For many years personal investment brokers were touting the benefits of mutual funds because they were a managed investment vehicle in which you literally owned a small piece of a pie along with other members in the fund and you didn’t really need to know anything about market movement. You could simply look at how that particular fund performed in the last year, or the last number of quarters, and make an investment decision based on that. However, in recent years there is a new kid on the block that appears to be outperforming mutual funds and that would be an ETF, Exchange Traded Fund. If you are asking why, it might be wise to understand the key differences between the two types of funds.
Of Prime Importance – ETFs Are Subject to Much Lower Taxes
When investing in anything whatsoever, from real estate to stocks and bonds, you hope to make a profit. After all, that is the reason you are investing in the first place and this understanding is inherent in the definition of the word ‘investment.’ One of the biggest factors which can affect your bottom line is the amount of taxes you will end up owing to Uncle Sam. Without going into the particulars here, it is widely known in the financial sector that ETFs have a greatly lower tax liability than mutual funds and for this reason, all things considered, ETFs are considered to have the greater potential for profit of the two.
Both Are Managed Funds So Why Choose ETFs?
Especially important to new investors is finding an investment vehicle that is managed for them as they learn the ropes. Both mutual funds and ETFs are managed funds and so there will be an investment manager who oversees the fund in terms of where the group’s money will best be invested so as to yield the highest dividends. ETF Investing is said to have approximately the same performance but will have a higher yield primarily due to lower taxation. However, that is not the only reason why many new investors choose ETF managed funds that are indexed.
Mutual funds are traded only once each day but ETFs, like stocks, can be traded any time the market is open. This means that your funds manager can move investment money around as the market fluctuates, even within the course of a single day. This is also where you should take time to learn about active vs. passive management of your ETF fund because trading styles can affect your bottom line as well.
Which Is Right for You?
While both ETFs and mutual funds are, in simple terms, a group of investors pooling their money to buy into the market, there are differences involving how and when they are traded as well as in the amount of tax liability you will incur. There are other differences as well, but those are the two most prominent differences to understand before looking at which is better for you, personally. For most new investors, the simple fact that ETFs have a much lower (as much as 75%) tax liability all due to long term capital gains inherent in mutual funds is enough to sway their investing decision. Now it’s up to you to learn more about what each is and how they are traded. Only then will you know which is right for you.
Category: Personal Finance | March 7, 2017 | Comments Off on How to Make Money Off of Your Car
Maybe you’re in a financial jam and you need to figure out how to make some quick cash. Or perhaps you just want to bolster your current income with a side hustle. If you’ve got a car, there are several ways you can use it to make money.
- Sell It
This is the most obvious idea, and also the one that’s likely to make you the most money, at least in terms of a lump sum. Selling your car private party could earn you quite a bit, depending on your car’s current market value and if you’re willing to drop the price to sell it faster.
If you’re in need of a solid chunk of cash, this may be the way to go. The downside is that you won’t have a car anymore, but if you live in or around a city, this may not be as bad as you think. Public transportation is getting better and better, plus there’s rideshare options available, which coincidentally brings us to our next money-making venture.
- Drive for a Ride Sharing Company
Provided your car is new enough to meet the minimum requirements, driving on Uber, Lyft or another ridesharing platform is an excellent way to make money on your own schedule. Now, in all fairness, it’s important to mention that rates aren’t what they used to be. The days of making huge money through these platforms are mostly over. You can make some decent extra cash, or drive consistently to make a living. For the best results, you’ll want to drive during the most popular times, when rideshare services jack up their rates. This usually happens on holidays and around the times when bars are closing.
The great thing about driving for ridesharing platforms is that it’s also an excellent way to meet new people. This is especially helpful if you want to network. You can print out business cards and distribute them to anyone you drive who is interested.
