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Tag: Personal Finance

  • Want to trade options? Before jumping on the bandwagon, here’s what you need to know

    Want to trade options? Before jumping on the bandwagon, here’s what you need to know

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    Options trading is booming. It’s also complicated — and if you don’t know what you are doing, you can lose big.

    Options essentially allow you to bet on whether you think an asset is going up or going down. You can buy or sell option contracts and implement various strategies. In March alone, the Options Clearing Corporation cleared 1.1 billion contracts, up 12.2% year over year. It was the highest total volume month in the organization’s history and the first time cleared contract volume surpassed 1 billion contracts in a single month. 

    However, many people aren’t necessarily approaching options trading the right way. 

    “So many investors take a ‘ready, fire, aim’ approach, which is not the right way to do it,” said Randy Frederick, managing director of trading and derivatives for the Schwab Center for Financial Research.

    In other words, they aren’t doing their homework before pulling the trigger on an options contract.

    As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

    That said, done the right away options can complement your portfolio, especially during times of market volatility. They can be used to generate income when the market is moving sideways or as a hedge to reduce the risk on an existing stock position.

    Getting started

    Before you start buying options, understand the lingo and how the contracts work.

    “Get educated. You need to know what you are doing with strikes, with how things expire,” said Scott Elisha, lead options strategist and wealth advisor at Perigon Wealth Management.

    The good news is there are plenty of resources available. Brokerage firms, like Schwab, have explainers on their websites, as does the Securities and Exchange Commission. The Cboe’s Options Institute also has an options 101 course.

    Understanding the basics

    A call and a put are the most common types of options contracts.

    A call option gives the buyer the right to buy shares of an underlying stock at a certain price — called a strike price — for a specified period of time. So if you think the price of a stock will move higher, you would buy a call option. If you sell a call option, you believe the price will go down or stay stable.

    A put option gives the holder the right to sell shares of an underlying stock at a predetermined price before the contract expires. If you believe the stock will go down, buy a put option. You can also sell a call option if you think the price is headed lower. If you sell a put option, you are betting shares will rise.

    While the buyer has a choice on whether to buy or sell the asset before the expiration date, the seller is obligated to sell or buy the asset if the buyer exercises his or her contractual right on or before the options expiration date.

    “When you buy an option, you know the maximum amount of money you are putting to work and the maximum amount of money you could potentially lose,” explained Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.

    “When you sell an option, you open yourself up to more risks,” he said. “For example, the risk to being short a call is, in theory, limitless because there is no actual limit on how high a stock can go.”

    There are also costs involved. Investors pay to execute an options contract. The price, known as a premium, is determined by several factors, including the value of the stock, the strike price, volatility and expiration date. For instance, larger implied volatility translates to higher option prices.

    Your first options trade

    Your very first options trade should be a covered call, said Schwab’s Frederick.

    A covered call is when the trader sells someone the right to purchase a stock that he or she already owns. If you have at least 300 to 500 shares of a company, have owned them for a while and they are worth more than what you paid for them, the strategy is a good way to “dip your toe into options,” he said.

    Sell one call against 100 shares of that position, Frederick advised. Set the price a little bit higher than where it currently sits and have the contract expire in about a month or two, he said.

    “Then you don’t have to do anything. Just sit tight. This is how you learn about how options work,” Federick added.

    There is also minimum risk involved, he said. If the stock goes down, you’ll have lost the money anyway by owning the equity, he said. If the stock shoots higher, you may have given up a little bit of profit but will still make money on the rest of the shares you hold. If the stock goes sideways, you made no money on the stock but a little on the options, he said.

    “The amount of downside is so little compared to the potential benefit,” Frederick said.

    Perigon’s Elisha also likes covered calls for his portfolio, as well as his clients.

    “The thing about selling covered calls is you do limit the upside,” he said. You also need to be comfortable with the strike price you select.

    “If you bought a stock at $100 and sell a $110 call and stock goes to $120, you are missing out on that $10 of upside,” he explained.

    Of course, there are other, more complex strategies available, including a multi-leg strategy that combines multiple options.

    “Don’t assume that a more complex multi-leg strategy is better,” Frederick said. “It is different and it gives you potentially more flexibility.”

    “Sometimes the simplest strategies are the best ones,” he added.

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  • Americans are saving far less than normal in 2023. Here’s why

    Americans are saving far less than normal in 2023. Here’s why

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    The U.S. personal savings rate remains below its historical average, according to the U.S. Bureau of Economic Analysis.

    The seasonally adjusted annual rate of personal saving was 4.6% in February. That’s well below the average annual rate of more than 8%, according to the data, which traces back to 1959. In June 2022, the rate had dipped to 2.7%, a 15-year low.

    This was a large fall from periods of the pandemic when households across the country were saving as much as 30% of their monthly income.

    “Something like $2 [trillion] to $2.5 trillion above what we would have otherwise expected were saved by American households,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.

    Collectively, Americans have trillions in excess savings compared with expectations leading up to the pandemic, according to Federal Reserve economists.

    “That really has helped to buoy the economy,” said Shelley Stewart, a senior partner at McKinsey & Company, “particularly in a place like the U.S., where consumption is such a big part of GDP.”

    Federal Reserve economists note that the lion’s share of excess savings is concentrated in the top half of households by income.

    But the lower half built up savings in this time, too, according to the central bank’s October note. They noted at the time that the lower half of earners had roughly $5,500 in excess savings per household. Experts believe these stockpiles of cash will begin to dwindle in 2023.

    In the months since, headline inflation stayed stubbornly high, at an annual rate of 5% in March. This weighs on consumer spending, while devaluing savings held in low return positions such as cash.

    Watch the video above to learn about how the personal savings rate affects you and the wider economy.

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  • Why Americans are saving less in 2023

    Why Americans are saving less in 2023

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    Americans started the 2020s with a personal savings boom. The trillions in excess personal savings built up in the pandemic are beginning to vanish amid high inflation, according to Federal Reserve economists. The annual savings rate fell to a 15-year low in 2022. It started a recovery in 2023, but remains well below long-term trends. Despite this slowdown in saving, consumer spending has remained robust, keeping the U.S. from recession.

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  • Rent or buy? Here’s how to make that decision in the current real estate market

    Rent or buy? Here’s how to make that decision in the current real estate market

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    Choosing whether to rent or buy has never been a simple decision — and this ever-changing housing market isn’t making it any easier. With surging mortgage rates, record rents and home prices, a potential economic downturn and other lifestyle considerations, there’s so much to factor in.

    “This is an extraordinarily unique market because of the pandemic and because there was such a run on housing so you have home prices very high, you also have rent prices very high,” said Diana Olick, senior climate and real estate correspondent for CNBC.

    By the numbers, renting is often cheaper. On average across the 50 largest metro areas in the U.S., a typical renter pays about 40% less per month than a first-time homeowner, based on asking rents and monthly mortgage payments, according to Realtor.com.

    In December 2022, it was more cost-effective to rent than buy in 45 of those metros, the real estate site found. That’s up from 30 markets the prior year.

    How does that work out in terms of monthly costs? In the top 10 metro regions that favored renting, monthly starter homeownership costs were an average of $1,920 higher than rents.

    But that has not proven to be the case for everyone.

    Leland and Stephanie Jernigan recently purchased their first home in Cleveland for $285,000 — or about $100 per square foot. The family of seven will also have Leland’s mother, who has been fighting breast cancer, moving in with them.

    By their calculations, this move — which expands their space threefold and allowing them to take care of Leland’s mother — will be saving them more than $700 per month.

    ‘You don’t buy a house based on the price of the house’

    “You don’t buy a house based on the price of the house,” Olick said. “You buy it based on the monthly payment that’s going to be principal and interest and insurance and property taxes. If that calculation works for you and it’s not that much of your income, perhaps a third of your income, then it’s probably a good bet for you, especially if you expect to stay in that home for more than 10 years. You will build equity in the home over the long term, and renting a house is really just throwing money out.”

    Mortgage rates dropped slightly in early March, due to the stress on the banking system from the recent bank failures. They are moving up again, although they are currently not as high as they were last fall. The average rate on a 30-year fixed-rate mortgage is 6.59% as of April — up from 3.3% around the same time in 2021.

    But that hasn’t significantly dampened demand.

    “As the markets kind of bubbled in certain parts of the country and other parts of the country priced out, we’ve seen a lot of investors coming in looking for affordable homes that they can buy and rent,” said Michael Azzam, a real estate agent and founder of The Azzam Group in Cleveland.

    “We’re still seeing relatively high demand” he added. “Prices have still continued to appreciate even with interest rates where they’re at. And so we’re still seeing a pretty active market here.”

    Buying a home is part of the American Dream

    The Jernigans are achieving a big part of the American Dream. Buying a home is a life event that 74% of respondents in a 2022 Bankrate survey ranked as the highest gauge of prosperity — eclipsing even having a career, children or a college degree.

    The purchase is also a full-circle moment for Leland, who grew up in East Cleveland, where his family was on government assistance.

    “I came from a single-mother home who struggled to put food on the table and always wanted better for her children … it was more criminals than there were police … It is not the type of neighborhood that I wanted my children to grow up in,” said Jernigan.

    The new homeowner also has his eye on building a brighter future for more children than just his own. Jernigan plans to purchase homes in his old neighborhood, renovate them and create a safe space for those growing up like he did.

    “I’m here because someone saw me and saw the potential in me and gave me advice that helped me. … and I just want to pay it forward to someone else” Jernigan said.

    Watch the video above to learn more.

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  • 8 value stocks that look like bargains for long-term investors

    8 value stocks that look like bargains for long-term investors

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    When is it a good time to buy stocks? Some investors would say the current negativity dominating the financial media means you are better off sitting on the sidelines. Others would say it is always a good time to buy stocks, provided you can get them for good prices.

    Count John Buckingham, editor of the Prudent Speculator, in the latter camp. He is a value investor with decades of experience. During an interview, he emphasized the importance of remaining disciplined through all market conditions. While he favors the value…

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  • How Would a Recession Affect Me and My Finances? | Entrepreneur

    How Would a Recession Affect Me and My Finances? | Entrepreneur

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    We’re publishing this article in 2023, a year many experts predicted would see the U.S. economy enter a recession. As we wait to see whether the National Bureau of Economic Research (NBER) will declare a recession, it’s worth considering how a recession would affect you and your finances.

    What can you expect to happen to your lifestyle during a recession? Are there ways you can profit from it? Can you do anything now to prepare?

    Key Takeaways

    • As interest rates rise, financing large purchases becomes more expensive.
    • Layoffs may increase if the economy continues to slow, making it harder to find stable employment.
    • Strategies for surviving a recession include paying down debt, increasing savings, and creating a budget specific to your financial situation.

    Impact of Higher Interest Rates

    Fear of recession often accompanies rate hikes from the Federal Reserve. The Fed uses rate hikes to slow the economy when inflation is high to keep growth sustainable. Though the Fed always hopes for a soft landing in which the economy doesn’t go into recession due to rate hikes, it’s a tall order to achieve that.

    Between March 2022 and March 2023, the Federal Reserve raised the federal funds target rate by 475 basis points (4.75%). The most immediate impact of rate hikes is that the cost of borrowing increases. Consumers can expect to pay more when shopping for a mortgage or a car. You may also pay more on interest if you carry a credit card balance (remember to pay off that balance every month if you can!).

    The other side of the coin is that you’ll likely get a boost from rate hikes if you have savings. Because a higher fed funds rate means banks pay more to borrow from each other’s reserves, banks use higher savings rates to entice you to deposit your money so they can make loans. Many high-yield online savings accounts paying around 1% at the start of 2022 were 3% or more at the beginning of 2023.

    If you need to borrow money when rates are high, make sure it is for something you must have now and that you borrow as little as possible to minimize the interest you pay.

    Large Purchases

    Even though the cost of borrowing increases when rates are high, the silver lining is you can save money more effectively for your next home- or car-related purchase. If you already have the financial bandwidth to make a big purchase, though, one advantage of doing it while rates are high is that demand for homes is usually low, causing some sellers to lower their prices.

