Categories
Investing

How Can a College Student Invest? Easy Tips

In my opinion college students are the best investors. They are constantly learning and not afraid to make mistakes. As you get a college education, you should be getting an education in building wealth. You don’t need tons of capital to start your investing journey: you just have to know how to do it.

This article will focus on the most popular option for college investors: online investing. If you are wondering how can a college student invest here are some tips to get you started.
If you want to get started investing the process is so much easier than you think. Great guide for beginners!

How Can a College Student Invest Starting with Stocks?

When you first start investing you will most likely want to start with stocks. The reason most first time investors start with stocks is that they are easy to relate to and they are widely discussed. You can start up a conversation about stocks with almost anyone and they should be able to voice at least an opinion. While some believe that there are certain best stocks for college students, I believe a general education on how to invest is important.

Establishing Your Online Investment Portfolio

According to financial experts, college investors have a significant advantage over other types of investors. They have time – lots of it. Considering the amazing powers of compound interest (i.e. a type of interest that earns additional interest), we can say that time IS money.

Experienced investors state that even a small amount of money, if invested properly, can reap huge profits in the future. That means you really have to think about building your personal investment portfolio while you are still in college.

Here are the things you have to do to jumpstart your career as an investor:

  1. If you are beginning with small capital (e.g. $25 to $50), find a broker that will accept the small account. Then, you can increase your overall capital by investing more money on a regular basis.
  1. You should calculate the total amount of money you are willing to risk. As a college investor, you have to keep in mind that investment always involves risk. Your personality and available funds are two of the most important factors that determine your “risk tolerance.”
  1. If you like to take risks, the possibility of earning large profits probably outweighs your fears of losing money. If you are risk-averse, on the other hand, you have to perform serious calculations regarding the exact amount that you are willing to risk.
  1. There are savings vehicles that guarantee profits and offer minimal risks. Here are some examples: certificate of deposits, federal savings bonds, student savings accounts approved by the FDIC, etc. Yep, I’m talking about saving accounts, CDs and other bank saving products. In general, these financial instruments provide the best protection against risks. However, they also involve the lowest potential for getting large profits. If you will invest in these instruments, your earning potential will be severely limited.
  1. If you can shoulder more risk and invest your money for a longer time period, you may try investing your capital in mutual funds or exchange traded funds (ETFs). These funds are composed of various securities such as bonds, stocks and commodities. Mutual fund corporations collect and manage the money of other people for investment purposes. Since these corporations employ financial experts, lots of college investors opt to put their money in mutual funds or ETFs.
  1. Prior to investing your hard-earned money in these mutual funds, you have to perform your own background research. Some mutual fund companies focus on particular industries (e.g. pharmaceutical, telecommunications, banking, etc.) while others use diversified portfolios (i.e. they make investments in different industries). You should research about the past performance of the company you will be investing on and the industries they work with. Remember: The past performance can in no way guarantee future results.

How Can a College Student Invest in Stocks?

As a college investor, once you become familiar with how the financial market works, you can start to invest in individual bonds or stocks. You can do this through the help of online brokerage firms. Individual investments, as the name implies, require the investor to personally manage all of the securities that he/she owns.

This might sound a bit scary.

However, there are lots of tools that you can use to simplify your investment decisions.

Almost all online brokerage firms provide their clients with reliable tools to monitor their investments. These days, lots of investment companies offer free accounts and minimal balance requirements. That means you can start your personal investment portfolio today.

You may think that investing is difficult or that it is hard to get started. That is not the case. Beginning your investing journey is as easy as opening an investing account. I used to have a few accounts with different brokers because I liked them for different reasons. Now I just have a few ETFs and stocks.

For example, I can buy stocks with an Ally Invest account. But I also like them because I can invest automatically without choosing stocks; you can open an account here with no minimum.

Lesson 1: What is a Stock?

A stock or a share, is an ownership interest in a business. A publicly traded business will use stocks, also called equity, to raise capital. As a stockholder, you own a piece of a business. You have the right to vote on certain changes, and you should be involved in the process. Figuring out what stocks to choose is the tough part. I remember when I made my first investments. I bought stocks based on what reporters were discussing on tv. And I lost horribly. After a few years, I learned how to research stocks and invest with the markets, not against them. I was a college student investing with extra cash and I enjoyed the process.

Lesson 2: How to REALLY Trade Stocks

Once you’ve placed a few trades and are confident in your abilities, it’s time to put some muscle behind your trades. You can beat the stock market if you make the choice to research your trades and take the time to follow the markets carefully.

