Investing in the stock market in general, can be intimidating. If you are just starting out and don’t feel confident in your investing knowledge, you may value the advice of a financial advisor.
Types of mutual funds
There are different types of mutual funds. They are stock funds, bond funds, and money market funds.
Which funds you choose depends on your risk tolerance. While mutual funds in general are less risky than investing in individual stocks, some funds are riskier than others.
However, you can choose a combination of these three types of funds to diversify your portfolio.
- Stock funds: a stock fund is a fund that invests heavily in stocks. However, that does not mean stock funds do not have other securities, i.e., bonds. It’s just that the majority of the money invested is in stocks.
- Bond funds: if you don’t want your portfolio to fluctuate in value as stocks do, then you should consider bond funds.
- Money market funds: money market funds are funds that you invest in if you tend to tap into your investment in the short term.
- Sector funds. As the name suggests, sector funds are funds that invests in one particular sector or industry. For example, a fund that invests only in the health care industry is a sector fund. These mutual funds lack diversification. Therefore, you should avoid them or use them in conjunction to another mutual fund.
Additional funds
- Index funds. Index funds seek to track the performance of a particular index, such as the Standard & Poorâs 500 index of 500 large U.S. company stocks or the CRSP US Small Cap Index. When you invest in the Vanguard S&P 500 Index fund, youâre essentially buying a piece of the 500 largest publicly traded US companies. Index funds donât jump around. They stay invested in the market.
- Income funds: These funds focus invest primarily in corporate bonds. They also invest in some high-dividend stocks.
- Balance funds: The portfolio of these funds have a mixed of stocks and bonds. Those funds enjoy capital growth and income dividend.
Related Article: 3 Ways to Protect Your Portfolio from the Volatile Stock Market
The advantages of mutual funds
Diversification. You’ve probably heard the popular saying “don’t put all of your eggs in one basket.” Well, it applies to mutual funds. Mutual funds invest in stocks or bonds from dozens of companies in several industries.
Thus, your risk is spread. If a stock of a company is not doing well, a stock from another company can balance it out. While most funds are diversified, some are not.
For example, sector funds which invest in a specific industry such as real estate can be risky if that industry is not doing well.
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Professional Management.
Mutual funds are professionally managed. These fund managers are well educated and experienced. Their job is to analyze data, research companies and find the best investments for the fund.
Thus, investing in mutual funds can be a huge time saver for those who have very little time and those who lack expertise in the matter.
Cost Efficiency. The operating expenses and the cost that you pay to sell or buy a fund are cheaper than trading in individual securities on your own. For example, the best Vanguard mutual funds have operating expenses as low as 0.04%. So by keeping expenses low, these funds can help boost your returns.
Low or Reasonable Minimum Investment. The majority of mutual funds, Vanguard mutual funds, for example, have a reasonable minimum requirement. Some funds even have a minimum of $1,000 and provide a monthly investment plan where you can start with as little as $50 a month.
Related Article: 7 Secrets Smart Professionals Use to Choose Financial Advisors
The disadvantage of mutual funds.
While there are several benefits to investing in mutual funds, there are some disadvantages as well.
Active Fund Management. Mutual funds are actively managed. That means fund mangers are always on the look out for the best securities to purchase. That also means they can easily make mistakes.
Cost/expenses. While cost and expenses of investing in individual stocks are significantly higher than mutual funds, cost of a mutual fund can nonetheless be significant.
High cost can have a negative effect on your investment return. These fees are deducted from your mutual fundâs balance every year. Other fees can apply as well. So always find a company with a low cost.
How you make money with mutual funds.
You make money with mutual funds the same way you would with individual stocks: dividend, capital gain and appreciation.
Dividend: Dividends are cash distributions from a company to its shareholders. Some companies offer dividends; others do not. And those who do pay out dividends are not obligated to do so. And the amount of dividends can vary from year to year.
As a mutual fund investor, you may receive dividend income on a regular basis.
Mutual funds offer dividend reinvestment plans. This means that instead of receiving a cash payment, you can reinvest your dividend income into buying more shares in the fund.
Capital gain distribution: in addition to receiving dividend income from the fund, you make money with mutual funds when you make a profit by selling a stock. This is called “capital gain.”
Capital gain occurs when the fund manager sells stocks for more he bought them for. The resulting profits can be paid out to the fund’s shareholders. Just as dividend income, you have the choice to reinvest your gains in the fund.
Appreciation: If stocks in your fund have appreciated in value, the price per share of the fund will increase as well. So whether you hold your shares for a short term or long term, you stand to make a profit when the shares rise.
Best mutual funds.
Now that you know mutual funds make excellent investments, finding the best mutual funds can be overwhelming.
Vanguard mutual funds.
Vanguard mutual funds are the best out there, because they are relatively cheaper; they are of high quality; a professional manage them; and their operating expenses are relative low.
