Categories
Investing

Simple Steps to Become a Millionaire

“I want to be a millionaire, so freaking bad.” You might have been thinking it, but Bruno Mars sang it first. Many people strive to become a millionaire. In fact, there is even a day dedicated to those people. This year Be a Millionaire Day is May 20th. On this day we answer the question, “Who wants to be a millionaire?” with a resounding shout, “Me! I do!” While it may seem difficult to save a million dollars, there are a few tips you can use today to make it to millionaire status sooner rather than later.

Steps to Become a Millionaire

Start a Savings Account

If you plan to reach the Millionaire’s Club by saving money, then you must first open a savings account. In order to accumulate one million dollars within 30 years, you will need to save around $750 per month at a 4% interest rate.

Use this calculator to determine your required savings rate.

Lately, interest rates have been pretty low on traditional savings accounts. Instead of simply shopping at your local bank, try an online bank. Then, look into a certificate of deposit. A certificate of deposit or CD is a way for your money to earn more. CD’s sometimes have higher rates than traditional savings accounts. A Discover Certificate of Deposit is great option with flexible terms from 3 months to 10 years and you can open your FDIC insured CD account with as little as $2,500.

Begin Investing

Let your money work for you. Investing your dollars gives each dollar a job and that job is to earn more money. When you invest, each dollar has the ability to earn a return. If you decide to invest by purchasing 100 shares of stock in a company, and those shares rise in value, your money just earned more money!

However, you have to be careful because if those shares drop in value, then so does your investment and you could lose money. Investing is not as safe as saving in an FDIC insured savings account. However, over the last ten years, investments in the broad market index, as measured by the S&P 500 have averaged 8.3% per year.

Mind the Gap

The gap separates a potential millionaire from a person that will never make it. What’s the gap? The gap is the difference between how much you earn and how much you spend. That unspent portion is available for saving and investing. Growing the gap will allow you to accelerate your millionaire status. How large should that gap be? Well that depends on how soon you want to become a millionaire. A larger gap means faster millionaire status.

“The amount of money you have has got nothing to do with what you earn… people earning a million dollars a year can have no money and… People earning $35,000 a year can be quite well off. It’s not what you earn, it’s what you spend.” -Paul Clitheroe

Here are a few examples.

Patrick and Jenny are 25 and both earn $50,000 per year. After taxes they each earn a take home pay of $3,000 per month.

Patrick keeps his expenses low and saves $1,500 per month or 50% of his take home pay.

Jenny enjoys shopping, dinners out, traveling, and attending concerts. She saves $300 per month or 10% of her take home pay.

In ten years, Patrick has saved a total of $220,876 with an interest rate of 4%. If he maintains the same saving rate he will become a millionaire by the time he is 55.

In the same ten years, Jenny has saved a $44,176 at a rate of 4%. If Jenny lives long enough, she will become a millionaire by the time she is 88.

Ultimately, becoming a millionaire is a simple process that requires diligence and persistence. Ready to become a millionaire? Open a savings account, begin investing, and create a budget that allows you to spend less and save more.

This post was created as part of the Discover partnership program.

Originally posted 2015-05-20 10:00:28.

Categories
Investing

What You Don’t Know About Scottrade

You may think you know all about the online discount broker Scottrade from the plethora of Scottrade review posts that are out there, but there’s always something you don’t know.

Don’t believe me?

Well, you don’t know what you don’t know. 😛

Inexpensive Trades for Young Adults

You might already know that Scottrade offers $7 trades online and advertises that you can open an account with just as little as $2,500 dollars.

But did you know that you can maintain an account with $2,499 dollars? Yes, with Scottrade there is no minimum balance and no fee on balances below 2,500 dollars.

So open an account and start your automatic deposits.

You’ll build it up to 2,500 dollars in no time.