Lesson 2b: Technical Analysis vs. Fundamental Analysis

This is where you have to do your homework and it’s really not that hard. Fundamental analysis is looking at the story behind the price changes whereas technical analysis is looking at the previous price changes to determine a future.

4 Tips for College Students Who Want to Invest

The following tips are recommended by financial experts. You should consider these before or while investing your money in the markets.

  1. Learn as much as you can – You can acquire investing knowledge and techniques just by reading reliable investing books and articles. The pieces of information you can gain from these resources can help you become a successful investor.
  2. Eliminate high interest debts – Debts (especially those with high interest rates) should be paid off first before making any investment. Risking your money in investments while having high interest loans can greatly worsen your financial condition.
  3. Select a brokerage firm – If you really want to make investments, you have to create a brokerage account. You have two options here: online firms and traditional firms. Online brokerage firms offer easy and computerized investment systems. However, traditional firms may provide personal advice and services.
  4. Diversify your portfolio – Investing all of your funds in a single company can result in financial disaster. Consider putting your money in various industries and investment vehicles. This strategy is called “portfolio diversification.” Even if you think an investment is a “sure thing” never put all of your eggs in one basket. A diversified portfolio is recommended.

6 Fears That Prevent You From Investing

It’s hopefully no secret that investing is the way to build wealth. Stock piling your money in a savings account won’t help you become a millionaire, or even help you achieve your financial goals. Unfortunately, there are a lot of concerns and excuses that young professionals like to throw around that keep them from investing. I hope to dispel a couple of them in this post and to help motivate you to look at investing!

1) Investing is for rich people.

How do you think most of those people got rich? Not by sitting around and working their 9-5 job! It only takes a little bit of money to get into investing, and anyone can start trading stocks online!

2) I just don’t have enough money to make it worthwhile.

It’s the principle of the matter; if you can learn to make a little bit of money, you can learn to make a lot of money!

3) I just don’t have time.

Let’s face it; what young professional does? The fact is, if you don’t purposefully make time for your finances, they’ll easily slip out of control for you. It actually doesn’t take all that much time to research and invest your money, plus there are now more and more affordable services online (Ally Invest, Learnvest) for you to pay a nominal fee to have your money invested.

4) There are too many options out there to invest in.

Well, you’ve gotta start somewhere. Try picking one good mutual fund or an index fund. This is a quick way to diversify your money and lessens the risk of just picking one stock.

5) I’m afraid I’ll lose my money.

That’s a fair point. Firstly, never put more money in than you could see decline. You should always keep an emergency fund as well as a nice pile of cash in the bank before you start investing. Secondly; no risk, no reward. You have to be willing to take a risk with your money in order to get the reward of actually making money. Thirdly; start small and safe with your investing. Don’t go investing in high tech companies that you don’t even understand their business model. Although you won’t ever eliminate the risk, you can certainly learn to mitigate it.

6) I already have a retirement fund, why should I invest more money?

Firstly, good for you for having a retirement fund! Take a look at your savings account right now, how much interest is it paying? I’d be surprised if you said more than 1%. Inflation in 2013 here in the US was 1.5% last year. That means that your money essentially lost some of its value just sitting in the bank.

Although you shouldn’t go out and invest all of your money in the market, investing more than $0 would be a good start.

By investing early, you’ll hopefully be able to enjoy years of compounding interest and will see you total net worth grow!

How did you start investing?

Originally posted 2019-04-20 08:00:27.

Categories
Investing

Review of Betterment How to Invest the Easy Way

This post includes links to Betterment, a trusted partner. If you choose to open an account, we receive compensation as an affiliate. View our full disclosures here.

Let’s face it, most people are lazy… including me and possibly you.

Yeah, we work at what is interesting to us, but otherwise, we’d rather keep things simple.

Here at Young Finances I’ve been trying to teach how to research stocks, build a portfolio and invest for retirement, but some people just hate finance.

And many Americans invest too little.

An Easy Way to Invest

Fortunately, I recently stumbled across a simple way to invest.

It’s called Betterment.com. Betterment.com was founded in 2008 as a simpler, smarter, safer way to invest.

The CEO and Founder John Stein said “I created Betterment because after years working in financial services I was amazed that no one made saving and investing money as simple as it ought to be.”.

How Does Betterment.com Work?