Here is a list of the best Vanguard mutual funds that you should invest in:
- Vanguard Total Stock Market Index Funds
- Vanguard 500 Index (VFIAX)
- Total International Stock index Fund
- Vanguard Health Care Investor
Vanguard Total Stock Market Fund
If you’re looking for a diversified mutual fund, this Vanguard mutual fund is for you. The Vanguard’s VTSAX provides exposure to the entire U.S. stock market which includes stocks from large, medium and small U.S companies.
The top companies include Microsoft, Apple, Amazon. In addition, the expenses are relatively (0.04%). It has a minimum initial investment of $3,000, making it one of the best vanguard stock funds out there.
Vanguard S&P 500 (VFIAX)
The Vanguard 500 Index fund may be appropriate for you if you prefer a mutual fund that focuses on U.S. equities. This fund tracks the performance of the S&P 500, which means it holds about 500 of the largest U.S. stocks.
The largest U.S. companies included in this fund are Facebook, Alphabet/Google, Apple, and Amazon. This index fund has an expense ration of 0.04% and a reasonable minimum initial investment of $3,000.
Vanguard Total International Stock Market
You should consider the Vanguard International Stock Market fund of you prefer a mutual fund that invests in foreign stocks.
This international stock fund exposes its shareholders to over 6,000 non-U.S. stocks from several countries in both developed markets and emerging markets. The minimum investment is also $3,000 with an expense ratio of 0.11%.
Vanguard Health Care Investor
Sector funds are not usually a good idea, because the lack diversification. Sector funds are funds that invest in a specific industry like real estate or health care. However, if you want a fund to complement your portfolio, the Vanguard Health Care Investor is a good choice.
This Vanguard mutual fund offers investors exposure to U.S. and foreign equities focusing in the health care industry. The expense ration is a little bit higher, 0.34%. However, the minimum initial investment is $3,000, making it one of the cheapest Vanguard mutual funds.
Bottom Line
Mutual funds are great options for beginner investors or investors who have little time to research and invest in individual stocks. When you buy into these low cost investments, you’re essentially buying shares from companies.
Your money are pooled together with those of other investors. If you intend to invest in low cost investment funds, you must know which ones are the best. When it comes to saving money on fees and getting a good return on your investment, Vanguard mutual funds are among the best funds out there.
They provide professional management, diversity, low cost, income and price appreciation.
What’s Next: 5 Mistakes People Make When Hiring A Financial Advisor
Speak with the Right Financial Advisor
- If you have questions beyond knowing which of the best Vanguard mutual funds to invest, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
- Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
| *TOP CIT BANK PROMOTIONS* | ||
|---|---|---|
| PROMOTIONAL LINK | OFFER | REVIEW |
| CIT Bank Money Market | 1.00% APY | Review |
| CIT Bank Savings Builder | 0.95% APY | Review |
| CIT Bank CDs | 0.75% APY 1 Year CD Term | Review |
| CIT Bank No Penalty CD | 0.75% APY | Review |
The post What Are Mutual Funds? Understanding The Basics appeared first on GrowthRapidly.
Source: growthrapidly.com
Dave Ramseyâs Baby Steps Explained
Whereas Dave Ramseyâs Baby Steps have often been dissected one at a time, my goal in this post is to give an overview of the steps as a unit and explain why the order is essential.
Hopefully, these steps can help you create a focused life plan for your finances, regardless of your age or financial well being.
First, the Baby Steps:
- Step 1: $1,000 in an emergency fund.
- Step 2: Pay off all debt except the house utilizing the debt snowball.
- Step 3: Three to six months of savings in a fully funded emergency fund.
- Step 4: Invest 15% of your household income into Roth IRAs and pre-tax retirement plans.
- Step 5: College Funding
- Step 6: Pay off your home early.
- Step 7: Build wealth and give.
The Power of Focus
Daveâs premise with the Baby Steps is that people can accomplish great things IF they can just be focused. When you read over these seven steps, you think, âYes. I need to be saving. But I also need to be investing for retirement. I should get my house paid off early. But I also need to be getting out of debt and saving for my kidâs college.”
You would readily agree that all of these goals are important for successful financial planning. The problem is that your stress level kicks into overdrive with the prospect of doing them all. You clench your jaw and do what you are capable of doing while feeling anxious about the goals you place on the back burner.
The Baby Steps plan works because when you stay focused on one step at a time, you can knowingly put some important goals on hold without the nagging feeling that you are leaving something undone.
You can also check out my YouTube video where I break down each of Dave’s Baby Steps here:
Why?
Because accomplishing each step puts you in a great position to accomplish the next one.
You begin to feel an empowerment and a sense of control as you get one step behind you and start the next one. You are making progress instead of treading water.
Why Are the Baby Steps in the Order They Are In?
Steps 1 and 2: $1,000 Emergency Fund and Debt Snowball
Notice that Steps 3 through 7 are all about using your money to do something positive for you and your family. Of course this money comes from your income, but the problem with most of America is that we are using our income on debt payments.
Because we are paying others instead of ourselves, we need to get rid of our debt (Step 2) in order to free up our income for Steps 3-7.
Ask yourself,
âWhat if I could use all the money I am currently paying to creditors to start âpaying myselfâ?
