Even though I had this “exclusive access” it took me a while to start investing in alternative asset classes.

The Securities and Exchange Commission states that as an accredited investor, I possess a level of sophistication that equips me to craft a riskier investment portfolio than a non-accredited investor. While this might not be universally true for everyone, in my case, I had demonstrated the financial resilience to bear more risk (see barbell investing), especially if my investments took an unforeseen downturn.

One of the intriguing aspects I discovered was that investment opportunities for accredited investors aren’t mandated to register with financial authorities. This means they often come with fewer disclosures and might not be as transparent as the registered securities available to the general public.

The underlying belief is that my status as a sophisticated investor implies a deeper understanding of financial risks, a need for less disclosure of unregistered securities, and a conviction that these exclusive investment opportunities are apt for my funds.

On a personal note, as a practicing CFP®, I haven’t always worked with accredited investors. Early in my career, I didn’t quite grasp the allure. However, as time went on, I began to see the broader spectrum of investment options available to accredited investors.

As I learned more the clearer it became why this realm was so sought after. The variety and potential of these exclusive opportunities were truly eye-opening, reshaping my perspective on the world of investing.

Introduction to Accredited Investors

An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities. They are entitled to this privileged access because they satisfy one or more requirements regarding income, net worth, asset size, governance status, or professional experience.

The concept of an accredited investor originated from the idea that individuals or entities with a higher financial acumen or more resources are better equipped to understand and bear the risks of certain investment opportunities.

Historically, the distinction between accredited and non-accredited investors was established to protect less experienced investors from potentially risky or less transparent investment opportunities.

Regulatory bodies, such as the U.S. Securities and Exchange Commission (SEC), have set criteria to determine who qualifies as an accredited investor, ensuring that they have the financial stability and sophistication to engage in more complex investment ventures.

Criteria for Becoming an Accredited Investor

To be classified as an accredited investor, one must meet specific criteria set by regulatory bodies:

Best Investment Opportunities for Accredited Investors

Here’s a rundown of some of the top investments for accredited investors…

1. Fundrise

• Minimum Investment: $500

• Best for Newbie Investors

Fundrise has revolutionized the real estate investment landscape. By democratizing access to real estate portfolios, it allows individuals to invest without the complexities of property management or the need for vast capital. The platform’s innovative approach provides exposure to a traditionally lucrative, yet often inaccessible, sector of the market

Through Fundrise, investors can access a diversified range of properties, from commercial ventures to residential units. The platform’s expert team curates these portfolios, ensuring a balance of risk and reward. With its user-friendly interface and transparent reporting, Fundrise has become a top choice for many venturing into real estate investments.

How It Works

Investors start by choosing a suitable investment plan on Fundrise. Once invested, the platform pools the funds with other investors and allocates them across various real estate projects. As these properties generate rental income or appreciation in value, investors receive returns in the form of dividends or appreciation.

Pros & Cons

2. Equitybee

• Minimum Investment: $10,000
• Best for: Experienced Investors

Equitybee offers a unique platform that bridges the gap between private companies on the cusp of going public and potential investors. This innovative approach provides a golden opportunity for investors to tap into the potential of startups and other private firms before they make their public debut.

The platform’s primary focus is on employee stock options. By allowing investors to invest in these options, they can potentially benefit from their appreciation as the company grows. With a vast array of companies, from emerging startups to established giants, Equitybee presents a diverse range of investment opportunities.

How It Works

Investors browse available stock options from various companies on Equitybee. Once they choose an option, they invest their funds, which are then used to purchase the stock options from the employees. If the company goes public or gets acquired, the investor stands to gain from the increased value of these stocks.

3. Percent

• Minimum Investment: $500

• Best for Novice Investors

Percent stands as a beacon in the vast sea of the private credit market, illuminating a sector often overshadowed by traditional investments. This burgeoning market, valued at over $7 trillion, consists of companies borrowing from non-bank lenders. Percent offers a unique vantage point into this market, allowing investors to diversify their portfolios beyond typical stocks and bonds.

The allure of Percent lies in its ability to offer shorter terms and higher yields, combined with investments that are largely uncorrelated with public markets. This makes it an attractive proposition for those looking to step away from the volatility of traditional markets.

How It Works

Upon joining Percent, investors are presented with a plethora of private credit opportunities. After selecting an investment, funds are pooled with other investors and lent out to companies seeking credit. As these companies repay their loans, investors earn interest, providing a steady income stream.

4. Masterworks

• Minimum Investment: $10,000

• Best for Novice Investors

Masterworks paints a vivid picture of art investment, blending the worlds of finance and fine art. Traditionally, investing in art was a luxury reserved for the elite. However, Masterworks has democratized this, allowing individuals to buy shares in artworks from world-renowned artists.

The platform’s strength lies in its expertise. From authentication to storage, every facet of art investment is handled meticulously. This ensures that investors can appreciate both the beauty of their investments and the potential financial returns.

How It Works

After registering on Masterworks, investors can browse a curated selection of artworks. They can then purchase shares, representing a fraction of the artwork’s value. Masterworks take care of storage, insurance, and eventual sale. When the artwork is sold, investors share the profits based on their ownership.

5. Yieldstreet

• Minimum Investment: $15,000

• Best for: Advanced Investors

Yieldstreet stands at the intersection of innovation and alternative investments. It offers a smorgasbord of unique investment opportunities, ranging from art to marine finance. For those looking to venture beyond the beaten path of traditional stocks and bonds, Yieldstreet presents a tantalizing array of options.

The platform’s allure lies in its curated selection of alternative investments, each vetted by experts. This ensures that while investors are treading unconventional grounds, they’re not stepping into the unknown blindly.

How it Works

Investors begin by browsing through the diverse investment opportunities on Yieldstreet. After selecting their preferred asset class, their funds are pooled with other investors and allocated to the chosen venture. Returns are generated based on the performance of these assets, be it through interest, dividends, or asset appreciation.

6. AcreTrader

• Minimum Investment: $10,000

• Best for Newbie Investors

AcreTrader, as its name suggests, brings the vast expanses of farmland to the investment table. It offers a unique opportunity to invest in agricultural land, combining the stability of real estate with the evergreen nature of agriculture. With the global population on the rise, the value of fertile land is only set to increase.

The platform meticulously vets each piece of land, ensuring only the most promising plots are available for investment. This rigorous process ensures that investors are planting their funds in fertile ground, poised for growth.

How It Works

Investors peruse available farmland listings on AcreTrader. After selecting a plot, they can invest, effectively owning a portion of that land. AcreTrader manages all aspects, from liaising with farmers to ensuring optimal land use. Investors earn from the appreciation of land value and potential rental income.

7. EquityMultiple

• Minimum Investment: $5,000

• Best for: Experienced Investors

EquityMultiple is a testament to the power of collective investment in the real estate sector. By leveraging the principles of crowdfunding, it offers a platform where multiple investors can pool their resources to finance high-quality real estate projects. This collaborative approach allows for diversification and access to projects that might be out of reach for individual investors.

The platform’s strength lies in its curated selection of real estate opportunities, ranging from commercial spaces to residential properties. With a team of seasoned real estate professionals at the helm, EquityMultiple ensures that each project is vetted for maximum potential and minimal risk.

How It Works

Upon joining, investors can explore a variety of real estate projects. After committing to a project, their funds are pooled with other investors to finance the venture. Returns are generated through rental incomes, property appreciation, or the successful completion of development projects.

8. CrowdStreet

• Minimum Investment: $25,000

• Best for: Advanced Investors

CrowdStreet stands as a pillar in the commercial real estate investment domain. With its vast experience and industry connections, it offers a platform where investors can tap into prime real estate projects across the nation. From bustling urban centers to tranquil suburban locales, CrowdStreet provides a diverse range of investment opportunities.

The platform’s expertise ensures that each project is meticulously vetted, offering a blend of potential returns and stability. For investors looking to delve into commercial real estate without the hassles of property management, CrowdStreet is an ideal choice.

How It Works

After registration, investors can browse a myriad of commercial real estate offerings. Upon investing in a project, CrowdStreet manages the investment, providing regular updates and ensuring optimal project execution. Investors earn returns based on the project’s performance, be it through rentals, sales, or project completions.

9. Mainvest

• Minimum Investment: $100

• Best for Newbie Investors

Mainvest offers a refreshing twist in the investment landscape, focusing on the heart and soul of the American economy: local businesses. From quaint cafes to innovative startups, Mainvest provides a platform where investors can support and benefit from the growth of small businesses in their communities.

The platform’s community-centric approach ensures that investments are not just about returns but also about fostering local economies. For those looking to make a difference while earning, Mainvest presents a unique opportunity.

How It Works

Investors can explore various local businesses seeking capital on Mainvest. By investing, they essentially buy a revenue-sharing note, earning a percentage of the business’s gross revenue until a predetermined return is achieved.

10. Vinovest

• Minimum Investment: $1,000

• Best for Novice Investors

Vinovest uncorks the world of wine investment, offering a blend of luxury, history, and financial growth. Fine wines have been a symbol of opulence for centuries, and Vinovest provides a platform where this luxury becomes an accessible investment.

With a team of wine experts guiding the way, the platform ensures that each wine is not just a drink but an investment poised for appreciation. From sourcing to storage, Vinovest handles every facet, ensuring the wine’s value grows over time.

How It Works

After signing up, investors set their preferences and investment amounts. Vinovest then curates a wine portfolio based on these preferences, handling sourcing, authentication, and storage. As the wine appreciates, so does the investor’s portfolio.

11. Arrived Homes

• Minimum Investment: $100

• Best for Novice Investors

Arrived Homes offers a fresh perspective on real estate investment, focusing on the charm of single-family homes. While skyscrapers and commercial complexes often dominate real estate discussions, single-family homes offer stability, consistent returns, and a touch of nostalgia.

The platform’s strength lies in its focus. By concentrating on single-family homes, it offers investors a chance to tap into a stable real estate segment, benefiting from both rental income and property appreciation.

How It Works

Investors browse available properties on Arrived Homes. After selecting a property, they can invest in shares, representing a portion of the home’s value. As the property is rented out, investors earn a share of the rental income. Additionally, any appreciation in property value benefits the investors.

12. RealtyMogul

• Minimum Investment: $5,000

• Best for: Novice to Experienced Investors

RealtyMogul stands tall in the commercial real estate investment landscape. It offers a platform where diversification meets opportunity, presenting a range of commercial properties for investment. From bustling office spaces to serene residential complexes, RealtyMogul provides a plethora of options for investors to expand their portfolios.

The platform’s prowess lies in its dual approach. Investors can either dive into non-traded REITs or make direct investments in specific properties. This flexibility ensures that both novice and experienced investors find opportunities that align with their investment goals.

How It Works

Upon joining RealtyMogul, investors can choose between REITs or direct property investments. Their funds are then channeled into these real estate ventures. Returns are generated through rental incomes, property sales, or successful project completions.

The Future of Accredited Investing

The world of accredited investing is dynamic and ever-evolving. Emerging trends suggest a shift towards democratizing investment opportunities, with regulatory bodies considering more inclusive criteria for accredited investor status. This shift aims to balance the need for investor protection with the recognition that financial acumen can come from experience and education, not just wealth.

Furthermore, technological advancements are playing a pivotal role. The rise of blockchain and tokenized assets, for instance, is creating new avenues for investment and might reshape the landscape of opportunities available to accredited investors.

As the line between traditional and alternative investments blurs, the future promises a more integrated, inclusive, and innovative environment for accredited investors.

The Bottom Line – Top Investments for Accredited Investors

Understanding the role and opportunities of accredited investors is crucial in the modern financial landscape. While the distinction offers privileged access to unique investment opportunities, it also comes with increased risks and responsibilities.

As the world of investing continues to evolve, potential accredited investors are encouraged to stay informed, conduct thorough research, and seek professional advice. The realm of accredited investing, with its blend of challenges and opportunities, promises exciting prospects for those ready to navigate its complexities.

The post 13 Best Investment Opportunities for Accredited Investors appeared first on Good Financial Cents®.

Nakamoto launched the Bitcoin network just a year later and began mining the currency— an estimated 1 million bitcoins were mined in the early years.

The creator(s) of this first-of-its-kind asset developed the cryptocurrency in response to the Great Recession of 2007-2009, spurred by a distrust of the traditional banking system and concerns about its stability. 

Given the recent values of Bitcoin, it’s hard to believe the currency first started trading on exchanges in 2010 at under $0.10. Since then, it’s experienced astronomical growth and some pretty wild price swings.

At its most recent high, one bitcoin was worth over $64,000—a far cry from trading for pennies in its earliest days. 

Whether you’re thinking of investing in Bitcoin or you’ve held this cryptocurrency for several years, it’s fun to look back at this groundbreaking asset’s history. Read on for insights on Bitcoin milestones, historical returns, and how its returns compare to those of other assets.

Bitcoin Performance Milestones

Since being created, Bitcoin has experienced several milestones. Here’s a look back at some of the most significant moments in the short history of this cryptocurrency:

• In March 2010, Bitcoin began trading on the now-defunct Bitcoin Market, one of the first-ever cryptocurrency exchanges.

• A Florida man named Laszlo Hanyecz bought pizza with 10,000 bitcoins in May 2010, making it the first time anyone used the currency to purchase something.

• In June 2011, Bitcoin saw its first significant price spike, climbing to a value of $29.60 (up from just $0.30 in January) before declining again later that year.