When you open an account at Betterment.com, you can deposit or set up recurring deposits from a checking or savings account.

Then the folks at Betterment will invest on your behalf into ETFs based on your portfolio allocation. Portfolio allocation just means where you want your money to go.

There are two options, stocks and bonds.

You don’t have to do any research or constant monitoring of your portfolio. They manage everything for you.

The only thing you have to do is decide whether you want a low risk portfolio or high return.

What Does it Cost?

I think this is my favorite feature of Betterment.

There are no hidden costs, fees, or minimum balances.

They simply charge a small percentage of funds under management. If you are familiar with hedge funds, you know that they may charge 2% and 20% fees for funds under management and performance.

Betterment.com charges anywhere from 0.25% to 0.40% based on how much you have deposited.

This fee covers everything. At most that’s 40 cents a year for every 100 dollars deposited and there is no minimum balance for a trading account.

Trading in a traditional brokerage account, even if you only made one trade a year, would cost you at least 5 bucks.

Is it Safe?

Betterment LLC is a Registered Investment Advisor with the SEC.

They have to report to the Securities and Exchange Commission and maintain fair dealings within the rules of the SEC.

Remember that it is an investment account not a savings account so your funds are not protected by FDIC insurance.

However, your investments are protected with SIPC (Securities Investor Protection Corporation) just like with any broker-dealer.

And Betterment.com has a systems and security team that works around the clock to protect your account from fraud or malicious activity. If you already have an account that you actively trade stocks in, then this is a great way for you to supercharge your long-term savings.

A good way to use this account is to set up automatic transfers each month.

Making investing automatic and inexpensive will allow you to keep more money in your pocket.

You could use Betterment for a travel fund. The same money that you would likely have sitting in a savings account earning a risk-free rate of pennies a day, could instead automatically invest.

I am no stranger to risk, so I would prefer have the opportunity to earn more for my money. But everyone is different, so choose what works best for you.

Remember that you can withdraw funds at anytime without fees, so it will give you flexibility as well.

Have you tried Betterment.com yet? Click here to open an account today!


Review of Betterment Easy Investing Account

5
LaTisha Styles
September 2018
“Easy way for young adults to invest in 5 minutes…”
“The Betterment brokerage account is an easy way to immediately build a diverse portfolio. Young adults can open an account in 5 minutes.”

Originally posted 2019-04-14 06:00:59.

Categories
Budgeting & Saving

How to Fix Bad Credit?

Wondering how to fix my credit myself? Or how to fix bad credit? There’s no doubt that living in the modern world requires credit. Yes, you can live without a credit card and survive on cash or cashback debit cards.

I know because I did it for over two years as I paid off credit card debt. But what I really wanted to do was improve my credit score immediately.

However, when you are ready to buy a house, you’ll need to get your credit straightened out. In this post I’ll discuss getting a credit repair service as well as what steps you need to take if you decide you want to fix your credit score yourself. You might even be able to fix your credit in just 6 months.

These steps are so easy. Perfect guide for do it yourself credit repair.

Related articles from our approved partners:

How Can I Fix Bad Credit Myself? – 6 MonthCredit Repair Guide

First, watch this video from my friend Dominique over at Your Finances Simplified. He’s going to tell you exactly how to fix your credit.

Watched the video? Good.
Feeling overwhelmed at the next steps?
Yep. I understand.
Let’s take this step by step.

Take a deep breath. People think that having bad credit is the worse thing that can happen. But just calm down. You are taking the first steps which puts you on the right track.

Remember, it’s just money.

No one is going to die. Take control and get back in the driver’s seat!

Fix 1: Check Bad Credit

The first thing you’ll need is your creditor information. Get the most recent credit card statements, loan balances, and installment loan reports along with addresses and phone numbers. I recommend printing everything old-school style. It’s going to come in handy later.

Fix 2: Get a Free Credit Report

Then, take a second to get your free credit report from AnnualCreditReport.com. Each year you are able to pull your credit report for free from the three providers Experian, Equifax, and Transunion.

Optional: Get Your Free Credit Score

You can check an approximation of your credit score for free at Credit Sesame one of our approved partners, but if you are trying to fix your credit, you probably already know your credit score looks a little like this….

bad credit personified

But that’s ok. We’re going to put you on the good foot.

Fix 3: Review your credit report for errors (highlight each error).

You’re getting ready to take charge and stop being a victim. Most people don’t even realize what they could get removed from their credit just because of errors.