  • iPhone, Android and Blackberry mobile trading
  • No transaction fee IRAs
  • No account maintenance fees
  • No inactivity fees
  • Watch lists
  • Real Time Streaming Quotes
  • Local Branches so you can talk to a human in person
  • Over 3,000 no transaction fee mutual funds

Referral Program

Did you know that you can earn free trades when you refer your friends?

Once you have opened an account with Scottrade, click on the “Refer Someone You Know” link to automatically send an email to a friend.

When they open an account you and your friend get three free trades.

No Transaction Fee Mutual Funds

Are you looking for a broker where you can trade mutual funds without paying a fee?

Scottrade offers over 3,100 mutual funds with no transaction fee. Not sure which mutual fund to choose?

Use their mutual fund screener to explore your choices, including load funds, no-load funds, no transaction fee funds (NTF) and more.

Gain Loss Tax Center

The tax center was put into place to help you when it is time to file your taxes.

When you sell your stocks, you will have a gain or a loss. The tax center helps you figure out your tax basis for the trade so you can file your taxes easily.

The drawback

Everything is not all stars and roses. Here is the one drawback to having a Scottrade account. They do not offer dividend reinvestment. Dividend reinvestment is when your dividends are automatically put back in to the stock you own. There is no trading fee to purchase these incremental shares. But unfortunately, Scottrade does not offer this. In my opinion, all of the good outweighs this one negative.

Update: 6/30/2013

Scottrade recently announced a major improvement in their services.

They now offer a Flexible Reinvestment Program.

In this program, you can use dividends to buy other stocks and exchange-traded funds commission free!

A lot of brokerage firms have dividend reinvestment programs for their clients, but Scottrade’s program takes it one step further. In a typical DRIP, dividend-paying equities can only be reinvested back into that equity.

As mentioned earlier, with Scottrade’s Flexible Reinvestment Program, dividends flow into a program balance, or pool.

You can then tap that pool to buy up to five securities – none of which have to be the securities that contributed the dividends – commission free.

Most stocks and ETFs are eligible in the program.

From Scottrade..

The added element of flexibility is something our clients were looking for, and it gives clients the choice to reinvest their dividends however they want.

AWESOMENESS

Ok, now we are down to the best part of becoming a Scottrade customer.

The knowledge base.

They have live local events so you can learn how to place a trade, how to get started with options and more. All of these events are taught by a licensed representative.

Here is what you can expect to see once you login to your account.

How to Open a Scottrade Account

  1. Open your Scottrade account online or by faxing in the paperwork.
  2. Fund your account via ACH, check, brokerage account or wire transfer.
  3. Print, sign, and mail the account agreement.
  4. Choose stocks, mutual funds, or other assets to purchase.

Originally posted 2015-05-05 10:00:26.

Categories
Investing

December Investing Challenge Results and 2015 Challenge Begins!

It’s January! And time for the final update on my Grow Your Dough Throwdown portfolio. You may remember that at the beginning of 2014 I entered a challenge to grow $1,000 in the markets. I decided to take a combined approach using passive and active methods.

For my active portfolio, I invested $400 with Loyal3. For my passive portfolio, I invested $600 with Betterment. Here is my post that details the stocks that I purchased.

Even though it is not an even split, I decided to call my portfolio the Gemini Portfolio. It’s a little of this and a little of that. Sometimes balanced and sometimes not as we Gemini’s can be.

The passive side lagged a bit during the year because I had some bond funds in the ETF portfolio. After I updated my allocation, the passive portfolio started keeping up with the markets nicely.

The active side performed poorly for the first few months of the year but then it started kicking butt and taking names! Choosing the right individual stocks helped boost my portfolio performance and I finished the year up 9.71%. If you are an email list subscriber then you know what my annual return goals are. And I’m happy to say that in 2014 I made it!

December & Year-End Portfolio Results

December Investing Challenge Results- Gemini Portfolio | Young Finances

What’s Next?

Up next is the 2015 Grow Your Dough Throwdown! This year I’m adding a $500 dollar portfolio with Motif Investing. I also moved all of the cash from last year into my Loyal3 account and I purchased a few more stocks.