• The second half of 2013 marked another major spike—from $68 on July 4th to $1,237 on December 3rd before declining again.

• One of Bitcoin’s most significant increases happened in 2017, with its value surging from around $1,000 at the start of the year to $19,345 by mid-December. 

• The Bitcoin hype cooled in 2018, resulting in significant declines—its lowest value was around $3,232 in December of that year.

• In 2019, Bitcoin saw another spike, hitting $13,813 on June 26th before declining.

• After seeing modest ups and downs through October 2020, Bitcoin’s value began to surge again. It hit an astronomical high of over $68,000 in November 2021.

• Bitcoin dropped by over 75% in 2022

• Bitcoin continues to hover around the $30k mark in 2023

Bitcoin Total Return (10 Year, 5 Year, 3 Years, 1 Year)

While Bitcoin isn’t exempt from the volatility cryptocurrencies often experience, it’s delivered some impressive returns over the years. Here’s a look at Bitcoin’s annual returns from 2010 to 2022:

And here’s a look at monthly returns, if you feel like getting a deeper dive:

While Bitcoin has experienced some wild monthly price swings and a couple of years where its value has declined, you can see that its declines have been eclipsed by some incredible gains. Now let’s explore how Bitcoin’s value has changed over 10, 5, 3, and 1 years.

Bitcoin 10-Year Return

Let’s say you bought one bitcoin on August, 3rd 2013, for $1,106.75, its price at the time. If you held that one bitcoin until August 3rd, 2023, it would’ve been worth $29,310.44, and your total ROI for the 10 years would be 2,546.8%.

Bitcoin 5-Year Return

We’ll also assume you purchased one Bitcoin for this example. A single bitcoin was valued at $965.31 on August, 3rd, 2018, and its value climbed to $29,310.44 by August 2023. Using our calculation above, your total ROI for those five years would be 294.1%.

Bitcoin 3-Year Return

A single bitcoin was valued at $11,246.20 in August 2020, and its value climbed to $29,310.44 at the end of 2021. Your total ROI for those three years would be 160.6%.

Bitcoin 1-Year return

If you purchased a single bitcoin in August 2022, you would’ve paid around $22,626.83. In one year, that value would’ve increased to $29,310.44. Your total returns for that year would be 29.54%.

Bitcoin Multi-Year Returns Compared

How Much You’d Have If You Invested $1,000 in Bitcoin 10, 5, 3, or 1 Year Ago

Instead of buying one bitcoin, let’s say you decided to invest $1,000 into Bitcoin. Here’s a look at how this $1,000 investment would’ve performed if you bought and held your Bitcoin for 10, 5, 3, and 1 years.

While Bitcoin’s earliest investors would have benefitted the most from buying and holding their Bitcoin, those who’ve invested recently also fared well.

How Does Bitcoin Compare to Other Asset Classes?

If you’re curious how Bitcoin returns compare to those of other asset classes, here’s how its annual and total returns compare to gold, real estate, and the S&P 500.

(Spoiler alert: Bitcoin outperformed all three assets by an enormous margin.)

Bitcoin vs. Gold

If you compare Bitcoin’s returns to gold’s returns, you’ll notice a stark difference. Bitcoin has an average annual return of 1,576% and a total return of 18,912% from 2010 to 2022, while SPDR Gold Shares had an average annual return of just 5.14% and a total return of 61.67% over the same period. 

Bitcoin vs. Real Estate

Let’s see if real estate fared any better compared to Bitcoin. The cryptocurrency delivered a whopping 1,576% average annual return and an 18,912% total return from 2010 to 2021, while the Vanguard Real Estate ETF had an average annual return of 13.49% and a total return of 161.91% over the same period.

So, real estate saw slightly higher returns than gold, but it still didn’t come close to Bitcoin’s returns.

Bitcoin vs. S&P 500 (Stock Market)

The S&P 500 didn’t fare too much better in its head-to-head with Bitcoin. From 2011 to 2023, the Vanguard S&P 500 ETF delivered an average annual return of 15.74% and a total return of 173.14%. While those numbers aren’t too shabby, Bitcoin’s average annual return for the same period was a whopping 819%, and its total return was 9,012%.

How Does Bitcoin Compare to The Best Performing Stocks?

We’ve analyzed how Bitcoin compares to gold, real estate, and the stock market, but how does it stack up against some of the best-performing stocks? Here’s how this popular cryptocurrency stacks up against major companies like Amazon, Apple, Berkshire Hathaway, JP Morgan, Microsoft, Visa, and Walmart.

We looked at the average annual and total returns for each asset. This data assumes you bought the asset in 2010 and held it until 2023. 

The Bottom Line – Bitcoin Historical Returns

While some investors may be skeptical about cryptocurrency, citing concerns over market volatility and a high risk of loss, Bitcoin’s performance over time paints a rosy picture. With its longevity and astronomically high returns, Bitcoin has been worth the risk for many investors—especially early adopters. 

Of course, historical performance doesn’t guarantee future returns. So if you’re considering investing in cryptocurrency, only invest what you can afford to lose.

The post Bitcoin Historical Annual Returns (10 Years, 5 Years, 3 Years, 1 Year) appeared first on Good Financial Cents®.

I had recently returned from Iraq, and my wife and I were hunting for a couch for our new home.

We found one that was on sale. We both thought it was perfect.

Okay, it was a red couch, and she thought it was perfect. I personally didn’t understand why anyone would buy a red couch, but apparently, I didn’t understand home decor. Nonetheless, the wife’s vote trumped mine.

When the sales clerk asked how we wanted to pay, suggesting we take advantage of their great in-store financing, an exciting thought ran through me – “We can pay cash.”

A year prior, that wouldn’t have been an option. Not even close!

But now we found ourselves in a very exciting position; we were financially stable.

I can’t say that I 100% believed we were financially stable at that point in our lives, but it definitely was a turning point for us.  Not only could we pay cash, but we also had money left over.

People often spend most of their lives chasing financial stability. But is it possible that you may already be financially stable?

Here are 27 signs that you’re financially stable – already! And if you’re not, you can start working to make these a reality in your life.

1. You Never Overdraw Your Checking Account

Even if you have overdraft protection with your checking account, you still prefer to keep a cushion in your account rather than relying on the protection. And you absolutely, positively, never bounce a check!

Part of it has to do with your aversion to paying overdraft fees. But mostly, it’s because you have a sufficient amount of money that you can keep more in your checking account than you need in a typical month.

2. You Don’t Lose Sleep Over Finances

When you go to sleep at night, you tend to sleep deeply and peacefully. And if anything does keep you awake, it’s usually not related to financial matters.

This is a non-financial benefit that people who are financially stable have as a result of their strong financial position. This isn’t to say that you don’t have any money worries at all, but rather that they are not significant and never without some sort of reasonable solution.

3. You Use Credit Cards for Convenience and Rewards – But Never Out of Necessity

I currently have 4 credit cards in my wallet and use them almost every day. <gasp!>

How could you, Jeff? You’re a Certified Financial Planner!

Yes, I am, but here’s the catch: I pay them off every month. As a bonus, we have carefully selected credit cards that collect reward points which we use for airline miles. Boo-yah!

Many people who are not financially stable have a bad habit of using credit cards as a way to extend their paychecks – to buy the things that they really can’t afford.

That’s not an issue in your life!

If you do use a credit card, it will strictly be for convenience, such as being able to make a fast payment online. Or you will do it because your credit card company provides you with rewards for making purchases.

4. You Don’t Worry About Losing Your Job

This is one of the very best indicators that you are financially stable. It’s a sad state of affairs that the vast majority of people in the US live from paycheck to paycheck. The thought of losing their job, even for a month or two, would be a financial disaster.

Since your finances are in balance, losing your job isn’t something that you worry about, at least not the potential for ruining your finances.

5. You’re Never Late With Payments

This is partly because you always have plenty of money to pay your bills, but also because of your preference for being ahead of your finances rather than behind.

This is also a big reason why you don’t lose sleep over your finances. When you go to bed at night, you know that your bills are paid and all is right in the world.

6. You Pay Your Bills Ahead of Time

Part of the reason why you’re never late with payments is that you pay your bills ahead of time. In fact, you probably pay them as soon as they come in. You do this because you don’t like bills to linger – and simply don’t like owing anybody anything.

7. People Ask Your Opinion About Financial Matters

One of the biggest outward signs that you are financially stable is when people ask your opinion about financial matters. They’ll do this because they see you as someone who has “figured it out,” at least when it comes to money.

When this happens, take it as a supreme compliment. It means that your financial stability is so obvious that others can see it and will ask your opinion as to how to achieve it.

8. You’re Generally Happy With Your Financial Situation

This doesn’t mean that your financial situation is completely perfect, but rather that your finances are in balance and you are satisfied with the direction that things are heading.

Even if you have financial challenges over the horizon, you have some sort of plan set up to deal with them before they come. That’s all anyone can do, and you’ve already got it covered.

9. You Have No Ugly Credit Card Balances

It’s not at all unusual for people who have high incomes and a large number of financial assets to also carry great, big, ugly credit card balances. That’s not a game that you play.

You absolutely refuse to carry credit card balances that can’t be paid off relatively quickly. And that keeps you from paying high interest rates and from losing sleep at night.

10. You Finance Your Cars Over Five Years or Less – If You Take Loans at All

Even though there are car loans available as far out as seven years, you keep your car loans to five years or less. Or you pay cash for your cars, or you pay them off ahead of schedule.

That means that you won’t live your life carrying a perpetual car loan payment. That also means that when you buy a new car, it’s very likely that you’ll be making a larger-than-average down payment on it, which is why you take shorter loans in the first place.

11. You Contribute a Double-Digit Percentage of Your Pay To Retirement

Many, many people contribute nothing more than the minimum percentage that they need in order to get the maximum employer match on their retirement contributions.

But that’s not a game that you play.

You recognize the importance of aggressive retirement investing as a critical part of becoming financially stable. You either make the maximum retirement contribution that you’re allowed, or your contribution is well into double-digit percentages.

And because you do, early retirement is actually a legitimate consideration in your life.

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12. You Don’t Feel Guilty When You’re Out For Special Occasions

Everybody has episodes where they spend a little bit too much money. This can happen on special occasions, such as birthdays, holidays, vacations, and other celebrations. But for you, these events are not budget-busters.

You have enough flexibility built into your budget that you can accommodate the occasional spending spree without having too much money at the end of your paycheck.

13. You Can Afford to Buy the Things You Really Want

If you really want something, you go out and buy it. Your finances are strong enough to enable you to get the things that you really want.

This isn’t at all about impulse spending on an ongoing basis, but rather about having enough room in your budget to get the things that you really want. In that way, money doesn’t rule you.

14. Recreational Spending Doesn’t Appeal to You

There are all kinds of coping devices in life, including bad habits like hard drinking, drug use, and overeating. For some people, the vice is recreational shopping.

Spending money enables them to lose themselves and their troubles, at least for a time. And often, recreational spending is a way of rebelling against their impaired financial situation.

That’s not something that you engage in, nor do you ever feel the need to do so. You’re happy with your finances in general, and you don’t need to spend money to feel good about yourself.

15. You’re a Natural Saver

This is one of the key habits to becoming financially stable, and it’s one that you mastered a long time ago. You’ve been doing it so long and so well that you are virtually a natural saver.

You can do it with a sense of purpose and without ever feeling any pangs of self-denial.

16. You’re Generous With Money When it Comes to Charities or Helping Others

You have certain charities that you support on a regular basis, and you’re generous to the people around you who are in need.

You’re able to do this because you never sense that giving money to others in need will in any way negatively impact your financial position. You give with ease, and you feel good about it.

17. You’re Confident About Your Future

This is one of the best indications that you are financially stable. Your finances are sufficiently under control that you feel confident about your future.

This is because you’re easily able to live on what you earn, you have substantial financial assets that you’re adding to on a regular basis, and you carry little if any, non-housing debt.

The future tends to be kind to people in that situation, and that’s where your confidence comes from.

18. Your Net Worth Grows Significantly From Year to Year

Your net worth tends to grow each year, and it does so by fairly large amounts. This isn’t about doubling your money each year, but rather about achieving fairly consistent increases in your net worth.

Those increases come from a combination of adding to your investments through regular contributions and solid investment returns.

19. You Have Substantial Equity in Your Home

Another of the major markers of being financially stable is that you have a large amount of equity in your home.

This is either because you made a large down payment on the home when you bought it, or because you’re paying extra principal on your monthly payment as a way to accelerate the payoff of the mortgage. It may even be a combination of both.

That large equity means that you don’t worry about falling property values, at least not the way people in low- or no-equity situations do.

20. You Consistently Live Beneath Your Means

You consistently live beneath your means because you are well aware of the fact that all the things that make someone financially stable start with having extra room in your budget for savings, investments, or paying off debt.

This isn’t a struggle for you either, but something that makes sense and comes easily to you.

21. A Large Pay Cut Wouldn’t Destroy Your Life

Yet another of the benefits of being able to live beneath your means is that the prospect of taking a large pay cut wouldn’t destroy your life.

Because you are already living on less than you earn, taking a pay cut at work or transferring to a lower-paying position won’t represent a mortal blow to your existence.

22. The Cost of Sending Your Kids to College Doesn’t Scare You

You’re looking forward to your kids going to college. You’re well aware that the cost is outrageous, but you’re making plans so that you’ll be prepared when the time comes.