What should you look for?

Wait a minute. So, you’re telling me you didn’t watch the video above?

Scroll back up for me right quick and you’ll find out exactly what you should look for.

Or keep reading…

Dispute incorrect names, addresses, SSN, and date of birth via the certified mail.

You will need supporting documentation and letters. You will have to write a dispute letter and include the specifics of the inaccuracies. You want to dispute inaccurate, erroneous, outdated, misleading, and unverifiable information in your credit reports.

Tired of being harassed by your creditors? Maybe you’d prefer that someone else handle all of this for you?

In that case, you might was to work with a credit repair company to improve your credit.


Are you ready to…

  • Remove bankruptcies to rebuild credit?
  • Permanently delete foreclosures and repossessions?
  • Erase debts that were in collection?
  • Completely get credit cards under control?
  • Get approved for loans?
  • Get the best financing on cars and homes?

In that case, check out our partner Lexington Law for more details on how they can help you clean up your credit report.

Finally, fixing your credit permanently also means creating good habits and getting out of debt.

How getting out of debt is like the MTV show, I Used to Be Fat.

I used to watch this TV show on MTV called I Used to Be Fat. The show documents young adults, usually high school seniors and high school graduates who want to lose weight before they start college. Each episode features a different teen. I absolutely LOVE this show. I like seeing the determination and perseverance of these kids, they are really focused on their goals. Most of them thought about quitting along the way but each one makes it to the end and they usually reach their goal.

I was thinking the other day about how the TV show is very similar to a battle with debt. When you’re in debt, it can feel like you’re carrying around a second person, experiencing frugal fatigue, or that you have a spare tire of bills around your waist. I know because I’m working on getting out of debt myself. I realized that there are 3 major points we can learn from the MTV show I Used to Be Fat when trying to take control of our debt.
debt

Improve Your Credit Step 1 – Give Yourself a Deadline

Before the teens even begin a weight loss program, their coach/personal trainer gives them a large tear off number calendar to place on their wall. It has the total number of days until their program completion date, and every day they rip off the next number.

It is a good idea, when you are paying off debt, to set a deadline for your debt-free date, like 6 months. Setting a deadline is a way of making your goal specific. Every time you look at that calendar or see that date it will push your brain consciously and subconsciously to make it to your ultimate goal, to reduce spending and get out of debt.

Improve Your Credit Step 2 – Check in Regularly with a Coach

Every week, the kids had a weigh in. Their personal trainer was making sure that they were on track with how much weight they were supposed to be losing at each stage in the process. Sometimes they were attempting to lose one pound a day! I never thought that was possible or healthy, but most of the teens actually accomplished it under the supervision of their coach.

If you really want to prioritize your goal of becoming debt free then you really have to give yourself check points. You can enlist the help of a friend or even a debt counselor to help you along the way. Having a good support system can make all the difference.

Improve Your Credit Step 3 – Get Rid of Old Habits and Create New Ones

When one of the teens was at a restaurant with her friends, she ordered a lean meal instead of the greasy french fries that her friends had. The personal trainer also taught her how to cook healthier meals so that she would be able to maintain her new lifestyle change.

Becoming debt-free is not a one-time goal. It has to be a lifestyle change. When I decided to start getting out of debt, I had to first evaluate why I was in debt in the first place. I had to eliminate my habit of impulse spending and replace that habit with a good habit. Now I impulse buy stocks and my portfolio loves it! It’s not easy to change a habit that took years to cultivate, but with a good support system, it is entirely possible.

Are you ready to make a change?

Some of you may be thinking, I’m still young, so why should I care about my credit score? Lots of people have debt and less than stellar credit, but they’re still enjoying a cushy lifestyle. As long as I’m able to buy the things that I want, why should I be concerned? The answer is simple. Life is easier when you have good credit.

Take a look at it this way. Landlords, employers, and lenders need to determine whether they can trust you, and they look at your credit score as an indicator of your financial reputation. You may not think credit affects you greatly, but it does. When you ruin your financial reputation (a.k.a. credit score), it will take you a long time to restore it.

Poor credit affects your ability to rent, buy a car, get a home loan, and even open up accounts. Creditors don’t want to work with people with bad credit because the risk of not getting paid is very high. How can they trust that you will pay them back if you haven’t even paid others? If you’ve already tarnished your credit, here are some tips to help you fix your credit score and reestablish your life.