What is Motif?

Motif Investing is an online brokerage firm offering an intuitive platform that empowers individuals to invest in real-world ideas through motifs. A motif is a carefully researched and balanced portfolio of up to 30 stocks reflecting a specific idea or trend. Examples include Renter Nation, Caffeine Fix and Seven Deadly Sins. Motifs are fully customizable—you can add and delete stocks, and change their weightings. You’ll pay just one low commission – and no management fees. And, you’ll get important diversification both within a motif and across motifs.

Motif Investing offers brokerage accounts as well as no-fee retirement accounts, including Roth IRAs, Traditional IRAs, and Rollover IRAs.

Motif Investing also provides a social network where its members share and discuss investing ideas. Ask for feedback. Find out what other investors have to say about the motifs that may interest you. You can invite people you trust most to join your own investing circle. Share only what you want, with the people you’ve chosen, or share nothing at all. It’s all up to you. And you’re always in control.

Investing Challenge Tracker

To make it easier to keep up with all of the challengers and our portfolio performance, the guys at Motif created a handy widget that will display the leaders. A quick but VERY IMPORTANT note. All investing involves risk and past performance is no indicator of future results. As I always say DO YOUR RESEARCH before investing.

Grow Your Dough 2.0 - Motif Leaderboard | Young Finances

Use this link to open a Betterment account and start investing today.

Disclaimer

All investing involves risk, past performance is not indicative of future results. There is no guarantee that I will make money. I could lose everything. When mentioning how I plan to invest, it should not be taken as a recommendation or investing advice. You should consult your personal financial advisor to determine what type of investing suits your personal situation and risk tolerance level. There can be substantial risk of loss in trading stocks. You should, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. All transactions in the financial markets are risky. No information I present is intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor.

S&P and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), a part of McGraw Hill Financial. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Past performance of an index is not a guarantee of future results.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index.

Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise.

Originally posted 2015-01-13 06:00:49.

Categories
Investing

TradeKing Review Online Trading

There are numerous options for those looking to begin the process of online trading. Few, however, offer the range of features exhibited by discount brokerage firm, TradeKing – and no other site provides these features at such an affordable cost.

Site Overview

TradeKing is an online broker site that specializes in the online trading of stocks, bonds and other options. The site ranks #1 among online brokers for site usability, so it offers a comfortable starting point for trading beginners. With excellent customer service, managed portfolio options and educational resources, the site is comprehensive in its overall features, as well.

Competitive Pricing

Cost is always a deciding factor when choosing the right brokerage site, and TradeKing offers the most competitive price point in the industry. TradeKing charges only $4.95 per trade, a steal when compared to fees at other well-known brokerage sites. Scottrade costs $7 per trade, while OptionsXpress costs $8.95. Both E*Trade and TD Ameritrade charge $9.99 per trade.

TradeKing’s flat-fee trade rate adds to the site’s user-friendliness and simplicity. While regular stock trades cost the flat $4.95, options trades cost $4.95 plus $.65 per contract. The site is not ideal, however, for penny stock traders given than stocks less than $2 per share still cost the flat rate plus a penny per share.

Tools

TradeKing stands out from other sites due to its extensive site features, including research reports, interactive charts and technical analysis tools. The site understandably boasts the fact that Barron’s ranked TradeKing 4 out of 4 stars for a solid eight years in a row in the company’s annual review of online stock and option brokers.

Education Center

TradeKing’s community education center is especially helpful for those starting out in the business of stock trading. Beginners can easily ask questions to more experienced members or choose to scour forum discussions to learn the ropes based on previously posted topics. Either way, a plethora of helpful information and potential mentoring opportunities is found through the site’s forums and available resources.

TradeKing LIVE

TradeKing LIVE is a streaming platform that is readily offered free of charge to TradeKing customers who perform more than one trade per year or maintain a minimum balance of $2,500. The platform features streaming quotes in real time, all customizable to your own unique market preferences.