For many people this is $1,000 to $3,000 a month.
Baby Step 2 debt snowball is designed to do just that. Step 1 is necessary before Step 2 because you donât want to start paying off debt without having a small cushion to absorb the little unplanned expenses that will occur during Step 2.
Step 3: 3 to 6 months of Savings
After completing the first two steps, you are out of debt (except for your house) and now have that cash flow you dreamed about: all of the money you used to pay others is at your disposal. The temptation is to start investing for retirement or saving for your kid’s college or pay off your house early.
NOT SO FAST! You will get to those, but doing so prematurely is way too risky.
Stop, take a deep breath and use that cash flow to build up your emergency fund so you will indeed be ready for emergencies. This fund needs to be liquid (in a top savings account or money market account).
If you skipped the step and started any of the ensuing steps, how would you handle emergencies? Pull money from your retirement account? Rob the kidâs college savings? Borrow money against your house? All bad ideas.
Step 3 is therefore always ahead of the following steps
Steps 4, 5, and 6: Saving for Retirement, College Funding, Pay Off Home
You may be asking,
âWhy is retirement ahead of college funding? Wouldnât a good parent put his children ahead of himself?â
Good question. But what if you end up without sufficient retirement income because you made college funding a higher priority? Who will you be depending on in your later years? Your kids!
The thing about retirement planning is that you only get one shot at it. The years go by and you will someday be retirement age. You donât have a choice. On the other hand, college funding is full of choices: kids can get scholarship, they can work, they can attend community colleges, they can find work/co-op programs, etc, etc.
Step 4 is therefore ahead of step 5. But notice that Step 4 is 15% of your income. If you have cash flow greater than 15% you can apply that to college funding immediately, and if you have more than enough cash flow to accomplish both steps 4 and 5, you can use all of the extra to pay off your house early (step 6).
Note that Step 6 comes behind retirement and college funding because reversing the order could possibly give you a paid for house at the expense of a dignified retirement or helping your kids through college. Most of us wouldnât want that.
Not sure where to start investing for retirement? Here are some tips:
- Best Places to Open a Roth IRA – Figuring out where to start investing your 15% of income can be confusing. A great place to start is a Roth IRA, but deciding a broker is confusing. This list will help you pick the best broker for your Roth IRA.
- Best Online Stock Broker Sign Up Bonuses – You can get hundreds of dollars or thousands of airline miles just for opening up a brokerage account.
- Beginner Investing Strategies – If you’ve never invested before it can be overwhelming. This list breaks down getting started into manageable pieces.
Step 7: Build wealth and give.
Life is now very good! You have no debt, a great emergency fund, and a paid for house. All of the cash flow that used to go toward debt reduction and house payments is now at your disposal.
This, by the way, is the step Mandy and I are on. Being semi-retired, we donât have a huge income, but it is very sufficient because we also donât have any debt. We continue to invest every month and we are able to give more than we have ever given before.
Once we got our house paid off, we started to budget âblessâ money, which we put into an envelope every month just to have available so we can bless others as we see the needs. We are also able to help our grown daughter and daughter-in-law cash flow their college.
As I said, life is good. Mandy and I are experiencing great financial peace and we are very grateful for Dave Ramseyâs Baby Steps.
I wish the same for you.
This article is a general overview of what Dave Ramsey has to offer and is not intended to replace his course, nor is this sponsored or endorsed by Dave Ramsey or the Lampo Group.
The post Dave Ramseyâs Baby Steps Explained appeared first on Good Financial Cents®.
Source: goodfinancialcents.com
What Is a Recourse Loan?
In borrowing, there are two types of debts, recourse and nonrecourse. Recourse debt holds the person borrowing money personally liable for the debt. If you default on a recourse loan, the lender will have license, or recourse, to go after your personal assets if the collateralâs value doesnât cover the remaining amount of the loan that is due. Recourse loans are often used to finance construction or invest in real estate. Hereâs what you need to know about recourse loans, how they work and how they differ from other types of loans.
What Is a Recourse Loan?
A recourse loan is a type of loan that allows the lender to go after any of a borrowerâs assets if that borrower defaults on the loan. The first choice of any lender is to seize the asset that is collateral for the loan. For example, if someone stops making payments on an auto loan, the lender would take back the car and sell it.
However, if someone defaults on a hard money loan, which is a type of recourse loan, the lender might seize the borrowerâs home or other assets. Then, the lender would sell it to recover the balance of the principal due. Recourse loans also allow lenders to garnish wages or access bank accounts if the full debt obligation isnât fulfilled.
Essentially, recourse loans help lenders recover their investments if borrowers fail to pay off their loans and the collateral value attached to those loans is not enough to cover the balance due.
How Recourse Loans Work
When a borrower takes out debt, he typically has several options. Most hard money loans are recourse loans. In other words, if the borrower fails to make payments, the lender can seize the borrowerâs other assets such as his home or car and sell it to recover the money borrowed for the loan.