    One way you can save is by negotiating. With fewer buyers in the housing market, there is a lower chance of a bidding war driving prices higher. Also, there is a greater chance your offer will be the only one made, allowing you to buy a house at less than the asking price.

    If you buy a car, you may save money as well. During the pandemic, new and used car prices skyrocketed. However, that trend for used vehicles is passing as prices slowly drop. Consider shopping for a used car to save money if you need a new vehicle.

    Slowing Job Market

    A slowing economy often brings layoffs and hiring freezes with it. There is a chance you will lose your job during a recession.

    One way some people try to avoid the first round of job cuts is to make themselves indispensable to their team. They take work from their boss, help co-workers with their workload, and find project teams to join. The more valuable you can become, the less likely your company will let you go.

    You can also update your resume. You likely haven’t done this since your last job. Take the time to update it with your current skills and accomplishments so that you can start looking for a new job immediately if you lose your current one.

    Finally, consider finding a side hustle to realize additional income. A second job can help you pay down debt or build your savings. If you lose your job and have a side hustle, you’ll still have some income while looking for your next job.

    Be Resourceful

    A recession causes financial hardship for many people. The lifestyle you are accustomed to may not be possible in a future where money is tight. You can take steps now to handle these changes better when they occur.

    Reducing your living expenses will go a long way in making your money last if you lose your job or take a pay cut. Take advantage of the dollar store to lower the cost of purchases. Turn down your thermostat, dress in layers, or use blankets to stay warm.

    Finally, evaluate if you need something before buying it. Ask yourself if you need to have something now or if it can wait. The more things you can do to lower your living expenses, the easier getting through a recession will be.

    Unknown Variables

    While no one knows how long a recession will last or how bad it will get, most experts agree that a potential recession in 2023 would be short-lived and mild. However, experts can only base their predictions on our current information.

    There are unknown variables that could change things dramatically. Here is what to keep an eye on.

    Supply Chain

    Disruptions to the supply chain can drive inflation up due to limited supply. The supply chain was significantly disrupted during the pandemic, causing shortages and price spikes. While most issues have been ironed out, things are not yet back to normal.

    What’s more, other issues can arise while post-pandemic problems are settling. Take, for example, the threat of a railroad worker’s strike we saw at the end of 2022. Had railroad workers gone on strike, it would have been a significant disruption to the supply chain in the U.S.

    Russia-Ukraine Conflict

    The ongoing conflict between Russia and Ukraine is arguably the most significant unknown variable. It would benefit the global economy if the two countries reached a deal to end the conflict.

    The stock market would also likely rally on the news, and oil prices would drop.

    But if the conflict escalates and other nations join it, it could have severe consequences. There could be supply chain issues, higher gas prices, and more.

    What Do I Do Now?

    Now that you know how a recession could impact you and the factors that could make it mild or severe, what are some smart things you should be doing with your money now and during the recession? Here are a few ideas.

    Invest Wisely

    A recession is a great time to buy certain stocks at a discount. Even though the stock market typically declines during a recession, it doesn’t mean you should not be actively investing. There are two strategies you can use to invest during a declining market.

    First, you can invest in individual stocks. Do your research to determine when stocks are selling at a discount.

    If you go this route, only invest a percentage of the money you plan to at any given time. No one knows where the bottom is, so you can mitigate risk by putting 25% of your available investing money into the market at a time.

    The other option is to use a dollar-cost-averaging strategy. With this tactic, you take a set amount of money and invest it regularly in smaller amounts. This reduces the impact of temporary market movements on your investment.

    Whichever strategy you use, keep your emotions in check. Over an extended period, the economy generally increases, so pulling your money out of the market because of a temporary drop in prices may not benefit you in the long run.

    Increase Savings

    Another money adjustment to make is increasing your savings. Higher interest rates can make saving more effective. With the Fed aggressively raising rates, many high-yield savings accounts now pay over 3% interest.

    You can also consider short-term Treasuries and I bonds, which typically have higher returns than savings accounts.

    Regarding savings, look for products that will give you a competitive interest rate.

    Reduce Debt

    If you have high-interest debt, you should work hard to pay down your balances. There are a couple of reasons for this.

    First, your interest rate on variable debt (such as adjustable-rate mortgages and credit cards) will continue to climb as the Fed raises rates. This will make your debt even more expensive.

    Second, with recession comes the risk of job loss. While unemployment is stressful, having a mountain of bills to pay simultaneously is even more stressful.

    By paying off some of your debt, you free up money you can use to pay for daily living expenses. Even if you think your job is safe, it is wise to pay down debt since having debt holds you back financially.

    The Bottom Line

    A recession will impact everyone differently. Some people will lose their jobs, while others will find themselves priced out of buying a home. The critical thing to do is to take some time, look at your financial situation, and create a plan. Do you have significant amounts of debt you should pay off? Are you at risk of losing your job? Do you have savings you can live off of? How will higher interest rates impact your large purchases moving forward?

    The more time you take to understand how a recession will affect you, the better you can plan for and minimize its impact on your financial health.

    The post How Would a Recession Affect Me and My Finances? appeared first on Due.

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    Eric Rosenberg

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  • The Financial Literacy Basics Entrepreneurs Need to Know | Entrepreneur

    The Financial Literacy Basics Entrepreneurs Need to Know | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Like most of you, I grew up with virtually no formal training on money. I learned that we definitely need money to get the things we want and one way or another, we have to work for it. Short of getting my passbook savings account back in the ’80s, I was taught very little about how to be financially literate.

    What happened? I got a job, paid bills, saved a little (but not really) — and then, when I got to college, I went into credit card debt in exchange for a free T-shirt. By not getting the proper education on money, it controlled me instead of the other way around. We all know how that feels! But it doesn’t have to be this way. Financial literacy won’t happen by accident; it happens by design.

    Money, for most of us, can be a double-edged sword. Some days we are in love with making it, some days we dread having to work to get it. As a dad, CFP and fintech entrepreneur, I’ve learned that a high level of financial literacy is key to one’s success. To have a great relationship with money, we must understand what it is, how to use it and how to manage our risks when we use it — so here’s what you need to know.

    Related: ‘Financial Illiteracy’ Cost Americans an Average of $1,819 in 2022 — Here Are The Most Common Mistakes People Make

    Understanding money

    Money is a tool. It helps us accomplish what we want and need in life and business. We all have a relationship with money, and how it manifests itself through our spending is based upon our financial literacy — or lack thereof.

    The first step for increased financial literacy is to understand that money is a tool created out of an idea and need for us to exchange things of value, be it goods, services, etc. You don’t want more money — you want more of what it does for you.

    So how do you understand money? Understand how you spend it by mastering your cash flow. Show me how and where you spend your money and I can tell you if you understand it or not and what’s important to you. Knowing your cash flow helps you understand what you actually do with your money which can be very insightful and helpful on how best to use your money. I didn’t understand money or my cash flow at all after graduating college, but I eventually mastered it by creating and using a simple yet robust cash flow worksheet. This will help you learn how to properly use money.

    Using money

    Money should be thought of as a tool of precision that can help us accomplish whatever it is we want. We earn money by doing or creating something of value. But what are you using your earned money for? Once you understand your current cash flow situation, you can assess some simple yet important things. Are you cash flow positive every month? If not, why? Are you spending (using) money on mainly assets or expenses? Assets ultimately put money in your pocket, while liabilities (expenses) take money out.

    Once you understand your money and where it’s currently going, you can leverage this information into how best to use your money. Instead of spending X dollars a month on coffee every morning, which can easily add up over time, what if you took that money and used it on something that made you money? You could spend it on marketing your business, investing in a savings plan, paying down debt and so on.

    Taking it a step further, you can now determine the ROI on where you’re using your money. If you’re paying down debt faster with your excess cash flow, you’re saving interest — and that’s real money. Investing your excess cash flow into marketing your business and seeing increased sales because of it? Now you have a direct correlation with what happens when you understand and use your money.

    A best practice is to balance how you use your money. There’s nothing wrong with spending some of your money on things that you want, but it also makes sense to deploy your money into things that can work for you. Where will your money work hardest and best for you?

    Related: We Owe it to Consumers to Foster Financial Literacy

    Managing risk with money

    Virtually everything in life has some level of risk. Risk is basically uncertainty about the future. When it comes to our finances, whether it’s personal or business, we have an opportunity to protect ourselves against uncertainty and manage risk. As an entrepreneur, we are prone to and arguably seek out risk since we know it can lead to a lot of rewards, but that doesn’t mean that we should blindly take on risks and just hope for the best. Planning for the worst and hoping for the best is a sound practice to help manage your risk.

    Some simple guidelines to manage risk with your money are:

    • Spend less than you make (positive cash flow).
    • Keep a solid cash cushion liquid in case of emergency; somewhere between 6-12 months of your expenses from your cash flow worksheet.
    • Consider appropriate types of insurance to protect against large but unlikely risks like death, accident, illness, security, etc.
    • Don’t invest all your capital into one thing, and with any investment you do make, ask yourself first, “What happens if I lose every penny of this investment?” If you don’t like or can’t live with the answer, then it’s probably too much risk for you.

    If we know what money is, how to use it and how to manage risk with it, we end up empowering ourselves to be the master of not only our money but — to an extent — our future. Life happens and curveballs will fly, but controlling these variables to the extent we can gives us a much better chance of being successful with our money.

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    Derek Notman

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  • Latest News – MarketWatch

    Latest News – MarketWatch

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    The stock market gets a new ‘fear gauge’ on Monday. What you need to know.

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  • Top Financial Blogging Books You Should Stop and Read Now | Entrepreneur

    Top Financial Blogging Books You Should Stop and Read Now | Entrepreneur

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    Your future is largely determined by how you plan your finances today. As you weigh your financial goals, you find it increasingly challenging to allocate funds to different needs and wants! You might want to invest in stock markets, REITs, bonds, or simply put aside funds for your kids. Timely financial planning makes your lifestyle organized!

    Well, as much as 56% of Americans don’t even have $1,000 in their savings account. What if a medical emergency arises and you are left out of funds to tackle the crisis? We would rather hope you don’t find yourself amidst this financially vulnerable population.

    We have shortlisted the top financial books that can help you streamline your personal finance. Whether you are an investor or an entrepreneur or simply want to grow your financial portfolio, you’ll find this list relevant.

    Financial maturity comes with money-handling knowledge

    Financial freedom happens to be one of the rare virtues that most individuals crave. How about retiring in peace without worrying about your income sources? Or having enough money so that you can start a new venture at any stage of your life? It feels great if you are privileged to cherish this financial freedom to eat out with your family, donate to charities, or hang around with friends without any financial crunch.

    Reading financial blogs and books enriches and nurtures the mind with financial maturity. So, here’s why we recommend you read the financial blogging books listed in this article.

    Gain relevant information: Every individual faces unique challenges as they are at different stages of their lives. Prioritizing your financial goals, read financial blogging books to gain relevant information and strategize your monetary decisions.

    Count on practical advice: Money happens to be a tangible entity. The authors of the listed books have provided the readers with practical advice to use!

    Read inspiring stories: The urge to define your financial goals and manage funds largely stem from anecdotes. The most practical way to access these inspiring stories is to read books on finance.

    Best financial blogging books you should read immediately

    We have listed these books along with relevant reasons to read them. This way, you can customize your choice based on your current financial stature and goals.

    1. Rich Dad Poor Dad: Robert T. Kiyosaki (Best book to manage personal finance)

    If you are just getting started with personal finance books, this is a must-read. Although a bit controversial, Rich Dad Poor Dad educates individuals to use their money not to accumulate liabilities but to acquire assets. Rather than shirking away from financial risks, you need to manage them tactically. This is exactly what Rich Dad Poor Dad is all about. The book inspires its readers to work so that they can learn rather than simply focus on the perspective of earning money.