This can be a combination of specifically saving money for each child through a college savings plan, streamlining your own finances so that you’ll be able to pay a large chunk out of your income, or working to help your children get scholarships that will contribute toward the cost.

23. You’re Totally Unconcerned With Keeping Up With the Joneses

In your world, being financially stable is its own reward. You have no need to acquire the trappings of the good life that others around you are working so hard to attain.

That keeps you from spending money that you don’t have and going into debt. And that leaves you more money for savings and investments, which increases your financial stability even more. No toys or trophies are needed!

24. You Give 100% on the Job – Financial Concerns Don’t Distract You

Just as you sleep like a baby because you are unconcerned with financial troubles, you’re able to give 100% on your job. You aren’t weighed down by the emotional troubles of having unpaid bills or outsized debts to pay.

And because you can live on less than you make, you don’t waste time feeling sorry for yourself because you’re not making enough money to pay your bills.

That frees you up to do the job that needs to be done and makes it more likely that you will get the bigger raises and promotions when they come around.

25. You Pay Your Credit Cards in Full Each Month

Since you don’t use credit cards as an extension of your paycheck, you simply pay the balance in full each month as the bill comes in. There are no lingering debts in your life and none of the worries that are attached to them. Every month, you have a clean slate going into the next month. See #3 again. 

26. You Could Survive For Months Without a Paycheck

You have sufficient liquid savings that you can live for months without a paycheck if you have to. You won’t need to tap long-term savings, like retirement plans, either. And bankruptcy won’t be even a remote consideration since you have very little debt.

The fact that you can live without a paycheck for an extended period of time even makes it easier to do your job. You can work without concerning yourself with the threat of being laid off or fired. And you never feel trapped by your job.

This is one of those circumstances where being financially stable feels so good!

27. You Feel in Control of Your Finances – Never Dominated by Them

Overall, you have a strong sense that you are in control of your finances. This means that when it comes to money, you have choices. And since money creates options in life, you have more than the average person.

This is what being financially stable is all about and what its ultimate goal should be. Being able to do what you want, when you want, and on your own terms.

This is a long list, and if you’re not feeling some of these right now, you can work to get yourself into a position where you will. It’ll take a bit of effort, but that effort will be sooo worth it!

The Bottom Line – What It Takes to Be Financially Stable

Achieving financial stability requires a combination of disciplined habits, informed decision-making, and a proactive approach to managing one’s finances.

By understanding the importance of budgeting, saving, investing wisely, and living within our means, we can pave the way for a secure and prosperous future. It may not always be an easy journey, but the rewards of financial stability are well worth the effort.

The post 27 Signs You Are Financially Stable appeared first on Good Financial Cents®.

But, how do you do that if you only have $100 to get started? That’s not a lot of capital, but it’s definitely better than nothing.

Also know that most “regular people” who’ve built real wealth started with small sums, kept on investing, and watched as their money snowballed from there. Not only that, but the act of learning how to invest is often all it takes to change someone’s mindset about money, and to get them on a path to earning more cash in other ways.

Having $100 in the bank might not seem like a lot, but it may be all you need to change your future for the better. If you’re wondering how to invest $100, how to flip $100, and how to invest and make money daily, you’re in the right place.

Can $100 Really Make a Difference?

Learning how to invest can feel like you’re playing a game of “catch-up” at first, and that’s especially true when you only have small sums of cash to start the process. After all, we’ve all heard of people who have made millions of dollars investing in the right stocks, crypto, or non-fungible tokens (NFTs) at the right time, or coming up with an awesome business idea nobody had ever thought of before.

However, you really do have to change your mindset if you want to flip $100 and turn it into substantial sums of money. The reality is, there are plenty of situations where you could have turned $100 into thousands, tens of thousands or even hundreds of thousands had you invested at the right time.

Don’t believe me? The chart below shows how much $100 would be worth today if you invested approximately 10 years ago:

Investing $100 into Bitcoin a decade ago would have seemed crazy at the time, yet a single Bitcoin purchased in 2012 would have set you back just $5.29. If you were forward-thinking enough to get in the game early on, imagine how many Bitcoins you could have purchased and what they might be worth today.

Remember the 12-year-old who made NFTs and used them to build a crypto wallet worth over $1 million dollars? How about the teenager who made millions on Bitcoin after investing what he had at the time ($1,000) in 2011?

These stories are absolutely real, and they happened to real people who had the courage and foresight to create something or invest at just the right time.

Can You Really Become a Millionaire With $100?

If you don’t want to make risky bets that may or may not pay off, you can still become a millionaire by investing relatively small sums of money over time. The key to winning at this game is investing in assets that can provide a fairly steady return you can count on, and making sure your contributions are consistent and automatic.

For example, it’s totally possible to invest $100 per month into a combination of index funds, ETFs, and individual stocks and then turn the money into more than $1 million dollars over the long term.

You may have to wait decades to become a millionaire, but it’s still totally possible. The chart below shows how long you would have to invest and the type of return you’ll need to hit the $1 million mark during your lifetime.

What Should You Do With $100?

What it really boils down to is this: How do you want to spend the $100 you have right now, as well as the hundreds (or thousands) of extra dollars you’ll have over the next few years?

For the most part, you have three main options to choose from. You can:

• Spend the Money: Buy “stuff” you want, go out to eat at your favorite restaurants, and have a blast as long as you can. YOLO!

• Save Your Money: Stash your cash in your emergency fund, which is hopefully held in a high-yield savings account. You can also use your money to pay down debt.

• Invest for the Future: With some discipline and forward-thinking, you can also begin investing your extra $100 or more for the future.

While you may have to give up a few things you want today to start investing $100 every single month, your future self will thank you. Not only that, but you’ll get used to stashing away $100 per month if you give it enough time, and you may not even miss the money at all.

Investing for Quick Profits vs. Long-Term Gains

As you decide how you want to invest your $100, you’ll also need to think about whether you want to invest for quick profits or for the long term. The fact is, there are a ton of ways to flip $100 and turn it into a few hundred dollars or even $1,000 or more over a few days or a few weeks. However, you can also get in the habit of investing to build long-term wealth, which is a totally different ballgame.

Examples of how to flip $100 include:

• Searching for Garage Sale or Thrift Store Finds You Can Sell at a Profit

• Investing Into High Value Sneakers You Can Flip

• Flipping Sports Cards After Buying Them for Less Than They’re Worth

• Offering a Service on Social Media, Such as Washing Cars or Painting

As you decide whether you want to flip $100 or invest for the long haul, it’s important to remember that time is money. For the most part, flipping items for profit requires you to exchange time for money, so this work isn’t passive at all.

Investing for the long haul is the opposite of that because it helps you build long-term wealth in a way that is totally passive. With the best passive investments, you don’t have to do any work outside of contributing more money to your account every month.

Examples of how to invest for the long term include:

• Buying index funds, ETFs, and other long-term investments aimed at long-term growth

• Pouring small sums of money (even as little as $1) into fractional shares of popular stocks

• Investing in crypto or NFTs and HODLing (holding on for dear life)

• Investing in real estate with the goal of creating long-term profits

How to Invest $100 Starting Today

Here’s a secret about investing most people don’t know:

It’s not really about how much you invest at first. What matters most is that you actually get started and do something.

Whether you’re trying to figure out how to invest $100, or you need to know how to invest $1,000 dollars, the key to getting ahead is making a decision and sticking with it.

Ready to invest $100? The ten strategies below are the perfect place to start.

1. Round Up Your Savings

Risk Level: Low

Acorns is an app that automatically “rounds up” your change when you make a purchase so it can invest that money on your behalf. When you sign up for a plan, you can automatically grow your wealth and your savings. You can also even choose among professionally curated portfolios that might work better or worse based on your goals and risk preferences.

How It Works:

Plans cost $3 or $5 per month depending on whether you want a personal plan or a family plan. Both plans automatically round up your purchases and invest your spare change, and they come with added benefits like checking and fee-free access at more than 55,000 ATMs nationwide.

Where to Get Started:

To get started, open an account with Acorns and download the mobile app. Pick your plan and you can begin rounding up your purchases and investing the difference at a lightning-fast speed. The top-tier Personal and Family plans are an excellent place to stash your initial $100 investment. Learn more through my Acorns app review.

Who It’s Best For:

Acorns is ideal for anyone who wants help saving money automatically, then investing that money into expertly chosen investments.

2. Dabble in Fractional Shares

Risk Level: Varies

Fractional shares are nothing more than a “fraction” or a “slice” of an individual stock. As a result, this type of investing lets you use $100 to buy stocks and other investments you couldn’t otherwise afford. You can also diversify your $100 investment across many different stocks and other assets that would work well in your portfolio.

How It Works:

You can buy stock in a company even if you don’t have enough money to buy an entire share. It’s called fractional share investing. Instead of buying one share of a $100 stock, you could invest $10 in 10 different stocks.

Where to Get Started:

Many online brokers make it easy to open an account and get started. This platform even lets you invest into BTC, ETH, LTC, DOGE and other cryptocurrencies with 0% in fees and a minimum starting investment of just $1.

Who It’s Best For:

Many online brokers are a great option for investing in fractional shares since there are no commissions and no minimum balance required to get started. Fractional share investing can be a good option for any investor who wants to diversify as much as they can.

Open an Account

• Commission-free investing
• Allows fractional shares in stocks, ETFs
• Small minimum investment: $100

3. Invest in Real Estate

Risk Level: Varies

Investors who poured their money into real estate have done incredibly well over the last decade and especially the last few years. In fact, the National Association of Realtors (NAR) just reported that the median price for a single-family home rose 15.7% nationally from May 2022 to May 2023. That’s a pretty sweet return for just a single year, and this rate of increase comes after a decade of rising prices among all types of housing across the board.

That said, the real estate industry has a fairly high barrier to entry since you need tens of thousands of dollars to begin buying up properties. That’s why I typically suggest investing in real estate through other means instead, including Real Estate Investment Trusts (REITs).

How It Works:

By investing in Real Estate Investment Trusts (REITs), you get exposure to real estate without having to buy individual properties or deal with the grunt work of being a landlord. Once you pick a fund and invest your money regularly, your investment balance can grow based on real estate profits that are realized over time.

Where to Get Started:

Fundrise is my favorite platform for investing in Real Estate Investment Trusts (REITs). However, this company specifically sells private equity REITs, or “eREITs,” which is a trademarked term. You can get started with Fundrise with as little as $10, and the starter account comes with auto-invest and dividend reinvestment features.

Who It’s Best For:

Fundrise is best for individuals who want to invest in real estate without dealing with the hassles involved in buying individual properties. There are also many other popular REITs to choose from, including options from brokerage firms like Fidelity and Vanguard.

Invest in Real Estate

• Low minimum investment – $100
• Diversified real estate portfolio
• Portfolio Transparency

4. Buy Index Funds

Risk Level: Moderate

An “index fund” is a type of mutual fund or exchange-traded fund that tracks the returns of a market index such as the S&P 500. This means you can invest in an index fund and receive roughly the same return as the market it tracks without any added work on your part.

Index funds are popular with long-term investors who are looking for ways to invest passively without having to worry about picking individual stocks. Plus, index funds have secured pretty good returns over the years. As an example, the S&P 500 index fund from Vanguard (VFIAX) is currently averaging a return of 8.17% over the last 15 years.

How It Works:

Investing in index funds is about as easy as it gets. All you have to do is select one of the best online brokerage firms then open an account. Decide on the index you want to track, and invest in the fund that suits your needs.

Where to Get Started:

I suggest investing in index funds with Betterment, mostly because this robo-advisor will work with you to help you achieve your long-term investing goals. You can set up an account in minutes, and Betterment offers added benefits like portfolio rebalancing, dividend reinvestment, and tax-loss harvesting.

Who It’s Best For:

Index funds are ideal for investors who want a passive way to invest in the stock market so they can build wealth over time.

5. Collect Dividends

Risk Level: Moderate

When I talk about collecting dividends, I am of course talking about investing in dividend stocks. This type of stock pays out a distribution of cash or stock to its shareholders regularly, so they are commonly used by investors who want to build streams of passive income.

For the most part, dividend stocks are offered by companies that have a long history of strong profits. However, there are also plenty of popular dividend-paying ETFs to choose from. Just remember that dividends aren’t necessarily guaranteed, and the expense ratios for dividend stocks, mutual funds, and ETFs can be higher than investment options without dividends.

How It Works:

Like other stock market investing strategies, you can get started with dividend stocks by opening an online brokerage account. One of the best platforms for this type of investment is M1 Finance since it lets you invest in dividend stocks without any investment fees.

Where to Get Started:

Open an account with M1 Finance since this company lets you invest without any fees. From there, you can build your own pie of investments with a selection of ETFs such as the Schwab US Dividend Equity ETF (SCHD), the Vanguard International High Dividend Yield ETF (VYMI), the Vanguard Dividend Appreciation ETF (VIG), and more.

Open an Account

• Commission-free investing
• Allows fractional shares in stocks, ETFs
• Small minimum investment: $100

6. Enroll in a Course or Certification

Risk Level: Low

There are thousands of different online courses you can take for less than $100, including ones that can help you expand your knowledge in any area you want. Whether you want to learn how to be a better writer, how to use Photoshop, or how to get paid to be a speaker — the options are endless!

