ReportWire

Tag: Personal Finance

  • Americans are spending big with credit cards. Here’s what that means for the possibility of a recession

    Americans are spending big with credit cards. Here’s what that means for the possibility of a recession

    [ad_1]

    Economists have been forecasting a recession for months, and that looming downturn is one of the most anticipated in U.S. history. But it’s not yet materialized, in part due to strong consumer spending.

    “Consumer spending represents more than half of the economy,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions. “So if consumer spending is strong, that alone is, generally speaking, enough to keep the economy from slipping into a recession.”

    In the first quarter of 2023, gross domestic product grew at a 1.1% rate compared to the previous quarter. This modest level of growth is an improvement from mid-2022 GDP figures, which initially brought recession fears to light.

    More from Personal Finance:
    What debt ceiling standoff means for money market funds
    Why missing one $2 expense could derail a national park trip
    MIT economist helps decide when recessions begin and end

    A key reason for the fear: Inflation stayed stickier than economists anticipated. In May, the U.S. Bureau of Labor Statistics reported headline annual inflation of 4.9%.

    To combat inflation, the Federal Reserve has hiked its overnight bank lending rate 10 times over the past year or so. At the Fed’s May meeting, policymakers hinted that they may pause further interest rate increases, barring unexpected developments.

    The end of this tightening cycle may be coming into focus as consumers reach their breaking point. As the pandemic fades, historic levels of personal saving have taken a nosedive. Deposits at banks have crested as consumers keep spending amid continually rising prices.

    This is happening as the least well off are increasingly relying on credit in their day-to-day lives. Roughly 29% of households earning less than $50,000 a year were using credit cards to finance their spending, according Bank of America Institute economists. Credit-use rates have risen steadily in recent years despite being below higher pre-pandemic levels.

    Moderate-income Americans also are facing the significant headwind of less tax-refund money. The average refund this year is $2,777 through April 28, down 8% from the same period last year, according to IRS data.

    “Because this is the same household that rely more on the tax refund to finance their spending, a lower refund really has some negative impact on their spending,” said Anna Zhou, an economist at the Bank of America Institute.

    Analysts at the New York Federal Reserve report record levels of credit card debt in 2023. This underscores the economic split in the country, with some consumers flush with savings following a thrifty pandemic while others are finding it increasingly difficult to spend wisely amid rising prices, mounting layoffs and the potential of recession.

    Still economists see the chance for a soft landing. “We don’t think … the slowdown process will be as dramatic as some people have feared,” said Zhou. “And it will be a gradual process.”

    Watch the video above to learn how U.S. consumer spending has so far fended off a recession.

    [ad_2]

    Source link

  • What’s your retirement ‘number’? How to figure it out.

    What’s your retirement ‘number’? How to figure it out.

    [ad_1]

    There’s a lot of numbers to weigh when it comes to retirement—but what’s your number? 

    Working Americans think they need $1.1 million to retire, according to the Schroders 2023 U.S. Retirement Survey, but how does each individual really figure out what they will need in a retirement that could last decades?

    “It is very difficult for someone at 35 to have any comprehension about what life at 65 will cost,” said Robert Gilliland, managing director and senior wealth adviser with Concenture Wealth Management. “You have no comprehension what $100 will buy in 30 years. It gets easier to imagine as you get closer to retirement but you need to start planning.”

    Read: What’s the magic number for retirement savings? Americans say it’s more than $1 million, but most will fall short of that goal.

    “We have people call us on a weekly basis to ask ‘do we have enough to retire?’ Yes, but it depends on what lifestyle you want,” Gilliland said. “We sit down with them, talk about the lifestyle they’re living now and the lifestyle they want to live if working was optional.”

    Start with a budget

    In the information gathering phase, you want to start with a budget. Look at your current expenses for everything from housing, food, utilities and transportation to extras like travel, gifts, and entertainment. You can keep a simple log or use more sophisticated budgeting software, but the key to the process is honesty, said John Leonard, vice president, client adviser with Spinnaker Trust. 

    “Be honest with yourself on what you really spend. It may surprise you,” Leonard said. “And think about your goals or what lifestyle do you want to live? Do you want to travel, move to a different state? What do you want your retirement to look like?”

    By retirement, you’ve likely paid down all or most of your debt and you’re no longer saving for retirement. So that will free up those funds. There will be some reduction in expenses, such as commuting costs or clothes costs associated with work, and you’ll likely be in a different tax situation with lower earnings, said Matt Fleming, wealth adviser executive with Vanguard.

    Plan for the long haul

    Plan for retirement to last several decades and base your budget around living to age 100.

    “You don’t want to plan for the average life expectancy. You want to plan conservatively and plan for expenses through age 100,” Fleming said. 

    Next, look at what potential sources of income you might have in retirement. That includes your 401(k), IRAs, pensions, savings and Social Security, plus any additional income streams such as rental properties, annuities or inheritance. Also, this is a good time to check on your insurance policies. To figure out your Social Security benefits, use the Social Security website at SSA.gov. 

    “Get to know your inflows and outflows,” said Fleming said.

    Vanguard estimates people should expect to have 75% to 85% of their preretirement income for retirement years, Fleming said.

    Another rule of thumb is the 4% rule, but that has evolved over time and may be lower now—as low as 2.5% to 3%, according to Gilliland. The original 4% benchmark suggested that a $1 million in savings and investments would allow you to spend an inflation-adjusted $40,000 each year in retirement with minimal odds of outliving your money. 

    Read: The 4% retirement spending rule may be too high. Could you get by on 1.9%?

    Social Security questions

    As far as whether to include Social Security in your planning, it depends on your age, experts said.

    “For those close to retirement, Social Security confidence is higher. For early accumulators just starting out in their retirement savings, we have little confidence Social Security will exist in a meaningful way,” Fleming said. “It’s better to overfund your plan than underfund.”

    Social Security’s combined trust funds will become depleted in 2034, with 80% of benefits payable at that time. The issue of how to “fix” Social Security has grabbed headlines in recent months with President Biden vowing to protect Social Security and Medicare and some politicians suggesting changes to the system. 

    Read: Social Security is now projected to be unable to pay full benefits a year earlier than expected

    “For those 45 and older, they will likely have Social Security. Generally, for those 35 and younger, we don’t talk about Social Security,” Gilliland said. “There will always be some form of Social Security. Politicians will want to be re-elected. Some form of Social Security will always be there—but how meaningful it will be, I don’t know.”

    Other factors to consider in budgeting include healthcare costs, travel expenses or helping with college tuition for grandchildren. 

    “People end up spending more in the first five to 10 years of retirement than they though they would—they’re active, traveling, involved with grandkids. They have an active lifestyle. Then spending goes down a bit until healthcare costs kick in,” Gilliland said 

    “People need to be aware and conscious of spending in this time,” Leonard said. “Put your expenses in buckets in terms of needs, wants and wishes.”

    Healthcare costs

    Weigh factors such as getting Medicare at 65, and the impact of long-term care costs and the estimated $315,000 the average couple is expected to spend on healthcare alone in retirement, according to Fidelity Investment’s 2022 report.

    Gilliland said to plan for healthcare costs to grow at about 7% a year. Family history and your own health should also shape how you budget for healthcare, he said. 

    For those who haven’t started saving for retirement—don’t wait. Start now, no matter how small. Eventually, work toward a goal of putting 12% to 15% of your pay toward retirement, said Fleming.

    “The earlier you start, the better. Stick to a plan and revisit it on an annual basis. Keep checking in and rein in your spending if you’re not on track,” Leonard said. “Be conservative and lean on the side of caution.”

    [ad_2]

    Source link

  • Social Security’s COLA could be 3.1% in 2024, and buying power has dropped 36% since 2000

    Social Security’s COLA could be 3.1% in 2024, and buying power has dropped 36% since 2000

    [ad_1]

    The buying power of Social Security has dropped 36% since 2000, meaning that oldest adults who retired before 2000 would need more than $500 a month extra just to maintain the same level of buying power, according to a new study by the Senior Citizens League, a pro-senior think tank.

    The Senior Citizens League also said it expects the 2024 cost-of-living adjustment for Social Security to be 3.1%, compared with the 8.7% increase in 2023’s COLA. The organization said last month it expected COLA for 2024 to be less than 3%. 

    …

    [ad_2]

    Source link

  • Here’s the inflation breakdown for April 2023, in one chart

    Here’s the inflation breakdown for April 2023, in one chart

    [ad_1]

    A shopper in Greenville, New York, April 30, 2023.

    Robert Nickelsberg | Getty Images News | Getty Images

    Inflation in April notched its lowest reading in two years, as price pressures for consumers continue to moderate from multidecade highs and costs for household staples appear to be in retreat.

    The consumer price index, a key barometer of inflation, increased 4.9% in April versus a year ago. That is the smallest annual reading since April 2021, the U.S. Bureau of Labor Statistics, or BLS, said Wednesday.

    The index also fell from 5% in March, marking the 10th consecutive month of declines.

    More from Personal Finance:
    What debt ceiling standoff means for money market funds
    Why missing one $2 expense could derail a national park trip
    MIT economist helps decide when recessions begin and end

    “Increasingly, we can be confident that inflation is coming back in” to target, said Mark Zandi, chief economist of Moody’s Analytics.

    Inflation measures how quickly prices are changing across the U.S. economy. The CPI measures anything from fruit and vegetable prices to those for a haircut or concert ticket.

    Since the CPI reading was a positive number in April, it means consumers didn’t see prices falling, in a broad sense. But it shows the rate at which they’re rising has slowed significantly from the 9.1% peak in June 2022.

    Policymakers aim to keep inflation at about 2% a year. It may take another year or so to reach that target, but “we’re definitively headed in that direction,” Zandi said.

    Where consumers saw prices fall in April

    Consumers saw average prices decline outright in April in certain categories.

    Grocery prices, for example, retreated 0.2% during the month, following a 0.3% decrease in March. This trend should continue as supply chains continue to normalize, as do costs for labor and diesel, a key input for transportation from farm to shelf, economists said.

    Monthly prices also declined for airline fares, new cars, hotels and household energy (such as electricity, fuel oil and utility gas service), among others.

    Where consumers saw prices rise in April

    On the flip side, notable increases in monthly prices occurred in categories such as shelter, used cars and trucks, motor vehicle insurance, recreation and personal care, according to the BLS.

    Gasoline prices also jumped 3% in April relative to March, though are down 12% in the last 12 months.