- Be a Delivery Driver
Delivering products is an easy enough job that you don’t need experience to get hired, and besides a base rate for every delivery, there’s also the possibility of receiving tips. The traditional way of getting a delivery driver job is applying at a company that needs products delivered, such as a restaurant that offers food deliveries. While this is still a good option, you can also work for a company such as Postmates, which has an app that allows customers to order whatever they want and have it delivered to their door. This type of job is similar to working for a rideshare company, as you simply log in on the app and make yourself available, and then you can accept delivery requests.
- Get a Title Loan
If you’re in need of fast cash but you don’t want to sell your vehicle, then car title loans are another option. You go to the title loan company’s office, they appraise your car, and then they’ll issue you a loan based on the current market value of your car. You’ll typically have 30 days to pay back the loan plus any interest charges.
This is definitely a last resort option. The interest rates on title loans are almost always very high, often reaching an annual percentage yield (APR) of 300 percent. This does depend on your state, and some states, such as Florida, actually put a reasonable cap on title loan interest rates. The key with a title loan is that you borrow as little as possible and you make sure that you’ll be able to pay it back.
There are many ways that a vehicle in good condition can make you money. All you need to do is find the method that’s best for you and your financial needs.
Category: Personal Finance | January 23, 2017 | Comments Off on Managing Debt for the Sake of Cash Flow and Investing
Debt is a dirty word to many people. It requires that you pay money for the privilege of using other people’s money. It can tie up much of the income that a person earns. This income could better be used on his needs and his wants. Finance gurus like Dave Ramsey give some great plans regarding how to manage debt. Ramsey and others like the popular personal finance blogger Mr. Money Mustache rightfully claim that debt is actually an emergency akin to “a cloud of killer bees covering every square inch of (his) body.”
Debt Is Problematic
Debt can definitely become a problem when you have too much of it. More and more of your paycheck can go toward paying interest on money that you’ve borrowed. When the debt load becomes too high to handle, people can lose access to credit, and bankruptcy can become a definite possibility. There can be decent uses of debt like buying a home or getting an education that allows you to make more money in the long run. However, most other debt can be a real drain. Here are two major reasons to manage your debt.
- Debt Hurts Cash Flow
It’s very important to understand cash flow. Income is the money that comes into your pocket. An expense is money that leaves it. If your income exceeds your expenses every single month, this means that you have a positive cash flow. When a family finds itself with a positive cash flow, they have the ability to build up an emergency fund that can alleviate the need for taking on debt to take care of extraordinary expenses.
With no cash flow for building up a savings account, it can quickly become a really big problem when a tire goes flat or a roof needs replaced. These expenses can be even bigger problems without access to credit. A bit of a cushion between income and expenses every month can lead to a greater peace of mind and a more comfortable home life.
- Low Debt Allows For Investment
Lower debt payments are positive. The lower a person’s debt, the more positive her cash flow is likely to be. After building up an emergency fund, the excess cash flow can then go to investments. When it comes to investing, individuals and families can really start to build up wealth. Bonds and dividend stocks can pay interest or dividends that can add to the positive cash flow.
When you’re in debt, compounding interest works against you. A family who takes out a standard 30-year home mortgage of $100,000 at 5 percent interest will pay the bank nearly $5,000 the first year of the loan. A hypothetical borrower one this loan would only pay $120 back on the loan the first month. On the other hand, nearly $417 would go to the bank. That $417 is money that is gone forever and does nothing to improve one’s overall financial situation.
When you’re investing, compound interest works for you. The excess capital that you can put to work on a monthly basis adds to your net worth. It also improves the overall cash flow for your family. Each dividend or bond interest payment that you receive is actual cash that you can use either to buy more stocks and bonds or to pay monthly expenses like housing, gas, groceries or utilities. The snowball of cash flow and wealth is growing in your favor, rather than in the favor of the bank as is the case with debt.
Manage Debt To Build Wealth Over Time
Managing debt is one of the most important steps that an individual or a family can take toward building up a positive financial situation. Excessive debt can hamper the ability to build wealth over the long term. Those with low debt and positive cash flows can see their wealth and income grow over time through smart investing, and the time to start on this process is now.