Customer Service

TradeKing is perhaps best known for two things: affordability and impressive customer service. SmartMoney Magazine even ranked TradeKing #1 for customer service in 2008, 2010, 2011 and 2012. The site also boasts a live chat feature that connects customers immediately with a customer service representative. This feature is available Monday through Friday from 8 A.M. to 6 P.M. Eastern Standard Time. Representatives are also available via email and phone.

Summary of Features

Positives

  • Affordable
  • Flat-rate fees
  • Accessible customer service
  • User-friendly site
  • Resources for beginners
  • Streaming market platform
  • No account minimum

Negatives

  • Penny stock fees
  • Mutual fund fees
  • Limited research options

Overall, TradeKing is an ideal site for newbies in the stock-trading world. With remarkable customer service and lower trade costs than its competitors, TradeKing is a great place to start when venturing into online trades.

Originally posted 2014-12-27 06:00:54.

Categories
Investing

E-Trade Stock Broker Review

When seeking personal finance solutions, E-Trade is one of the first companies that comes to mind, thanks to a national ad campaign and lengthy track record (the company was formed in 1982). E-Trade was one of the first online brokerage services, initially aimed at more lucrative investors willing to pay high fees to be one of the first to access online investing tools. Today, it is an option for investors large and small.

Pricing and Services

E-Trade still caters to premium investors, while also offering accessible low-cost packages to young professionals seeking to hone their personal finance abilities. E-Trade’s $9.99 standard commission per stock trade is average compared to competitors. Where E-Trade separates from the pack is via its several exclusive services, including 1,300 no-fee mutual funds, nearly 100 commission-free ETFs and a variety of banking services, which is ideal for convenient fund transfers.

Some E-Trade services are lower in cost compared to competitors, such as a commission-associated mutual fund of choice being priced at $19.99 instead of the more common $50 fee at other sites. Also, E-Trade ranks among the most accessible in terms of the minimum deposit required to open an account at just $500. A margin-enabled account requires a $2000 minimum deposit.

E-Trade’s cost is particularly attractive for active traders; investors who make between 150 and 1,500 trades per quarter qualify for a reduced commission rate of $7.99, which is a substantial $2.00 off the normal fee. If you make more than 1,500 trades per quarter, you can also negotiate an even bigger discount.

Strengths

In addition to providing convenient banking services and having low initial minimum deposits, E-Trade has various research tools, which include:

  • Investing Insights – provides investing ideas influenced by trends such as relevant investing topics and market trends.
  • Analyst Research – Commentary from respected sources like Credit Suisse, S&P and Thomson Reuters are provided, with in-depth analysis and comparisons of stock options.
  • Community Activity – E-Trade users can directly ask financial pros questions on current trends or recent market events.
  • Stock Screener Tools – the ability to screen stocks via E-Trade allows users to discover stocks worth investing in based on their personal criteria.

 

In addition, E-Trade offers access to foreign markets – Canada, France, Germany, Hong Kong, Japan and the UK, in particular. It’s a nice perk for anyone more specialized in foreign markets.

Weaknesses

Although there are certainly users who have no issues with E-Trade’s customer service, a one-star rating on Consumer Affairs after over 240 reviews suggests there are some issues, mostly citing poor communication by customer service. Still, it’s worth keeping in mind that most banking institutions have poor reviews online, so E-Trade is not too different than its major competitors in this regard.

Another potential criticism of E-Trade is that it is not accessible to every type of trader, in terms of frequency. Those who trade very infrequently or rarely may find lower fees elsewhere, but for average or above-average traders, E-Trade offers a great platform where you can lower commission rates through increased activity. Some fees – like broker-assisted market orders being an extra $25 per trade – are irritating, but for the large part E-Trade is very fair in terms of pricing.

Overall, E-Trade is a recommended option with a variety of tools and platforms that make up for some higher costs.

Originally posted 2014-11-20 13:00:00.

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.