Lenders can go after a borrowerâs other assets or take legal action against a borrower. Other assets that a lender can seize might include savings accounts and checking accounts. Depending on the situation, they may also be able to garnish a borrowerâs wages or take further legal action.
When a lender writes a loanâs terms and conditions, what types of assets the lender can pursue if a debtor fails to make debt payments are listed. If you are at risk of defaulting on your loan, you may want to look at the language in your loan to see what your lender might pursue and what your options are.
Recourse Loans vs. Nonrecourse Loans
Nonrecourse loans are also secured loans, but rather than being secured by all a personâs assets, nonrecourse loans are only secured by the asset involved as collateral. For example, a mortgage is typically a nonrecourse loan, because the lender will only go after the home if a borrower stops making payments. Similarly, most auto loans are nonrecourse loans, and the bank or lender will only be able to seize the car if the borrower stops making payments.
Nonrecourse loans are riskier for lenders because they will have fewer options for getting their money back. Therefore, most lenders will only offer nonrecourse loans to people with exceedingly high credit scores.
Types of Recourse Loans
There are several types of recourse loans that you should be aware of before taking on debt. Some of the most common recourse loans are:
- Hard money loans. Even if someone uses their hard money loan, also known as hard cash loan, to buy a property, these types of loans are typically recourse loans.
- Auto loans. Because cars depreciate, most auto loans are recourse loans to ensure the lender receive full debt payments.
Recourse Loans Pros and Cons
For borrowers, recourse loans have both pros and and at least one con. You should evaluate each before deciding to take out a recourse loan.
Pros
Although they may seem riskier upfront, recourse loans are still attractive to borrowers.
- Easier underwriting and approval. Because a recourse loan is less risky for lenders, the underwriting and approval process is more manageable for borrowers to navigate.
- Lower credit score. Itâs easier for people with lower credit scores to get approved for a recourse loan. This is because more collateral is available to the lender if the borrower defaults on the loan.
- Lower interest rate. Recourse loans typically have lower interest rates than nonrecourse loans.
Con
The one major disadvantage of a recourse loan is the risk involved. With a recourse loan, the borrower is held personally liable. This means that if the borrower does default, more than just the loanâs collateral could be at stake.
The Takeaway
Loans can be divided into two types, recourse loans and nonrecourse loans. Recourse loans, such as hard money loans, allow the lender to pursue more than what is listed as collateral in the loan agreement if a borrower defaults on the loan. Be sure to check your stateâs laws about determining when a loan is in default. While there are advantages to recourse loans, which are often used to finance construction, buy vehicles or invest in real estate, such as lower interest rates and a more straightforward approval process, they carry more risk than nonrecourse loans.
Tips on Borrowing
- Borrowing money from a lender is a significant commitment. Consider talking to a financial advisor before you take that step to be completely clear about how it will impact your finances. Finding a financial advisor doesnât have to be difficult. In just a few minutes our financial advisor search tool can help you find a professional in your area to work with. If youâre ready, get started now.
- For many people, taking out a mortgage is the biggest debt they incur. Our mortgage calculator will tell you how much your monthly payments will be, based on the principal, interest rate, type of mortgage and length of the term.
Photo credit: ©iStock.com/aee_werawan, ©iStock.com/PictureLake, ©iStock.com/designer491
The post What Is a Recourse Loan? appeared first on SmartAsset Blog.
Source: smartasset.com
8 Safe Investments for People Who Hate Risking Their Money
Think back to what the stock market looked like to you in March 2020, aka, the apocalypse. Did it look like:
A.) The biggest bargain sale youâve ever seen in your lifetime?Â
or
B.) A burning pit of money that was about to incinerate your lifeâs savings?
If you answered âB,â you probably have a low risk tolerance. You worry more about losing money than missing out on the opportunity to make more of it.
Being cautious about how you invest your money is a good thing. But if youâre so risk-averse that you avoid investing altogether, youâre putting your money at greater risk than you think.
Do Safe Investments Actually Exist?
When you think about the risks of investing, you probably think about losing principal, i.e., the original amount you invested. If you keep your money in a bank account, thereâs virtually no chance of that happening because deposits of up to $250,000 are FDIC insured.Â
But consider that the average savings account pays just 0.05% APY, while in 2019, inflation was about 2.3%.
So while youâre not at risk of losing principal, you still face purchasing power risk, which is the risk that your money loses value. Your money needs to earn enough to keep up with inflation to avoid losing purchasing power. If inflation continues at 2.3%, buying $100 worth of groceries will cost you $102.30 a year from now. If youâre saving over decades toward retirement, youâll be able to buy a whole lot less groceries in your golden years.
Thereâs also the risk of missed opportunity. By playing it too safe, youâre unlikely to earn the returns you need to grow into a sufficient nest egg.
Though thereâs no such thing as a risk-free investment, there are plenty of safe ways to invest your money.
8 Low-Risk Investments for People Who Hate Losing Money
Here are eight options that are good for conservative investors. (Spoiler: Gold, bitcoin and penny stocks did not make our list.