    Housing, the largest component of the average household’s budget, was the largest contributor to inflation in April, the BLS said. Shelter costs rose 0.4% in April relative to the prior month, a decrease from 0.6% in March.

    However, average rents have moderated or even decreased over the past six months, a trend that will soon be reflected in lower inflation readings for shelter, since those price dynamics typically take several months to feed through into federal data, economists said.

    “It looks like inflation in the [shelter] category has peaked,” Andrew Hunter, senior U.S. economist at Capital Economics, said.

    Overall, households are faring much better than they were months ago relative to inflation in staples such as food, energy and housing, according to Zandi.

    “Gas prices are way down from where they were a year ago,” he said. “Food prices are no longer rising quickly.”

    “And rents are now flat to down,” Zandi added. “Those are the key items in people’s budget and all of them feel pretty good at this point in time.”

    Why inflation surged to multidecade highs

    Consumer prices began rising rapidly in early 2021 as the U.S. economy started to reopen after the pandemic-related shutdown. Americans unleashed a flurry of pent-up demand for dining out, entertainment and vacations, aided by savings amassed from government relief.

    Meanwhile, the rapid economic restart snarled global supply chains, a dynamic exacerbated by Russia’s invasion of Ukraine. In other words, supply couldn’t keep up with consumers’ willingness to spend.

    Inflation, which increased in economies around the world during the Covid-19 pandemic era, was initially siloed in categories of physical goods such as used cars and trucks. But the dynamic has morphed.

    Now, it’s largely being driven by the labor market, not a shortage of physical goods, economists said.

    Increasingly, we can be confident that inflation is coming back in.

    Mark Zandi

    chief economist of Moody’s Analytics

    As the economy reopened after the pandemic, businesses rushed to hire workers and job openings surged to record highs. That demand tilted the job market in favor of workers, who had ample opportunities. They saw wages grow at their fastest pace in decades as employers competed to hire them.

    That strong wage growth has nudged employers, especially labor-intensive service businesses, to raise their prices, economists said.

    But now, “the earlier extreme levels of excess demand for workers are easing,” Hunter said.

    Those labor-market dynamics should continue to put downward pressure on overall inflation.

    “The trend from here is definitely looking a lot better,” Hunter said. “I think we’re finally seeing clear signs of progress.”

    [ad_2]

    Source link

  • How To Budget And Take Care Of Your Finances | Entrepreneur

    How To Budget And Take Care Of Your Finances | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Are you looking to improve your financial portfolio but don’t know where to begin? Have you been dreaming of establishing greater financial freedom but aren’t sure what steps to take to get there? Budgeting and managing finances can be intimidating — especially when trying something new.

    Leveraging these strategies can help set realistic expenditures while keeping track of investments to reach your financial goals faster.

    Establishing realistic financial goals and expectations

    You need to establish clear and achievable financial goals to achieve financial freedom. It involves setting short-term and long-term objectives aligning with your financial plan. Your goals should be realistic and attainable, which means they should be specific, measurable, achievable, relevant and time-bound (SMART).

    Related: Keep Your Business Finances in Order With These 6 Tips

    For example, one short-term goal might be to pay off credit card debt within a year, while a long-term goal could be to save for retirement in 20 years. By setting clear financial goals, you can track your progress, stay motivated, and make informed financial decisions, ultimately leading to greater financial freedom.

    In addition to establishing financial goals, setting realistic expectations for success is important. It involves acknowledging that financial success takes time and effort. Remember, setbacks and challenges are to be expected along the way.

    To set realistic expectations, you should create a comprehensive budget that outlines your income, expenses, and savings goals. It will help you live within your means, avoid overspending, and prioritize your financial goals. You should also regularly review your progress and adjust your budget and financial plan.

    Creating a budget to track expenditures and investments

    Creating a budget is the key to successful budget management and expansions. It allows you to track your expenses, set financial goals, and make informed choices about how to use your money. When creating a budget, it’s important to factor in fixed (e.g., rent) and variable (e.g., entertainment) costs. You should also include debt payments, such as student loans or credit cards.

    Once you have tracked your expenses and established financial goals, it’s time to create an investment plan that works for you. It could involve setting aside money regularly into a savings account or investing in stocks or mutual funds with higher potential returns but more risk involved.

    Budget management: leveraging strategies for growth and expansion

    In addition to setting financial goals and creating a budget, there are other strategies you can leverage for growth and expansion. One effective strategy is to diversify your investments. Investing in a variety of assets, such as stocks, real estate, and bonds, may reduce risk while possibly increasing rewards.

    Another strategy is to maximize your income streams. It could involve taking on a side hustle, freelancing gig, or negotiating a higher salary at your current job. By increasing your income, you can allocate more funds towards your financial goals and accelerate your progress towards achieving financial freedom.

    Related: Risky Business: Should You Diversify?

    Furthermore, continually educating yourself about personal finance and investing is important. It could involve reading books and articles, attending workshops and seminars, or working with a financial advisor. By staying informed and up-to-date, you can make informed decisions about your money and investments and take advantage of new opportunities.

    Finally, staying disciplined and committed to your financial plan is crucial. It involves sticking to your budget, regularly reviewing your progress, and adjusting as needed. It also means avoiding impulsive purchases and maintaining a long-term perspective on your financial goals.

    Analyzing spending habits to make informed decisions about money

    The first step in budgeting and expanding your finances is to analyze your spending habits. It means tracking your expenses, identifying necessary costs and areas of potential savings, and understanding how you are currently using your money.

    Once you have done this analysis, you can decide which expenses to cut back on or increase to achieve your financial goals. For example, if you spend a lot on dining out or entertainment, you might want to reduce these expenditures to save more toward retirement.

    Related: How To Monitor Your Spending Habits

    Creating a budget that works for you is essential to financial success. It helps you track your expenses and understand where your money is going so that you can make informed decisions about how to use it most effectively. It also allows you to set and achieve financial goals to build wealth and reach your dreams.

    Budget management: developing a plan of action for achieving financial freedom

    Once you have identified your financial goals and created a budget to track expenditures and investments, it’s time to develop an action plan. It involves setting short-term and long-term goals and taking concrete steps towards achieving them. It also means consistently following through on the actions you set in place so that you stay motivated and committed to your financial plan.

    You should also regularly review your progress and adjust your budget and financial plan. Pay attention to changes in the market or economic conditions that may affect your investments or income streams, as well as any modifications to laws or regulations that could impact your finances.

    Utilizing tools for monitoring progress toward your desired outcome

    Utilizing tools such as budgeting apps or online banking services will make it easier to track expenses and investments. This information can help you analyze spending patterns and identify areas of potential savings.

    You should also assess your debt load and develop strategies for reducing it. Paying off high-interest debt is a great way to free up more funds for investing in other areas of your finances.

    Finally, consider using rewards programs or discounts for purchases to maximize savings. These offers can add up quickly, allowing you to spend more money toward achieving your desired outcome.

    Staying motivated and celebrating successes along the way

    Finally, staying motivated and committed to your financial plan is important. Celebrate the small successes along the way, such as paying off a loan or reaching a milestone in your investments. Acknowledging these achievements will help you stay focused on achieving your long-term goals.

    By following these steps and continuing to educate yourself about personal finance, budgeting, and investing, you can take control of your finances and get closer to achieving financial freedom. With discipline and dedication, you can reach your desired outcome.

    [ad_2]

    Under30CEO

    Source link

  • What the really rich are doing with their money right now: Goldman Sachs

    What the really rich are doing with their money right now: Goldman Sachs

    [ad_1]

    When it comes to investing, some people don’t think in terms of thousands of dollars, tens of thousands, or even millions.

    They think in hundreds of millions, or even billions. They have so much money they actually set up a private company, known as a “family office,” to manage all the loot.

    And now Goldman Sachs, one of the bankers to the…

    [ad_2]

    Source link

  • Here’s how to play oil-industry stocks for long-term growth of 20% or more

    Here’s how to play oil-industry stocks for long-term growth of 20% or more

    [ad_1]

    Oil demand is likely to hold up longer than many people expect during the anticipated transition to electric vehicles. And changes in the industry point to oilfield services companies as good long-term growth investments as offshore production ramps up.

    Below is a list of oil producers and related companies favored by two analysts who have followed the industry for decades.

    U.S….

    [ad_2]

    Source link

  • The best wit and wisdom from Warren Buffett and Charlie Munger at Berkshire Hathaway’s annual meeting

    The best wit and wisdom from Warren Buffett and Charlie Munger at Berkshire Hathaway’s annual meeting

    [ad_1]

    Shareholders watch Warren Buffett and Charlie Munger from the overflow room during the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb.

    Rebecca H. Gratz | AP

    Berkshire Hathaway‘s annual shareholder meeting on Saturday included dozens of questions spanning topics such as investing strategy, artificial intelligence and politics for the legendary investors at the helm of the conglomerate: Chairman Warren Buffett and Vice Chairman Charlie Munger

    But it wasn’t all strictly business. Buffett and Munger — who are 92 and 99 years old, respectively — cracked jokes and shared wisdom from decades in the investing world throughout the more than five hours spent answering questions.

    Tens of thousands congregated at the CHI Health Center in Omaha, Nebraska were left laughing on multiple occasions by quips from the nonagenarians.

    Here’s some of the best moments from the “Oracle of Omaha” and Munger:

    King Charles and King Charlie

    Buffett referenced the coronation of King Charles III in England also scheduled for Saturday as he introduced Munger. Charles was the 40th monarch to be crowned at Westminster Abbey in a tradition that dates back to 1066, according to NBC News.

    “When I woke up this morning, I realized that we had a competitive broadcast going out somewhere in the U.K. … They were celebrating a ‘King Charles,’ and we’ve got our own ‘King Charles’ here today.”

    More people do ‘dumb things’

    Munger said value investors should be prepared to get smaller returns as competition intensifies. But Buffett said there’s still opportunities given so many people have a short-term view and often do stupid things in a panic.

    What gives you opportunities is other people doing dumb things … In the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number people doing dumb things, and they do big, dumb things.

    ‘Deworsification’

    Munger said it’s “insane” to teach that one has to diversify when investing in common stocks.

    One of the inane things that’s taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks … That is an insane idea. It’s not that easy to have a vast plethora of good opportunities that are easily identified. And if you’ve only got three, I’d rather be in my best ideas instead of my worst.