    Rich Dad Poor Dad is partially a reflection of the author’s life. Kiyosaki conveys valuable money-handling lessons, drawing inspiration from the life of his best friend and his father. These lessons revolve around the ideal approach to finances. Besides, the book throws light on the concepts of budgeting, accounting, investing, and money management.

    A highly recommended personal finance book, Rich Dad Poor Dad, will help you with crucial money-management tips!

    2. Money: Master the Game: Tony Robbins (Ideal for asset diversification and compound interest)

    This is one of the best finance books young people should read. This is because you should start diversifying your assets and banking on the power of compound interest as early as possible!

    Author Tony Robbins interviewed some of the best billionaire investors in the world. Based on his inference, he recommends seven simple steps to help you attain financial freedom.

    Tony spent a decade researching before writing this amazing book. Just after the recession hit the world in 2008, he decided to help the commoners with his financial advice.

    Money: Master the Game is a must-read, given that Tony Robbins wrote it based on the interviews of financial legends like Warren Buffett, Ray Dalio, and Jack Bogle. This book is an amalgamation of their best financial strategies!

    Right from framing the right mindset to asset allocation and saving money, this book goes a long way, helping commoners master the game of money.

    3. Retire Before Mom and Dad: Rob Berger (Early retirement and wealth building)

    Rob Berger, a personal finance expert and the deputy editor of Forbes, authors this book to provide a comprehensive guide on wealth building and early retirement. If you are someone fancying financial freedom, don’t miss this out!

    This finance book serves as a roadmap for common people to embrace their dream financial life. How about living a stress-free financial life, focussing only on matters you care about? Retire Before Mom and Dad generates a powerful insight into unlocking the superpower to enjoy financial freedom without making expensive sacrifices.

    This wonderful book on finances helps its readers bust common money myths that refrain them from enjoying financial freedom. It also provides a methodical plan to save money without compromising your hobbies. Retire Before Mom and Dad shows the gateway to attaining financial freedom at seven levels.

    4. I Will Teach You to Be Rich: Ramit Sethi (Best book for saving money)

    I Will Teach You to Be Rich is one of the most actionable books that will help you transform concepts into practical money-saving habits quickly.

    This is a groundbreaking book that can boost your earning potential exponentially and maximize your savings. Well, Ramit Sethi’s book presents readers with a six-week plan to set up wealth-building mechanisms. Right from strategizing your finances to sticking to your plans, this book is a must-read for millennials struggling to control their expenses.

    Ramit Sethi started his financial blog back in 2004. Back then, he used to sell his eBooks for a few dollars. He realized the potential that online earning holds and capitalized on virtual selling platforms. Today, his online financial courses are worth millions of dollars!

    As the book proceeds, Sethi outlines practical ways to maximize rewards on credit cards. Besides, the book touches on crucial aspects of cultivating healthy financial habits. For instance, there are lessons on automating your savings and benefitting from better interest rates from high-yielding savings accounts.

    5. The Total Money Makeover: Dave Ramsey (Best book for debt management)

    One of the most effective guides to tackle debts and regain your financial freedom, Dave Ramsey’s book on finance serves as a rescuer for thousands of millennials.

    While talking about personal finances, you can’t possibly overlook debt management, right? Debt management continues to be a sizable subset of personal finance.

    The Total Money Makeover outlines a practical guide to walking out of your debts and strengthening your financial stature. Ramsey advises his readers on the common financial nitty-gritty, such as cash advances, rent-to-own, or using credit cards.

    Besides, the author recommends having at least $1,000 as an emergency fund. You can find help planning for your retirement or allocating funds for your kids. Ramsey also comes up with his unique ‘Snowball Method’ for clearing off debts.

    Besides debt management, his book focuses on how people can start saving bit by bit. Eventually, the book advises people to invest once they cover their basics.

    The radio show titled ‘The Ramsey Show’ continues to be one of the most popular programs in the US. He shares his experience in these episodes and helps people tackle emotional issues they encounter while handling money.

    6. The Millionaire Fastlane: MJ DeMarco (Best financial book for entrepreneurs)

    A note to entrepreneurs: try not to miss this book!

    MJ DeMarco’s book, The Millionaire Fastlane, is a perfect reflection of the entrepreneurial mindset to attain financial success. The author has redefined the perceived or traditional approach to getting rich. He does away with the old concept of working hard to get rich after bagging a degree and a job. Rather, he defines wealth creation through a different pair of lenses. DeMarco, in this book, defines how to retire young.

    DeMarco further points out to entrepreneurs that wealth stands for freedom, relationships, and health. Money is not necessarily one of these components. The book explains how entrepreneurs can strategize their finances to gain financial independence.

    Well, the title might be suggestive of something else. Often, the first impression readers get is that the author would talk about get-rich hacks. However, The Millionaire Fastlane is a book that talks about taking calculated risks, boldness, persistence, and thinking unconventionally.

    7. Broke Millennial Takes On Investing: Erin Lowry (A comprehensive guide to investments)

    Targeted at socially and financially conscious millennials, Broke Millennial Takes on Investing by Erin Lowry serves as a beginner’s guide for investments. The author has loaded this book with tips for beginners. It teaches the readers how to navigate the financial market, prioritizing their values, beliefs, and monetary goals. If you are a young professional trying to get started with investments, this book is a must-read. Particularly, if you believe you aren’t rich enough or ready to invest, this book will guide you in getting started.

    Lowry has rightly pointed out that young minds often run out of ideas regarding how to start channeling their funds for investment. The sheer lack of information continues to be a hurdle for millennial investors. Besides, they face the dilemma of whether to close their student loans or invest through AI apps.

    Broke Millennial Takes on Investing is a book that also cultivates the virtue of social responsibility among investors. Altogether, this finance book can inspire you to start investing to create your wealth portfolio.

    8. The Automatic Millionaire: David Bach (Best for wealth building)

    Want to grow a typical millionaire mindset? Make sure to have this book on your wish list!

    David Bach’s book, the Automatic Millionaire, happens to be the business bestseller of Wall Street Journal, Bloomberg Businessweek, USA Today, and the New York Times. It’s a story of a couple who starts off their journey with a combined income of $55,000. 

    The author shows us the wealth-building path as we follow the couple owning two homes and cruising along to their financial dreams. They also ensure a decent college education for their kids and eventually retire with investments of over a million dollars just at 55.

    The secret to financial success and emerging as a millionaire lies in setting up an automatic financial system for savings. This ensures that millennials can turn saving into a habit!

    The concept of the story revolves around the option of getting rich even when you are on a budget. This idea resonates with the strategy of making systematic investments in recurring accounts or mutual funds.

    9. The Little Book That Beats the Market: Joel Greenblatt (Learn stock market investment strategies)

    Well, if you are into share trading, don’t miss out on this gem of a book from Joel Greenblatt. Given that 80% of stock market investors end up losing money, it pays to make an educated decision in the money market!

    The Little Book That Beats the Market serves as a methodical tool along with a mathematical formula that helps investors choose the right stocks at the right time. This way, investors can eye a long-term profit.

    The author educates the readers to evaluate stocks by observing parameters such as return on capital and earnings yield. Next, Greenblatt shows how to combine these parameters and rank them to find the best stocks to invest in.

    In case you are just getting started with stock market investments or want to diversify your portfolio, this book is worth a read.

    Endnote 

    We have carefully shortlisted these 9 books on different finance domains to help you plan a secure future. These are the best books on finance that will help you get out of debt, manage your immediate expenses, build an emergency fund, and save for your retirement.

    If you are struggling to put your poor financial habits behind you or recovering from financial turmoil, there are plenty of resources at your disposal to count on. Create the much-needed financial freedom in your life with the valuable guidelines from these authors.

    The post Top Financial Blogging Books You Should Stop and Read Now appeared first on Due.

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  • CNBC’s best mortgage lenders of 2023

    CNBC’s best mortgage lenders of 2023

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    A mortgage is essential for anyone looking to buy a home but doesn’t have the cash to pay for it in full. However, with dozens of lenders to choose from, it can be challenging to pick the one that best suits your needs. Some are geared toward first-time homebuyers looking for flexible loan options, while others may be better for seasoned investors seeking speedy pre-approvals.

    Mortgage interest rates can fluctuate quite often depending on the market, and the rate you are likely to receive will heavily depend on your location, credit score and credit report. The higher your credit score, the lower your interest rate and monthly mortgage payments will be.

    The mortgage approval and acceptance process also comes with many lender fees. Some lenders may waive certain fees or provide discounts on fees so it’s always a good idea to ask which fees have the potential to be waived. Though some lenders advertise no closing costs, they may pass on the cost through a higher interest rate.

    Below, CNBC Select rounded up a list of five of the best mortgage lenders of 2023 based on the types of loans offered, customer support and minimum down payment amount, among others (see our methodology below.)

    The best mortgage lenders of 2023

    • Best for lower credit scores: Rocket Mortgage
    • Best for flexible down payment options: Chase Bank
    • Best for no fees: Ally Bank
    • Best for flexible loan options: PNC Bank
    • Best for saving money: SoFi

    Best for lower credit scores

    Rocket Mortgage

    • Annual Percentage Rate (APR)

      Apply online for personalized rates

    • Types of loans

      Conventional loans, FHA loans, VA loans and Jumbo loans

    • Terms

      8 – 29 years, including 15-year and 30-year terms

    • Credit needed

      Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met

    • Minimum down payment

      3.5% if moving forward with an FHA loan

    Pros

    • Can use the loan to buy or refinance a single-family home, second home or investment property, or condo
    • Can get pre-qualified in minutes
    • Rocket Mortgage app for easy access to your account

    Cons

    • Runs a hard inquiry in order to provide a personalized interest rate, which means your credit score may take a small hit
    • Doesn’t offer USDA loans, HELOCs, construction loans, or mortgages for mobile homes
    • Doesn’t manage accounts for jumbo loans after closing

    Who’s this for? Rocket Mortgage is one of the biggest U.S. mortgage lenders and has become a household name. Most mortgage lenders look for a minimum credit score of 620 but Rocket Mortgage accepts applicants with lower credit scores at 580.

    The lender even has a program called the Fresh Start program that’s aimed at helping potential applicants boost their credit score before applying. Keep in mind, though, that if you apply for a mortgage with a lower credit score, you may be subject to interest rates on the higher end of the lender’s APR range.

    This lender offers conventional loans, FHA loans, VA loans and jumbo loans but not USDA loans, which means this lender may not be the most appealing for potential homebuyers who want to make a purchase with a 0% down payment. Rocket Mortgage doesn’t offer construction loans (if you want to build a brand new custom home) or HELOCs, but if you’re a homebuyer who only plans to purchase a single-family home, a second home, or a condo that’s already on the market, this shouldn’t be a drawback for you.

    This lender offers flexible loan repayment terms that range from 8 – 29 years in addition to standard 15-year and 30-year terms.

    On average, it takes about 47 days to close on a home through Rocket Mortgage. However, keep in mind that, in general, much of the closing timeline will depend on how quickly you can provide all the information and documentation that’s needed and whether or not they can be processed without a major hitch.

    Best for flexible down payment options

    Chase Bank

    • Annual Percentage Rate (APR)

      Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

    • Types of loans

      Conventional loans, FHA loans, VA loans, DreaMaker℠ loans and Jumbo loans

    • Terms

    • Credit needed

    • Minimum down payment

      3% if moving forward with a DreaMaker℠ loan

    Pros

    • Chase DreaMaker℠ loan allows for a slightly smaller down payment at 3%
    • Discounts for existing customers
    • Online support available
    • A number of resources available for first-time homebuyers including mortgage calculators, affordability calculator, education courses and Home Advisors

    Cons

    • Doesn’t offer USDA loans or HELOCs
    • Existing customers discounts apply to those who have large balances in their Chase deposit and investment accounts

    Who’s this for? Chase Bank provides several options for homebuyers who would prefer to make a lower down payment on their home. The traditional advice has been to make a down payment that’s about 20% of the price of the home, however, Chase offers a loan option called the DreaMaker loan that would allow homebuyers to make a down payment that’s as low as 3% (by comparison, the FHA loan requires borrowers to make a 3.5% down payment).