How It Works:

A variety of online platforms let you purchase online courses and certifications in almost any industry. Consider what skill can be useful in your professional or personal life. Perhaps a certification would help you get a promotion at your current job, or maybe a new skill would help you drop your 9-to-5 job and begin working in a brand-new field.

Where to Get Started:

MasterClass is my top pick for enrolling in courses and certifications. With this online platform, you can pay a small monthly fee ($15 to $23) and enroll in hundreds of courses in arts and entertainment, music, business, and more. Your initial $100 investment in this platform could currently pay for more than six months of unlimited learning.

Who It’s Best For:

Online courses and certifications can be a good investment for anyone, but MasterClass in particular is a good choice if you don’t know exactly which courses you want to take. With a small monthly fee, you can take a bunch of different courses until you find the right fit.

7. Open a Roth IRA

Risk Level: Varies

A Roth IRA is a type of retirement account you can open in addition to other accounts you have like a workplace 401(k). This type of retirement account lets you invest with after-tax dollars, and your money grows tax-free until you are ready to access it. The best part is, you can withdraw your Roth IRA funds without paying income taxes once you’re at least 59 ½ years in age.

How It Works:

You’ll need to open a Roth IRA on your own, which is easy to do with any number of online brokerage firms. Just keep in mind that income caps limit who can contribute, so it’s possible you may not be eligible if you have a high income.

Also, note that contribution limits apply. Most people can contribute up to $6,500 to a Roth IRA (and a traditional IRA, in total) in 2023, yet those ages 50 and older can contribute up to $7,500.

Where to Get Started:

The best places to open a Roth IRA include Betterment, Stash, M1 Finance, and more. Research online brokerage accounts until you find the best option for your needs and goals.

Who It’s Best For:

A Roth IRA makes sense for anyone who wants to save money for retirement or other goals. Since this account lets you withdraw money without income taxes in retirement, it’s also a good choice for people who want access to tax-free money later in life.

Open an Account

• Commission-free investing
• Roth IRA with fractional shares of stocks, ETFs
• Small minimum investment: $100

8. Worthy Bonds

Risk Level: Medium

Worthy is a company that offers bonds with a fixed interest rate of 5%. You only need $10 to get started, and interest compounds in your account on a daily basis. There are no hidden fees, and the money you invest is loaned out to businesses that can make a positive impact in your community.

How It Works:

Opening an account with Worthy is easy, and there are no fees or penalties involved. Since each bond costs just $10, your initial investment of $100 can help you buy 10 bonds right off the bat.

Where to Get Started:

Head to the Worthy website and select the option to open a new account. From there, you can buy as many bonds as you want in $10 increments. Interest will accrue daily in your account, and there are no fees involved.

Who It’s Best For:

Worthy bonds are a great option for anyone who wants to earn a fixed rate of 5% on their savings.

9. Open a High-Yield Savings Account

Risk Level: Low

If you have $100 to your name but you don’t have any extra cash for emergency expenses, then your best bet, for now, is to save that money. However, you can easily earn a better rate of return with a high-yield savings account from an online bank.

This type of savings account works like other savings accounts from a traditional bank. Setting up an account is a breeze, and the biggest difference is that you can earn a higher interest rate on your deposits.

How It Works:

The best online savings accounts are from banks like Discover, CIT Bank, and national average of just 0.07%. Just make sure you compare accounts until you find an option with the perks you want and no hidden fees.

Where to Get Started:

Discover offers excellent high-yield savings accounts with no minimum deposit requirement and no ongoing fees. You can also earn 5x the national average on your savings. That’s still not a lot, but earning something is still better than nothing.

Who It’s Best For:

Everyone needs savings for emergencies and a rainy day.

Your Investment Style 

If you only have $100 to invest right now, you’ll want to be careful you’re investing in a way that aligns with your investment style. This style will probably depend on a whole host of factors, which may include:

• Whether You’ll Need Easy Access to Your Money

• How Much Risk You Want to Take

• Your Investment Timeline

• How Much Research You Want to Do

If you want to invest for the long haul and you won’t need your $100 right away, then you may want to look into options like opening a Roth IRA, investing in cryptocurrency, or getting started with fractional shares. Each of these lets you grow your money over a long timeline, and potentially without a lot of fine print or hidden fees.

On the flip side, you may want a “safer” option if you need access to your $100 when emergencies come up. In that case, Worthy Bonds or a high-yield savings account might be a better choice.

Invest $100 to Make $1,000 a Day

Many people also wonder how they can invest $100 and turn it into $1,000 in income for every day of the year. While it will absolutely take time to build up $1,000 per day in passive income, keep in mind that $1,000 per day works out to $365,000 per year, and there are all kinds of people who have that kind of passive income coming in.

Generally speaking, you’ll need a $9 million dollar investment portfolio earning 4% to generate $360,000 per year (or a little less than $1,000 per day) in passive income. However, you’ll only need a portfolio of $6 million dollars to generate that much if your money is earning 6% per year.

If your portfolio is earning 9%, on the other hand, you only need a portfolio of $4 million to generate $360,000 in spending money every year.

Building that kind of portfolio may seem out of reach, particularly if you’re starting out with just $100. However, these examples still show the point I’m trying to make.

The sooner you start investing, the faster you can start working toward your goals.

From there, finding a way to achieve higher annual returns can help you reach your goals at a lightning-fast speed.

Don’t Waste Your $100 on This

Finally, you’ll want to read this warning: Don’t fall for get-rich-quick schemes!

It’s absolutely crucial to avoid throwing your $100 (or more) away on something that won’t help you build wealth. Remember that there are always going to be people who promise you can get rich quick if you do this or that, but that their promises are totally empty the vast majority of the time.

Also try to remember the golden rule that applies to most aspects of our lives:

If something seems too good to be true, it probably is!

Some of the most common schemes to avoid include:

• Penny Stocks (Remember the Movie the Wolf of Wall Street?)

• Options Trading

• Fly by Night Crypto Meme Coins

• Pyramid Schemes

• Almost All MLMs (Market-Level Marketing Companies)

If someone is promising that you can turn your $100 into thousands of hundreds of thousands of dollars practically overnight, you should run from them, block them on your phone, or both right away.

Chances are good that whatever plan they’re suggesting will only benefit them (and not you).

The Bottom Line on Investing $100

There are many ways to invest $100, just as there are smart options if you have $1,000 to invest, $5,000 to get started, or $10,000 you are ready to devote to building wealth. Make sure you compare all of your options and only dive in once you know you’re ready.

Although $100 may not seem like a lot, imagine what you can accomplish if you began investing $20, $50 or even $100 per month. When it comes to building wealth, you really do have to start somewhere. Investing $100 is the first step to building the life you really want.

FAQs on Investing $100

The post 9 Ways – How to Start Investing With $100 appeared first on Good Financial Cents®.

“What’s your best rates on Roth IRAs?”

Coming in at a close second is,

“What’s the best stock to buy right now?”

Both of those questions are extremely hard, if not impossible, to answer. In addition, the question I get on Roth IRAs makes almost no sense at all. So, how would you explain Roth IRA rates to someone?

Whenever I get that question, I typically start by explaining what an I-R-A stands for:

 Individual Retirement Arrangement (emphasis on arrangement).

I have to admit that I even thought that the “A” stood for account at one point in my life. However, I was informed by my readers that the Internal Revenue Service actually refers to them as “arrangement.”  (Thanks to my readers for keeping me on my toes!)

Need to Open a Roth IRA?

My favorite online broker is M1 Finance but you can check out our recap on the best places to open a Roth IRA and the best online stock broker sign-up bonuses.

There are many good options out there, but I have had the best overall experience with M1 Finance. No matter which option you choose, the most important thing with any investing is to get started.

Another important fact for everyone to realize is that Roth IRAs don’t pay anything or have interest rates attached to them.   They are just a type of account – a retirement account.

Roth IRAs Are Not Investments

The Roth IRA serves as a retirement “account,” but not a retirement investment. Many people have the belief that IRAs are like a CD that pays out interest.

However, this is only true if you invest in an IRA at your local bank. In this case, you are purchasing a CD within the IRA because CDs are typically the only investment option that is available (some banks now do have in-house brokerage firms that allow you to put money into other investments).

So in this case, the best IRA rate you can get on your Roth IRA Account is what the going CD rates are.

IRAs Are the “Investment Vehicle”

I have always explained the IRA as your own personal investment vehicle. Once you open an account, you can then choose which type of passengers go inside your vehicle.

Of course, a mental image of a clown car might be coming to mind at this point. You can have as many clowns in your IRA as you want – or as few as you want. I recorded this YouTube short using my daughter’s Barbies to illustrate this here:

You could have all your money invested into Walmart stock or spread out across 100 different stocks (You would have to have a substantial amount of money in the IRA to do this).

If you open a Traditional or Roth IRA at a brokerage firm, you may invest into CDs just like at your local bank, but you also open the door to many other investment choices. Then, what your IRA pays is determined on the actual return of that investment.

If you had invested into the stock market in 2008, your Roth IRA probably paid closer in the -30% range.   (Ouch!)

When somebody asks me what the best Roth IRA rate is, I simply respond with:

“It depends.”

Then I wait for confusion to set in.

What’s the Average Roth IRA Interest Rate?

While Roth IRAs don’t pay interest directly, the investments inside of them can pay dividends, capital gains and interest. What you can expect to earn depends on the investments you have chosen for your Roth IRA.

To give you an idea of the potential returns, let’s consider some investment options commonly found in Roth IRAs. Large-cap stocks historically offer average rates of return ranging from 7% to 10%, but they come with higher risks.

Small-cap stocks tend to yield slightly higher returns, averaging between 9% and 11%. On the other hand, government bonds provide lower-risk investments with average rates of return ranging from 2% to 5%.

Certificates of Deposit (CDs), another option for Roth IRAs, offer lower average rates of return, typically ranging from 1% to 3%, depending on the term.

Remember, these figures are historical averages and not guarantees. Your actual Roth IRA returns will depend on the performance of the investments you choose.

Let’s Define a Roth IRA

Now that we have explained how a Roth IRA doesn’t really have “rates” of its own, let’s delve into how Roth IRAs actually work.

In summary, a Roth IRA is a retirement account that is funded with after-tax dollars. As such, many people use a Roth IRA in conjunction with a tax-advantaged retirement account.

For 2024, the maximum amount most people can contribute to a traditional or Roth IRA is $7,000. Those ages 50 and older can make what is known as a “catch-up contribution” and contribute up to $8,000 each year.

Not everyone can open a Roth IRA, however, due to the rules that govern this retirement account. To be able to contribute the maximum amount to a Roth IRA in 2024, for example, you must:

• Be single or head of household with an income less than $146,000
• Be married filing jointly with an income less than $230,000

The income cut-off for Roth IRAs doesn’t come to an abrupt halt. At $146,000 for singles and $230,000 for married couples filing jointly, the maximum amount you can contribute begins to phase-out gradually. For 2024, the phase-outs for retirement savers are as follows:

• Single or head of household begins phasing out at $146,000, and becomes ineligible at $161,000
• Married filing jointly begins phasing out at $230,000, and becomes ineligible at $240,000

Roth Accounts That Handle Investing For You

Traditionally, when a person opened a Roth IRA account all of the interest earned would depend on their ability to invest in stocks, mutual funds, or other investments.  With better artificial intelligence that is not the case any more.

A new type of investment advisor has been created by using machine learning to make the investments for us.  These new advisors are called robo-advisors and have become a very popular place to open your Roth IRA. Currently there are two main competitors who offer a Roth account:

• Wealthfront – Is a very good service and is top notch on their technology.  Their entire platform is designed so you do not have to talk to a person.  Once you do the initial risk assessment survey they take it from there. 
• You can open an account with Wealthfront with only $500 and there are no fees on the first $10,000 you invest.  After the $10k threshold you only pay 0.25% on all additional money invested.
• Betterment – Betterment is the largest of the robo-advisors and has been a personal favorite.  They offer their services for a low fee of 0.25% and the back end is really slick.  When you open an account with Betterment, you will have a five minute questionnaire that determines your risk tolerance and then they do all the investing and adjusting for you.

Why Are Roth IRAs So Popular?

If you read about retirement strategies at all, you have probably heard all about the Roth IRA and its benefits. Year after year, Roth IRAs remain popular among those serious about saving for retirement, and for myriad reasons.

Here are some of the reasons Roth IRAs continue to pique the interest of retirement savers everywhere:

By contributing with after-tax dollars now, you can save on taxes later. Since Roth IRAs are funded with after-tax dollars, you don’t get a tax break on the front end when you choose to contribute. However, many people see this as much more of a positive than a negative. 

By contributing to a Roth IRA with after-tax dollars, you can avoid paying taxes on distributions down the line. That’s right; contributions to Roth IRAs grow tax-free and distributions are also tax-free.

You can contribute to a Roth IRA or traditional IRA in addition to your tax-advantaged retirement accounts. Anyone who is serious about saving for retirement will want to max out as many retirement accounts as possible while they’re still young.

Fortunately, you can contribute to a Roth IRA even if you max out your work-sponsored 401(k) or retirement account.

Diversify your exposure to taxes. Where tax-advantaged retirement accounts let you avoid paying taxes on your contributions now, a Roth IRA provides the opposite experience.

Because of this, many people see having both types of accounts as a way to diversify their exposure to taxes in the future. 