    And he said investors should know themselves and their strengths.

    We’re not so smart, but we kind of know where the edge of our smartness is … That is a very important part of practical intelligence. … If you know the edge of your own ability pretty well, you should ignore most of the notions of our experts about what I call ‘deworsification’ of portfolios.

    ‘Hold the godd— stock’

    Munger had simple advice when it comes to Berkshire Hathaway in an estate. And he didn’t mince words sharing it.

    Well, at Berkshire, we have a simple problem of estate planning. Just hold the godd— stock.

    Write your obituary and live up to it

    Buffett offered advice on how to live life and spend and invest in a way that isn’t detrimental.

    “You should write your obituary and then try to figure out how to live up to it. That’s something you get wiser on as you go along. … You just want to make sure you don’t make any mistakes that take you out of the game or come close to taking you out of your game. You should never have a night when you’re worried about investing, assuming you have any money to invest at all. … Spend a little bit less than you earn, and you can spend a little bit more than you earn. … Then you’ve got debt, and chances are you’ll never get out of debt. I’ll make an exception in terms of a mortgage on your house.”

    Not smarter, but wiser

    Buffett said investors don’t need to be experts in technical aspects of businesses if they can understand fundamentals and commit to always learning.

    We’re interested in owning a wonderful business forever. … We do learn a lot as we go along. … We’re learning all the time how consumers behave. I’m not going to be able to learn the technical aspects of businesses. It’d be nice if I knew it, but it isn’t essential. … We’ve got a business at Apple … I don’t understand the phone at all, but I do understand consumer behavior. … We’re learning all the time, from all of our businesses. … We don’t get smarter over time, we … get a little wiser, though, following it over time.

    [ad_2]

    Source link

  • 26 Ways to Simplify Your Financial Life – While Saving Astronomical Amounts of Money | Entrepreneur

    26 Ways to Simplify Your Financial Life – While Saving Astronomical Amounts of Money | Entrepreneur

    [ad_1]

    Interested in simplifying your financial life? You’re not alone. After all, most people’s finances are too complicated. As a result, other parts of their lives get affected.

    Procrastination and stress are the results of a messy financial life. Your financial security, independence, and peace of mind can increase when you simplify your finances.

    In order to spend more time and energy on what truly matters in life, here are 26 tips for simplifying your financial life.

    1. Make the switch to paperless billing.

    Like frosted tips and Beanie Babies, paper bills should be relegated to the 1990s.

    By going paperless with your bills, you can reduce clutter around the house — and even save some trees All the companies that you do business with make it easy for you to opt for electronic billing. This includes banks, credit card companies, cable TV providers, cellphone companies, and insurance companies. As a result, they sometimes offer bonuses, gift certificates, sweepstakes prizes, and other incentives to customers who opt for paperless billing to save money on stationery and postage.

    On the other hand, some companies charge you for paper statements. If you receive bills via snail mail, you could be paying between $2 and $10 for the unnecessary privilege.

    If you would like to opt out of receiving paper statements, you can log into your online account and go to the settings menu. Instead of receiving paper bills, enter an email address where you’d like to receive e-bills. That’s all it takes, and if you ever need a hard copy, just print it out.

    2. Automate your bills.

    When possible, set up auto payments to simplify your finances. All of your monthly bills, from credit cards to utilities to insurance to loans, mortgages, and even rent, can be put on autopilot.

    Moreover, late fees and late payments won’t be an issue. That might seem like a priority. However, late fees typically range between $25 and $50. In addition to increasing account balances, late fees can negatively affect consumers’ credit scores as well.

    By entering your bank account information on the website of the service provider, you can often set up automatic payments for your bills.

    What happens if a business does not offer automatic payments? In your checking account or via your bank’s mobile app, you can set up recurring payments.

    3. Bank and retirement accounts should be consolidated.

    Having one checking account and one savings account is sufficient for most people. It is a good idea to consolidate your various accounts into one checking account and one savings account if you have more. After all, do you really need 2 savings, 3 checking, and 4 separate retirement accounts? Your banking will be simplified without sacrificing service levels.

    Similarly, retirement accounts are subject to the same rules. As a result of previous jobs with 401(k) plans, you may have several 401(k) plans you would like to roll over into a self-directed IRA account. Besides reducing paperwork, this will also eliminate account fees, and make managing your retirement assets more convenient.

    4. Create a 50/30/20 budget.

    The purpose of a budget is to show how you can spend your money from month to month. Creating a budget will help you keep your finances in check every month. You can also save money with a budget for your goals or emergency expenses.

    Thankfully, you don’t have to create an overly complicated budget. Case in point, the 50/30/20 budget.

    This simple budget rule, popularized by Senator Elizabeth Warren, is a great place to start for those just beginning to learn how to budget. The plan appeals to everyone who wants to pay their current bills, pay down debt, and start saving for the future at the same time.

    Simply divide your income into these categories;

    • 50% is spent on necessities
    • 30% for wants
    • 20% goes to debt repayment and savings

    Another benefit? It’s flexible enough to allow you to use different variations to meet your specific needs. The 80/20 rule, for instance, can be tweaked for a stripped-down version. 80% of your income goes toward essentials and luxuries, while 20% is saved.

    5. Redefine “enough.”

    Do you have everything you need or want? Does your life have “enough”? As a society, we are taught to believe that we deserve more because we are socially persuaded that we need it. In order to keep a possession current, relevant, and functional, you need to upgrade or update it regularly.

    It’s assumed that the more you spend, the more comfortable you are. But are you really comfortable? Is it enough for you?

    You can keep yourself sane by defining enough for yourself on a financial, physical, psychological, and moral level. Forget what everyone else thinks is “enough.” Stop keeping up with the Kardashians.

    Repeat after me. You are enough.

    6. Combine your insurance.

    A single insurance company can provide you with both home and auto insurance, which can save you time and money.

    “It’s easier to review your policies with one insurer and see at a glance if your limits and deductibles are appropriate for your needs,” Penny Gusner, consumer analyst at Insurance.com, told Kiplinger. Esurance, Progressive, and Safeco, for example, impose only one deductible for claims involving both your car and home if a storm results in a tree falling and damaging both.

    According to Insurance.com, customers save 11.4% off the auto premium when they bundle their auto and home insurance together (9.6% if they bundle their auto and condo insurance, and 5% if they bundle their auto and renters insurance). There is usually a split between the two policies when it comes to the overall discount.

    Bundling two or more policies, like life insurance or coverage for an RV, motorcycle, or boat, can result in a bigger discount. Insurers may partner with one another to offer bundled discounts and coverage they don’t underwrite. It’s important to keep in mind that bundling doesn’t always result in savings, so you should look for policies separately as well as bundled.

    7. Maintain a one-in-one-out policy.

    When you follow this policy, you will be able to control your spending, borrow (if possible) before you buy, and put an emphasis on experiences rather than possessions.

    As an example, you need to get rid of one shirt when you purchase a new shirt. If you want to control your consumption habits, this rule of thumb is helpful. You should donate your old jacket if you purchase a new one. Try borrowing an occasional or seasonal tool instead of buying it if you need to buy a new one.

    8. Knock down debt.

    Eliminating high-interest debt is one of the best ways to reduce financial stress.

    If you pay off even one large credit card or loan, it can ease your worries, as well as reduce your monthly financial obligations. Furthermore, you can use the money you would otherwise spend on debt to pay off additional debt or take that dream vacation.

    Paying off debt can be accomplished by using a debt snowball or debt avalanche strategy.

    By using the debt snowball method, you list your debts by size and then pay the minimum on any debt with the smallest balance while paying extra on the rest. You start with the smallest debt, then move on to the next. Your life can become simpler, and you may feel accomplished if you are able to pay off your debts in full.

    In the debt avalanche method, you prioritize debts by interest rate, then pay extra money for the debt with the highest interest rate first, after which you pay the minimum on the remaining debts. As soon as that debt is paid off, you put extra money toward the next-highest debt. Using this method may take more time, but over time you will pay less interest on your loans.

    9. Reduce your credit card usage to just one.

    Credit cards are one of the best ways to earn rewards and take advantage of zero-interest rate promotions. As soon as the rewards and zero interest disappear, though, the cards are worthless.

    Focus on one credit card for credit scoring purposes, but keep them open for other purposes. Put away the rest of them and choose the one that offers you the most benefits. A single credit card makes managing spending and payments much easier than five or ten.

    10. Expenses should be paid annually or semiannually.

    While some bills are recurring, you can eliminate some by paying them annually or semiannually.

    Paying bills such as car and homeowner’s insurance every six months or once a year is an option. It is likely that you will qualify for a discount for setting up this kind of payment method.

    With just two bills, you will have two fewer monthly payments to worry about.

    It is likely that you will have to adjust your monthly and annual budgets in order to accomplish this. Even so, it’s always a good idea to review and adjust your budget.

    Additionally, if you pay in advance for your home and car insurance, you will receive a discount. Most insurance companies offer discounts that range from 6% to 14% if you pay in full instead of breaking your bill up into monthly payments. By spreading out your payments, you will also avoid paying a monthly finance or service fee that some companies charge.

    11. You can reclaim your time by unplugging.

    As you know, getting rid of cable and your landline will save you money. In response, a growing number of people are streaming TV shows directly from television networks online and subscribing to more affordable services like Hulu or Netflix.

    When you watch only a few shows anyway, or want to cut down on TV time, this is the way to go. In addition, landlines are becoming increasingly irrelevant as people use their smartphones to communicate and entertain themselves.

    Consider this question: Which services aren’t necessary? By cutting the cord, you’ll be able to reclaim your time, while saving some money.

    12. Hide your emergency fund.

    Savings and checking accounts are typically held at the same bank. This may work for rotating savings goals like that expensive smartphone you’ve been eyeing or your vacation. However, it won’t help your emergency fund.

    Emergency funds should not be easily accessible. Whenever you log into your online banking, you don’t want to see that large sum tempting you to use it “just once” for a non-emergency.

    Don’t put it at your bank; put it elsewhere. An online bank or taxable brokerage account may offer money market accounts or high-interest savings accounts. In an ideal world, it would earn maximum interest while being available whenever needed.

    Despite the rule that you should consolidate your accounts, your emergency fund is the exception. Don’t forget it, but keep it out of sight and mind.