    This option is made for those who can only afford a smaller down payment, but it also comes with stricter income requirements compared to their other loans (the annual income used to qualify the customer must not exceed 80% of the Area Median Income (AMI), according to the Chase team). If you meet the income requirements for the DreaMaker loan, this option could be very attractive for those who would prefer to make a down payment that’s as small as possible so they can have more money reserved for other homebuying expenses.

    In addition to the DreaMaker loan, Chase also offers a conventional loan, FHA loan, VA loan and jumbo loan (USDA loans and HELOCs are not offered by this lender). Much like other lenders, Chase has a minimum credit score requirement of 620 for their mortgage options.

    Chase offers mortgage terms that range from 10 years to 30 years, as well as fixed rate and adjustable-rate mortgages (ARM). This lender also offers discounts for existing customers, but the requirements are rather high: For $500 off your mortgage processing fee, you need to have $150,000–$499,999 between Chase deposit accounts and Chase investment accounts; $500,000 or more in these accounts can get you up to $1,150 off the processing fee.

    On top of this, Chase provides a number of resources to help their customers navigate the process and feel comfortable managing their mortgage, including online customer support, mortgage calculators and educational articles. Chase customers typically close on their house within three weeks.

    Best for no lender fees

    Ally Bank Mortgage

    • Annual Percentage Rate (APR)

      Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

    • Types of loans

      Conventional loans, HomeReady loan and Jumbo loans

    • Terms

    • Credit needed

    • Minimum down payment

      3% if moving forward with a HomeReady loan

    Pros

    • Ally HomeReady loan allows for a slightly smaller downpayment at 3%
    • Pre-approval in just three minutes
    • Available in all 50 U.S. states
    • Online support available
    • Existing Ally customers can receive a discount that gets applied to closing costs
    • Doesn’t charge lender fees

    Cons

    • Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs

    Who’s this for? It’s common for lenders to charge a number of fees on mortgage applications, including an application fee, origination fee, processing fee and underwriting fee — these fees can end up costing a significant amount during the home-buying process. Ally Bank doesn’t charge any of these fees (they may, however, charge an appraisal fee and recording fee, and may charge title search and insurance). You can get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes as long as you have all the necessary documents handy.

    Ally offers a HomeReady mortgage program that is geared toward low- to mid-income homebuyers (regardless of whether it’s their first time or if they’re a repeat buyer) that would allow them to put down as little as 3% for a down payment. Applicants must also have a debt-to-income ratio of no more than 50%, their income must be equal to or less than 80% of the area’s median income and at least one borrower must take a homeowner education course.

    In addition to this loan option, homebuyers can also apply for a jumbo loan (FHA loans, VA and USDA loans are not available through this lender). Customers can also choose between fixed-rate and adjustable-rate mortgages, and 15-year, 20-year and 30-year loan terms.

    Ally Bank customers take an average of 36 days to close on their homes.

    Best for flexible loan options

    PNC Bank

    • Annual Percentage Rate (APR)

      Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

    • Types of loans

      Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan

    • Terms

    • Credit needed

    • Minimum down payment

      0% if moving forward with a USDA loan

    Pros

    • Offers a wide variety of loans to suit an array of customer needs
    • Available in all 50 states
    • Online and in-person service available

    Cons

    • Doesn’t offer home renovation loans

    Who’s this for? It’s sometimes tough to find lenders that offer USDA loans in addition to other standard mortgage options, but PNC Bank includes USDA loans in their lineup. This lender also offers conventional loans, FHA loans, VA loans, jumbo loans and a PNC Bank Community Loan, which is a special program that allows homebuyers to put down as little as 3% (without paying private mortgage insurance) while still choosing between fixed-rate and adjustable-rate mortgage terms.

    This lender also offers a special loan option catered to medical professionals who are looking to buy a primary residence only. With this loan, medical professionals can apply for as much as $1 million and won’t have to pay private mortgage insurance (PMI), regardless of their down payment amount. They can also choose between fixed-rate and adjustable-rate terms.

    PNC Bank offers online and in-person mortgage application processes, which can be a plus for homebuyers who don’t live near a PNC Bank location but still want to apply for a loan. You can get online prequalifications in as little as 30 minutes as long as you have all the documentation on hand and similar to most other lenders, PNC Bank has a minimum credit score requirement of 620.

    Best for saving money

    SoFi

    • Annual Percentage Rate (APR)

      Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

    • Types of loans

      Conventional loans, jumbo loans, HELOCs

    • Terms

    • Credit needed

    • Minimum down payment

    Pros

    • Fast pre-qualification
    • Provides access to Mortgage Loan Officers for guidance
    • $500 discount for existing SoFi members
    • 0.25% price reduction when you lock in a 30-year rate for a conventional loan
    • Offers up to $9,500 cash back if you purchase a home through the SoFi Real Estate Center

    Cons

    • Doesn’t offer FHA, VA or USDA loans
    • Mortgage loans are not available in Hawaii

    Who’s this for? SoFi offers homebuyers a number of discounts that can help them save as much money as possible throughout their home-buying process. When you lock in 30-year rate for a conventional loan, you can receive a 0.25% discount. And when you purchase a home through the SoFi Real Estate Center, which is powered by HomeStory, you can receive up to $9,500 in cash back. Another appealing perk is that SoFi members can get a $500 discount on their mortgage loan.

    This lender offers an online-only experience for those looking to qualify for a conventional loan, jumbo loan, or HELOC (SoFi doesn’t offer FHA, VA, or USDA mortgage loans). Terms range from 10 to 30 years and are both fixed and adjustable-rate. Similar to most other lenders, SoFi considers applicants with a minimum credit score of 620.

    Homebuyers can also take advantage of a host of resources from SoFi, like a home affordability calculator, a mortgage calculator and a home improvement cost calculator, which can really come in handy if you’re purchasing a home that needs some work done and you need to figure out ahead of time how much to budget for renovations.

    Just keep in mind, though, that SoFi’s mortgage loans are available in states except for Hawaii.

    FAQs

    What is pre-approval and how does it work?

    Pre-approval is a statement or letter from a lender that details how much money you can borrow to purchase a home and what your interest rate might be. To get pre-approved, you may have to provide bank statements, pay stubs, tax forms and employment verification, to name a few. Once you’re pre-approved, you’ll receive a mortgage pre-approval letter, which you can use to begin viewing homes and start making offers. It’s best to get pre-approved at the start of your home-buying journey before you start looking at homes.

    How do mortgages work?

    A mortgage is a type of loan that you can use to purchase a home. It’s also an agreement between you and the lender that essentially says that you can purchase a home without paying for it in-full upfront — you’ll just put some of the money down upfront (usually between 3% and 20% of the home price) and pay smaller, fixed equal monthly payments for a certain number of years plus interest.

    For example, you probably can’t pay $400,000 for a home upfront, however, maybe you can afford to pay $30,000 upfront; a mortgage would allow you to make that $30,000 payment while a lender gives you a loan for $370,000 (the remaining amount) and you agree to repay that amount plus interest to the lender over the course of 15 or 30 years.

    Keep in mind that if you choose to put down less than 20%, you’ll be subject to private mortgage insurance (PMI) payments in addition to your monthly mortgage payments. However, you can usually have the PMI waived after you’ve made enough payments to build 20% equity in your home.

    What is a conventional loan?

    A conventional loan is a loan that’s funded by private lenders and sold to government enterprises like Fannie Mae and Freddie Mac. It’s the most common type of loan and some lenders may require a down payment as low as 3% or 5% for this loan.

    What is an FHA loan?

    A Federal Housing Administration loan (FHA loan) is a loan that typically allows you to purchase a home with looser requirements. For example, this type of loan may allow you to get approved with a lower credit score and applicants may be able to get away with a higher debt-to-income ratio. You typically only need a 3.5% down payment with an FHA loan.

    What is a USDA loan?

    A USDA loan is a loan offered through the United States Department of Agriculture and is aimed at individuals who want to purchase a home in a rural area. A USDA loan requires a minimum down payment of 0% — in other words, you can use this loan to buy a rural home without making a down payment.

    What is a VA loan?

    A VA mortgage loan is provided through the U.S. Department of Veterans Affairs and is meant for service members, veterans and their spouses. They require a 0% down payment and no mortgage insurance.

    What is a jumbo loan?

    A jumbo loan is meant for home buyers who need to borrow more than $647,200 to purchase a home. Jumbo loans are not sponsored by Fannie Mae or Freddie Mac and they typically have stricter credit score and debt-to-income ratio requirements.

    How is my mortgage rate decided?

    Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. While the Federal Reserve doesn’t set mortgage rates, mortgage rates tend to move in reaction to actions taken by the Federal Reserve on its interest rates.

    Market forces may influence the general range of mortgage rates but your specific mortgage rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.

    It can also be worth shopping around with different mortgage lenders to see which one offers you the lowest interest rate.

    What is the difference between a 15-year and a 30-year term?

    A 15-year mortgage gives homeowners 15 years to pay off their mortgage in fixed, equal amounts plus interest. By contrast, a 30-year mortgage gives homeowners 30 years to pay off their mortgage. With a 30-year mortgage, your monthly payments will be lower since you’ll have a longer period of time to pay off the loan. However, you’ll wind up paying more in interest over the life of the loan since interest is charged monthly. A 15-year mortgage lets you save on interest but you will likely have a higher monthly payment.

    Subscribe to the CNBC Select Newsletter!

    Money matters —  so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.

    Our methodology

    To determine which mortgage lenders are the best, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

    When narrowing down and ranking the best mortgages, we focused on the following features:

    • Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
    • Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property. 
    • Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
    • Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances where a lender does charge such fees. 
    • Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
    • No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early. 
    • Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches. 
    • Customer support: Every mortgage lender on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
    • Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount. 

    After reviewing the above features, we sorted our recommendations by best for overall financing needs, quick closing timeline, lower interest rates and flexible terms.

    Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

    Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.

    Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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  • Top Stock Market Data APIs for Financial and Decentralized Apps | Entrepreneur

    Top Stock Market Data APIs for Financial and Decentralized Apps | Entrepreneur

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    Investing in the stock market is often considered a game of chance, and the only generally accepted advice is to “buy low and sell high.” However, there is data involved with the stock market, and the right apps can make it more accessible to those who need it. Whether you’re a developer or trader, it’s important to understand stock market data APIs and determine which are the best for your needs.

    Stock market data APIs provide a stream of data to finance and decentralized applications, lending all the information necessary to display accurate numbers and help end users make better decisions.

    It’s a great tool, but before you choose one to incorporate, it’s important to ask yourself: “Which stock market APIs are best?” And how do you choose between them when building a finance application, including decentralized finance (DeFi)? Multiple factors may affect which API you choose, which is why it’s crucial to know what to look for. Below, this article will explain what you need to know about stock market APIs and offer a list of the top stock market data APIs currently available.

    What Is a Stock Market Data API?

    In the programming world, API stands for “application programming interface.” It is a kind of interface designed to connect apps or other systems, often to exchange meaningful data in a streamlined way. A stock market data API, more specifically, is designed to parse vital financial data from markets all over the world so that it can be readily transmitted, exchanged, and eventually utilized by end users who need financial data to make better decisions.

    As a programmer of a financial app, if you need access to market data, you only have two main options. You can either figure out a way to write your own complex code for parsing raw data from every major stock exchange and crypto exchange — or you can make use of a stock market API that already exists and functions well.

    The latter option is much less expensive and much easier, which is partially why financial market data is now a more-than-$30 billion industry.

    What Makes a Stock Market API Worth Using?

    What makes a stock market data API worth using over another one? That’s a great question, and it really boils down to personal preference and need. All APIs are going to offer data, but you have to decide if it’s the kind of data you need and if it’s compatible with the rest of your financial app.