Improve Your Credit Step 4 – Make Your Payments on Time

This may sound trivial, but we all know that money can be tight, and skipping payments on one bill can help pay for other expenses. But, timely payments are the biggest factor affecting your credit score. Keep a budget, and make sure you have sufficient funds to make your credit card and loan payments on time.

Improve Your Credit Step 5 – Consider Getting a Secured Credit Card

Obviously, it will be very hard to get a regular credit card if you have bad credit. If you don’t qualify for a credit card, you can get a secured card instead. This is when the bank gives you a credit line equal to the deposit you make. If used wisely, a secured card can help nurse your poor credit to better health.

Improve Your Credit Step 4 – Add an Installment Loan

You can improve your score quickly if you show that you can be responsible for both major kinds of credit: revolving (credit cards) and installment (mortgages, auto, student loans, etc.). If you don’t have an installment loan and feel you are ready to handle one, consider adding a small personal loan. Stay away from expensive finance companies and “teaser” deals, and use a company that reports the loan to all three credit bureaus.

Improve Your Credit Step 5 – Avoid the Minimum Payment Trap

Credit cards come with high interest rates. We all know how our $2,000 computer ended up costing $8,168 because we only made the minimum payments at 20% on our credit card. Ouch, that hurts! Keep constant payments on your credit card (and don’t run them up again) and your balances will drop.

Improve Your Credit Step 6 – Use Your Credit Cards Lightly and Check Your Limits

Even if you pay your bills on time and in full each month, having big balances can hurt your score. Try to limit charges to 30% or less of your card’s limit. Lenders typically like to see a big gap between how much you’re charging and your available credit limit.

Improve Your Credit Step 7 – Keep Old Credit Cards

Don’t close out old credit cards. The longer your credit history, the better. Leave the accounts open but once you pay them off, stop using them. Closed accounts tend to bring down your score.

Improve Your Credit Step 8 – Suspend Credit Inquiries

The more credit inquiries you have, the more your credit score drops. Fix your credit and wait a while before allowing your credit to be pulled again.

Improve Your Credit Step 9 – Get a Goodwill Adjustment

If you have been responsible about paying your credit cards on time, the lender may agree to erase a late payment from your credit history. For more troubled accounts, communicate with your lender about possible options to erase previous delinquencies. If the lender agrees, it will improve your overall record.

Improve Your Credit Step 10 – Check Your Credit Report for Errors

You can check your credit report without negative scoring (once per year, for free) with the three credit bureaus at AnnualCreditReport.com. Make sure to look for any mistakes that could be hurting your score. If you see something wrong, make the effort to have it corrected.

Improve Your Credit Step 11 – Seek Professional Help

If you are overwhelmed with debt and don’t feel you can handle the problem on your own, consider working with a professional debt relief agent. They can help you explore your options and give you guidance on this post

It’s very easy to ruin your credit, but it takes time to build it back up. No matter how bad your credit is, you can take steps to make it better.

Sometimes we mishandle our budget, and we spend more than we should. (You know that you shouldn’t have bought that expensive flat screen TV). And, sometimes we end up in tough financial situations because of things beyond our control. Whether you have experienced job loss, illness, or another type of financial disruption, it’s important to know that you can turn things around.

It may not be easy, but step by step, you will be able to fix your financial situation. Just don’t delay facing the issue. The longer you wait, the harder it is for you to recover.

Categories
Budgeting & Saving

4 Things You Should Save Up For Before Moving Out

You got your first taste of freedom when you went away to college, and you got to live either in the dorms or off campus apartments.

After graduation, the thought of moving back in with your parents was probably cringe worthy. But moving out on your own shouldn’t be a decision you jump into quickly. You’ll learn that being on your own is different than living away from your parents while you’re in school.

You no longer have the same safety net, including borrowing money from mom and dad, or using financial aid to hold you over between your part time checks.

Before you pack your things yet again, here are 4 things you should save up for before you move out on your own:

Your rent deposit

Depending on where you rent and who you rent from, you’ll probably have to put a deposit down to reserve your living space. In some cases it can be first and last month’s rent, and in other cases, it’s another fixed amount.

You’ll want this money set aside before you tell your parents you’ll see them later. I’ve rented several times, and two of those times, I’ve had to borrow money for my deposit from my mom, which was embarrassing.

Before you sign a lease or rental agreement, be sure to save at least two month’s worth of rent for your deposit. Yes, there’s a possibility to get that money back at the end of your living arrangement, depending on the conditions you leave your space.