    13. Put your savings on autopilot.

    Saving money can be highly effective when you set it and forget it. It’s convenient because you never have to remember to transfer money from your checking account to your savings account. In addition, you won’t have a chance to spend the money before it disappears from your checking account.

    Setting up a recurring transfer from your checking account to your savings account each month — perhaps the day after your paycheck clears — is the easiest way to automate savings in just a few minutes.

    It can be worth automating this task even if you are only able to handle a small amount each month. Regardless of what happens, your savings will accumulate over time since you will save every month.

    14. Instead of investing in individual stocks, invest in funds

    You can get rich investing in individual stocks, but it’s complicated too. Each stock in your portfolio needs research, purchase, tracking, and selling. In fact, the more you own, the more this resembles a part-time job.

    If you invest in mutual funds or exchange-traded funds, you will avoid all that hassle. Actively managed funds rarely outperform index funds since they are very rarely diversified across asset classes. The tax return process for funds is also much simpler. It can also be costly to prepare taxes for individual stocks, since they require a lot of tax-related documentation.

    15. Don’t spend money you don’t have.

    This might sound harsh. Buying now, paying later and 12-month financing are scams. As The Motley Fool points out, BNPL can lead to overspending on items people could not afford otherwise if they had to pay upfront.

    For some people, this can lead to excessive debt. Close to a third of BNPL users had difficulty making payments, resulting in them skipping a bill to avoid defaulting on their plans, according to the Consumer Financial Protection Bureau (CFPB). One in four Americans (22%) who use BNPL regrets their decision immediately and wishes they hadn’t signed up, as a result.

    What’s the best way to get something you can’t afford right now? Save.

    As you save and wait, you can research all of your purchasing options and find the best deal. As a result, I either discover a better alternative or realize that I don’t actually need the item.

    16. Go used.

    Don’t be afraid to buy used cars. New, fancy cars are often associated with prosperity, so this is a tough one for many people. Getting rid of your car as an object of status is a very liberating experience.

    In addition to the money you’ll save on monthly payments, you’ll also save money on the cost of premium gas, repair and maintenance parts, and insurance premiums.

    17. Streamline lifestyle practices.

    What is the origin of your food? Do you gag at the smell of commercial cleaning products? Are you reusing and repurposing items, or do you toss them out?

    Life should be made easier by convenience. The result is that you end up wasting money and damaging the environment as well as your own health by replacing products frequently. Get back to life basics by growing your own food and making your own cleaning products, for instance. In the end, you’ll be able to provide for your family in a way that’s rewarding and fulfilling, and it won’t take you much time.

    18. Spend only with cash or debit cards.

    Whether you’re looking for cash back or travel rewards, credit cards have tons of perks to offer. At the same time, credit cards provide plenty of temptation to overspend. According to USA Today, over 60% of credit card holders experience this issue. As a result, these cardholders are unable to pay off their credit card debt on time with their normal income, which leads to interest charges and increasing balances.

    Putting your credit cards away in a drawer and spending only the money you have is the best way to pay off your credit card debt each month. For spending and budgeting, you could use the envelope system. Alternatively, you could set up a checking account for discretionary spending and use your debit card only.

    19. Set fewer goals.

    Having financial goals can be a great thing. Most of us plan to buy a home, pay for our children’s college, and retire. When you set too many goals at once, you can lose focus, and you won’t make any progress.

    Focusing on just a few objectives at a time can be more effective. In order to achieve your retirement goals, you should start saving early. The sooner you start saving, the easier it will be.

    Saving for a down payment on a house, paying off your credit card debt, or putting money aside to help pay for your children’s college may also be goals.

    Your best chance of making progress may come from focusing your attention on just one or two specific goals. Best of all? After you achieve your first goal, you’ll likely be inspired to set and accomplish new ones.

    20. Focus on what brings in the most income.

    Multiple streams of income sound great in theory. But pursuing too many income streams can actually complicate matters. To me, having one primary and one secondary source at the same time is the best strategy.

    As an example, let’s say you work a demanding full-time job, run a blog, dabble with freelancing, and drive for Lyft on the weekends. Decide which of these side hustles best fits your lifestyle, and focus on it. It is likely that you will achieve more success if you simplify your financial life.

    21. Reduce the number of subscriptions.

    There’s no denying the popularity of subscription boxes right now. The monthly subscription is like receiving a present every month, and who doesn’t like receiving gifts?

    But, here’s the catch. This is an impulse purchase disguised as a box. Most people don’t return the items, so they make it easy for you to do so.

    Keeping something you don’t need is easier than sending it back. So, while it may seem like a small amount, that $12 here and $25 there quickly adds up to an entire closet full of stuff we don’t actually need.

    Don’t stop there, though. If you rarely use any subscription or service, cancel it. This could be a streaming service you never watch or that gym membership you never use. By removing them, you’ll simplify your life and save money. And, it is easier to manage your finances if you have fewer payments to make.

    Thanks to tools like Trim, Rocket Money, and the Bobby App can can these subscriptions for you.

    22. Don’t go big, go small.

    Relocate or downsize if housing expenses are causing financial stress for you. After all, it might be possible to improve your financial situation by taking a similar job in a less expensive area. In general, if your total housing expenses, including rent or mortgage, insurance, taxes, maintenance, and utilities, exceed 40 percent of your income, then you may be in financial hardship.

    Also, it’s easy to overbuy a house with credit if we leverage it to purchase a home. Buying a larger home means paying a higher mortgage, insurance, utility, and maintenance costs. Moreover, you’ll have to fill it with more junk.

    Take a look at a smaller vehicle as another example.

    Even though this is a big move, you may not need something that big if you own a large car or SUV. Besides being more expensive, it uses more gas, is harder to maintain, and is more difficult to park.

    If you have a family, you don’t need to go tiny. But try to find the smallest car that your family can comfortably fit in.

    23. Invest automatically.

    In the process of paying off your high-interest debt, you might start thinking more about investing to build wealth. But what should you invest in?

    Getting help from friends and family might not be as easy as you think. It is possible that they will tell you to invest in stocks or real estate, but not how to choose a fund or allocate your assets.

    If you’re willing to accept algorithmic advice, anyone can now get free investment advice as well as automated investments and portfolio rebalancing. A robo-advisor may seem scary to novice investors, but the fact is that robo-advisors know more about investing than you do.

    You should find a robo-advisor that fits your budget and wealth. Many offer free options, and all automate your investments.

    24. Start a fitness plan.

    Don’t mistake me for saying you need to join a gym. Exercise builds up over time. So, each step you take, every walk you take, every sit-up you do contributes to your overall well-being.

    Furthermore, physical health contributes to financial health. With a clearer, more mindful outlook, you’ll make better decisions, stay healthier (with fewer medical bills), and make better decisions.

    “One study showed that medical reasons may account for two-thirds of bankruptcies in the U.S. Even if that stat is skewed, we all know that medical costs can be really tough for the average family to handle,” Kate Underwood wrote in a previous Due article. “Keeping yourself healthy can prevent a ton of extra costs.”

    25. Pay someone else.

    Making money sometimes requires spending money. You can save a lot of money in the long run by hiring a professional in a few areas of life. In the case of real estate or a side business, or if you have a lot of assets, a good accountant is invaluable. Ultimately, a good financial planner can help you create a budget, an investing plan, and a plan to deal with your student loans.

    You might consider hiring an electrician, plumber, or professional organizer to assist you with home repairs and decluttering, depending on your situation.

    26. Say no sometimes.

    Whenever someone asks you to do something that is not in line with your values, priorities, or time constraints, say no! Ultimately, it’s up to you how you spend your time and money.

    However, if you say no to something, it doesn’t necessarily mean it’s for life. It could simply mean “not today.’ Keep in mind that every time you say “yes’ to one thing, you’re also saying “no’ to another. Think about what’s most important to you at the moment.

    FAQs

    Why simplify your financial life?

    Being intentional with your money begins with decluttering and simplifying. You should also be more mindful of what you consume.

    When you declutter and simplify your home, you’re likely to be motivated to buy fewer items. This will help you maintain a clutter-free home. The more you buy, the more money you save, the more debt you pay off, and the more money you spend on purpose.

    You can also keep track of what you have and find things more easily when you clear the clutter. If you avoid buying duplicate items or replacing things you cannot locate, you will save money.

    As you simplify, you are able to spend your money more wisely. It also reduces financial stress by giving you a greater sense of control over your finances.

    What are the benefits of clear financial life goals?

    Oftentimes, people feel rudderless when their financial life goals are unclear, which leads to feelings of insecurity, anxiety, and scattered thinking, especially when planning for retirement.

    Changing your mind through goal-setting is proven to change your brain. Furthermore, when highly motivated to achieve something, you begin to perceive obstacles as less important. The science also suggests you’re more likely to succeed if you keep regular track of your progress.

    Are you ever done saving?

    Simply put, no.

    Expenses such as home maintenance, vacations, and special occasions gifts should be easily covered by your savings account from time to time, but not unexpectedly.

    As well as regular savings, you need to pay off debt and replace your car’s tires in case of an emergency. Despite knowing these things will happen at some point, you should still prepare for them even though they may not happen at the right time.

    What is the best way to evolve your financial strategy as your needs change?

    There is no guarantee that everything will go according to plan, even with the best planning. It is natural for your life stage, preferences, and needs to change. Your financial plan should change when they do.

    At one moment, you prepare to launch your children into adulthood at another. Then you’re taking care of your aging parents. As your journey evolves, your financial plan must adapt as well.

    In order to avoid decisions that would jeopardize your most important previous or new goals, you can repeat scenarios that you conducted early in your planning. The best financial plans and processes adapt to you, not the other way around.

    The post 26 Ways to Simplify Your Financial Life – While Saving Astronomical Amounts of Money appeared first on Due.

    [ad_2]

    John Rampton

    Source link

  • Loneliness is an ‘epidemic’ that costs billions and leads to bad health outcomes and even death

    Loneliness is an ‘epidemic’ that costs billions and leads to bad health outcomes and even death

    [ad_1]

    Loneliness is more than a bad feeling. It’s as deadly as smoking up to 15 cigarettes a day and is associated with a greater risk of cardiovascular disease, dementia, stroke, depression, anxiety, and premature death, according to an advisory by the U.S. Surgeon General.

    The mortality impact of being socially disconnected is greater than that of obesity and physical inactivity, U.S. Surgeon General Vivek Murthy said in an 81-page report called “Our Epidemic of Loneliness and Isolation.”