Anything you contribute to a Roth IRA will grow tax-free. And once you’re ready to begin taking withdrawals, the money you receive will also be tax-free.

You can withdraw contributions without paying a penalty at any time. Here’s something few people know about their Roth IRA. If you want, you can withdraw your contributions at any time without penalty. Because of this, many people see the Roth IRA as a type of savings account as well. 

Just remember, you can withdraw your contributions without penalty at any time, but not your earnings.

You don’t have to begin taking distributions at a certain age. While traditional IRAs require you to begin taking distributions at age 73, Roth IRAs don’t have that requirement. Because of this, they offer more flexibility than most retirement plans. 

Since Roth IRAs will let you grow your money indefinitely, you can hold onto them at the last minute and only begin taking money out when you need it.

How to Decide if You Should Open a Roth IRA

So, at this point, we have covered what a Roth IRA is and what it isn’t. We have also talked about who qualifies for one and highlighted the major benefits that come with using a Roth IRA for retirement.

But, is a Roth IRA really right for you?

When deciding whether to open a Roth IRA, it’s important to consider your individual situation and your retirement goals. A Roth IRA might not be right for everyone, but opening one is probably a smart move if you fall into one of these categories:

You should consider a Roth IRA if…

• You want to save as much money for retirement as you can. If you’re serious about saving for retirement, the Roth IRA offers one more place to stash your money away. Even after you max out your work-sponsored 401(k), you can still put $7,000 in a Roth IRA or traditional IRA in 2024 (or $8,000 if you’re ages 50 and older). If you have a lot of discretionary income and want to put it away for future use, the Roth IRA is a no-brainer.
• You think you will be in a higher tax bracket later. Since the Roth IRA is funded with after-tax dollars, the money you invest is allowed to grow tax-free. Then, you’ll get tax-free withdrawals once you begin taking money out – as long as you’re ages 59 ½ or older and your account has been open for at least five years. If you think you might be in a higher tax bracket when you retire – or if you worry taxes will be higher for everyone across the board – investing with a Roth IRA is one way to shelter yourself from higher taxes in the future.
• You want a retirement account that allows you to withdraw contributions without paying a penalty. With a Roth IRA, you can withdraw your contributions at any time without a penalty. This makes this account very different from other tax-advantaged retirement accounts which require you to pay a penalty if you choose to take your contributions out early. This is also the reason many people who want some flexibility choose to invest in a Roth IRA. Since you can withdraw your contributions without a penalty at any time, any money you invest will remain within your reach.
• You want to provide your heirs with some tax-free funds upon your death. If you’re worried about your heirs getting stuck with a huge tax bill, having a Roth IRA might be a smart move. Because these accounts are funded with after-tax dollars, your heirs can generally access this money without paying taxes upon your death. If you hope to save your heirs from paying at least some taxes on their inheritance, the Roth IRA is a smart investment vehicle in that respect.
• You want at least one account you don’t have to touch. If you want at least one retirement account that doesn’t come with a minimum age for distributions, the Roth IRA is an extremely smart choice. By opening this account and funding it for a lifetime, you create a retirement nest egg that won’t need to be accessed once you reach a certain age. Whether you live to be ninety years old, you’ll never have to take a single cent out of your Roth IRA if you don’t want to.
• You want to invest in diverse investment products. While a work-sponsored 401(k) plan might offer limited investment choices, the fact that you can open a Roth IRA anywhere and on your own terms means you get to choose where you invest that money. That could mean investing in stocks, bonds, mutual funds, and more. Of course, you’ll also get to choose a firm to invest that money for you. While Ally Invest is one of our favorite options, you’ll find an array of choices out there.

We also highlighted some other top choices in our guide on the best places to open Roth IRA.

The Bottom Line – Best Roth IRA Rates

I hope you have enjoyed this primer on the fallacy of “Roth IRA rates,” along with a general idea of Roth IRA Rules and guidelines. Now that you know all about this exciting investment vehicle, it’s time to figure out if a Roth IRA is actually right for your situation.

No one can make this decision for you, but I hope we highlighted some of the top reasons a Roth IRA might work in your favor. As a general rule, having more money saved for retirement is better than not having much saved at all.

The Roth IRA is just one more place to stash your money where it can grow over time and be there for you when you’re ready to retire.

The post What Are Your Best Roth IRA Rates? appeared first on Good Financial Cents®.

If you’re looking into cryptocurrency for the first time, you may be wondering, “Can I start by investing $100 in Bitcoin?” The answer is definitely yes. But before you make your first investment, there are a few things you should know about crypto.

Here’s a closer look at what investing $100 in Bitcoin today looks like for new investors and veterans alike.

What Is Bitcoin?

Bitcoin is a digital currency that exists only on the Internet. But if you think about it, much of the money you have today only exists on the Internet. If you’re paid with direct deposit, you may have money coming in and out of your accounts without ever touching a physical dollar bill.

With that in mind, Bitcoin offers a completely new take on currency, and it’s controversial for some of the features that also make it so interesting (we’ll get into that later).

Bitcoin was created in 2009 by a mysterious figure who goes by the pseudonym Satoshi Nakamoto. But while Nakamoto is known as the currency’s founder, it is not controlled by any single individual. Instead, Bitcoin is a decentralized currency that operates through a network of computers worldwide known as cryptocurrency miners.

Cryptocurrencies, including Bitcoin, rely on a technology called blockchain.

Every single Bitcoin transaction that has taken place is tracked in this public database. Because many computers around the world have a copy, this record is extremely hard to manipulate.

Anyone with an Internet connection can participate in the cryptocurrency economy. To buy and hold bitcoin you can use a cryptocurrency wallet, like one from Ledger, Trezor, or MetaMask. You can also buy and hold your currency through a central exchange like Coinbase or Gemini.

While it’s fairly easy to buy bitcoin, especially if you’ve ever invested in the stock market, that doesn’t mean it’s right for everyone. When investing in Bitcoin and other cryptocurrencies, it’s wise to avoid investing more than you can afford to lose. We’ll take a closer look at why in the next section.

What Is Bitcoin Worth?

The value of a bitcoin goes up and down frequently; so much of its volatility is due to the controversy around Bitcoin’s worth. When it first launched in 2009, a single bitcoin was only worth a few cents, but at its peak, it was worth around $60,000. As of this writing, a single bitcoin is valued at around $30,000.

As you can see from those numbers, early Bitcoin investors who held on through the crypto’s ups and downs likely made a fortune. If you bought $100 of bitcoin when it was worth a few cents and held it until it was worth more than $50,000 apiece, you could have easily made millions of dollars.

The price of Bitcoin has been extremely volatile over time. Here’s a 10-year price history from the cryptocurrency tracking site CoinMarketCap.

But the controversy comes from the many detractors who say Bitcoin and other cryptocurrencies are effectively worthless. These include some high-profile Wall Street CEOs, analysts, and government officials. If they are right, Bitcoin will eventually fall to a value of zero or very close to it.

With enthusiasts saying Bitcoin price will go “to the moon “ and others saying it will go to zero, what is its true value? At this point, unlike buying stocks, it’s somewhat difficult to say exactly what a bitcoin is worth.

Bitcoin is in limited supply. There will only ever be 21 million created (about 19 million exist as of December 2023). The scarcity drives up the value and makes it useful as a store of value online, somewhat like a digital version of gold. But if it turns out to be fools gold, a big investment in Bitcoin may become a big mistake.

Can Beginners Invest in Bitcoin?

If you are brand new to the world of investing and have never bought stocks, mutual funds, exchange-traded funds, or other types of investments—for instance, a retirement account through your workplace—you may want to skip Bitcoin for now and start investing with the stock market. The stock market is a lot more established with hundreds of years of history and clearer methods of deciding the value of an asset.

However, if you have a little investing experience, you can absolutely invest in Bitcoin.

If you’re comfortable using a computer and have your information handy, you can create an account with most exchanges in about 10 minutes or less. Then it takes just a few minutes to link your bank account, make a deposit, and fund your cryptocurrency exchange account for the first time. Some exchanges offer the ability to instantly buy Bitcoin and other cryptocurrencies, even if your bank’s deposit has not yet been cleared.

If all of that sounds overwhelming, there’s no harm in skipping this particular asset class. But if you’re excited about digital currencies and believe blockchain technology is a big part of the future of finance, you may find the risks of Bitcoin well worth it.

What May Happen if You Invest in Bitcoin

An investment in Bitcoin is far from guaranteed. Things might turn out great, and you could earn your money back tenfold, maybe even more. On the other hand, your investment might drop down to zero. While I’d like to think your odds in Bitcoin are better than in Vegas, many riskier cryptocurrencies look like gambling.

Unlike government-backed fiat currencies, there is no large organization behind Bitcoin that guarantees its value. I don’t want to sound like a broken record, but it’s important to understand that you should only invest what you can afford to lose when buying cryptocurrency.

How Much Money Do You Need to Buy Bitcoin?

It’s not difficult to invest in Bitcoin, but keep it a small portion of your portfolio. You don’t have to buy a full Bitcoin at once. Like a dollar is divided into cents, bitcoin is easily divided into smaller slices.

Most cryptocurrency exchanges allow investors to start very small. You may be able to buy as little as two, five, or $10 of bitcoin when entering a transaction. If you have a $1000 portfolio and want to start with Bitcoin as only 5% of your investments, it’s easy to accomplish that using most centralized cryptocurrency exchanges.

To make a long story short, you don’t need much money to buy Bitcoin. If you’re nervous about making your first purchase, consider starting small with around five dollars. This limits your risk and gives you time to decide if it’s right for your investment goals. If you like the experience, you can always invest more later.

How Much Would I Have If I Invested $100 in Bitcoin?

Early Bitcoin investors who sold at the top, or even still hold their currency, have likely seen huge gains. If you bought Bitcoin early, even in small amounts, you could be a millionaire.

If you invested $100 in Bitcoin in Bitcoin in July 2013, over 10 years ago, you would have bought 1.47 BTC. At its peak, that was worth about $101,500. That’s an incredible gain!

As of this writing, 1.47 BTC is worth about $38,743.27.

That’s still a massive return on investment.

Where to Buy $100 in Bitcoin

If you’re serious about learning the inner workings of cryptocurrencies, you may want to use a self-controlled digital currency wallet. But for anyone who doesn’t consider themselves a tech nerd, the easiest place to buy and sell cryptocurrencies is with a centralized cryptocurrency exchange.

Here’s a look at some of the most reputable cryptocurrency exchanges available to investors and traders in the United States:

• Coinbase: Coinbase is one of the biggest and most recognized cryptocurrency exchanges in the United States. While it doesn’t come with the lowest trading fees, it supports a large number of currencies and makes buying and selling easy.

• Gemini: Gemini is another large cryptocurrency exchange based in the US. The Winklevoss brothers of Facebook infamy founded this exchange. Gemini is a serious cryptocurrency exchange with many bank-like features, including the ability to earn interest from most cryptocurrencies held in your account.

• Binance.US: Binance.US is the arm of Binance focused on American traders. Binance is by far the largest global cryptocurrency exchange. However, the experience for users in the United States is not exactly the same as in the rest of the world due to US securities regulations. Despite those limitations, competitive pricing and access to a large list of currencies could make Binance.US a good home for your crypto.

• Kraken: Kraken is a cryptocurrency exchange that may be better for those with more cryptocurrency knowledge. Kraken offers a wide list of currencies, low, competitive fees, and a very good earn feature where you can receive generous rewards for staking or holding multiple currencies.

• Robinhood: Robinhood offers completely commission-free cryptocurrency trades. While it only supports a short list of cryptos, the low cost is very attractive. Also note that you can’t withdraw cryptocurrency from Robinhood to an outside wallet, though that feature may be coming with Robinhood’s new wallet product.

• Webull: Another commission-free trading app, Webull is built for active traders and supports up to 41 currencies depending on your location. The low costs are attractive, but again you can’t withdraw cryptocurrency holdings to outside wallets or accounts.

• Public: Public is another brokerage that started with stocks and grew to support cryptocurrencies. The public supports 30 cryptocurrencies. While there are no commissions, a 1% to 2% markup is included in the trade price as a fee.

How Much Are Fees to Buy $100 of Bitcoin?

Coinbase is one of the biggest and best-known exchanges, but trades can be costly. Using the main platform, trades are subject to a flat fee per trade plus a spread. The fee varies based on the trade size. Anyone can upgrade to the active trading platform with lower fees.

Robinhood Crypto offers fee-free cryptocurrency trades. While the list of supported currencies is shorter than some competitors, you can’t beat free trades!

Can You Mine $100 in Bitcoin?

Earlier in this article, I mentioned the concept of coin mining. Whether or not you participate in mining, the Bitcoin mining process greatly impacts coin holders and anyone making cryptocurrency transactions on the Bitcoin blockchain.

Bitcoin miners are computers competing against each other to process and verify the next block of transactions. The block—a group of transactions from the same period—is where blockchain gets its name.

When a miner is first to succeed in solving the complex math to process a new block of transactions, that person is rewarded with the transaction fees from recent users and newly minted bitcoin. Because Bitcoin is so valuable, there are many, many miners around the world competing to earn that reward. Once all Bitcoin has been mined, rewards will be reduced to only transaction fees.

Because so many miners compete to earn bitcoin rewards, it’s extremely difficult for solo miners to earn anything independently.