    These are some of the most important variables we’re going to consider when evaluating different stock market data APIs:

    Real-time and historical data

    Do you need stock market data in real-time, as prices fluctuate in response to new information? Do you need market data as it’s been reported historically, so you can track how prices have changed over time? You’ll probably need both if you’re building a financial app. Not every API pulls data in real-time, and not every API offers historical data. We favor APIs that can do both.

    Exchange and asset class access

    It’s important to ask yourself: What financial data do you need? There are many different exchanges, including exchanges outside of the United States, so it usually pays to choose a stock market API that has access to as many as possible. You also need to think about access to data for different types of asset classes, such as equities, crypto, bonds, and ETFs. Depending on the application, you may need a tool that can do it all.

    Exchanges and aggregated data

    When a stock market API pulls data to provide to end users, does it derive that data from a single exchange or from an aggregated pool of different sources? These can lead to slightly different outputs, so it’s usually best to have an API that can do both.

    Adjusted and unadjusted historical prices

    It’s also important to think about the difference between adjusted and unadjusted historical prices. In some cases, corporate actions can retroactively change the closing price of a given stock; for example, after a stock split, a stock may present an “adjusted close.” Do you need a stock exchange that provides both adjusted and unadjusted historical prices?

    Language support

    You should also consider the language support inherent in each tool. If your app is based in Java, your API needs to be compatible. Ideally, your stock market API will support whatever programming language you choose to use for your app.

    Overall ease of use

    Why not make your job a little bit easier? Some APIs are super streamlined, making them easier for developers to integrate.

    The Best Stock Market Data APIs for Financial and Decentralized Applications

    These are some of the best stock market data APIs available today:

    Alpha Vantage

    Alpha Vantage is a stock market data API that’s been backed by Y Combinator. It’s currently a free, open-source API for financial data. For the past several years, Alpha Vantage has been the “intel inside” data feed for over 500 open-source libraries on GitHub, with support for many programming languages like Python, Java, and JavaScript.

    With it, engineers can tap into both real-time and historical data on stocks, ETFs, mutual funds, and cryptocurrency. It also processes derived financial data, including more than 50 different technical indicators, to help investors further. Most developers find it both robustly functional and easy to use. Alpha Vantage is also a leading data provider for blockchain oracles by serving as the “data bridge” between the decentralized world and conventional capital markets.

    Zirra

    With Zirra, you can tap into the power of artificial intelligence (AI) to gather the financial data you need in a sensible way. This API provides real-time data and more than 100 time series signals for 16,000 (and growing) companies. It also pulls data from the past, providing historical data from 2014 onward. Zirra also has access to several secondary metrics and data points, such as media sentiment. Zirra also provides cryptocurrency-related news feeds.

    QuoteMedia

    If you’re looking for an enterprise product designed to provide financial data at scale, you might consider QuoteMedia. This tool is customized on a per-client basis, so you can get a functional and reliable data stream that’s perfectly suited to your specific needs. You’ll get all the information you need, filtered exactly how you require, and you’ll also get access to ample support once deployed. QuoteMedia’s data universe includes equities, mutual funds, commodities, forex, and cryptocurrency.

    Xignite

    Xignite is another API that was “built by developers, for developers,” and it’s designed to make it easy to incorporate real-time financial data into your latest applications. It offers coverage for almost every imaginable asset class, including equities, ETFs, crypto, options, futures, and even credit markets. It also relies on a diverse mix of data sources and curates its own set of high-quality data to ensure you and those using your app always have the information needed.

    Polygon.io

    Uninitiated investors might imagine there’s only one stock exchange — but in reality, there are more than 10 in the United States alone. Polygon is a stock API that attempts to simplify the process of aggregation, so you can get a reliable, accurate stock quote while simultaneously considering data from all exchanges at once. It also offers individual, exchange-specific price quoting.

    IEX Cloud

    Another convenient tool for financial data developers is IEX Cloud, which offers both first-party data (directly from the exchange) and third-party data (from various sources). Like many of the APIs on this list, IEX Cloud provides both historical and real-time data, and it offers data streams on a wide range of different asset classes across many different exchanges.

    Bloomberg API

    You’ve likely heard of Bloomberg Terminals — the computer software system that enables financial professionals to access, monitor, and analyze real-time financial market data and place trades. So why not consider using a more modern version in the form of Bloomberg API? With it, you can get access to real-time data from many different exchanges for as long as you’re a paying Bloomberg customer.

    The Bottom Line — Making the Right Decision For You

    As a developer, you owe it to yourself to choose a financial data API that’s functional and easy to use, and you owe it to your eventual end users to choose an API capable of providing a reliable stream of millions of different data points.

    Fortunately, you have plenty of options available to you. Remember to compare the type of data they collect, whether that’s real-time, historical, aggregated, or from a single exchange. It’s also important to think about access to data for different types of asset classes. Ensure the API you choose offers the financial data you need.

    Compare these APIs carefully so you can pick the best interface for your upcoming fintech or DeFi applications. Choosing the right API can save you time and money, especially when comparing the task to creating your own from scratch. You’ll save countless hours of development time, but make sure you still end up with an option that meets your needs and standards.

    The post Top Stock Market Data APIs for Financial and Decentralized Apps appeared first on Due.

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    Deanna Ritchie

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  • Op-ed: After the Silicon Valley Bank collapse, don’t try to time the market

    Op-ed: After the Silicon Valley Bank collapse, don’t try to time the market

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    Rosley Majid / Eyeem | Eyeem | Getty Images

    Following recent bank failures and ongoing market volatility, it may be tempting to try to time the market. Of course, buying low can be a good thing. But a continuous mindset of buying and selling in response to market changes may not be.

    Why? Because time in the market has shown to be more important than timing the market.

    For example, according to Morningstar data, the John Hancock Funds Fundamental All Cap Core Fund Class I Fund (MUTF: JFCIX) had an 11.39% five-year annual return as of March 31. But despite the fund’s impressive performance, the typical shareholder lost 2.86% a year over that period, Morningstar found.

    How is that possible? In my view, it has to do with when investors buy and sell. When investors buy after a strong run of performance, they are investing when a fund is relatively expensive.

    More from Personal Finance:
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    $7,500 electric vehicle tax credit may soon be harder to get

    After a downturn, investors may hang with it for a while, but many eventually give up. That’s right — they buy high and sold low.

    Then, if the fund recovers — putting on another impressive streak of performance — it may attract another set of investors, who may buy high and later sell low. When this happens over and over again, it means a fund could do very well on average but, on average, its investors could actually lose money.

    In fact, research from Eventide Asset Management using Dalbar data shows that the average investor underperformed nearly every asset class, barely even beating out inflation, from 2001-2021.

    It’s all about time, not timing

    Time — not timing — is a great friend to money. Albert Einstein reportedly called compound interest “the most powerful force in the universe.” Benjamin Franklin is said to have defined it this way: “Money makes money. And money that makes money makes money.”

    As a hypothetical illustration of compound interest, the $3 a day you might spend on a cup of coffee, invested for 40 years, could grow to over $215,000 over 40 years (assuming a 6.7% growth rate). Even modest amounts of money have the potential to grow to impressive sums over long periods of time.

    People tend to forget, when the market is down, that performance over one year can differ drastically from performance over 10 or 20 years.

    It can seem smart to chase a hot return. But what I’ve seen is that investors get nervous when times are hard; they respond to the environment and sell at a lower price.

    The market volatility we’re seeing now spikes two kinds of fear: fear of missing out and fear of loss. Both can lead to poor investment behavior.

    When you look at the performance of the U.S. stock market going all the way back to its inception in 1871, you don’t see a steady upward trend. Instead, you see a zigzag pattern, with lots of ups and downs.

    Ralph Wanger, a successful portfolio manager, once likened it to an excitable dog on a very long leash, darting randomly in every direction, while its owner walks steadily and predictably from southwest to northeast across New York’s Central Park — up, and to the right. His advice, as detailed in Bill Bernstein’s “The Four Pillars of Investing,” was to “keep your eye on the owner, not the dog.”

    So, what strategy can help you practice restraint and avoid the timing mindset? I’ve found that many people who invest in alignment with their values are better equipped to stick with their financial plans, rather than buying and selling at the wrong times. Values remain consistent, even when the market fluctuates.

    When you have a sense of how practicing those values can contribute to a company’s success (like how a great employee culture allows a company to attract and retain the best people), you’ll be more prepared to keep with an investment through those ups and downs.

    Imagine partnering with a portfolio of companies for the long-term that you are proud to own and talk about. That’s what it looks like to shift from a transactional mindset to an ownership mindset, and it can be a powerful driver for long-term success.

    — By Robin John, founding member and CEO of Eventide Asset Management

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  • These 7 simple portfolios have beat the S&P 500 for more than 50 years

    These 7 simple portfolios have beat the S&P 500 for more than 50 years

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    Long-term investors who can manage a 10-fund equity portfolio, as I described last week, have what I consider the absolute best shot at attractive returns no matter what happens in the stock market.

    This time, in Part 2 of a series for do-it-yourself investors, I’ll tell you how to get much of that benefit with fewer funds.

    The Merriman Financial Education Foundation has created seven additional equity portfolios that handily outperformed the S&P 500 over the past 53 calendar years, from 1970 through 2022.

    Each requires only one to five funds. If you’re looking for action without too much angst, one of these seven could be for you.

    First, let’s get the baseline comparison on the table.

    From 1970 through 2022, $10,000 invested in the S&P 500
    SPX,
    -0.60%
    would have grown to $1.89 million. In the same period, a portfolio made up of equal parts of that index and nine other U.S. and international asset classes would have grown to $3.74 million.

    Those additional asset classes made a mighty big difference.

    The other asset classes are U.S. large-cap value stocks (US LCV), U.S. small-cap blend stocks (including both value and growth) (US SCB), U.S. small-cap value stocks (US SCV), real-estate investment trusts (REIT), international large-cap blend stocks (Intl LCB), international large-cap value stocks (Intl LCV), international small-cap blend stocks (Intl SCB), international small-cap value stocks (Intl SCV), and emerging markets stocks (Em Mrkt).

    That’s a lot to keep track of, more than most people are willing to do.

    A few years ago, I challenged Chris Pedersen, research director of our foundation, to find a way to achieve similar returns with no more than four funds.

    Here are seven additional portfolios. In this table below (and available on my foundation’s website), you can see the breakdown of each fund and the asset classes that make up each one.

    1. Chris came through, creating what we call the Worldwide Four-Fund portfolio. From 1970 through 2022, $10,000 would have grown to $3.92 million.

    2. Of course, many people are skittish about owning funds with companies based outside the United States. For them, we created the U.S. Four-Fund combo. In this one, $10,000 grew to $4.09 million from 1970 through 2022.

    If you’re wondering where these higher returns come from, the answer is simple: value stocks.

    3. In our five-fund Worldwide All Value portfolio, $10,000 invested in 1970 would have grown to $5.34 million, nearly three times as much as the same investment in the S&P 500 alone.

    4. For investors who want to stick with U.S. companies, there’s the U.S. All Value portfolio. In this simple but powerful combination, $10,000 would have grown to $6.43 million.

    Compared with just the S&P 500, that seems pretty astounding. But hang onto your hat for a moment.

    5. Both internationally and in the United States, small-cap value stocks have been the most productive of these asset classes. In our two-fund Worldwide All Small-Cap Value portfolio, $10,000 would have grown to an astonishing $9.14 million from 1970 through 2022.

    That’s $7.25 million more than the S&P 500 alone.

    6. The all-U.S. variation is the ultrasimple U.S. All Small-Cap Value portfolio. The 1970-2022 growth of $10,000 in this one-fund variation would have been $8.65 million.

    U.S. small-cap value stocks have such a highly productive track record that they are part of every single suggested portfolio except the S&P 500 by itself.

    By now, you might be thinking you’d like some of that small-cap value horsepower, but also some of the “safety” and familiarity of the good old S&P 500. That seems reasonable.