    Social isolation among older adults alone accounts for about $6.7 billion in excess Medicare spending a year, largely due to increased hospital and nursing facility spending, the report said. 

    Read: Depression, isolation, loss of purpose: Could retirement be bad for your mental health?

    Loneliness and isolation also are connected with lower academic achievement and worse performance at work. In the U.S., stress-related absenteeism attributed to loneliness costs employers an estimated $154 billion annually, according to the report.

    “Given the profound consequences of loneliness and isolation, we have an opportunity, and an obligation, to make the same investments in addressing social connection that we have made in addressing tobacco use, obesity, and the addiction crisis,” the report said. Still, no federal funding or programming will be provided to combat the issue.

    Essentially, social connection is a significant predictor of longevity and better physical, cognitive, and mental health, while social isolation and loneliness are significant predictors of premature death and poor health, the report said.

    Read: Americans are lonelier than ever—and that’s bad for your health

    The Surgeon General’s advisory is intended as a public statement that calls the people’s attention to an urgent public health issue and provides recommendations for how it should be addressed. Advisories are reserved for significant public health challenges that require the nation’s immediate awareness and action, the report said.

    “Each of us can start now, in our own lives, by strengthening our connections and relationships. Our individual relationships are an untapped resource—a source of healing hiding in plain sight. They can help us live healthier, more productive, and more fulfilled lives,” the report said. “Answer that phone call from a friend. Make time to share a meal. Listen without the distraction of your phone. Perform an act of service. Express yourself authentically. The keys to human connection are simple, but extraordinarily powerful.”

    Americans have become less connected to houses of worship, community organizations and their own families and have reported an increase in feelings of loneliness. The number of single households has also doubled over the last 60 years.

    About half of U.S. adults report experiencing loneliness, with some of the highest rates among young adults. People cut their circles of friends during the Covid-19 pandemic and reduced time spent with those friends, according to the report. 

    Read: ‘When we retire, we lose a lot.’ How to avoid retirement shock.

    Americans spent about 20 minutes a day in person with friends in 2020, down from 60 minutes daily nearly two decades earlier. Among young people, ages 15 to 24, time spent in-person with friends has reduced by nearly 70% over almost two decades, from roughly 150 minutes per day in 2003 to 40 minutes per day in 2020, the report said. 

    Technology has made loneliness worse. People who used social media for two hours or more daily were more than twice as likely to report feeling socially isolated than those who used such technology for less than 30 minutes a day, according to the report.

    Murthy called on technology companies, employers, community-based organizations, parents and individuals to tackle the problem. 

    “We are called to build a movement to mend the social fabric of our nation. It will take all of us…working together to destigmatize loneliness and change our cultural and policy response to it.

    It will require reimagining the structures, policies, and programs that shape a community to best support the development of healthy relationships,” Murthy said. 

    [ad_2]

    Source link

  • ‘These high yields are not going to last forever’: Fed’s rate hike may be the last for now — time to say goodbye to 5% on CDs and savings?

    ‘These high yields are not going to last forever’: Fed’s rate hike may be the last for now — time to say goodbye to 5% on CDs and savings?

    [ad_1]

    The Federal Reserve’s interest-rate increases have been propping open a window for people to get tempting yields in turbulent times from savings accounts, certificates of deposit and other low-risk cash investments.

    Now the Fed increased its benchmark rate again Wednesday. The 25-basis point increase is the central bank’s tenth straight rate hike since March 2022. The increase, which brings the rate to a range of 5%-5.25%, could also be the final increase too, some Fed watchers say.

    So if the window for high yields on low-risk cash investments is at its highest point for now, there’s likely only one direction they’ll go next, observers say.

    “In our view, we are now at the peak or very near the peak in the federal funds rate. If you look at the market signals, they indicate exactly that,” said Angelo Kourkafas, investment strategist at Edward Jones.

    What that means for rate-sensitive cash investments — like bank accounts, CDs, money-market funds and short-term Treasury debt maturing within one year — “is an opportunity to take advantage of these high yields that are not going to last forever,” he said.

    The largest money-market funds currently offer an average 4.64% seven-day yield as of Monday, according to Crane Data. Meanwhile, the yields on Treasury bills are also ranging around 4% to 5%, according to data.

    The annual percentage yields on high-yield savings accounts and one-year online bank CDs can now reach 4% and 5%, according to DepostAccounts.com.

    But some of the longest maturity CDs “may have already peaked,” according to Ken Tumin, the site’s founder and senior industry analyst at LendingTree.

    Long-term CD rates are less influenced by the federal funds rate moves and “are the first ones to react,” he said. The APY on a five-year CD averaged 3.95% in April, down from 4.04% in January, he noted.

    Rate retreats show elsewhere. I-bonds, the fixed-income investments pegged to inflation that caught wide attention, now offer a 4.3% rate. That’s down from 6.89% in the previous six months, and off their recent peak of 9.62%.

    Even as inflation rates declined from scorching to warm, Americans amassed $1 trillion in personal savings as of March. But recession worries continue to to build among many economists and consumers.

    “It’s not imminent that we see lower [Federal Reserve] rates down the road, but we could potentially by the end of the year,” said Kourkafas. “From an investor standpoint, locking in some of these high yields makes sense,” he later added.

    “This could be ‘last call’ for savers,” said Greg McBride, Bankrate chief financial analyst. “CD yields on maturities of one year and longer have peaked, and now is the time to lock in. A slowing economy coupled with the Fed moving to the sidelines mean CD yields will start pulling back soon.”

    Are we at the top?

    It’s tough to say for sure whether the Fed has reached the top of this particular interest-rate cycle, but it’s a key question for Wednesday’s Fed meeting. Another question is when the central bank starts considering rate decreases.

    With its latest rate increase Wednesday, the central bank said, looking ahead, it will weigh a range of factors to decide the extent that “additional policy firming may be appropriate.”

    There’s been no decision on a pause, Federal Reserve Chair Jerome Powell told reporters Wednesday. But the central bank had a tone shift in its latest statement, discarding a line that said “some” extra increases “may” be necessary.

    It was “a meaningful change that we’re no longer saying we anticipate. So we’ll be driven by incoming data meeting by meeting, and we’ll approach that question at the June meeting,” Powell said.

    For around a year, “retail investors — as they do in every tightening cycle — they’ve been gradually moving their deposits into higher yielding places, such as CDs and other things, including money market funds,” Powell noted.

    “That’s a gradual process that is quite natural and happens during a tightening cycle,” he said.

    If the Fed keeps its rate higher for longer, the window for higher yields will likely stay at its peak for a while, said Tumin. “Deposit rates might not fall quickly, so people might have time to take advantage of higher deposit rates.”

    Federal Deposit Insurance Corporation data showed banks paying $78.7 billion in interest on domestic deposit accounts last year, according to DepositAccounts.com research. That’s more than triple the $24.3 billion that banks paid for deposit interest in 2021.

    “If things turn for the worse,” Tumin said, “deposit rates could fall quickly, before the first Fed rate cut.” If banks tone down their personal and business lending portfolios, they wouldn’t need to entice as many depositors with higher rates, he explained.

    Economists say credit is already tightening as banks mull their next move after the failures of Silicon Valley Bank and Signature Bank last month. This week, JPMorgan Chase & Co.
    JPM,
    -2.12%
    acquired First Republic Bank after the troubled lender closed its doors.

    Ever since the Fed started tightening, consumers have become “increasingly rate-conscious,” said Jennifer White, senior director of banking and payments intelligence at JD Power.

    “What goes along with rate chasing is all the other behavior that consumers learned during this process,” she said. That includes a heightened focus on the customer services a bank offers, and the costs it charges for those services, she said.

    If and/or when interest rates decline, “I don’t think that’s going to be lost on customers,” White said.

    Don’t get carried away

    “With cash rates where they are right now, you can get meaningful yield,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley’s
    MS,
    -1.78%
    Global Investment Office. “It can make sense to hold a larger portion of cash, and cash-like investments.”

    Just how much cash you decide to hold onto depends on your own risk tolerance, and the amount of time before you need to tap your portfolio, he said. Just don’t go overboard, he said.

    There are many convenient trade-offs, like the lock-up period for money in a CD, or the fact that returns on cash ultimately cannot outrun inflation. “If you’re holding excess cash in your portfolio, you run the risk of not maintaining purchasing power over time,” Loewengart added.

    Suppose investors pulled all their money from stocks and bonds, and put it all into Treasury bills that matured in three months’ time?

    That cash-focused investor would have a 74% chance of underperforming a 60/40 portfolio, according to Vanguard’s number crunch on four decades of data. The person’s returns would be around 4% lower, researchers said.

    (A 60/40 portfolio is a classic investment mix comprised of 60% stocks and 40% bonds — though its effectiveness is a source of debate.)

    If the investor stayed in three-month Treasury bills for a year, Vanguard’s analysts said they faced an 87% chance of underperforming a 60/40 portfolio. Here, the T-bill investor underperformed the 60/40 portfolio by an average 13.5% underperformance, Vanguard said.

    Joe Davis, Vanguard’s chief global economist, said does not expect a rate cut this year.

    Vanguard sees inflation cooling, but it also predicts a recession in the second half of the year that entails less bank lending, more job losses, and more bankruptcy cases, he said.

    Financial advisers always emphasize the importance of keeping the long view, and avoiding knee-jerk investment decisions that attempt to time the market.

    Markets and investors have experienced “the most aggressive Fed rate-hiking campaign” in decades, said Kourkafas. “It’s a big milestone, but now we have to think about what’s next.”

    It’s been “painful for everything — except cash — last year,” Kourkafas said. “But now, as we make that turning point, there’s an opportunity with cash, but also investors shouldn’t forgo other parts of their portfolio.”

    [ad_2]

    Source link

  • I’m 65 with more than $5 million saved and I can’t figure out how to spend it fast enough to avoid an RMD disaster

    I’m 65 with more than $5 million saved and I can’t figure out how to spend it fast enough to avoid an RMD disaster

    [ad_1]

    Got a question about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write me at beth.pinsker@marketwatch.com.  

    Dear Fix My Portfolio,

    I think I have an uncommon problem. I’m a 65-year-old recently retired education administrator. I think I…

    [ad_2]

    Source link

  • Here’s how the Federal Reserve’s latest quarter-point interest rate hike impacts your money

    Here’s how the Federal Reserve’s latest quarter-point interest rate hike impacts your money

    [ad_1]

    The Federal Reserve Bank building

    Kevin Lamarque | Reuters

    What the federal funds rate means to you

    The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and saving rates they see every day.