However, there are some landlords who are notorious from keeping a large portion of your deposit, no matter how clean you leave your place. Don’t rely heavily on getting 100% of that money back.

Expect 50% just so you won’t be disappointed.

Rent reserve

Bottom line, things happen. Sometimes your check is shorter than you anticipated, or maybe an unexpected expense comes up.

When you’re renting, either from a private landlord or a property management company, you’ll soon learn how important the first of the month is. You always want to pay your rent on time, so you should save up for a backup rent resource.

This should be anywhere between one month to three months worth of rent.

This money will hold you over in rough times when you find yourself running short and the beginning of a new month approaching.

Home emergency fund

Although landlords and owners typically take care of repairs when you’re renting, there may be situations where something is not covered, and you’ll have to come out of pocket.

You should save money for home based emergencies. In my first apartment, our garbage disposal broke because a shot glass fell down the drain (don’t ask). It wasn’t covered in our rental agreement, but we were lucky enough to get the maintenance person to replace it for free.

This money can be used if you need to call a locksmith (they can be expensive), or fixing an after-hours emergency because the maintenance person was off the clock.

Another tip: get renter’s insurance! It’s good to have in case your items are damaged or stolen.

Moving expenses

When the day comes when it’s time for you to move, it can be stressful and expensive if you don’t plan ahead.

If you’re moving into a one bedroom apartment, you probably don’t need to hire movers. However, you might decide movers are within your budget. Check different companies’ hourly rates and minimum moving prices.

You should also consider the expenses you don’t typically think about, such as stocking your cabinets and refrigerator from scratch, utility deposits, and furniture delivery.

Living on your own is a very freeing accomplishment, but it’s independence at a cost.

You can move without saving for all of these things, but you’ll learn the hard way, like I did, that living away from home is a shock to your wallet.

You can deal with your parents for a couple more months while you save up for these things before packing your bags.

Originally posted 2014-08-27 06:00:42.

Categories
Young Finances

Should I Pay Off Student Loans or Invest?

As a recent college graduate, it’s likely that you have student loan debt. According to the National Center for Education Statistics,

“From academic years 2006-07 to 2010-11, the percentage of first-time, full-time undergraduate students at 4-year degree-granting institutions receiving any financial aid increased from 75 to 85 percent.”

With an average 4-year tuition cost of 21,000 dollars, and more and more students taking on student loan debt; a portion of your salary will go directly to paying of this debt. (Source)

However, if you research investment strategies, you’ll see the same advice over and over again. Start early and use time to your advantage.

Starting early puts the power of compounding on your side. That means more money. That also means that you are faced with a difficult question. Should you pay off student loans first or invest?

Before you can answer that question, you should evaluation your personal situation.

Do you have any other debt?

Do you have any other debt aside from student loans such as credit card debt, car loans, or medical bills? Even though your balance of student loan debt will typically be higher, these types of debt often have a higher interest rate. In order to save money on fees and interest. You should work on paying these off first. In addition, student loans give you more flexibility in terms of deferring payments whereas, waiting to pay credit card debt will most certainly affect your credit score negatively.

How much money do you have saved?

If you lack emergency savings, and you have an unexpected expense, you will cause yourself more stress than necessary. Emergency savings of 2-3 months of expenses as a bare minimum will help you manage most unexpected expenses such as hospital bills or car accidents. Take some time to build up an emergency savings fund first before you consider investing.

If you have all other debts in check and you have already set aside your emergency cash, now you can consider if it is better for you to pay off student loans or invest.

What types of loans do you have?

Typically, government issued loans have a fixed interest rate. If you do not have a fixed interest rate, then it would definitely be much wiser to pay off that loan as much as possible (or entirely) before you consider putting your money into investments. This is because when it comes to finances, figuring out what is certain and what is uncertain will help you determine where to put your efforts.

Are you ready to risk investing?

There is no such thing as a safe investment. The market can crash and businesses can go under at any time. Some investments are safer than others. When investing, there is a trade off between the risk you take and the reward you earn. The higher the risk becomes, more money will be returned on the investment. Only you can determine what types of risks you’re willing to take in your investing.

One final consideration is how you feel about your student debt. If you are the type of person who is uncomfortable with knowing that you owe someone a lot of money, or you have concerns about making that payment every month, then the answer should be obvious. Pay off your student loans.