    7. To meet that need, we created the U.S. Two Fund portfolio: equal parts of the S&P 500 and U.S. small-cap value stocks. From 1970 through 2022, an initial $10,000 would have grown to $4.48 million, more than twice as much as the S&P 500 by itself.

    In Table 1, you can find these variations along with their 1970-2022 results.

    Table 1

    The far-right column, standard deviation, represent a common measure of risk. But in this case, I don’t think they are the best indicator. For many investors, a better measure involves the number of years in which they lose money. 

    Table 2

    As you can see, the numbers in the far-right column aren’t that different from one another.

    If you could accept a worst year of 36.8% (as in the bottom two rows), you could perhaps also live with a one-year loss of 42.2%, especially since it came bundled with the fewest losing years.

    Of these alternative portfolios, the U.S. Two-Fund might be the most intriguing:

    • It taps into the power of U.S. small-cap value stocks, and can easily be modified.

    • You can substitute a target-date retirement fund or a balanced fund for the S&P 500.

    • And the proportions don’t have to be 50/50.

    To elaborate on ways investors can use these interesting portfolios, I have recorded a video and a separate podcast.

    Richard Buck contributed to this article.

    Paul Merriman and Richard Buck are the authors of We’re Talking Millions! 12 Simple Ways to Supercharge Your Retirement. Get your free copy.

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  • Is Buying Rental Property Worth It in 2023? | Entrepreneur

    Is Buying Rental Property Worth It in 2023? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Picture this: It’s New Year’s Eve, 2022, and you’ve finally committed to a resolution you really want to keep. In the coming year, you want to buy your first rental property and start investing in real estate. But what will real estate look like in 2023? Will housing prices continue to drop? There seem to be more questions than answers.

    If this scenario sounds like you, you might feel intimidated by the uncertainties of the coming months. Deciding to buy your first rental property can feel like a scary or risky endeavor in any market climate, but doing so during a housing correction may seem even riskier. You might be questioning your decision and wondering, “Is buying rental property worth it?”

    Before you throw out your resolution, however, reconsider what you know about real estate and how to retain and increase its value. This article will hopefully give you some of the tools and resources to invest in any market and demonstrate that 2023 can still be a fruitful time to buy your first property.

    Related: How to Start Investing in Rental Properties — Your Step-by-Step Guide

    What is a housing correction?

    First things first: What is a housing correction?

    A housing correction is a period during which housing prices start to fall in some places after a rapid rise. This fall is usually only by 10% or less, according to U.S. News & World Report. It typically occurs because home prices were unsustainably high in recent years, and the market therefore “corrects” itself to more reasonable prices that match the current supply and demand. Corrections are more gradual than housing market crashes, but they can last anywhere from a few months to a few years.

    Housing corrections are caused by interactions between a variety of factors, including mortgage rates, supply, demand, affordability, inventory and stock market trends. Analysts track these factors over time to look for signs that prices will soon fall. These signs can include a decline in sales, homes selling more slowly and homes selling for significantly less than just a few months prior.

    Many people who own property during a housing correction may worry that their properties aren’t worth as much as they used to be. However, housing corrections aren’t inherently “bad,” nor do they spell the death of your rental business. In fact, they can make home-buying possible for first-time owners or those looking to start their investing journeys without competing with high-capital peers. Corrections are part of the real estate cycle, and knowing what to expect can help you navigate one with confidence.

    What’s happening in 2023?

    Analysts and economists are monitoring the housing market, and many have predicted that a housing market correction has already begun or soon will. Today, the national housing market is up by only about 6% compared to March 2022, which is a relative slowdown in comparison to 15% a few months prior. Experts predict that house prices will continue to fall through 2023, with the markets that grew the fastest in the past year likely to see the starkest decreases (even up to 30% in overpriced cities).

    Why is this happening? Experts cite a few factors. For one, there are fewer people looking to buy expensive homes than there were in previous years. Many Baby Boomers now have fixed incomes and aren’t as interested in buying expensive homes, which is a natural cause of corrections. Meanwhile, young families are looking for starter homes.

    Related: 5 Tips for New Investors Who Want to Make Money With Real Estate

    How and why you can still invest during a housing market correction

    Don’t let decreasing prices discourage you from investing in real estate. A good deal is a good deal, and if you do your research, you have a good chance of securing a lucrative one.

    The key is to stay informed on market trends and be patient. Housing corrections are temporary, and they help transition from a seller’s market to a buyer’s market, so you can actually benefit from this period of low prices. Plus, as experts at BiggerPockets remind us, housing prices do not equal profit. There are a variety of other ways to earn revenue in real estate besides appreciation. Cash flow, value add deals and tax benefits all make real estate worth it even in less-than-ideal markets. It makes sense to be cautious, but don’t let that prevent you from taking advantage of great opportunities when you find them.

    Buying a rental property

    So, you’ve decided to buy a property in 2023: What do you need to know?

    When considering what to know when buying a rental property, one of the most important steps is analyzing the local market. Local data is more useful than national averages any day, as it will provide the clearest insight into the rental marketplace in the specific area you’re targeting.

    Calculating ROI:

    When choosing a property, the best way to get a picture of local demand is to survey local rent rates of comparable properties nearby. For a given property in that area, you’ll be able to estimate approximately how productive that investment will be.

    To do this, you’ll want to calculate ROI, or return on investment. ROI for rental property is the ratio of income you’ll generate to your initial investment or purchase price of the home. To calculate it, divide your expected annual return by the purchase price. If the resulting percentage is 10% or more, it is typically considered a good investment.

    Remember that you can increase your ROI by adding value to your property, then increasing the rental rate. For instance, if you add another bedroom and bathroom to a single-family home, you now have a property worth far more than the one you started with. You may have bought the house at below-market value during a correction, but you’ll soon make up for it in revenue generation and appreciation as the market leaves the correction period.

    Related: 6 Effective Real Estate Investment Strategies

    Legal and administrative tasks:

    You’ll also have some legal and administrative tasks on your checklist for buying a rental property. Namely, you should hire a licensed property inspector to review the property before finalizing the deal. You don’t want to discover that the home has severe infrastructural problems or water damage after you’ve already locked yourself into a price.

    Other important tasks include reading over the property title documents to confirm the seller’s ownership, confirming property tax receipts and writing up a solid property purchase contract. You may have an agent assist with this process. The goal is to clearly define and explain the terms of the sale so that you know exactly what you’re paying for. Many of these steps are also required by lenders to secure a mortgage — your lender has an investment in the property, too, so they also want to ensure you’re making smart choices.

    Becoming a first-time landlord doesn’t come without its challenges. The first step is to find and analyze a great deal that will lead you toward financial freedom. By following these tips, you can be a successful real estate investor in any market season.

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    Dave Spooner

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  • Worried the IRS is going to audit your tax return? If you earn less than $400,000, you can probably relax.

    Worried the IRS is going to audit your tax return? If you earn less than $400,000, you can probably relax.

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    Some clarity is emerging regarding statements from Biden administration officials that no one making less than $400,000 will see higher audit rates by the Internal Revenue Service, which is about to step up its scrutiny of wealthy taxpayers.

    The Inflation Reduction Act — the tax and climate package enacted last summer — earmarked $80 billion for the IRS over the next decade and a half. The money is intended in part to facilitate more audits of corporations and wealthier individuals.

    Ahead of the bill’s passage, Treasury Secretary Janet Yellen pledged that there would be no increase in the audit rate for households and small businesses with annual incomes below $400,000 “relative to historical levels.”

    But Republican critics and other observers have asked what “historical levels” might actually mean.

    The audit rate on returns for tax year 2018 is the reference point to keep in mind, IRS Commissioner Danny Werfel told senators on Wednesday. He emphasized that “there’s no surge coming for workers, retirees and others.”

    The IRS audited fewer than 1% of 2018 returns with total positive incomes — the sum of all positive amounts shown for various sources of income reported on an individual income-tax return, which excludes losses — of between $1 and $500,000, according to statistics that the tax agency released last week.

    The agency has three years to start an audit from the time it receives a return.

    Also read: The IRS wants more people working in tax enforcement. Now it has to find them.

    The numbers show that 0.4% of returns for taxpayers earning up to $25,000 were audited. That figure was 0.3% for returns between $200,000 and $500,000 and more than 9% for returns over $10 million, the IRS data show. Six years earlier, more than 13% of returns over $10 million were scrutinized, according to the IRS.

    “Help us with understanding what the words ‘historic level’ means,” Sen. James Lankford, a Republican from Oklahoma, asked Werfel during a Wednesday budget hearing.

    “We will take the most recent final audit rate, and it’s historically low … and we allow that to be the marker for least several years, and then we’re revisit it,” Werfel said. The 2018 audit rates were the newest final rates, he added.

    “So the 2018 number is what it’s going to be?” Lankford asked.

    “Yes,” Werfel replied.

    “Werfel’s explanation that 2018 audit levels will be the reference point is the most detail I’ve heard so far,” Erica York, s senior economist at the Tax Foundation, told MarketWatch. “He did seem to leave open the possibility of revisiting the reference year for ‘historical’ in the future,” she added.

    Another open question has been how the $400,000 income threshold will be determined. Months after the Inflation Reduction Act passed, IRS and Treasury officials still hadn’t finalized what counted as $400,000 in income, according to a January Treasury Department watchdog report.

    “How are you arriving at this number?” asked Sen. Marsha Blackburn, a Republican from Tennessee. Blackburn’s state has many self-employed entrepreneurs who might appear richer on paper than they actually are, she said. “While they may have a higher gross, their net is very low,” she added.

    “We’re going to look at total positive income as our metric,” Werfel said. He later added that “there would be no increased likelihood of an audit if they have less than $400,000 in total positive income.”

    The IRS description of total positive income as “the sum of all positive amounts shown for the various sources of income reported on an individual income tax return and, thus, excludes losses” represents, effectively, a tally of income before taxpayers subtract their losses.

    Total positive income is a metric the IRS usually applies to categorize audits, the Tax Foundation’s York noted. But one challenge of strict thresholds for more audits, she said, “is that it creates incentives for underreporting income” to stay under the line.

    Compared with recent years, there are now more specifics about how the IRS will implement additional audits of higher-income taxpayers, said Janet Holtzblatt, a senior fellow at the Tax Policy Center.

    “But still there are questions,” she noted, about how the agency will treat situations when taxpayers don’t provide full picture of their income.

    Read on: Make sure the tax breaks you’re taking now won’t hammer you in retirement

    Also: ‘This was a test’: IRS has handled more than 100 million returns already — Tax Day by the numbers

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  • Savings account interest rates just hit a 15-year high, but fewer Americans are benefitting

    Savings account interest rates just hit a 15-year high, but fewer Americans are benefitting

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    D3sign | Moment | Getty Images

    The returns savers stand to get on their money are the highest they’ve been in 15 years, thanks in part to stubborn inflation, which pushed the Federal Reserve into hiking interest rates over the past year.

    Top-yielding online savings account rates are now just north of 5%, the highest since 2008, and much higher than last year’s 0.8%, according to Bankrate.com.

    Even Apple got in the game with a savings account offering a 4.15% interest rate.

    More from Personal Finance:
    How Apple’s new 4.15% savings account ranks
    The ‘best defense’ against inflation, per a financial advisor
    Here are the 3 best ways to pay down credit card

    “Higher returns on federally-insured savings and money market accounts represent the only free lunch in finance,” said Greg McBride, Bankrate’s chief financial analyst. 

    Meanwhile, the savings account rates at some of the largest retail banks, which have been near rock-bottom for years, are currently 0.39%, on average.

    “On a $10,000 balance, that’s $500 you could be earning, versus close to zero,” said Ken Tumin, founder of DepositAccounts.com.  

    While savers could get better returns on their cash, just 22% of savers are earning 3% or more on their accounts — and nearly as many savers are not earning any interest at all, according to a report from Bankrate.

    Most people said the main reasons for not switching to a high-yield savings account were because they preferred their local branch or were comfortable at their current bank. Some also said they worried about the security of their cash at an online institution or they didn’t have enough savings to make the switch worthwhile.