If you want to participate in Bitcoin mining, you may need to buy expensive computer hardware and have the in-depth technical knowledge to get everything set up and working properly.

To increase their chances of winning a reward, some miners pull their resources together and collaborate in a mining pool. But whether you mine through a pool or on your own, you are unlikely to get rich with Bitcoin mining these days.

In fact, miners may spend more money on the electricity powering their computers than they earn from mining rewards. Most people are best off buying Bitcoin through a favorite cryptocurrency exchange.

Bitcoin Safety and Security

If you decide to move forward and buy Bitcoin, it’s essential to follow online security best practices. That includes using a unique, difficult-to-guess password on every financial website, including cryptocurrency exchanges, banks, brokerages, credit card companies, and other lenders.

Cryptocurrency is not FDIC insured, and if a cryptocurrency account is hacked, you’re unlikely to be reimbursed by the exchange for your losses. If you don’t feel confident keeping your online account secure and using strong passwords, you may want to skip cryptocurrency altogether.

Other Cryptocurrencies to Know Besides Bitcoin

Of course, Bitcoin isn’t the only cryptocurrency that’s grabbed headlines over the last few years. Ethereum, Dogecoin, Shiba Inu, Stellar Lumens, Avalanche, Cardano, and Solana are just a few of the more than 10,000 cryptocurrencies on the marketplace today.

However, it’s important to note that Bitcoin and Ethereum are arguably the safest and most stable cryptocurrency projects today. Investments outside of these core currencies come with even more risk and volatility.

To learn more about other top cryptocurrencies, check out websites like CoinMarketCap and CoinGecko.

How to Decide if Bitcoin Makes Sense for You

Bitcoin has a lot of pros and cons. While it’s great to think about what would happen if you make an investment that grows tenfold or more, it’s also important to remember the risk of taking major losses.

For savvy investors, diversification is an important concept to follow. That could mean adding Bitcoin and other cryptocurrencies to your portfolio. If you’ve done your research, understand how Bitcoin works, and still think it makes sense for you, investing your first $100 in Bitcoin could be a good way to dip your toe in the crypto water before making a larger, riskier commitment.

Final Thoughts on What Might Happen if You Invest $100 in Bitcoin Today

Investing $100 in Bitcoin can yield substantial gains or significant losses due to its volatile nature and controversial status. Bitcoin’s unique features, like decentralization and limited supply, set it apart from traditional currencies. The cryptocurrency’s value has fluctuated dramatically, from mere cents to tens of thousands of dollars per bitcoin. 

While early investors profited immensely, skeptics argue it could eventually become worthless. Beginners should only invest what they can afford to lose, considering the risks. Bitcoin’s value remains uncertain, making it important to research and understand before investing. Diversification is wise, and starting small can offer exposure to crypto’s potential while minimizing risk.

The post What Might Happen if You Invest $100 in Bitcoin Today? appeared first on Good Financial Cents®.

Mint does a fantastic job of giving you numbers but falls short of providing any financial insight.

Then there’s Blueleaf, which I subscribe to for my clients and find to be excellent on both accounts, but it’s not available to the DIY investor.

So when I discovered Empower (formerly Personal Capital), I was so excited to learn more that I immediately signed up and synced all of my investment accounts to it.

Sign Up for Free

• Use their Fee Analyzer to find hidden fees
• The app is 100% free
• See all your money accounts in one place, in real time

What Is Empower (Formerly Personal Capital)?

Empower is an online tool, available from your desktop or phone, that will help you:

• Monitor all of your financial accounts in real-time – whether checking account, certificate of deposit, or retirement account

• Get objective investment advice designed to make you – not the advisor – money

• Provide investment options that are tailored to your goals

This is fantastic. You see, financial advisors that focus primarily on wealth management can be costly to keep around.

They charge either a percentage of assets managed or a flat hourly rate that can run as high as several hundred dollars per hour, plus trading commissions and administrative fees.

So, while these advisors can certainly be excellent, they’re mostly unreachable unless you have millions of dollars to invest.

What’s more, these wealth advisors aren’t really there to teach you how to put together a budget. They strictly manage your money.

Empower to the rescue.

I know what you’re thinking. “Okay, great, but why should I trust these new guys?” I’ve got to be honest with you. There were two words I saw on Empower’s website that made my heart skip a beat.

Those two words? Are you ready?

Fiduciary Obligation

Here’s a copy straight from their website:

Objective Advice: The sorry truth is that bankers and brokers are motivated to help themselves, not you. They are salespeople paid to push products, earning commissions and kickbacks when they do. In stark contrast, Empower is an investment advisor. We accept a fiduciary obligation to act in your best interest, and our advice must be aimed at making money for you, not for us.

This is absolutely key with any financial advisor you talk to, whether in person or online. Fiduciary duty means the party has a legal obligation to put their interests above their own.

Whereas normal brokers get paid commissions by getting you to churn your investments over and over (which costs you thousands of dollars in lost percentages here and there), Empower is putting a requirement on themselves to put your interests above theirs.

This is huge!

Seriously, there are major points for Empower from me on this one.

How Empower Works

Empower offers a free version and a premium version that features direct investment management. Whichever version you use, your account is actually held by Pershing Advisor Solutions, which acts as a trustee for your account.

The Free Version

With the free version, you get full use of the Empower platform as well as a free consultation from a financial advisor.

That advisor will give you a personalized analysis of your investments and recommendations as to what you can do with your portfolio. Your financial advisor can be contacted by phone, email, or by online chat.

In fact, the only feature that differentiates the free version from Empower’s premium product is its personalized portfolio management.

Other than that, the free version includes all of the many features and benefits that are available on the platform, including the ability to aggregate all of your financial accounts, the 401(k) analyzer, objective investment advice and investment check-ups, real-time financial dashboard, and access via the mobile app.

To show you how comprehensive their free platform is, take a look at this screenshot of their Portfolio Review from my free account:

This is just the “Holdings” tab on this feature. You can also get information on your performance and asset allocation. I can’t stress enough how valuable this information is for all types of investors – beginner or seasoned.

The Premium Version

Also known as their Wealth Management program, Empower’s premium program includes active management of your investment portfolio.

Like other similar products, they first determine your risk tolerance, personal preferences, and investment goals. Using that evaluation, they then create a portfolio tailored to fit within those parameters.

The fee structure for this service is as follows:

• 0.89% of the first $1 million

• 0.79% of the first $3 million

• 0.69% of the next $2 million

• 0.59% of the next $5 million

• 0.49% on balances over $10 million

These fees are quite reasonable when compared with fees of 1% to 2% that are customarily charged by active investment management services.

The fees apply only to the assets you have under management at Empower and not to other investments that may be aggregated on the site, such as your 401(k) plan.

And that’s it. There are no additional fees. Empower does not charge trading, commission, administrative, or any other types of investment fees. Your only cost is the annual, all-inclusive percentage that applies to your portfolio level.

Investment Strategy

Empower uses Modern Portfolio Theory (MPT) to manage your portfolio. MPT focuses less on individual security selection and more on diversification across broad asset classes. Those asset classes include:

• US Stocks (Which Can Include Individual Stocks)

• US Bonds

• International Stocks

• International Bonds

• Alternative Investments (Including ETFs and Commodities)

• Cash

Though Empower makes use of funds in constructing your portfolio, they may also include up to 100 individual securities in order to avoid being too heavily concentrated in a small number of companies.

I also discovered through my review that Empower uses an integrated investment approach to managing your investments, which is a pretty unique feature. This means that they factor in all of your investment holdings – including those not managed by Empower – in managing your portfolio.

For example, though they don’t manage your 401(k) account, your 401(k) allocations will be considered when making decisions about your investments that are actually managed by Empower.

Review of Empower Tools and Benefits

There is a long list of tools and benefits in using Empower. Some of the more interesting ones include:

The Investment Checkup

This tool analyzes your investment portfolio and gives a risk assessment of it to make sure that your level of risk is consistent with your goals.

This will help you to create an asset allocation that will get you where you need to go with your investments. Here’s a screenshot of their Investment Checkup from my Empower dashboard:

401(k) Fund Allocation

This tool can be used to analyze your employer-sponsored 401(k) plan, even though it is not under the direct management of Empower.

It can be used to help you with your asset allocation, at least based on the investment options that your plan includes. This is an excellent tool since most 401(k) plans don’t have any kind of investment management advice.

Retirement Planner

You can often find retirement planners or retirement calculators on various sites throughout the Internet. But what better place than to have it available where you also have all of your investment accounts listed?

Empower’s Retirement Planner allows you to run numbers on your retirement to make sure that you will be prepared when the time comes.

It allows you to incorporate major changes in your life into your retirement planning, such as the birth of a child or saving for college.

Net Worth Calculator

Since Empower aggregates all of your financial accounts on the same platform, they can also provide you with ongoing monitoring of your net worth.

This will enable you to get the most comprehensive view of your financial situation since it not only takes into account your assets but also your debts.

Net worth is the best single indicator of your overall financial strength, and this will give you an opportunity to track it.

Cash Flow Analyzer

Though our focus in this article has been primarily on the investment side of Empower, it’s important to recognize that it also includes a budgeting capability.

The Cash Flow Analyzer tracks your income and expenses from all sources, letting you know where you’re spending money (or spending too much of it), which will help you to make adjustments that will improve your overall budget.

Mobile App

Empower’s mobile app is a free feature that can be downloaded on Apple iPhone, iPad, Apple Watch, and Android. The mobile version has everything that is available on the desktop platform.

It will enable you to track your investment portfolio, as well as your banking and credit card activity while you’re on the go.

Tax Optimization

Empower uses tax optimization in the management of your portfolio. This feature is available to premium Wealth Management clients, and not if you are using the free version.

They use several tactics as part of tax optimization. For example, they include income-producing investments in tax-deferred accounts, while growth-oriented investments – that have the benefit of lower capital gains taxes – are held in taxable accounts.

In addition, they don’t use mutual funds but instead use exchange-traded funds with a mix of individual stocks since stocks can be easily bought and sold for tax-loss harvesting.

And speaking of tax-loss harvesting, they use this strategy to sell losing stocks, which offsets the gains on the sale of winning stocks. This strategy minimizes the negative impact on your investment portfolio from income taxes.

Site Security

Empower uses bank-level, military-grade encryption on the platform. They also perform ongoing third-party security audits to test their systems. They also use device authentication so that each device you link your account to must first be authenticated in order to be used.

Crash Test Your Portfolio

Investing expenses and taxes are the two things you can absolutely count on within the investing world. You can’t rely on gains every year, but you can guarantee you will be taxed and you will pay expenses.

That makes reducing those expenses one of two ways you can control your investing destiny.

Thankfully, Empower realizes this and offers you a really great tool to analyze the cost of your investments.

Where this gets interesting is you can do an analysis of your employer’s 401 (k) plan (as discussed above)  to discover whether your plan is amazing, just okay, or terrible when it comes to costs.

You might be the person to go to HR to reveal just how expensive your plan is, lay out a new plan that would cut costs for everyone, and end up getting a promotion just for running a cost analysis.

Even if you don’t get promoted to head investment advisor for your employer, at the very least, you’ll save your own retirement from exorbitant fees. And that’s a huge win we can all settle for.

Is Empower for Me?

The idea of wealth management means you need to have wealth to manage. If you’re struggling to get out of debt, that’s okay, but Empower probably isn’t the best fit for you.

In that case, Mint might be a better option, and you can see a full comparison in my complete Personal Capital vs Mint review.

However, if you are building up your retirement assets and want to be able to maximize your nest egg without gambling on penny stocks, then you should definitely sign up for the service.

All of the features, aside from the personalized portfolio management, are absolutely free, so there’s really no reason not to give them a try.

Final Thoughts – Empower (Formerly Personal Capital) Review – Managing All Your Investments in One Place

In the quest for a tool that offers both financial consolidation and insightful investment analysis, Empower (formerly Personal Capital) emerges as a frontrunner.

Unlike its competitors, Empower provides an all-in-one solution, ensuring users can monitor their entire financial spectrum while also gaining objective investment advice.

With many financial advisors charging exorbitant rates, Empower offers a more accessible alternative without compromising on quality. Their fiduciary obligation demonstrates a commitment to prioritize users’ financial interests above all else.

This dedication to transparency and accountability not only distinguishes Empower from many in the market but also earns it high commendation for its genuine dedication to the user’s financial growth.

How We Review Brokers and Investment Companies:

Good Financial Cents conducts a thorough review of U.S. brokers, focusing on assets under management and notable industry trends.

Our primary objective is to offer a balanced and informative assessment, assisting individuals in making informed decisions about their investment choices. We believe in maintaining a transparent editorial process.

To achieve this, we gather data from providers through detailed questionnaires and take the time to observe provider demonstrations. This hands-on approach, combined with our independent research, forms the basis of our evaluation process.

After considering various factors, we assign a star rating, ranging from one to five, to each broker.

For a deeper understanding of the criteria we use to rate brokers and our evaluation approach, please refer to our editorial guidelines and full disclaimer.

Empower (formerly Personal Capital) Review

Product Name: Empower - Personal Capital

Product Description: Personal Capital is a financial advisor and investment management company. They provide services such as wealth management, retirement planning, and portfolio management.