There were many questions posed in this article. That is because there are many things to consider with a question such as this. You are the only person who can determine which choice is the correct choice. Evaluate your situation carefully, and make a decision that works best for you and causes you the least amount of worry.

This post was originally published as a part of the PNC Achievement Sessions helping you get smarter about money. Click here for more articles.

Originally posted 2014-08-20 06:00:42.

Categories
Investing

15 Totally Random Facts About People Who Retire With Roth IRA Money

“The best time to start thinking about your retirement is before the boss does.” Anonymous

Opening and investing in a Roth IRA will allow you to have a pretty sweet nest egg of tax free money once you are ready to retire.

Now that you are a member of the Roth IRA club, you should know a few totally random facts about people who retire or plan to retire with tax free money.

1) They are much more intelligent than those around them.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

2) They have seen the movie Office Space enough times to know exactly how they envisioned their final day at work.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

3) They enjoy either beaches, skiing, or golfing.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

4) They frequently take videos of themselves relaxing by the ocean.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

5) They enjoy drinking fruity drinks by the beach.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

6) They find math interesting and may not have a TI-83 graphing calculator but they’re pretty handy with a retirement calculator.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances
(Calculator Courtesy of Bloomberg)

8) They frequently ask, “what’s your number?” to start up a discussion on retirement savings.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

(Courtesy of ING)

9) They secretly love/hate either Dave Ramsey, Suze Orman, or Robert Kiyosaki.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

10) They’re not afraid of using travel reward credit cards to book flights around the world.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

11) They’ll travel to foreign countries and stop in a new restaurant just for the free fire show.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

12) They think the Roth IRA is a retirement account that is really awesome. Fo sho!

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

13) They know exactly how well balanced their portfolio is thanks to Personal Capital.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

14) They love the Roth IRA so much they’re willing to put on a wig to spread the word.

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

 

15) They’re vigilant. They know that this list skipped the number 7. They keep an eye on every dollar. Every dollar!

15 Totally Random Facts About People Who Retire With Roth IRA Money | Young Finances

This post is a part of a special Roth IRA series. See the other posts and videos by clicking over to The Ultimate Roth IRA Guide for Young Adults.

Originally posted 2014-08-14 05:00:02.

Categories
Investing

10 Important Roth IRA Rules. Number 7 is a Shocker.

By now you should know that the Roth IRA is a pretty important component to any healthy financial plan for a young adult.

If you missed the reasons why you can watch this video, or read this post.

Now it’s time to learn the basic rules for the Roth IRA. I’ve pulled the most important points together so you won’t spend time on what you don’t need to know. But if for some reason, you want all of the Roth IRA rules, check out IRS Publication 590.

How Much Can I Contribute to My Roth IRA?

1) If contributions are made only to Roth IRAs, your contribution limit generally is the lesser of $5,500 ($6,500 if you are age 50 or older), or your taxable compensation.
The contribution limits have the potential to change each year. In the last few years they have not changed, but you should double check if they have changed each year the new IRS rules are released.

When Can I Contribute to My Roth IRA?

2) You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year.
If you are contributing for the year 2014, you can contribute for 2014 even into April of 2015 when tax returns are due. This is a great way to catch up if you missed the opportunity to contribute.

What if I Want to Contribute More to My Roth IRA?

3) A 6% excise tax applies to any excess contribution to a Roth IRA.
Double check your contributions before the tax year ends. Request a withdrawal for any extra contributions you’ve made in order to avoid the excess contribution penalty.

Can I Change My Mind and Open a Roth IRA if I Already Have a Traditional IRA?

4) You can convert a traditional IRA to a Roth IRA. The conversion is treated as a rollover, regardless of the conversion method used.
In order to convert, you will have to pay taxes on the balance of the Traditional IRA. Those are ‘before-tax’ dollars and they have to be changed into ‘after-tax’ dollars.

Don’t worry.

The IRS will handle that little bit of magic for you.

10 Important Roth IRA Rules. Number 7 is a Shocker. | Young Finances

When Can I Withdraw from My Roth IRA?

5) You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA.

How Much Can I Withdraw from My Roth IRA?

6) Direct contributions to a Roth IRA (principal) may be withdrawn tax and penalty free at any time.
You are free to withdraw your contributions at any time. Even if you just opened your account last year or two years ago. No special forms needed. Just don’t withdraw earnings. Then the tax man cometh.

Is There a Way I Can Withdraw Roth IRA Earnings Penalty Free?