    49% have less in savings, or none, compared to 2022

    Americans, overall, are saving less. Nearly half, or 49%, of adults have less savings or no savings compared to a year ago, according to a separate Bankrate survey from February.

    More than one-third also now have more credit card debt than emergency savings, which is the highest on record.

    If you are not part of the banking system, you are not benefitting from savings rates and not likely building credit very effectively,

    Greg McBride

    chief financial analyst at Bankrate

    “Inflation has been running very hot, so savings has been a casualty of that in many households,” McBride said.

    The average American’s savings are 32% behind where they should be when scaled against their salary, according to one analysis by DollarGeek based on data from the Fed’s Survey of Consumer Finances.  

    4.5% of households are unbanked entirely

    And then there are those who don’t save at all, at least at a bank or credit union.

    In 2022, 4.5% of households had no checking or savings account, according to the FDIC’s latest survey.

    The most common reasons cited for being unbanked included not having enough money to meet minimum balance requirements and distrust of banks, followed by concerns over account fees.

    Although more households can rely on online payment services such as PayPal and Venmo for day-to-day transactions, “if you are not part of the banking system, you are not benefitting from savings rates and not likely building credit very effectively,” McBride said — “and those can have pretty significant ripple effects on your finances, not only now but for years to come.”

    Subscribe to CNBC on YouTube.

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  • How to Utilize Real Estate in Your Retirement Portfolio | Entrepreneur

    How to Utilize Real Estate in Your Retirement Portfolio | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Owning investment real estate to generate income during retirement can be a valuable addition to your portfolio. There are several ways to utilize real estate in your retirement portfolio. In this article, we explore several ways owning real estate could be incorporated into your current balance sheet and become a major part of your retirement plans.

    We will break down the different options you have and list a few pros and cons as well:

    Related: 5 Reasons Why Real Estate Is a Great Investment

    Supplemental income stream

    The most common way to make real estate a contributing factor in your retirement portfolio is owning rental real estate as a supplemental income stream. Let’s break down the pros and cons of such an endeavor:

    The pros:

    • A stable, potentially rising stream of income

    • An activity to keep you busy in retirement

    • Potential additional tax advantages and deductions

    • Great diversification from stocks and bonds

    The cons:

    • People rarely factor in all the costs such as insurance, taxes, maintenance, bad tenants, etc.

    • A large down payment or cash offer is often required to generate positive monthly cash flow.

    • Mortgage rates are high now compared to recent history, which makes positive cash flow a bit harder to achieve.

    • Potential liability from an unforeseen accident

    Short-term rentals

    There are a lot of great opportunities in the short-term rental space. This does bring on the added responsibility of marketing, generating positive reviews and buzz, as well as an increased need for maintenance and attentiveness. Like any small business where some extra work is required — if done well, it will pay off in the end. We have several clients who have had a lot of success with short-term rentals. There are even websites dedicated to helping you generate supplemental income from your properties.

    Related: 9 Ways to Invest in Real Estate for Retirement

    Publicly traded real estate investments

    Physically owning and maintaining real estate is not the only way to go about benefiting from real estate as an investment. You might want to consider publicly traded real estate investments (REITs or Real Estate Investment Trusts).

    These also come with their own sets of pros and cons:

    The pros:

    • Higher stream of income vs. similar credit quality stocks and bonds

    • An easy way to access specific niches (i.e., targeting warehouses and data centers, housing, offices, medical communities, etc.)

    • Decent diversification from other types of stocks and bonds

    The cons:

    My personal recommendation is, if you own publicly traded real estate, make sure you own it primarily for the income, not for the principal appreciation. Yes, you could potentially make money over time, but you should think of this transaction as an income play.

    Real estate investment trusts (REIT)

    Another option to consider is the private REIT space. A private REIT will give you an investing experience somewhere between owning real estate and owning a publicly traded real estate fund. If you’re interested in the private REIT space, you should work with your advisor to do some due diligence and keep in mind the following:

    • How does the fund’s liquidity work? What is your time commitment?

    • You’re paying fees to a sponsor and a property manager — not entirely different than you would pay when owning other properties.

    • Understand what these costs and fees look like.

    • What do they own, and what do they plan to buy?

    • Have they successfully gone “full cycle” before?

    • How did their funds do during prior periods of real estate distress?

    • Accept the fact that you’re giving up control over these decisions but mitigating the risk of bad decision-making by relying on professionals.

    Related: What You Should Consider Including in Your Retirement Portfolio

    Owning rental real estate can be a rewarding and wealth-building experience. If you’ve never owned rental real estate before, the idea could be daunting. But many experienced real estate investors will tell you that while the first investment property may be the hardest, it will only get easier from there.

    Once you begin, you may experience a bad tenant. It’s bound to happen, and every rental owner should be prepared for the occasional bad apple. Don’t let one or two bad experiences scare you from being a landlord.

    The more you’re willing to roll up your sleeves and get involved, the more likely you’ll succeed — just like with anything else in life. Any type of success in real estate does not happen by accident. Make sure you’re working with your financial planner and your property and casualty specialist to account for potential worst-case scenarios.

    Whether you’re physically owning it with after-tax dollars or diversifying a portion of your retirement accounts into publicly traded real to increase your existing portfolio’s level of income — there are certainly a lot of potential benefits that at least merit a conversation about how you can utilize real estate in your retirement portfolio.

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    Chris Kampitsis

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  • Electric-vehicle tax credit: See which EVs qualify on updated list

    Electric-vehicle tax credit: See which EVs qualify on updated list

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    The Biden administration, pushing for more U.S. manufacturing, has issued its updated list of all-electric and gas-electric hybrid vehicles that qualify for the full $7,500 tax credit, and those that can earn at least a partial sweetener for buyers.

    With the update, 16 models are now eligible for a full or partial tax credit, based on new thresholds that require a certain percentage of the battery parts and the minerals used in those batteries to come from North America, meaning the U.S., or a country with select trade agreements with the U.S.

    The total is down from 25 electric and plug-in models previously eligible for a U.S. tax break, which were first introduced about 10 years ago.

    The revision limits the selection to vehicles built by four car companies: Tesla Inc.
    TSLA,
    -0.96%    ,
     Ford Motor Co.
    F,
    -0.04%    ,
     General Motors Co.
    GM,
    +0.17%
    and Stellantis NV
    STLA,
    +0.03%    ,
    which owns Jeep and Chrysler.  

    See the full list.

    The government site also advises on tax incentives for used vehicles and leased vehicles.

    For buyers to claim the full $7,500 tax credit, a percentage of the pre-determined battery parts must be made in North America and a percentage of critical minerals sourced in the U.S. or from certain trade-friendly countries. A partial $3,750 credit is available for meeting one of these two battery-sourcing requirements.  


    Terrence Horan

    Not a single electric model from a foreign brand is eligible for the subsidy as revised. And EVs from startups, such as passenger- and commercial-truck maker Rivian Automotive Inc.
    RIVN,
    -1.64%
    and luxury brand Lucid Group Inc.
    LCID,
    -0.19%    ,
    also missed making the list. That’s largely because their vehicles are too expensive for the price contingencies that inform which autos qualify. Income levels of buyers are also a consideration.

    Still, the new rules make for certain immediate winners over others.

    Nearly all of GM’s new EV models are eligible for the full $7,500 tax credit. Six Ford electric and plug-in hybrid models also qualify for a partial or full tax credit, including the Mustang Mach-E and F-150 Lightning. 

    Among Tesla’s models, some entry-level Model 3 sedans will get a $3,750 credit. That is because the car uses battery cells made in China. Higher-end Model 3s and all its Model Y configurations qualify for the full $7,500 credit. 

    Tesla has been cutting its retail prices, a move to boost sales and bring some offerings in line with the tax breaks. And analysts say the maker likely isn’t done cutting prices.

    The tax credits made a big splash when they were included in 2022’s Inflation Reduction Act, the broad spending bill that observers labeled the biggest pro-climate action by an administration to date. But Biden’s pro-America stance soon came in conflict with the heart of the existing EV market, much of which is sourced abroad.

    Read: Biden adds more EV charging across U.S., with pledges from Uber, Walmart, PG&E and others

    The latest changes, which are intended to attract auto manufacturers into building domestically, apply to vehicles delivered to customers starting Tuesday. Several overseas makers, including Hyundai and Honda, have started to build battery plants in the U.S. 

    Other actions are intended to push EVs as well. The Environmental Protection Agency last week proposed its toughest restrictions ever on tailpipe emissions, a target that can likely only be met by turning out more EVs from assembly lines. The new standards aim for two-thirds of U.S. car sales to be electric by 2032.

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  • Today is Tax Day. Here’s what you need to know if you haven’t filed your return yet — and even if you have | CNN Business

    Today is Tax Day. Here’s what you need to know if you haven’t filed your return yet — and even if you have | CNN Business

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    Editor’s Note: This is an updated version of a story that originally ran on April 14, 2023.


    New York
    CNN
     — 

    It’s April 18, the official deadline to file your federal and state income tax returns for 2022. (It is also, apparently, National Animal Crackers Day for those who celebrate.)

    Whether you have already filed your tax return or still need to, the good news is this tax filing season has gone much more smoothly than the past three, which were hurt by the pandemic.

    “This is the first tax season since 2019 where the IRS and the nation were on normal footing,” IRS Commissioner Danny Werfel said in a call with reporters.

    For instance, Werfel noted that since January, thanks to an infusion of some new funding after years of budget cuts, IRS employees have been able to answer 87% of calls from filers with questions. Last year, they answered fewer than 15%. And the wait times on those phone calls dropped to just 4 minutes this filing season from 27 minutes last filing season.

    The agency also added a roster of new online tools for filers, he added.

    Those online tools may be especially helpful today if you are scrambling to get your return in before midnight. Or, if you’ve come to the realization that you need to file for an extension. Either way, here are some key things to know:

    Not everyone has to file on April 18: If you live in a federally declared disaster area, have a business there — or have relevant tax documents stored by businesses in that area — it’s likely the IRS has already extended the filing and payment deadlines for you. Here is where you can find the specific extension dates for each disaster area.

    Thanks to many rounds of extreme weather in recent months, for instance, tax filers in most of California — which accounts for 10% to 15% of all federal filers — have already been granted an extension until Oct. 16 to file and to pay, according to an IRS spokesperson.

    If you’re in the armed forces and are currently or were recently stationed in a combat zone, the filing and payment deadlines for your 2022 taxes are most likely extended by 180 days. But your specific extended filing and payment deadlines will depend on the day you leave (or left) the combat zone. This IRS publication offers more detail.

    Lastly, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return. But you may want to anyway if you think you are eligible for a refund thanks to, for instance, refundable tax credits such as the Earned Income Tax Credit. (Use this IRS tool to gauge whether you are required to file this year.) You also are likely eligible to use IRS Free File (intended for those with adjusted gross income of $73,000 or less) so it won’t cost you to submit a return.

    Your paycheck may not be your only source of income: If you had one full-time job you may think that is the only income you made and have to report. But that’s not necessarily so.

    Other potentially taxable and reportable income sources include:

    • Interest on your savings
    • Investment income (e.g., dividends and capital gains)
    • Pay for part-time or seasonal work, or a side hustle
    • Unemployment income
    • Social Security benefits or distribution from a retirement account
    • Tips
    • Gambling winnings
    • Income from a rental property you own

    Organize your tax documents: By now you should have received every tax document that third parties are required to send you (your employer, bank, brokerage, etc.).

    If you don’t recall receiving a hard copy of a tax form in the mail, check your email and your online accounts — a document may have been sent to you electronically.