1. CDs
If you have cash you wonât need for a while, investing in a CD, or certificate of deposit, is a good way to earn more interest than youâd get with a regular bank account.
You get a fixed interest rate as long as you donât withdraw your money before the maturity date. Typically, the longer the duration, the higher the interest rate.Â
Since theyâre FDIC insured, CDs are among the safest investments in existence. But low risk translates to low rewards. Those low interest rates for borrowers translate to lower APYs for money we save at a bank. Even for five-year CDs, the best APYs are just over 1%.
You also risk losing your interest and even some principal if you need to withdraw money early.
2. Money Market Funds
Not to be confused with money market accounts, money market funds are actually mutual funds that invest in low-risk, short-term debts, such as CDs and U.S. Treasurys. (More on those shortly.)
The returns are often on par with CD interest rates. One advantage: Itâs a liquid investment, which means you can cash out at any time. But because they arenât FDIC insured, they can technically lose principal, though theyâre considered extraordinarily safe.
3. Treasury Inflation Protected Securities (TIPS)
The U.S. government finances its debt by issuing Treasurys. When you buy Treasurys, youâre investing in bonds backed by the âfull faith and credit of the U.S. government.â Unless the federal government defaults on its debt for the first time in history, investors get paid.
The price of that safety: pathetically low yields that often donât keep up with inflation.
TIPS offer built-in inflation protection â as the name âTreasury Inflation Protected Securitiesâ implies. Available in five-, 10- and 30-year increments, their principal is adjusted based on changes to the Consumer Price Index. The twice-a-year interest payments are adjusted accordingly, as well.
If your principal is $1,000 and the CPI showed inflation of 3%, your new principal is $1,030, and your interest payment is based on the adjusted amount.Â
On the flip side, if thereâs deflation, your principal is adjusted downward.
4. Municipal Bonds
Municipal bonds, or âmunis,â are bonds issued by a state or local government. Theyâre popular with retirees because the income they generate is tax-free at the federal level. Sometimes when you buy muni bonds in your state, the state doesnât tax them either.
There are two basic types of munis: General obligation bonds, which are issued for general public works projects, and revenue bonds, which are backed by specific projects, like a hospital or toll road.
General obligation bonds have the lowest risk because the issuing government pledges to raise taxes if necessary to make sure bondholders get paid. With revenue bonds, bondholders get paid from the income generated by the project, so thereâs a higher risk of default.
5. Investment-Grade Bonds
Bonds issued by corporations are inherently riskier than bonds issued by governments, because even a stable corporation is at higher risk of defaulting on its debt. But you can mitigate the risks by choosing investment-grade bonds, which are issued by corporations with good to excellent credit ratings.
Because investment-grade bonds are low risk, the yields are low compared to higher-risk âjunk bonds.â Thatâs because corporations with low credit ratings have to pay investors more to compensate them for the extra risk.
6. Target-Date Funds
When you compare bonds vs. stocks, bonds are generally safer, while stocks offer more growth. Thatâs why as a general rule, your retirement portfolio starts out mostly invested in stocks and then gradually allocates more to bonds.
Target-date funds make that reallocation automatic. Theyâre commonly found in 401(k)s, IRAs and 529 plans. You choose the date thatâs closest to the year you plan to retire or send your child to college. Then the fund gradually shifts more toward safer investments, like bonds and money market funds as that date gets nearer.
7. Total Market ETFs
While having a small percentage of your money in super low-risk investments like CDs,
money market funds and Treasurys is OK, there really is no avoiding the stock market if
you want your money to grow.
If youâre playing day trader, the stock market is a risky place. But when youâre committed to investing in stocks for the long haul, youâre way less exposed to risk. While downturns can cause you to lose money in the short term, the stock market historically ticks upward over time.
A total stock market exchange-traded fund will invest you in hundreds or thousands of companies. Usually, they reflect the makeup of a major stock index, like the Wilshire 5000. If the stock market is up 5%, youâd expect your investment to be up by roughly the same amount. Same goes for if the market drops 5%.
By investing in a huge range of companies, you get an instantly diversified portfolio, which is far less risky than picking your own stocks.
8. Dividend Stocks
If you opt to invest in individual companies, sticking with dividend-paying stock is a smart move. When a companyâs board of directors votes to approve a dividend, theyâre redistributing part of the profit back to investors.
Dividends are commonly offered by companies that are stable and have a track record of earning a profit. Younger companies are less likely to offer a dividend because they need to reinvest their profits. They have more growth potential, but theyâre also a higher risk because theyâre less-established.
The best part: Many companies allow shareholders to automatically reinvest their dividends, which means even more compound returns.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Source: thepennyhoarder.com
Best business credit cards with a 0% intro APR
Choosing a card with an introductory APR can be a great move for a small business. You can pay off large purchases over time without worrying about accruing interest â allowing you to truly invest in your business.
If you have a large business purchase looming ahead that you want to finance, there are plenty of great small business credit cards that offer 0% interest on new purchases for the first few months of card ownership.
Read on to learn about some of the best business credit cards with an intro APR.
See Related: How does credit card APR work?