Category: Personal Finance | December 13, 2016 | Comments Off on Tips For Saving Money When You’re Young
Saving money is not meant to be reserved exclusively for the golden years of one’s life. In fact, as years go by, it is becoming increasingly more difficult to have a comfortable retirement savings amount without starting well before you actually retire. With this in mind, saving money while you’re young doesn’t mean that every penny is held back. Implement a few of these tips now and you can find yourself with an easier time saving throughout your life.
Eating out is not as cheap as it used to be. There was a time when having a meal out, alone or with a family, cost about as much as it would to make a nice meal at home. With the rising costs of almost everything, convenience foods and restaurants have started to cost more in kind. Now it is far more cost effective to prepare meals at home rather than to purchase one while you are away. Consider packing a lunch to take with you to work for instance. Doing this saves you considerable money over the course of a month, which can add up to big savings over a year’s time.
Out On The Town
As a young person, social engagements are a priority for most. You do not need to skip out on the night with your friends, but it would be wise to consider the ways that you can spend a little less. Most establishments offer a happy hour daily, some of which last for more than just the one hour. Knowing where these places are and what times to get there can really save you some serious money, regardless of how often you and your friends hit the town.
You might find that when you are researching ways to save your money, articles and blogs might suggest going for the cheaper versions of things that you would otherwise go brand name for. While this is great advice for things like groceries and toiletries, it is actually the opposite for big electronic purchases that will inevitably be made. You will actually save more money in the long run by spending a little more right now. Phones, laptops, tablets and televisions are a few of the items that you really don’t want to go second rate for. The reason being is that the more cheaply made and low quality the item is, the less likely it is to last as long as its higher end competitors or offer the functionality that you actually want. For example, Lenovo makes high quality computers. Spending your money on a product that is deemed among the best means a long standing warranty and the lesser likelihood of spending more money replacing the product before you are personally intending to upgrade.
Snip Those Coupons
In both the physical world and on the internet, coupon codes are becoming a fast way for people to save really big. Before you make any purchases (for really anything and everything), you should do a quick search to see if there are any available printable coupons or promotional codes that you can use to get a little lower of the overall cost. Sometimes even just getting something shipped for free can be a big difference in the end.
These are just a few ways that you can make a dedicated stand towards saving money while you are young. There are countless ways to keep putting money back for the rainy days or retirement, but these listed options should be a good way to get you started.
PPI or Payment Protection Insurance is protection that is included with mortgages, credit cards or loans. It actually protects your payments for one full year in the event you lose your job, become disabled, or any event that renders you unable to make payments. It is a valuable form of insurance which helps protect loan repayments in the event of unforeseen circumstances.
One of the most common questions with those that have PPI is how far back can you claim PPI? Many people that ask this question have had PPI mis-sold to them and want to make PPI claim from their loan providers. The answer to this question is somewhat detailed since it can be a complex process and it is highly recommended that you consult an expert claims management company to file a claim. They can advise you whether you are actually entitled to a refund even before you file a claim.
There is a 6-year time limit for many PPI claims however this time limit was set by the FOS or Financial Ombudsman Services. This is the amount of time that lending institutions including banks must retain records that are in direct relation to any financial agreement such as a mortgage or loan that you have with them. Those records are kept on file the entire time you are repaying your loan. What people don’t know is that only when the loan is repaid or the policy has ended or is terminated does the 6-year time limit come into play. The 6-year time limit is not recognized while a loan is active or being repaid.
If you have an active loan or mortgage meaning you are still making payments the 6-year time limit is not in effect. Only when a loan has been repaid, is inactive or has been terminated is the 6-year time limit in effect. This is one of the most common misunderstandings that many people have when considering how far back they can go to claim PPI.
So the answer to the question how far back can you claim PPI actually depends on the time limit on your loan or mortgage plus the 6-year time limit.« go back — keep looking »