    Here are some of the tax forms you may have received:

    • W-2 from your wage or salaried jobs
    • 1099-B for capital gains and losses on your investments
    • 1099-DIV from your brokerage or company where you own stock for dividends or other distributions from their investments
    • 1099-INT for interest over $10 on your savings at a financial institution
    • 1099-NEC from your clients, if you worked as a contractor
    • 1099-K for payments for goods and services through third-party platforms like Venmo, CashApp or Etsy. The 1099-K is required if you made more than $20,000 in over 200 transactions during the year. (Next year the reporting threshold drops to $600.) But even if you didn’t get a 1099-K you still must report all the income that you made over third-party platforms in 2022.
    • 1099-Rs for distributions over $10 that you received for a pension, annuity, retirement account, profit-sharing plan or insurance contract
    • SSA-1099 or SSA-1042S for Social Security benefits received.

    “Be aware that there’s no form for some taxable income, like proceeds from renting out your vacation property, meaning you’re responsible for reporting it on your own,” according to the Illinois CPA Society.

    One very last-minute way to reduce your 2022 tax bill: If you’re eligible to make a tax-deductible contribution to an IRA and haven’t done so for last year, you have until April 18 to contribute up to $6,000 ($7,000 if you’re 50 or older). That will reduce your tax bill and augment your retirement savings.

    Proofread your return before submitting it: Do this whether you’re using tax software or working with a professional tax preparer.

    Little mistakes and oversights delay the processing of your return (and the issuance of your refund if you’re owed one). You want to avoid things like having a typo in your name, birth date, Social Security number or direct deposit number; choosing the wrong filing status (e.g., married vs single); making a simple math error; or leaving a required field blank.

    What to do if you can’t file by April 18: If you’re not able to file on time, fill out Form 4868 electronically or on paper and send it in no later than today. You will be granted an automatic six-month extension to file.

    Note, however, that an extension to file is not an extension to pay. You will be charged interest (currently running at 7%) and a penalty on any amount you still owe for 2022 but haven’t paid by April 18.

    So if you suspect you still owe tax — perhaps you had some income outside of your job for which tax wasn’t withheld or you had a big capital gain last year — approximate how much more you owe and send that money to the IRS by the end of today.

    You can choose to do so by mail, attaching a check to your extension request form. Make sure your envelope is postmarked no later than April 18.

    Or the more efficient route is pay what you owe electronically at IRS.gov, said CPA Damien Martin, a tax partner at EY. If you do that, the IRS notes you will not have to file a Form 4868. “The IRS will automatically process an extension of time to file,” the agency notes in its instructions.

    If you opt to electronically pay directly from your bank account, which is free, select “extension” and then “tax year 2022” when given the option.

    You can also pay by credit or debit card, but you will be charged a processing fee. Doing so, though, may become much more costly than just a fee if you charge your tax payment but don’t pay your credit card bill off in full every month, since you likely pay a high interest rate on outstanding balances.

    If you can’t pay what you owe in full, the IRS does have some payment plan options. But it might be smart to first consult with a certified public accountant or a tax preparer who is an enrolled agent to make sure you are making the best choice for your circumstance.

    If you still owe income taxes to your state, remember that you may need to go through a similar exercise of filing for an extension and making a payment to your state’s revenue department, Martin said.

    Use this interactive tax assistant for basic questions you may have: The IRS provides an “interactive tax assistant” that can help you answer more than 50 basic questions pertaining to your individual circumstance on income, deductions, credits and other technical questions.

    If you’ve already filed your return, you’re probably glad to have it in the rear view mirror. But you may still have a few questions about what’s ahead.

    What about my refund? If you are due a refund, the IRS typically sends it within 21 days of receiving your return. When yours does arrive, it may be smaller than last year, even if your financial life didn’t change much. That’s because a number of Covid-related tax breaks expired.

    So far, the average refund paid was $2,878 for the week ending April 7, down from $3,175 at the same point in last year’s filing season.

    Will I be audited?: The reasons and methods for auditing a taxpayer can vary — and many audits result in “no change,” meaning you don’t end up owing anything more to the IRS. But one thing is common for the vast majority of US tax filers: Audit rates are exceedingly low.

    For filers reporting incomes between $50,000 and $200,000, only 0.1% of them were audited in 2020, according to the latest data from the IRS. Even for very high income filers, audit rates were quite low: Just 0.4% for those reporting income of between $1 million and $5 million; 0.7% for those with income between $5 million and $10 million; and 2.4% for returns with income over $10 million.

    Looking ahead, the IRS commissioner noted in a press call that the agency will be using money from the Inflation Reduction Act to bolster its compliance efforts to focus more on auditing high-income individuals — defined as making $400,000 or more. As for filers with income below that level, he said he did not anticipate any change in the likelihood they would be audited.

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  • Some travel is ‘off the charts’ expensive, experts say. Here are 3 ways to cut some costs

    Some travel is ‘off the charts’ expensive, experts say. Here are 3 ways to cut some costs

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    D3sign | Moment | Getty Images

    Some aspects of travel are pricier than ever amid pent-up demand.

    “The big cities and the popular [international] destinations — Paris, Rome, Madrid, Lisbon, Milan — those are off the charts,” Sofia Markovich, a travel advisor and founder of Sofia’s Travel, said of trip cost. “I look at this every day and I’m just shaking my head, like wow.”

    But fear not: There are ways for price-conscious travelers to satiate their wanderlust without breaking the bank.

    “People should be prepared not just for a busy travel season, but an expensive travel season,” said Sally French, a travel expert at NerdWallet. “The good news is: There’s hope.”

    Often, scoring the best deal may mean staying flexible and planning well ahead of time, experts said. Here’s what you need to know about the current market, and how to save.

    More from Personal Finance:
    This is the ‘best defense’ against inflation, says financial advisor
    Egg prices crashed 11% in March — and more relief may follow
    Here’s the inflation breakdown for March 2023 — in one chart

    International travel costs have hit record highs

    The Eiffel Tower and Seine River at sunrise in Paris.

    Alexander Spatari | Moment | Getty Images

    Consumers are traveling again after a few years of shelving plans during the pandemic. That pent-up demand has been reinforced by an easing of pandemic-era travel restrictions around the world.

    The typical American traveler expects to take 3.5 leisure trips in the next 12 months, up from 2.9 a year ago, according to a recent poll by Destination Analysts, a tourism market research firm.

    The so-called “revenge travel” dynamic has helped to push up prices, perhaps most acutely for travel abroad.

    For example, a round-trip airline ticket to Europe is now about $1,000 — 20% more expensive relative to this time in 2019 and 32% more costly than last year, said Hayley Berg, lead economist at Hopper, a travel app. A round-trip flight to Asia costs $1,600 — about 60% pricier than a 2019 ticket, she said.

    These are record-high prices, Berg said. It’s an especially notable shift considering that prices had generally been falling for international travel before the pandemic.

    People should be prepared not just for a busy travel season, but an expensive travel season.

    Sally French

    travel expert at NerdWallet

    This summer is expected to be the busiest on record for international travel, the U.S. State Department said in March. More than half of Americans’ search demand is for international destinations, the most since 2019, with Asia and Europe being the most sought-after locales, according to Hopper data.

    The U.S. dollar has also weakened in recent months relative to major currencies like the euro, making it more expensive to travel to certain areas.

    Domestic flights, rental cars have fallen from their peak

    Alistair Berg | Digitalvision | Getty Images

    Overall, travel costs are up 9% in the past year and 20% versus 2019, according to a NerdWallet analysis.

    The analysis — which includes airfare, hotels, rental cars, dining out and entertainment — compiles data in the most recent consumer price index, issued Wednesday by the U.S. Bureau of Labor Statistics.

    Hotel room rates were at record highs in March, said French of NerdWallet. Nightly rates are up 3% from February and 8% in the past year, according to CPI data.

    In dollar terms, the average person is paying about $100 a night for a U.S. hotel room today, according to Hopper data. Rates are especially high in popular leisure-travel destinations like Los Angeles and New York, where nightly rates are up 30% and 17%, respectively, from last year, Berg said.

    Inflation in the broad U.S. economy is falling gradually but remains high.

    Those general inflationary pressures feed into higher costs across the travel chain, Berg said. For example, higher worker wages, property costs, higher interest payments for businesses, even the little shampoo bottles in a hotel room or pretzels on an airplane, are passed on to consumers to some degree, she said.

    Not all aspects of travel are necessarily at record levels, though.

    Domestic airfare costs $281, on average, today — 12% lower than this time last year and about flat with 2019, Berg said. Prices had soared to record highs in 2022 amid high demand and operational issues among airlines.

    Renting a car is also about 9% less costly than it was a year ago, according to CPI data. Rental cars had been “one of the biggest stories” of pandemic-era travel, French said; costs soared as Americans took more road trips and a semiconductor shortage drove up car prices.

    How to score a good deal on travel

    Thomas Barwick | Digitalvision | Getty Images

    Here are some of the top ways Americans may be able to reduce the overall cost of a trip, according to travel experts.

    1. Be flexible with trip timing, location

    Being flexible with your plans is one of the major ways to save money, travel experts said.

    That flexibility can take many forms. For example, instead of Paris, perhaps consider a different city or region of France, said Markovich, the travel advisor. Going to Normandy might cost a traveler half what Paris would, she said.

    Or, weigh a trip to another area of Europe, like Scandinavia, which is “very underrated, beautiful and has a lot to offer — history, culture, culinary experiences and so on,” she said.

    These general principles apply across the globe. They may also yield an equally or even more rewarding experience, especially if your initially desired destination is overcrowded, Markovich said.

    “I like to suggest to clients to perhaps look at different options,” Markovich said. “Paris and Rome aren’t going away. They will be there [later].”

    Sunset in northern Norway.

    © Marco Bottigelli | Moment | Getty Images

    Being flexible on travel day and time of year can also make a big financial difference, French said. That might mean traveling during a shoulder season instead of high season for a particular area, or adjusting the days during which you’re traveling.

    Instead of traveling on a Friday or Sunday — which tend to be the highest-volume days — midweek is generally lighter-trafficked and less expensive for airfare, she said.

    Price “is more about the day you’re traveling, not the day you’re buying the ticket,” French said. “Even adjusting by a few days can make a big difference.”

    A service like Google Flights can help travelers compare dates, prices and how ticket costs compare to a historical average, French said.

    Sometimes, if flying a multileg journey — especially to Europe — you may instead be able to substitute a layover for a short train ride and save some cash, Markovich said. For example, instead of flying from the U.S. to Paris and then on to Geneva, you can fly to Paris and then take a train to Geneva, she said.

    2. Book early

    Your options and pricing are often better when planning ahead instead of waiting until the last minute, experts said.

    For example, the typical sweet spot for lower-cost international airfare is buying three to five months out from a trip, Berg said.

    “For summer, if you’re traveling internationally, you should really be booking right now,” Berg said.

    For domestic flights, the window is a bit shorter. Book by the end of April if traveling in June or July, and sometime by the first or second week of May if traveling in August, Berg said.

    I like to suggest to clients to perhaps look at different options. Paris and Rome aren’t going away.

    Sofia Markovich

    travel advisor and founder of Sofia’s Travel

    The one exception to buying well ahead: Big cities like Chicago, London or New York, which have ample hotels competing for business, Berg added. In these locales, hotel operators often discount rooms at the last minute; travelers who can be flexible on neighborhood and type of room might save as much as 25%, Berg said.

    One note of caution: That wait-it-out strategy may not work well in resorts or popular leisure destinations like Miami, Orlando (i.e., Walt Disney World Resort) or Nice, France, that may not have a huge supply of available hotel rooms, she added.

    3. Use your travel card benefits

    Certain credit cards — especially ones geared toward travelers — carry benefits that might help you save. (The caveat: You must use the card to fund your purchase).

    For example, some waive international transaction fees (generally around 3% per transaction) for charges abroad. Some have travel insurance benefits for trip delays or lost baggage. Others might carry rental car perks like auto insurance collision coverage.

    Further, for travelers who have credit-card points and miles, “this is definitely the best year to spend them,” French said. The points are generally more valuable (i.e., they can buy you more) right now because many travel operators like hotels haven’t yet reset their rewards programs to reflect current prices; they take some time to catch up, French said.

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