Chase Ink Business Cash® Credit Card
Best intro APR business card for office supplies: Chase Ink Business Cash® Credit Card
The Ink Business Cash Credit Card offers one of the longest introductory periods available on the market â 0% for the first 12 months on purchases (13.24% to 19.24% variable APR thereafter). Plus, the card comes with a competitive earning rate that makes it a particularly good choice for small business owners who need to stock up on office supplies.
| Chase Ink Business Cash® Credit Card | |
Why should you get this card? If youâre determined to keep costs to a minimum, the Chase Ink Business Cash Credit Card offers a lot of cash back on your business purchases â including purchases made on employee cards â for no annual fee. Read full review |
Other things to know:
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Beyond a competitive intro APR, the Ink Business Cash card offers plenty of potential value for cardholders with a competitive rate of cash back on internet, cable and phone services, office supplies, gas and dining purchases. If you spend a lot of money on office supplies or you frequently charge client dinners to your business card, you can rack up plenty of rewards with the Ink card.
Best intro APR business card for a flat rate on all purchases: American Express Blue Business Cash⢠Card
The American Express Blue Business Cash⢠Card offers an intro APR of 0% on new purchases for the first 12 months of card ownership (13.24% to 19.24% variable APR thereafter). Unlike the Ink Business Cash card, the Amex Blue Business Cash offer the same 2% cash back on all purchases, up to $50,000 per calendar year (1% thereafter). If you have a wide variety of purchases to make for your business, this flat rate might equate more rewards.
| American Express Blue Business Cash⢠Card | |
Why should you get this card? The American Express Blue Business Cash Card comes with a major selling point: 2% cash back on your first $50,000 of purchases each year for no annual fee. Read full review |
Other things to know:
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Adding to its appeal for small business owners, the Blue Business Cash card comes with access to top-notch business perks from Amex, including expense-tracking tools and the ability to enroll in Working Capital Terms.
Alternate #1: The Blue Business® Plus Credit Card from American Express
If points are more your speed than cash back, the Blue Business® Plus Credit Card from American Express offers the same generous rewards rate as the Blue Business Cash â with one key difference. Rather than cash back, Blue Business Plus cardholders earn 2 Membership Rewards points per dollar on the first $50,000 in spending each year and 1 point per dollar on all purchases thereafter.
value Membership Rewards points at an average of 1.19 cents per point. If you redeem your rewards strategically, you can stretch them a long way.
Plus, the Blue Business Plus card offers the same lengthy introductory interest rate on new purchases â making it a top-notch card for financing large purchases in the first year (after that, it’s 13.24% to 19.24%).
Alternate #2: Chase Ink Business Unlimited® Credit Card
Another popular Chase small business credit card, the Ink Business Unlimited® Credit Card offers the same 12 months interest-free for new purchases (13.24% to 19.24% variable APR thereafter) as the Ink Business Cash. But unlike the Ink Business Cash card, the Ink Business Unlimited offers the same flat rate of cash back on all purchases â 1.5%.
Though a slightly lower rate than the Amex Blue Business Cash or Blue Business Plus, this earning rate is still great for cardholders who donât weigh their spending heavily to one particular category. For a card with no annual fee, it is a pretty generous earning scheme. Plus, there are no caps on what you can earn. If you spend significantly more than $50,000 per year on your business, the ongoing flat rate of 1.5% might make more sense for you.
Other intro APR business cards
While a 0% interest rate is a compelling reason to choose a business rewards card, you should also ensure that the rewards rate on the card closely matches your spending habits. This will boost your ability to eke plenty of value out of the cards even after the intro APR ends.
If none of these Chase or American Express cards seem right for your spending, Capital One also offers two cards with introductory APRs. Both the Capital One® Spark® Cash Select for Business* and the Capital One® Spark® Miles Select for Business* offer a 0% APR on new purchases for the first nine months (13.99% to 23.99% variable APR thereafter).
Though this introductory period is shorter than those on competing business cards, it might be worth taking a shorter offer if one of these cardâs rewards better suits your spending. With the Spark Cash Select, you can earn 1.5% cash back on every purchase. The Spark Miles Select comes with 5 miles per dollar on hotels and rental cars booked through Capital One Travel, while other purchases earn 1.5 miles per dollar.
Bottom line
Business credit cards are a valuable resource, as they can improve your cash flow while allowing users to rack up rewards on all their business purchases. By choosing a card with an introductory APR, you can pay off large purchases or debt over time without racking up interest â saving yourself money to reinvest in your business.
*The information about Capital One Spark Cash Select for Business and Capital One Spark Miles Select for Business has been collected independently by CreditCards.com. The card details have not been reviewed or approved by the card issuer.
Source: creditcards.com
Why a Family Should Make Major Financial Decisions Together
The post Why a Family Should Make Major Financial Decisions Together appeared first on Penny Pinchin' Mom.
Whether or not you have the option to stay at home with your children or choose to work full or part-time, making major financial decisions with your partner or spouse can make a huge difference in your self-esteem and deepen your trust in each other. Having an equal voice in the big decisions, backed by the solid knowledge of what your joint investments and accounts hold, is a smart mom move.