• [ Open a Free Account ]

Summary

Empower, originally known as Personal Capital, offers a comprehensive suite of financial tools that help users track and manage their finances. Its primary features include a dashboard that gives an overview of all assets, liabilities, and investments, a budgeting tool to track and categorize spending, and an investment checking tool that provides insights into one’s portfolio. The platform prides itself on its intuitive user interface, ensuring that both novices and seasoned financial experts can navigate and utilize its features with ease.

• Cost and Fees
• Customer Service
• User Experience
• Product Offerings

Overall

4.6

Pros

• The App Is Free to Use
• User-Friendly Interface
• Provides a Comprehensive Overview of Your Financial Situation
• Offers a Variety of Tools to Help You Manage Your Finances

Cons

• Limited Features
• Investment Management Fees
• Limited Access to Advisors
• Limited Investment Options
• Potential Conflicts of Interest

The post Empower (Formerly Personal Capital) Review – Managing All Your Investments in One Place appeared first on Good Financial Cents®.

If this past year has taught us anything, it’s that investments that seem too good to be true almost always are. Many investors were burned by ‘can’t miss’ tech stocks and could only watch as the value of digital assets, like cryptocurrencies and NFTs, evaporated in minutes and couldn’t sustain the promised high returns.  

In a highly volatile market, deciding how to invest your money is as challenging as ever, which is why rising interest rates have led many investors toward the safety of savings accounts and Certificates of Deposit (CDs).

This is where SaveBetter comes in.

SaveBetter pools high-interest savings accounts and CDs from financial institutions nationwide, giving customers access to high-yield accounts they otherwise wouldn’t know about.

But is SaveBetter (Raisin) the best way to secure the best savings rates? I’ll answer that question and more in this review.

What Is SaveBetter (Raisin)?

SaveBetter (Raisin) is a financial technology company founded in late 2020 as a subsidiary of Deposit Solutions, now Raisin DS. Raisin works with over 400 banks in more than 30 countries worldwide.

What makes SaveBetter unique is that it’s a digital platform, not a traditional bank. SaveBetter claims to provide a digital “storefront” for banks and credit unions looking to promote deposit products to a larger audience.

Because the SaveBetter platform promotes products from lesser-known financial institutions, investors can take advantage of offers they may not have had access to otherwise.

Customers can choose between savings products from FDIC-protected banks and NCUA-insured credit unions that offer superior interest rates.

OUR PARTNER – Top Savings Accounts

Yes! sign me up

5.26%

Interest Rate

varies

Min. Initial Deposit

Turn Your Savings Into Something

Key Features

SaveBetter (Raisin) Products

With SaveBetter (Raisin), you can easily locate savings products from several financial institutions to ensure you’re earning the best possible yield.

You can also access your savings accounts and investments under one dashboard, For example, you could have a two-year fixed-term CD for your wedding savings and a high-yield savings account for your emergency fund, and view them both on the same dashboard.

High-Yield Savings Account. A traditional savings account with no limits on deposits and withdrawals. Allows you to earn a higher interest rate while having constant access to funds when you need it.

Money Market Deposit Account (MMDA). A money market account is a type of savings account at a bank or credit union that lets you earn interest on your money and make withdrawals.

No Penalty CD. Lock in an attractive rate for a set period with the ability to make a complete withdrawal at any point after the first seven calendar days of funding your account without paying the penalty. CD yields are usually higher than savings accounts.  

Fixed-Term CD. Your money is held for a fixed period with a competitive APY that allows a predictable and safe return on your money. Fixed-term CDs offer higher rates than savings accounts and no-penalty CDs, but your money is locked in for the duration of the term, i.e., 1 Year, 3 Years, or 5 Years.

Is SaveBetter (Raisin) Legit?

SaveBetter is a legit way to invest. Even though SaveBetter isn’t a bank, your deposits with them are protected up to $250,000 with FDIC protection for bank products and NCUA coverage for credit union products.  

SaveBetter is also a SOC 2-certified platform, and they use other security protocols, including multi-factor authentication, encryption, and advanced internet protection from Cloudflare.

While there aren’t as many SaveBetter Reviews online as you would find with more established banks, it’s likely that the service just hasn’t been around for long enough. 

How to Get Started With SaveBetter (Raisin)

Here’s how you can get started with SaveBetter:

Step 1: Create your account. 

Set up an account with your unique username and password in 3-5 minutes. It will ask you for the same information required when signing up for any kind of financial product. 

Step 2: Review the different investment options.

Once your account has been activated, it’s time to review the various investment offers on the main page. You can choose between high-yield savings accounts, fixed-term CDs, and no-penalty CDs. You’ll notice a wide range of products from different financial institutions, so you can shop around until you find the most attractive offer for your situation. You can also explore these options before creating your account. 

Step 3: Apply for offers.

You can apply for any FDIC-insured product listed on the platform. SaveBetter also lets you mix and match when it comes to the different institutions and offerings available. For example, you can invest in a high-yield saving account with Third Coast Bank and a fixed-term CD offered through Ponce Bank. 

Step 4: Fund your account.

Once you’re ready to purchase an investment based on your financial goals and liquidity preferences, you will fund your account by connecting an existing checking or savings account through Yodlee (a third-party app), or manually inputting your routing and account number for your current banking setup.

From there, it takes about three business days for the transfer to go through. You’ll start accumulating interest on your money when the transfer hits your SaveBetter account. 

Step 5: Manage your different investing accounts under one dashboard.

With SaveBetter, you can manage all of your accounts under a single dashboard. For added simplicity, you’ll only get one tax document from SaveBetter, even if you invest with multiple financial institutions. 

SaveBetter (Raisin) Alternatives

As an online marketplace dedicated to savings products, SaveBetter is unique and has no direct competitor. That said, other online banks are offering attractive rates on high-interest savings accounts and CDs. Here are a couple of SaveBetter alternatives worth considering.

Ally Bank

Ally is an online-only bank that also offers high-yield savings accounts and CDs. With a 4.25% APY at the time of this writing, their savings account is slightly lower than what you can find with SaveBetter (Raisin). Still, it offers numerous features you won’t find elsewhere, like recurring transfers and savings buckets. 

You also don’t have to worry about a minimum balance or maintenance fees with an Ally Bank savings account. However, if you’re looking for the highest return for your money, SaveBetter (Raisin) rates are higher.

SoFi

SoFi is an online personal finance company and a bank that allows you to complete your financial transactions in one place. You can have a checking account, savings account, credit card, credit score tracking services, and various other financial products under one umbrella. 

SoFi is currently offering a savings account with a 4.50% APY. You can do all your banking in one place, and you’re guaranteed to earn interest on your money. With over four million users, it’s clear SoFi has become a one-stop shop for personal finance for many folks. 

OUR PARTNER – Top Savings Accounts

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5.26%

Interest Rate

varies

Min. Initial Deposit

Turn Your Savings Into Something

SaveBetter Review: Final Thoughts

If you’re looking for a place to park your money in the short term, you should be checking out SaveBetter’s offers. At the very least, review the products to see if you can find a suitable product that meets your needs. Savings accounts don’t offer the return potential of long-term market investments, but you’ll sleep well at night knowing your money’s safe.

Even though SaveBetter isn’t as established as some of the big national banks, and they work with smaller financial institutions, know that your money will be protected with deposit insurance while you earn a decent return.

SaveBetter (Raisin) FAQs

Since SaveBetter (Raisin) only launched in 2020, many investors still aren’t familiar with the company. Here are the answers to some common questions people have about SaveBetter.

How We Review Banking or Financial Institutions: 

Good Financial Cents undertakes a comprehensive review of banking and financial institutions, analyzing service offerings, customer satisfaction, and financial stability. Our intention is to provide readers with a balanced overview, aiding them in their financial journey. We consistently emphasize editorial transparency.

We source data from these institutions, reviewing account offerings and other key services. This data, when combined with our in-depth research, forms the foundation of our evaluation. Institutions are subsequently rated on a range of criteria, resulting in a star rating from one to five.
For further insight into the criteria we use to rate banking and financial institutions and our evaluation approach, please refer to our editorial guidelines and full disclaimer.

Raisin Review

Product Name: Raisin

Product Description: Raisin is an innovative online savings and investment platform that provides users access to competitive interest rates across a variety of European banks. It streamlines the process of creating and managing savings accounts, making it easier for users to optimize their returns without the hassle of navigating through different banking portals. The platform emphasizes transparency, user-friendliness, and providing a diverse range of savings products.

• [ Open An Account]

Summary of Raisin

Raisin distinguishes itself by consolidating a wide range of savings and investment products from different European banks onto one accessible platform. Users can effortlessly compare interest rates, terms, and conditions to find the most suitable savings options. The platform also simplifies the account creation process, enabling customers to open and manage multiple savings accounts across different banks without additional paperwork for each new account. Raisin’s commitment to providing a user-friendly experience is evident through its straightforward interface and responsive customer support. While it opens up opportunities for higher returns on savings, the platform primarily features products from European banks, which might be a limitation for users interested in global investment opportunities.

• Cost and Fees
• Customer Service
• User Experience
• Product Offerings

Overall

4.3

Pros

• You can open an account in 3-5 minutes.
• Access investments from multiple financial institutions.
• Manage all of your accounts from a single dashboard. 
• Simplified tax reporting with a single 1099-INT document.

Cons

• You may be investing with less established FIs.
• No online bill pay or checking services available.
• Limited customer service is only available between 9 AM and 4 PM EST.

The post SaveBetter (Raisin) Review: The Best Place to Go for High-Interest Savings? appeared first on Good Financial Cents®.

Could it be that motivation wanes over time? Perhaps external circumstances change. Maybe it has to do with the feasibility of the goals.

Many people have trouble sticking to something over the course of a single year let alone several years or decades.

Perhaps that’s why long-term goals – like most financial goals – are so difficult to achieve.

How do we fight against whatever it is that holds us back from achieving these financial goals? Is it possible to win?

Yes. It is.

Today I’d like to share with you some ways you can achieve your long-term financial goals. I won’t claim it will be easy, but it will be worthwhile.

So whether you need to pay off debt, build an emergency fund, save for your kids’ college education, or invest for retirement, here are some ways you can make it hap’n, cap’n.

Why Long-Term Financial Goals Are Important

Long-term financial goals provide direction and motivation for your financial decisions. By defining your long-term goals, you will have a clear picture of what you want to achieve and what steps you need to take to get there. Setting long-term financial goals can help you:

• Stay focused on your priorities: Setting long-term financial goals will help you prioritize your financial decisions and avoid getting distracted by short-term financial needs or impulses.

• Achieve Financial Stability: Long-term financial goals can help you create a safety net, build wealth, and prepare for unexpected events such as medical emergencies or job loss.

• Enjoy the Benefits of Compound Interest: Investing in long-term goals, such as retirement or education, can help you take advantage of the power of compound interest and grow your wealth over time.

1. Capture Your Long-Term Goals in Your To-Do List.

Long-term goals of the financial sort are usually more like projects than individual tasks.

For example, if you want to pay off your debt, chances are that you don’t just have one credit card to pay off – you might have three credit cards, a vehicle loan, and a student loan to overcome (if not more).

“Pay off debt” would be the project. “Pay off Visa #1” would be the task.

The truth is that without writing down your projects and tasks within a task management system of some type, you’re much less likely to accomplish your long-term goals.

There’s just something about seeing your long-term goals on paper (or on a screen) that makes them real. The very act of writing them down is a type of commitment.

Give it a whirl. Write down your long-term financial goals and review them on a regular basis.

2. Don’t Bury Your Long-Term Goals.

It’s not enough to write down your long-term financial goals. Additionally, you need to make them readily available to your eye.

One idea that I’ve found works well is to write down your goals on a whiteboard where you can’t help but see them. But that’s not for everybody.

The point is that you need to find a way to see your long-term goals in the context of all your other goals (namely, your short-term goals).

Don’t bury your long-term goals. They’re important too!

3. Dedicate Certain Days of the Week to Long-Term Goals.

One helpful tip I derived from Strategic Coach was to dedicate certain days of the week to certain goals. This has proved to be very helpful in my own life, and I believe it will in yours, too.

For example, you could dedicate a certain day of the week to managing your finances and brainstorming ways to improve your financial future. Perhaps you have a day off of work that would work best for you.

Now, I can hear you saying, “Oh Jeff, if I only had a day for such tasks – I’m way too busy with other stuff!” That’s fair.

But here’s the thing, you don’t just have to make this day about finances – you can make it about your other long-term goals too. Add in health, family, and other areas of responsibility.

Consider this day (or these days) of the week to be all about bettering yourself and your life. Can’t you make time for that?

4. Prioritize Your Long-Term Goals Properly.

When it comes to long-term financial goals, you need to properly prioritize them. There are some preliminary goals that should only take you less than a month, like setting up a budget and cutting expenses, but we’ll leave that for another article.

What are some common long-term financial goals and in which order should you complete them? Generally, I recommend you complete the following long-term financial goals in the order they are displayed below:

Build Your Emergency Fund

Think of your emergency fund as the foundation of your financial future. Without some liquid money, you’re going to be out of luck when a financial disaster strikes. Believe me, they happen.

Your car engine might explode. Your kneecap might explode (ouch). Your water heater might explode. There are so many things that can explode . . . and it’s not easy to just walk away from those explosions while keeping your cool. It’s stressful!

But you know what would make those situations a little less stressful? You guessed it: an emergency fund baby!

Wipe Out Your Debt

Once you have your foundation in place, it’s time to knock out that debt. This can take several years or a few months – it depends on how much debt you have and how quickly you can shovel money at it.