7) If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them.
If you withdraw contributions and earnings typically you are taxed, but if you take them in the same year you contributed, then it’s like the contributions never happened!

When Can I Withdraw All of My Money From My Roth IRA?

8) Generally, if you are under age 59½, you must pay a 10% additional tax on the distribution of any assets (money or other property) from your Roth IRA. Distributions before you are age 59½ are called early distributions.

Are There Any Exceptions? What if I Want to Buy My First Home?

8b) You may not have to pay the 10% additional tax if you are in one of the following situations.

  • You have reached age 59½.
  • You are totally and permanently disabled.
  • You are the beneficiary of a deceased IRA owner.
  • You use the distribution to buy, build, or rebuild a first home.
  • The distributions are part of a series of substantially equal payments.
  • You have unreimbursed medical expenses that are more than 10% of your adjusted gross income (defined earlier) for the year.
  • You are paying medical insurance premiums during a period of unemployment.
  • The distributions are not more than your qualified higher education expenses.
  • The distribution is due to an IRS levy of the qualified plan.
  • The distribution is a qualified reservist distribution.

How Long Can I Keep My Roth Account?

9) You are not required to take distributions from your Roth IRA at any age.
Want to leave your money in the account? You can do that. This rule works pretty nicely when you purchase an investment property inside of a Roth IRA.

What Happens to My Individual Retirement Account When I Die?

10) A beneficiary can combine an inherited Roth IRA with another Roth IRA maintained by the beneficiary only if the beneficiary either inherited the other Roth IRA from the same decedent, or was the spouse of the decedent and the sole beneficiary of the Roth IRA and elects to treat it as his or her own IRA.

Married and your spouse passes away? You can combine both Roth IRA accounts into one for the surviving spouse. A Roth IRA can also be passed down to a child as an inheritance. Now that’s how to begin building generational wealth.

And now you know the basics of the Roth IRA. Have you fallen in love yet?

Anything else you know or like about the Roth IRA?

This post is a part of a special Roth IRA series. See the other posts and videos by clicking over to The Ultimate Roth IRA Guide for Young Adults.

Originally posted 2014-08-13 06:30:43.

Categories
Investing

What is a Roth IRA and Why Do I Care?

Remember that time that Trace Adkins warned that little girl not to grow up too soon?

Don’t remember? Let me catch you up.

As the song begins, there’s a little girl that can’t wait to turn 18 and get out of her mother’s house. Then the hook comes with the warning. It goes a little like this.

She was staring out that window, of that SUV
Complaining, saying I can’t wait to turn 18
She said I’ll make my own money, and I’ll make my own rules
Mamma put the car in park out there in front of the school
Then she kissed her head and said I was just like you

You’re gonna miss this
You’re gonna want this back
You’re gonna wish these days hadn’t gone by so fast
These are some good times
So take a good look around
You may not know it now
But you’re gonna miss this

I have a similar warning, but it has nothing to do with popular country music.

If you don’t take the time to figure out how a Roth IRA can benefit you, you’re gonnna miss this chance for tax free money.

This one financial vehicle is often quoted as the best financial tool for young adults.

What is the Roth IRA?

IRA stands for Individual Retirement Arrangement, but the lettering is often used interchangeably with Individual Retirement Account or Individual Retirement Annuity because these are the two options for opening an IRA.

The Roth IRA was set up under tax law as a way for US citizens to save for retirement with tax benefits.

With the Roth IRA you have the ability to deposit funds today that have already been taxed.

Once you reach the age of eligibility to withdraw, as long as you satisfy the requirements, you do not pay taxes on withdrawals.

You can open a Roth IRA pretty easily with a bank, broker, insurance agent, or custodian licensed to accept retirement assets.

Remember that an IRA is an individual account. It cannot be opened as a joint account.

You can contribute to a Roth IRA within the Roth IRA rules and guidelines, which is covered in part two of this series.

Opening and contributing to a Roth IRA is one of the best ways to save for retirement and grow your assets.

Now that you know how to grow your assets, you can sing about your Roth IRA’s honky tonk, badonkadonk.

My Roth IRA Helps Me Grow My Assets, Honky Tonk, and Badonkadonk | Young Finances

Information courtesy of Publication 590 via the Internal Revenue Service.

This post is a part of a special Roth IRA series. See the other posts and videos by clicking over to The Ultimate Roth IRA Guide for Young Adults.

Originally posted 2014-08-11 06:00:00.