Donât be scared of the words âmajor financial decisions.â Keep reading. Iâll be gentle.
Donât let fear guide you
Nothing used to make me more nervous than the idea of talking about money. And itâs not because I have a lot of it, quite the opposite. When I was single, I always paid my bills, but rarely on time. I racked up interest on my credit cards, wasting money I couldnât afford to give away. I didnât file my taxes for ten years, which cost about $5,000 to clean up.
I was at war with money. So, I was more than happy to hand over the management of the family finances to my partner as soon as we combined households.
This was a mistake. It wasnât wrong for any nefarious reason. My ex-husband remains one of my best friends. Simply put, it was a missed opportunity. But, for someone with a less trustworthy partner, handing over responsibility could lead to a major disaster.
Making decisions means sharing responsibility
Letâs start with the best-case scenario. You and your partner have a good stable relationship. Money is okay. Thereâs enough coming in that you arenât really worried about any of the basics. But who sits down and pays the bills?
If itâs you, then you know how much the taxes are and the utilities and the mortgage or rent. Maybe you balance out what you allow yourself to purchase at the grocery store by what you know is in the family checking account.
But, if your partner doesnât know the cost of living, whatâs to stop them from ordering an expensive new gadget. Maybe they make more money than you bring in, and they are super excited about the new iPhone.
Sounds like a tense situation brewing.
A new piece of electronics is tiny as far as major purchases are concerned. But spending nearly (or even over) $1,000 for the latest smartphone can set back a family making an average income when an out-of-pocket medical expense pops up in the same month. And, with a family, thatâs bound to happen.
If both partners know the familyâs finances, purchases can be coordinated and saved for. Thatâs the first step to bigger things, like buying a home, paying for college, and figuring out what kind of retirement you can look forward to.
How to get started with family finances
Talk about it. Itâs family meeting time. Say you want to pay the bills or share them. I know couples who pass the responsibility of paying the bills back and forth every six months. They have a joint checking account and set up all the bills in an online payment system that needs to be monitored. Find a method that works for you.
You might think you are really good at saving money, because you only buy sale items, but thatâs small potatoes. If you expand your thinking to future savings and layout purchases in a spreadsheet, you might have fun planning how much you can save in a month and a year. Then you get to plan what to do with those savings at your next family meeting.
For example, once you save $1,000, you can begin to think about opening an investment account, like an IRA, for retirement, or you could invest in stocks on your own.
Stuff happens: be prepared
No one wants to think about death, divorce, or disability. But, moms with kids stand to lose the most when these things happen. Knowing the state of your familyâs finances ahead of time will save you time and stress when you can least afford to waste either.
Even the most civilized divorce is a tense process. To serve or answer a divorce summons you have to know every last detail of your own and your partnerâs income, expenses, and investments.
Do you know how much your partner has squirreled away for retirement? Have a talk about what kind of future you want to have together and what expectations you have for your children. You donât just get what you ask for; you get what you plan for, too.
And, if an accident happens, your husband or wife would want you to be OK. If you and your partner donât know each otherâs bank information and logins, exchange them as a shared trust exercise. Itâs good practice, in case of an emergency and necessary should something terrible occur.
Take care of yourself
My college sociology teacher told the women in my class something Iâm going to pass on to you.
Get your own bank account and credit card, separate from your partnerâs. Pay bills on a credit card that you know you can fully pay off on a monthly basis so that you can build your own credit.
You never know when your credit score could become what saves your family from a disaster, like homelessness. And if you get used to making small and medium-sized financial decisions together, youâll be ready for the really big things.
Build confidence
After your initial discomfort dissipates, youâll find that having your familyâs financial facts at your fingertips gives you confidence. When you donât know how much you have and how much you spend, then your partner is your banker. And no matter how much love you share, money will always be a power issue.
A family financial meeting once a quarter or twice a year will save you from answering to your partner about your credit card bill or wondering why your debit card isnât working.
—By Nic DeSmet
The post Why a Family Should Make Major Financial Decisions Together appeared first on Penny Pinchin' Mom.
Source: pennypinchinmom.com
Investing With the Business Cycle
A âbusiness cycleâ refers to the periodic expansion and contraction of a nationâs economy. Also known as an âeconomic cycle,â it tracks the different stages of growth and decline in a countryâs gross domestic product, or economic activity.
business cycles . Each business cycle is dated from peak to peak or trough to trough of economic activity.
During the expansion phase of the business cycle, GDP increases and the economy grows. This phase tends to be significantly longer than the contraction phase. Since 1945, the average expansion has been 65 months, while the average contraction has lasted 11 months, according to a congressional research report. Features of expansion periods include:
• GDP growth rate of 2-3%
• Inflation around 2%
• Unemployment between 3.5-4.5%
• Bullish stock market
• Increased demand for goods and services
• Interest rates move higher
• Job creation
• Stock prices usually increase
• Increased wages
• Increased real estate values
As economic growth slows down, an economic contraction begins as the nation enters a recession. GDP growth dips below 2% in this phase.