    This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

    Here’s a breakdown of how it works:

    How higher rates are affecting your wallet

    Credit cards

    Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles.

    Credit card annual percentage rates are now over 20%, on average, an all-time high. With most people feeling strained by higher prices, more cardholders carry debt from month to month.

    “Now people are racking up debt and borrowing at high rates and that’s troublesome,” said Tomas Philipson, University of Chicago economist and a former chair of the White House Council of Economic Advisers.

    With this rate increase, consumers with credit card debt will spend an additional $1.7 billion on interest, according to an analysis by WalletHub. Factoring in the hikes between March 2022 and March 2023, credit card users will wind up paying at least $31.7 billion in extra interest charges over the next 12 months, WalletHub found.

    Home loans

    Boonchai Wedmakawand | Moment | Getty Images

    Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

    Rates are now off their recent peak, but not by much. The average rate for a 30-year, fixed-rate mortgage currently sits at 6.48%, according to Bankrate, down slightly from November’s peak but still much higher than it was a year ago.

    “This goes to show just how hard it is for many buyers to overcome today’s persistently high home prices and mortgage rates,” said Jacob Channel, senior economic analyst at LendingTree.

    Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. Already, the average rate for a HELOC is up to 7.99%, according to Bankrate.

    Auto loans

    Even though auto loans are fixed, payments are getting bigger because the prices for all cars are rising along with the interest rates on new loans. So if you are planning to buy a car, you’ll shell out more in the months ahead.

    The average rate on a five-year new car loan is now 6.58%, according to Bankrate.

    The Fed’s latest move could push up the average interest rate even higher, right at a time when borrowers are already struggling to keep up with bigger monthly loan payments.

    Student loans

    Kameleon007 | Istock | Getty Images

    Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-year Treasury notes later this month.

    For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects to happen sometime this year.

    Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.

    Savings accounts and CDs

    While the Fed has no direct influence on deposit rates, those tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom for years, are currently up to 0.39%, on average.

    Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.5%, much higher than the average rate from a traditional, brick-and-mortar bank, according to Bankrate.

    Rates on one-year certificates of deposit at online banks are closer to 5%, according to DepositAccounts.com.

    With more economic uncertainty ahead, consumers should be taking aggressive steps to secure their finances — including paying down high-interest debt and boosting savings, McBride advised.

    “Grabbing a 0% credit card balance transfer offer or putting your emergency fund in a high-yield online savings account are good first steps.”

    Subscribe to CNBC on YouTube.

    [ad_2]

    Source link

  • How to have a fun summer when your finances fall short

    How to have a fun summer when your finances fall short

    [ad_1]

    With layoffs, bank closures and inflation, financial tensions remain high for many Americans heading into the summer. In a fall 2022 survey conducted by The Harris Poll for the American Psychological Association, 83% of adults said inflation was a source of stress, and 56% said they and/or their family had to make different choices in the last month because they didn’t have enough money.

    Making tough money choices is stressful, and sacrificing “wants” to afford the “needs” can be disappointing. But, if you’re questioning the financial impact of your summer plans or they have suddenly become out of reach, there are still ways to have fun, save money and put yourself in a better place for next year.

    PIVOT TO A POSITIVE MINDSET

    In the face of canceled summer plans, Rob Bertman, a family budgeting expert and certified financial planner in Missouri, suggests flipping your mindset from disappointment to opportunity. Use the moment to talk about money decisions with your partner or kids.

    “I think it’s always good for kids to see that their parents are trying to learn and get better,” he says.

    With children, Bertman says to avoid language like “we can’t afford it” or “it’s too expensive” because that can lead to a scarcity mindset. Instead, he suggests reframing the difficult choice as one that benefits the family in the long run.

    The key to this attitude shift is not losing sight of your priorities. What you’re looking for, ultimately, is to make memories with people you love. While vacations seem primed for those frame-worthy moments, sometimes the things that matter most happen in your own backyard.

    REDUCE THE COST OF ACTIVITIES

    Summer is prime time for free events, but you’ll have to put in a little work to find cheap events in your area. Even still, having things to look forward to on your calendar can be a big emotional lift.

    A membership to a zoo, park, aquarium or museum could pay off in multiple visits all summer long. In addition, it’s a great way to get out of the house and enjoy the weather — or escape the heat, depending on where you live.

    If a membership is too pricey, you might have a workaround in your wallet. For example, Bank of America credit card holders are eligible for the Museums on Us program, which provides free general admission to over 225 cultural centers across the country on the first full weekend of each month.

    AAA members can get discounted tickets to concerts, movies, sporting events and amusement parks. And don’t forget your local library. Some offer free “experience passes” to gardens, museums, zoos and parks.

    Once you pick an activity, cut costs by bringing your own food. You’ll save money on that last-minute drive-through meal or overpriced snack. When dining out, look for places where you can BYOB because alcoholic drinks can sometimes double the bill.

    If you still want to travel, consider someplace close or split the cost with family or friends. “The easiest thing to do is treat your city or town like you’re a tourist,” Bertman says. Drop a pin or draw a circle around your town and find drivable destinations to explore, he suggests.

    A vacation rental that was $3,000 might suddenly become affordable if you’re paying only $1,500. Grandparents might be happy to join in to make family memories — and you might even get a date night out of it.

    SET YOURSELF UP FOR NEXT SUMMER

    — AUTOMATE SUMMER SAVINGS. If having a full summer schedule is nonnegotiable, it might be time to prioritize this in your budget. Automatically transferring a fixed amount of money into a separate savings account each paycheck can help you build funds so you’ll have them set aside by next summer. Months with fewer holidays and birthdays are also prime for boosting additional savings, according to Bertman.

    — BE FLEXIBLE. Life is unpredictable. Protect your plans by booking hotels with free cancellation policies or flights with refundable tickets to avoid fees or lost deposits. Travel insurance is another option, and some plans cover your reservations and medical expenses.

    — CHECK IN ON SPENDING WEEKLY. Bertman recommends conducting five-minute weekly spending reviews to see where your money is going. It will eventually become a habit — but set judgment and guilt aside. “Once families kind of get in the rhythm of doing that,” he says, “they figure out how to really cut out their spending without sacrificing their lifestyle.”

    __________________________________

    This article was provided to The Associated Press by the personal finance website NerdWallet. Amanda Barroso is a writer at NerdWallet. Email: abarroso@nerdwallet.com.

    RELATED LINK:

    NerdWallet: How to save money https://bit.ly/nerdwallet-how-to-save-money-22-proven-ways

    Methodology

    The Stress in America 2022 survey was conducted online by The Harris Poll for the American Psychological Association from Aug. 18 to Sept. 2, 2022. It includes 3,192 adults ages 18 and older who reside in the U.S. and who have agreed to participate in surveys administered by Harris.

    The sample data is accurate to within +2.9 percentage points using a 95% confidence level.

    [ad_2]

    Source link

  • Hotel housekeeping jobs have fallen by 102,000 during the pandemic. What happened?

    Hotel housekeeping jobs have fallen by 102,000 during the pandemic. What happened?

    [ad_1]

    As some U.S. hotels hung on to practices they adopted during the early stages of the coronavirus pandemic — such as eliminating daily room cleanings — the number of hotel housekeepers fell by more than 102,000 last year from prepandemic levels, new data show.

    The total number of hotel housekeeping jobs as of May 2022 was 364,990, a 22% decline from the total of 467,270 such positions during the same period in 2019, according to numbers released last week by the Bureau of Labor Statistics.

    Unions…

    [ad_2]

    Source link

  • Millennial Money: Trusts can aid those with mental illness

    Millennial Money: Trusts can aid those with mental illness

    [ad_1]

    More than 50% of Americans will be diagnosed with a mental illness or disorder during their lifetime, according to the Centers for Disease Control and Prevention. Chances are, some of these individuals will be inheriting wealth at some point.

    If a family member’s mental health issues may interfere with their ability to manage finances, answering these questions could help them create long-term financial stability.

    HAVE I SET UP A TRUST?

    Setting up a trust is one way to transfer wealth to a loved one and create financial stability for them. A trust enables you to leave specific instructions for trustees about how to care for your loved one and distribute assets.

    Trusts can be especially helpful for transferring assets to loved ones who have a mental illness but are still able to function independently. While these loved ones are often independent, they may still have difficulty managing assets on their own, says Lillie Nkenchor, an attorney who does estate planning in New York. One example includes someone with depression.

    “You can put assets in a trust,” Nkenchor says. “It can simply be a trust that says, ‘This money is to be used to take care of my sister who is high functioning, but is not great with money.’”

    Likewise, you can request money be allocated to health care expenses and anything else that helps them live a healthy and functional life. Having a trust in place can also help beneficiaries avoid probate, a court process for handling estates that could be stressful for someone who has a mental illness.

    DOES MY LOVED ONE RECEIVE GOVERNMENT ASSISTANCE?

    Another important question to ask is whether the person receives government assistance or may need to in the future. While a basic trust may suffice for a loved one who has a mental illness but mostly functions independently, it could negatively impact one who doesn’t and receives government assistance.

    “We want to make sure that if we are caring for someone who’s receiving that type of benefit, we don’t accidentally leave them something that disqualifies them from that benefit,” Nkenchor says.

    People who receive government assistance may have limits on how much they can have in assets. For instance, to be eligible for Supplemental Security Income through Social Security, they generally can’t have resources of more than $2,000 as an individual or $3,000 as a couple. That is, unless you put those assets into a special needs trust. It’s an estate planning tool for individuals with disabilities or functional needs.

    “The special needs trust is meant to supplement government benefits that person is receiving. It doesn’t replace it, it’s meant to supplement it,” Nkenchor says.

    Nkenchor adds that a standard special needs trust isn’t effective until the person who establishes the trust dies. So, if you plan to financially support your loved one while you’re alive while they receive benefits, consider setting up a stand-alone special needs trust . Since setting up an SNT can be complicated, it’s advisable you speak to a professional who specializes in this area. The Special Needs Alliance website has a directory that can point you toward attorneys for special needs planning to help you get started.

    HAVE I NAMED THE RIGHT TRUSTEES?