Companies that have taken out loans may struggle to repay them, so they have to lay off workers and slow down production. As workers lose jobs, they have to cut down on spending. This creates a cycle of economic decline. Features of contraction periods include:
• GDP growth falls below 2%
• Decreased demand for goods and services
• Interest rates move lower, making it easier to borrow money
• Loss of jobs, increased unemployment
• Reduced wages because people need jobs so theyâre willing to work for less, and companies canât pay as much
• Stock prices usually decline
• Real estate values plateau or decline
Stage 1: Recession
One definition of a recession is two consecutive quarters with a decline in real GDP. A recession could actually be defined more broadly as a period where there is significant decline in economic activity throughout the entire economy.
During this stage, GDP, profits, sales, and economic activity decline. Credit is tight for both consumers and businesses due to the policies set during the last business cycle. This leads to shifts in monetary policy that lead to a recovery phase. Itâs a vicious cycle of falling production, falling incomes, falling employment, and falling GDP.
The intensity of a recession is measured by looking at the three Dâs:
• Depth: The measure of peak to trough decline in sales, income, employment, and output. The trough is the lowest point the GDP reaches during a cycle. Before World War II, recessions used to be much deeper than they are now.
• Diffusion: How far the recession spreads across industries, regions, and activities.
• Duration: The amount of time between the peak and the trough.
A more severe recession is called a depression. Depressions have deeper troughs and last longer than recessions. The only depression that has happened thus far was the Great Depression, which lasted 3.5 years, beginning in 1929.
Stage 2: Early Cycle
Following a recession, there tends to be a sharp recovery as growth begins to accelerate. The stock market tends to rise the most during this stage, which generally lasts about one year. Interest rates are low, so businesses and consumers can borrow more money for growth and investment. GDP begins to increase.
Just as a recession is a vicious cycle, a recovery is a virtuous cycle of rising income, rising employment, rising GDP, and rising production. And similar to the three Dâs, a recovery period, which includes Stages 2-4, is measured using three Pâs: how pronounced, pervasive, and persistent the expansion is.
Stage 3: Mid-Cycle
This is generally the longest phase of the business cycle, with moderate growth throughout. On average the mid-cycle phase lasts three years. Monetary policies shift toward a neutral state: Interest rates are higher, credit is strong, and companies are profitable.
Stage 4: Late Cycle
At this stage, economic activity reaches its highest point, and while growth continues, its pace decelerates. Monetary policies become tight due to rising inflation and low unemployment, making it harder for people to borrow money. The GDP rate begins to plateau or slow.
Companies may be engaging in reckless expansions, and investors are overconfident, which increases the price of assets beyond their actual value. Late cycles last a year and a half on average.
What Industries Do Well During Each Stage?
Historically certain industries have prospered during each stage of the business cycle.
When money is tight and people are concerned about the economy, they cut back on certain types of purchases, such as vacations and fancy clothes. Also, when people anticipate a coming recession, they tend to sell stocks and move into safer assets, causing the market to decline.
Basically, industries do better or worse depending on supply and demand, and the demand for certain products shifts throughout the business cycle. In general, the following industries perform well during each stage of the business cycle:
Recession
• Healthcare
• Consumer staples
• Utilities
• Bonds
Early Cycle
• Information technology
• Financial sector
• Industrial sector
• Consumer sector
• Stocks and bonds
• Real Estate
• Household durables
Mid-Cycle
• Information technology
• Stocks
• Energy and materials
• Media
Late Cycle
• Commodities such as oil and gas
• Bonds can be a safe haven
• Index funds
Who Should Invest With the Business Cycle?
Business cycle investing is an intermediate-term strategy, since it isnât as short-term as day trading but not as long-term as buy and hold strategies. Each stage of the business cycle can last for a few months to a few years.
the best strategy for beginner investors.
However, more experienced investors might choose to shift at least a portion of their portfolio along with the business cycle. Business cycle investing can also be a good option for younger investors because they will have more opportunities to take advantage of the ups and downs of future cycles.
Understanding the business cycle can also help people make decisions such as when to buy a home or search for a job. Itâs usually best to purchase a home, start a business, or look for a job in the early to mid-stages of the cycle.
The Takeaway
No business cycle is identical but history shows there can be a rough pattern to which industries do better as the economy expands and contracts. Investors can take cues from which stage of the business cycle the economy is in in order to allocate money to different sectors.
One great way to invest and keep track of the market is using an online investing app like SoFi Invest®. The investing platform features both active and automated investing.
For help getting started, SoFi has a team of professional financial advisors available to answer questions and offer guidance.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individualâs specific financial needs, goals and risk profile. SoFi canât guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term âSoFi Investâ refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated InvestingâThe Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (âSofi Wealthâ). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (âSofi Securities).
2) Active InvestingâThe Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital AssetsâThe Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOIN20172
The post Investing With the Business Cycle appeared first on SoFi.
Source: sofi.com