    The estate managers you name will be responsible for distributing assets to your loved one when you die or if you’re incapacitated. Talisa Utsey , an independent estate planning attorney licensed in Maryland and New York, says a mistake some people make is not appointing the right trustee. She adds that people sometimes take advantage of older adults, young people and those with mental illnesses.

    You have two options: someone you know or a corporate fiduciary. Utsey says if you opt for the former, choose someone who has a good relationship with the beneficiary. You also want to be sure they have some knowledge of estates or can get advice from someone who does.

    “If they are not familiar with estate administration, if they’re not familiar with the documents that give them the authority, they’re not familiar with their actual authority, then that can be harmful,” Utsey says.

    Alternatively, you may choose to appoint a corporate trustee since they’re usually experienced and have no emotional investment. For example, you could use a financial institution like a bank. Just know that corporate fiduciaries often charge heavy fees.

    Utsey also advises appointing at least one successor trustee — a person who takes over trustee duties if the initial trustee can’t serve. And don’t forget to consult with prospective trustees first, Utsey says: “Make sure that the primary and the successor are both interested in taking on that type of responsibility.”

    IS MY ESTATE PLAN CLEAR?

    To protect your loved one from financial abuse and prevent mishandled funds, you want your plan to be clear and streamlined, Utsey says. This means ensuring all your accounts and assets are addressed to the trust, none are in your loved one’s name, and there are clear directions about how money is spent. All assets should flow through the trust if possible.

    “When there’s a plan, there’s less likelihood of manipulation and funds being wasted because it’s clear, it’s a process and it’s written down in plain English, and black and white,” Utsey says. “And to some extent, it’s legally enforceable when it’s done the right way.”

    Being clear will also help the trustee execute your plan with ease.

    _______________________________________

    This column was provided to The Associated Press by the personal finance site NerdWallet. The content is for educational and informational purposes and does not constitute investment advice. Elizabeth Ayoola is a columnist at NerdWallet. Email: eayoola@nerdwallet.com.

    RELATED LINK:

    NerdWallet: Special needs trust (SNT): What it is and how to start one https://bit.ly/nerdwallet-special-needs-trust

    [ad_2]

    Source link

  • France is still mad about a hike in the retirement age. But can the protests last? | CNN

    France is still mad about a hike in the retirement age. But can the protests last? | CNN

    [ad_1]


    Paris
    CNN
     — 

    Clashes erupted in Paris on Monday marking May 1, a traditional day of union-led marches, in the wake of hugely unpopular changes to France’s pension system that were signed into law last month.

    One of France’s largest unions, the CGT, had called for “historic” protests following months of unrest and widespread strikes that saw transport grind to a halt and garbage mount in the streets of Paris.

    A CNN team on the ground reported chaotic scenes from the protests, having witnessed fireworks and other projectiles thrown at the police who answered with tear gas as they retreated and regrouped. Ahead of the protest the police had warned of a heightened risk of violence, with at least 30 people arrested as a result of Monday’s demonstrations, according to CNN affiliate BFMTV.

    Protesters were forcibly pulling detained civilians out of the police’s arms.

    One officer hit by a Molotov cocktail received treatment after sustaining what seemed to be “serious burns,” according to a spokesman with the Paris police.

    Policemen look on during Monday's demonstrations, with fierce clashes between security officials and protesters leading to dozens of arrests.

    France’s Constitutional Council, which plays a similar role to the US Supreme Court, in April approved the most controversial part of the reform – the raising of the retirement age from 62 to 64.

    Despite the decision, some of France’s powerful unions say they will fight on, with the question now whether this anger will plague the rest of Macron’s time in office or disappear from the streets.

    Here’s all you need to know about the pension reforms.

    For the French “it was never about the age of retirement,” said political scientist Dominique Moïsi, “but the balance between work and life.”

    Pensions reform has long been a thorny issue in France. In 1995, weeks-long mass protests forced the government of the day to abandon plans to reform public sector pensions. In 2010, millions took to the streets to oppose raising the retirement age by two years to 62 and in 2014 further reforms were met with widespread demonstrations.

    “Each time there is opposition from public opinion, then little by little the project passes and basically, public opinion is resigned to it,” Pascal Perrineau of Sciences Po university said.

    For many in France, the pensions system, as with social support more generally, is viewed as the bedrock of the state’s responsibilities and relationship with its citizens.

    The post-World War II social system enshrined rights to a state-funded pension and health care, which have been jealously guarded since, in a country where the state has long played a proactive role in ensuring a certain standard of living.

    How Macron pushed through these reforms – bypassing a parliamentary vote – inflamed tensions as much as their content, focusing anger on the president himself.

    “I don’t think in the history of the Fifth Republic, we have seen so much rage, so much hatred at our president. And I remember as a young student, I was in the streets of Paris in May ’68, and there was rejection of General de Gaulle but never that personal hatred,” Moïsi said.

    Macron is above all a business-minded president. Making France more business-friendly and government more efficient have been central to his mission.

    The young president made social reforms, especially of the pensions system, a flagship policy of his 2022 re-election.

    For Macron’s cabinet, the problem is money. The current system – relying on the working population to pay for a growing age group of retirees – is no longer fit for purpose, the government says.

    Labor minister Olivier Dussopt said that without immediate action the pensions deficit would reach more than $13 billion annually by 2027. Referencing opponents of the reforms, Dussopt told CNN affiliate BFMTV: “Do they imagine that if we pause the reforms, we will pause the deficit?”

    It is worth noting that the higher pension age will still keep France below the norm in Europe and in many other developed economies.

    State pensions in France are also more generous than elsewhere. At nearly 14% of GDP in 2018, the country’s spending on state pensions is larger than in most other countries, according to the Organization for Economic Cooperation and Development (OECD).

    The Constitutional Council’s decision means the reforms are going ahead.

    From September, the first retirees will have to wait an additional three months for their state pensions. With regular, incremental increases, by 2030 the retirement age will have reached 64.

    Protesters are unbowed. One told journalists in the immediate aftermath of the decision they would “fight until this reform is abandoned.”

    Between January and mid-April, despite sporadic violence, support for the protests grew by some 11%, figures from pollster IFOP in partnership with Fiducial/Sud Radio showed.

    Protestors stormed the headquarters of luxury giant LVMH last month.

    In contrast, during the Yellow Vest protests, started in opposition to hikes in fuel prices, violence gradually soured public support. That these pensions protests continue to hold such popular goodwill is an ominous sign for Macron’s future plans.

    The size and violence of pensions protests spiked when Macron forced the legislation past the country’s lower legislative house without a vote. Since then, a determined minority has continued to protest – and a much smaller group to engage in violence. For now, with the law passed, momentum may have shifted away from mass street protests, even if flare-ups continue.

    But for an electorate the majority of whom did not pick Macron as their first choice, the May 1 marches will be a barometer of that anger, filmmaker David Dufresne, who directed a documentary on the Yellow Vest protests, told CNN.

    “Democracy by the street is back again,” he said.

    Macron is still not far into his second term, having been re-elected in 2022, and still has four years to serve as the country’s leader. Given French presidents serve fixed terms, his position is safe.

    Following the passage of the reforms, his government laid out a slew of policies promising additional funding for public services – nurse and teacher salaries included – tougher immigration measures and more environmental action in an effort to win back public support. But the horse may have already bolted for Macron’s efforts to woo back the public.

    Looking ahead to the next presidential election in 2027 – still far off on the political horizon – the anger Macron has stirred in the country’s streets doesn’t bode well for his party’s chances.

    While unions have led these protests, opposition politicians, political allies and even some in his own party have come out in support of the demonstrators.

    Macron has pressed on with his plans despite fierce opposition.

    In a re-run of the 2024 presidential run-off, with the far-right’s Marine Le Pen up against a candidate from Macron’s party, this popular anger may be enough to give pause to voters who supported Macron merely to stymie the far-right.

    “He failed to sell his logic and rationality,” Moïsi said, comparing Macron to Barack Obama, whose second term gave way to the presidency of Donald Trump.

    While Macron’s reforming crusade continues, the pensions controversy could ultimately force him to negotiate more, Perrineau warns – though he notes the French president is not known for compromise.

    His tendency to be “a little imperious, a little impatient” can make political negotiations harder, Perrineau said.

    That, he adds, is “perhaps the limit of Macronism.”

    [ad_2]

    Source link

  • Crypto Royalties: How To Earn Long-Term Income From Crypto Investments | Entrepreneur

    Crypto Royalties: How To Earn Long-Term Income From Crypto Investments | Entrepreneur

    [ad_1]

    The cryptocurrency space suffered in 2022 as the world economy tumbled due to supply chain issues, the ongoing conflict in Ukraine, and soaring inflation rates. Many NFT projects disappeared; we even saw a crypto collapse when Luna crashed. Luna’s landing platform, Anchor, also went down when the entire blockchain was destroyed.

    That said, there are still some ways to earn money from crypto investments as a long-term investor looking for passive income opportunities. There are still decent yields for staking your cryptocurrency, and you can theoretically make a continuous money stream from your work with NFT royalties.

    Key Takeaways

    • You can earn crypto royalties from NFT royalty programs, staking rewards, and lending.
    • Investing in crypto is risky as it’s a volatile asset, but long-term investors can benefit from various royalty programs.
    • You can earn passive income from lending your tokens to borrowers or by staking your crypto to verify transactions on the blockchain.

    How can you earn money from crypto royalties?

    In the cryptocurrency space, you can generate passive income from crypto lending and staking. Crypto lending is, as the name suggests, all about lending out your tokens to borrowers at an agreed-upon rate. Crypto staking is a bit different as it involves leasing your tokens to the blockchain to verify transactions.

    Since no centralized bank controls everything and verifies transactions, companies use one of two mechanisms for verifying transactions on a cryptocurrency blockchain. Any blockchain that uses the proof-of-stake (PoS) mechanism allows for the staking of cryptocurrency to validate transactions on the network in exchange for rewards, which are usually a portion of that token.

    Since the Ethereum merge led to a switch to the PoS system, you can stake your Ethereum tokens. You can also stake Cardano, Solana, and any other cryptocurrency that uses this mechanism. You can’t stake Bitcoin since they use a proof-of-work mechanism.

    This article will consider crypto lending, crypto staking, and NFT royalty programs as options for making money as long-term crypto investors.

    Crypto lending opportunities

    In decentralized finance (DeFi), many financial products and services are built on a blockchain. DeFi differs from centralized banking because its foundation is peer-to-peer digital exchanges rather than centralized institutions like banks. One of the most popular DeFi services has become crypto lending.

    You may have seen advertisements from crypto exchanges telling you how much you can earn through crypto lending. You can make money from crypto lending by depositing your crypto in a lending platform that turns around and loans your crypto to borrowers looking to secure cash loans using crypto holdings as collateral. In exchange for loaning your crypto out, you earn interest as you get paid back.

    The amount you earn will depend on the platform, the type of cryptocurrency you’re lending out, and other possible market factors. We urge you to shop around different exchanges to see the rates different companies offer.

    How to make money from crypto staking

    One of the common ways to make money from crypto is through crypto staking, which involves giving your tokens to a blockchain so it can verify transactions.

    How can you stake crypto? Here are the steps you’ll likely follow if this interests you:

    • You must decide which cryptocurrency you want to invest in. Finding a coin you want to invest in that allows staking is important.
    • Find the right platform. You want to find a crypto exchange that offers competitive rates and security.
    • Deposit your crypto, and stake it for an agreed-upon time. When it comes to the verification process, it’s often wise to stake your crypto on an exchange where the exchange adds your tokens to a validator’s stash. This way, you earn a portion of the rewards generated from validating transactions.

    Many people will use an exchange like Binance to stake their chosen crypto. The percentage yields change depending on market conditions.

    There are two different kinds of staking: locked and DeFi. Locked staking means that you have to lock up your crypto for a time, usually 30 to 120 days. As the name suggests, the locked-in staking means you can’t access your crypto for that agreed-upon time.

    DeFi staking has more to do with smart contracts and DeFi projects. If you try DeFi staking through a service like Binance, Binance won’t take responsibility for any security problems with on-chain smart contracts.

    As we saw with what happened to Luna, it’s crucial that you only invest money that you can afford to lose when it comes to staking your crypto.

    NFT royalty programs

    NFT royalties allow you to earn a percentage of your sale price every time someone purchases your NFT project on a marketplace. Smart contracts complete the payments and can range from 5-10%.

    NFT royalties don’t require an intermediary. They only need a smart contract executed on the blockchain; everything else is handled automatically.

    These NFT programs have attracted many artists and folks in the digital creator space since they can earn money directly from their work.

    So, for example, an artist could sell one piece of digital art or any kind of creative project once and then profit many times from it.

    Let’s say that a customer purchases your NFT artwork and decides to sell it for profit in a few months since it was limited or the value increased for some reason. You’ll earn a royalty from that sale depending on the terms you’ve agreed to (anywhere from 5-10%). Then another six months later, as your reputation as an artist grows or the artwork becomes more valuable again, this person decides to sell. You’ll once again earn a royalty as stated in your terms.

    The blockchain and smart contracts work hand-in-hand, so the rightful owner receives the payment once the transaction goes through.

    These NFT royalty programs benefit both parties because the artist or creator of the original work is rewarded for their efforts, while the buyer rests easy knowing they’re purchasing an authentic version instead of a counterfeit.

    How can you make money from NFT royalty programs?

    While the idea of making money from NFT royalties sounds simple, the execution is where it gets challenging, as you have to create an NFT project that others want to purchase. Many musicians, artists, and digital creators are simply turning to NFTs because they already have an established audience looking to purchase from them.

    You have to mint your NFT project on a marketplace for the public to be able to purchase it. The most popular NFT marketplace is OpenSea, which some have dubbed the “eBay of NFTs.” There’s also Rarible and Mintable.

    What you need to know about crypto income

    We want to stress that you must purchase the cryptocurrency coin before you can stake it or lend it. This indicates you’re taking two different risks to earn passive income since you’re not just putting cash in a savings account.

    You must hope the coin’s price remains strong when it’s out of your hands. For example, if you lock your Solana in for 90 days but want to sell it because you notice that the price starts dropping, that’s not an option.

    What should you consider before investing in crypto royalties?

    It’s worth reminding you that investing in cryptocurrency can be very risky, and the market is filled with volatility. We also have to state that regulators in the US have heavily criticized these crypto-lending platforms. Before Luna crashed, its native lending platform offered interest rates that seemed too good to be true. In hindsight, this was the case, and the platform went down.

    You must also remember that your money isn’t secured by federal insurance. First, you have to use your fiat currency to purchase the cryptocurrency. Then you have to lend it or stake it on a platform. You then have to hope this platform doesn’t become insolvent, making you lose your investment. There have been many horror stories of investors losing money when a platform fell. Investors have lost tens of thousands of dollars overnight due to crashes.

    How should you be investing your money?

    While many unique opportunities for generating passive income in cryptocurrency exist, risks are always involved.

    New markets always carry an added level of risk as they find their footing. If you’re an investor with a shorter time horizon and lower risk tolerance, putting your money into a more established and secure investment might be a good choice. You shouldn’t invest any money in crypto you’re unprepared to lose.

    The Bottom Line

    If you want to generate passive income from cryptocurrency, many options are worth considering. Crypto lending involves giving your crypto tokens to people who wish to use them as collateral for a loan. You can earn interest on that loan. Crypto staking involves giving your tokens to a blockchain so they can use them in the validation process. This only applies to cryptocurrencies that use proof-of-stake. We urge you to take the time to conduct further research before you decide which investment to go with.

    The post Crypto Royalties: How To Earn Long-Term Income From Crypto Investments appeared first on Due.

    [ad_2]

    Eric Rosenberg

    Source link

  • This 28-year-old pays $62 a month to live in a dumpster he built for $5,000—take a look inside

    This 28-year-old pays $62 a month to live in a dumpster he built for $5,000—take a look inside

    [ad_1]

    Last October, I returned to London after working abroad for nearly a year in Central America and Southeast Asia.

    Finding an apartment on a budget wasn’t easy. The average cost of a one-bedroom in Southwark, a borough in South London, is around $1,850 a month. That’s more than 75% of my income as an architectural designer.

    At 28, my goal is to save up to buy a house of my own one day. But I didn’t want to move to the outskirts of the city, so I started looking into the possibility of living in a skip — or, as it’s called in the U.S., a dumpster.

    Harrison’s tiny home sits on an empty lot in South London. The land was granted to him by an arts charity called Antepavilion.

    Photo: Gergana Popova for CNBC Make It

    How I turned a waste container into a tiny home

    I run a small architecture company called CAUKIN Studio. We’ve done work with SKIP Gallery, which commissions emerging artists to create artwork in the confines of a dumpster.

    After hearing about my project, an arts charity called Antepavilion granted me an empty, grassy lot in Southwark to put my house on. I currently rent the dumpster base from a waste management company for only $62 a month (although I have not been charged for it yet).

    The building process, which began in December 2022, took three weeks. I had worked on similar projects in the past as an architect, so I had all the tools and knowledge I needed. On most days, my friends would come by and help.

    The tiny home can be transported like a dumpster, so moving it from the construction site to the grassy lot was easy.

    Photo: Gergana Popova for CNBC Make It

    It cost me roughly $5,000 to build the home:

    • Building supplies (including timber, insulation and fixings): $4,620
    • Interior furnishings (including storage and foam mattress): $380

    I used my savings to fund the expenses, and paid movers $635 to transport the dumpster from the manufacturer to the construction site, then to the lot where it stands today.

    My electricity bill is so small that it is included in my land sponsorship, and my water supply consists of a hose pipe that runs from a neighbor’s property.

    Harrison says it’s hard to wash up in his tiny home. He gets his water from a hose outside, and stores it in a glass jar.

    Photo: Gergana Popova for CNBC Make It

    For Wi-Fi, I use a dongle connected to mobile data to watch Netflix and take Zoom calls on my laptop. This costs $20 a month.

    A look inside my tiny home

    The base of the dumpster is only 25 square feet, so I had to make the most out of the volume to make the space livable.

    The home’s entrance is up a small ladder and through a hatch door.

    Photo: Gergana Popova for CNBC Make It

    I have four built-in wooden boxes to put my clothes in. I’ve always lived a minimal lifestyle and traveled a lot for work, so the limited storage space works for me. I didn’t have to give away any items.

    Up above is my raised, mezzanine-style bed.

    An arched roof gives Harrison plenty of room in his mezzanine-style double bed.

    Photo: Gergana Popova for CNBC Make It

    On the other end is the kitchen. I have an eight-can portable mini fridge, a small sink and an induction cooktop. 

    Since kitchen space is limited, Harrison mostly cooks one-pot meals and often eats out with friends.

    Photo: Gergana Popova for CNBC Make It

    Windows on both sides of the home provide plenty of natural light and ventilation, making the space feel less claustrophobic.

    The toilet is outside, so I need to leave my house every time I use it. There’s no shower either, so I’ll be using the one at work and at the gym for the foreseeable future. I do my laundry at a laundromat.

    Harrison’s toilet is outside of the tiny home.

    Photo: Gergana Popova for CNBC Make It

    Getting used to the skip life

    I’ve been living here for a few months now, and managing its inconveniences has slowly gotten easier.

    But this is a great location in London. It’s a 15-minute bike ride to work, and I love spending my free time exploring the area or meeting up with friends. 

    My biggest challenging has been adjusting to all the attention. Many people stop by because they’ve seen me on the news.

    The tiny home allows Harrison to live alone in a city where that’s a luxury, and has amplified the conversation about rent prices in London.

    Photo: Gergana Popova for CNBC Make It

    With its ups and downs, I’ve turned my living situation into an art piece. It shines light on the absurdity of London’s housing crisis in a way that makes people smile and think.

    This has been a unique experience, and I’m grateful that it was sponsored. But I don’t recommend replicating it. I hope that I can move out soon, but I certainly won’t be swapping it for no savings and a small, damp room. It’s weirdly comfortable.

    Harrison Marshall is the co-founder of CAUKIN Studio, a design studio that specializes in community and impact-based projects. He holds a master’s degree in architecture and has worked on more than 50 projects worldwide. Harrison combines his background with his passion for social impact to create experiences that spark joy and thought. Follow him on Instagram @caukinstudio and @theskiphouse. 

    Don’t miss:

    [ad_2]

    Source link

  • Americans’ personal savings just hit $1 trillion. What’s the best place to store your cash — I-bonds, CDs or online savings accounts?

    Americans’ personal savings just hit $1 trillion. What’s the best place to store your cash — I-bonds, CDs or online savings accounts?

    [ad_1]

    People are saving more these days. Where’s the best place to put your cash?

    [ad_2]

    Source link