Write down all of your debts and attack them one by one. It’s easier that way.

Start Investing for Retirement

Now it’s time to start investing for your latter years. Why? It’s possible that your earning potential can go down when you’re physically unable to work. Who knows, you might have a self-sustaining business upon reaching retirement age, but don’t count on it. Invest for the future!

Helping people retire well is what I do.

Start Saving for Other Long-Term Goals

This might include saving for your kids’ college education, purchasing a new vehicle, saving for a home renovation, changing careers, or another goal that will take some time.

By prioritizing your long-term goals in the proper way, you can ensure that should you experience a slump in income, you aren’t wiped out due to a lack of financial planning.

5. Discover and Focus On Your Motivations.

I’m convinced that one of the main reasons people don’t accomplish their long-term goals is because they really haven’t discovered their motivations.

For example, everyone knows it’s a good idea to pay off debt. It’s a financial goal that’s been embedded in our minds by countless financial advisors. But unless you discover your motivation for paying off debt, chances are you’ll give up before you achieve your goal.

In fact, if you’re paying off debt for the sake of paying off debt, you might as well give up now. You’re not going to be motivated enough to get the job done.

Instead, focus on some common motivations that can become your motivations. Here are some great reasons why people want to pay off debt:

• To Not Have to Pay Interest on Their Purchases

• To Free up Money for Vacations

• To Free up Money for Investing in Retirement

• To Not Have to Worry About Those Bills

• To Reduce the Amount of Stress in Their Lives

• To Free up the Time It Takes Managing Debt to Focus On Family

These are just a few of the motivations of others. What’s your motivation?

Assign a motivation for every long-term goal you have. Otherwise, you’re just trying to accomplish your long-term goals for the sake of accomplishing them – that’s not a real motivating factor if you ask me!

Long-Term Goal Examples (Using SMART framework)

Long-term financial goals can take many forms, depending on your values, aspirations, and time horizon. Here are some examples of long-term financial goals in the SMART framework:

Example 1: Save for Retirement

Specific: Save $1 million by age 65 for retirement.

Measurable: Save $500 per month in a retirement account.

Achievable: Based on current income and expenses, it is feasible to save $500 per month for retirement.

Relevant: Retirement is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal by age 65.

Example 2: Pay off Debt

Specific: Pay off $30,000 in credit card debt.

Measurable: Pay $500 per month towards credit card debt.

Achievable: Based on current income and expenses, it is feasible to pay $500 per month towards credit card debt.

Relevant: Paying off debt is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal within 5 years.

Example 3: Invest in Education

Specific: Save $50,000 for a child’s college education.

Measurable: Save $200 per month in a 529 college savings plan.

Achievable: Based on current income and expenses, it is feasible to save $200 per month for a college education.

Relevant: Investing in education is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal in 18 years.

Example 4: Buy a House

Specific: Save $100,000 for a down payment on a house.

Measurable: Save $1,000 per month in a high-yield savings account.

Achievable: Based on current income and expenses, it is feasible to save $1,000 per month for a down payment.

Relevant: Buying a house is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Achieve this goal in 5 years.

Example 5: Start a Business

Specific: Launch a profitable business in the next 5 years.

Measurable: Develop a business plan and secure funding within the next 12 months.

Achievable: Based on current skills and experience, it is feasible to develop a business plan and secure funding within the next 12 months.

Relevant: Starting a business is a long-term financial goal that aligns with personal values and aspirations.

Time-bound: Launch the business within the next 5 years.

Need More Long-Term Goal Examples?

Knowing I’m not the only goal-setting freak that exists in this world, I asked fans from the Good Financial Cents Facebook page what their long-term goals are (big shout to the Fincon community for contributing, too!).

Fincon Community Long-Term Goals

Here’s a great list of examples of long-term goals:

Bob Lotich at SeedTime.com says:

[I want] to provide a comfortable life for my family, to have enough cash to maintain a flexible lifestyle, and to use everything else to financially support charities and organizations that are making a huge impact on the world.

Ryan Guina at TheMilitaryWallet.com says:

[I want] to become financially independent. What this means to me: to have no consumer or mortgage debt and have enough resources in savings and investments to cover my everyday living expenses without relying upon income from my job. This will provide more freedom in pursuing activities based on fulfillment vs. the need to generate revenue.

Larry Ludwig at InvestorJunkie.com says:

[I want] to be financially free. I define it specifically as to accumulate $10,000,000 in investment assets that can generate at minimum 4% per year of income.

Teresa Mears at LivingOnTheCheap.com says:

[I want] to support myself, both now and in retirement, and enjoy life. What else is there?

Steve Chou at MyWifeQuitHerJob.com says:

[I want] to generate enough income so that I can spend more time with my family and be there for the kids. Growing up, my parents worked their butts off so I could go to a good school but I didn’t see them very often during the week. With my kids, I’m going to send them to a good college and always be present.

Grayson Bell at DebtRoundup.com says:

[I want to] build a business and a financial stockpile to allow my family and I to travel when and where we want to. I don’t want to be stuck due to a job or financial situation. This will require scaling my business and looking for more opportunities to expand my passive income streams.

Robert Farrington at TheCollegeInvestor.com says:

[I want] to generate enough passive income to replace my current income. This will require a long-term strategy of earning more money (through my salary and side hustles) and investing the excess. The goal, of course, is to retire early while still being able to provide the quality of life I want.

My Lifetime Goals

Long-term goals can be difficult to articulate but deserve to be written down.  I previously shared my lifetime goals on this post.  Looking them over I recognize I would make a few tweaks, but; for the most part, they still align with what I want to achieve in life.  Here’s a look:

1.  Spiritual Leader of My Household:   I want my kids to see me first as a God-loving father who puts his faith first before success.  I want to continually love and support my wife and do so in a Godly manner.

2. Live a Long and Filling Life With My Wife and Family: Raise my kids with the philosophies of working hard, but not sacrificing “work” for what you love; love first; and treating people with respect (Golden Rule)

3. Have Several Multiple-System Driven Businesses That Produce >$100,000 a Month of Passive Income.

4. Live in Multiple Countries (5+) For an Extended Period of Time (Minimum 3 Weeks) With Entire Family

5.  Inspire Over 1,000,000 People to Invest in Themselves:  This can be through traditional investing (Roth IRA, 401(k), obtaining a higher degree or certification, or investing in a small business.

6. Be a Successful Entrepreneur and Best-Selling Author of Numerous Works: I want to be recognized as a hard worker who puts his family and faith first.

The Bottom Line – Long-Term Financial Goals

Setting long-term financial goals is an important step towards achieving financial stability and building wealth. By defining your values, aspirations, and time horizon, you can create a roadmap that aligns with your priorities and guides your financial decisions.

Remember to monitor your progress, stay motivated, and seek professional advice when needed. With discipline and perseverance, you can achieve your long-term financial goals and secure your financial future.

Here’s Your Homework

I want you to implement at least one of these strategies for reaching your long-term goals over the next year. When the year is over, write me. Tell me how well the strategy worked out for you. I want you to put your heart and soul into one or more of these strategies.

Why? I want you to see success.

Make it hap’n, cap’n!

FAQs – Long-Term Financial Goals

Need some more long-term goals? Check out The Top 10 Good Financial Goals That Everyone Should Have. If you’re a baby boomer, check out 5 Financial Goals for Baby Boomers.

The post How to Achieve Important Long-Term Financial Goals appeared first on Good Financial Cents®.

While it’s true that the amount of return you can get depends on how much risk (and losses) you are willing to accept, great investors make their living by balancing these forces.

While we can’t decide for you how much risk you are willing to take, we have structured this guide to give you a range of options based on zero, low, or medium risk for long-term investments.

Some of these options like picking up a bonus for switching banks, or getting into a higher-yield savings account carry zero risk. Other options could take some additional learning or planning on your part.

The Top 15 Best Low-Risk Investments With The Highest Returns:

Where To Start – Low-Risk Investing

For anyone looking to start investing, I recommend just getting started small because nothing leads to learning faster than action. The easiest way to get started investing in a whole host of asset classes is through a “robo-advisor“.

My personal favorite is M1 Finance because it’s low-cost and dead simple to use. They offer individual stocks, ETFs and give you the ability to build your own custom portfolios.

Open an Account

• Commission-free investing
• Allows fractional shares in stocks, ETFs
• Small minimum investment: $100

My Favorite Low-Risk Investment Right Now

Fractional Real Estate

One of the historically lowest risk/highest return asset classes is real estate. The problem has always been that it’s really hard to get started with small amounts of money.

In recent years, great platforms like Fundrise have popped up and “democratized” access to real estate investments. This advancement makes real estate a very viable option for people looking for alternatives to the stock market.

With Fundrise, you can get started with a well-diversified portfolio of commercial and multi-family real estate with as little as $10.

Invest in Real Estate

• Minimum investment of $10
• Diversified real estate portfolio
• Portfolio Transparency

Long-Risk Investments That Require Zero Risk-Taking

Ok, maybe these aren’t actual investments, but consider them smart money moves to make more money and optimize your finances at a baseline.

1. Grab a Bank Bonus

If you have some extra money you won’t need for a while, you can occasionally earn some free cash with a bank bonus from one of the nation’s best banks. Most banks will offer a bonus as an incentive for you to sign up, and these bonuses can be worth several hundred dollars on their own.

Bank bonuses are sometimes regional, however, and can depend on the local banks in your area and the products they offer.

In exchange for your bank bonus, you may have to set up a direct deposit to your new account or use a bank-issued debit card for a certain number of transactions within the first few months.

By jumping through these hoops, you can usually earn a few hundred dollars for your efforts. Best of all, you won’t have to worry about losing a single cent of your deposit. And if you decide not to keep the account for the long haul, you can always close it once you earn the bonus and meet all of the bank’s requirements.

2. Trade-Up To A High-Interest Savings Account

If you’re looking for a risk-free way to earn some interest on your money, a high-yield savings account might be your answer. With these accounts, you’ll earn a nominal amount of interest just for keeping your money on deposit.

Other than opening your account and depositing your money, this strategy requires almost no effort on your part, either. The best high yield savings accounts offer competitive interest rates without charging any fees. Currently the highest savings rate goes to:

OUR PARTNER – Top Savings Accounts

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5.26%

Interest Rate

varies

Min. Initial Deposit

Turn Your Savings Into Something

3. Open An Online Checking Account

Just like high-yield savings accounts, online checking accounts let you earn small amounts of interest on the money you deposit. If you’re going to park your money in the bank anyway, you could surely appreciate earning some interest along the way. Best of all, many online checking accounts charge zero or minimal fees to get started.

If you want the utmost flexibility, it’s also important to seek out an account that doesn’t impose account minimums or deposit requirements. And if you want to withdraw money frequently, you’ll want to make sure you have access to local, no-fee ATMs as well.

4. Earn More Credit Card Rewards

Credit cards are not the devil. We all spend money, and when used properly, a credit card can help you earn cashback on your spending. By picking up a cash-back credit card, you earn “points” that translate into real money.

In reality, the “rewards” you earn with some of the top cards are far more lucrative than anything you might earn with a Certificate of Deposit or online savings account.

With credit cards I currently earn:

• 5% Back on Cable, Internet, Cell Service, and at Amazon and Target

• 3% Back on Dining and Travel

• 6% Back at the Grocery Store

• 2% Back on Gas

Here’s how these offers work:

Let’s say you picked up a Chase Sapphire Preferred® card and put your regular spending on it to earn the signup bonus. Once you spent $4,000 on your card in 90 days, you would earn 60,000 points worth $750 in travel ($600 in gift cards or cashback). If you spent that $4,000 on bills you would normally pay like groceries, daycare, or utilities, and paid your card off right away, this is the closest thing to “free money” you’ll ever find!

If you want to learn more about the easy money you can score with credit card rewards, check out our guide on the best cash-back credit cards.

Best Low-Risk Investment Options

These investment options carry a very small amount of risk overall. In turn, you won’t expect to make as much, but your money should be relatively safe and still earn yields.

5. Certificate of Deposit

No matter how hard you look, you won’t find an investment more boring than a Certificate of Deposit. With a Certificate of Deposit (CD), you deposit your money for a specific length of time in exchange for a guaranteed return no matter what happens to the interest rates during that time period.

Be sure and buy your CD with an FDIC-insured financial institution (up to $250k is insured). The longer the duration of the CD, the more interest the financial institution will pay.

For a quick low-risk turnaround, I recommend a CIT Bank 11-month No Penalty CD at 4.15%.

6. Money Market Account

A money market account is a mutual fund created for people who don’t want to lose any of the principal of their investment. The fund also tries to pay out a little bit of interest as well to make parking your cash with the fund worthwhile. The fund’s goal is to maintain a Net Asset Value (NAV) of $1 per share.

These funds aren’t foolproof, but they do come with a strong pedigree in protecting the underlying value of your cash.

It is possible for the NAV to drop below $1, but it is rare. You can park cash in a money market fund using a great broker like TD Ameritrade, Ally Invest, and E*TRADE or with the same banks that offer high-interest savings accounts.

While you may not earn a lot of interest on your investment, you won’t have to worry about losing vast amounts of your principal or the day-to-day fluctuations in the market.

7. Treasury Inflation-Protected Securities (TIPS)

The US Treasury has several types of bond investments for you to choose from.

One of the lowest risks is called Treasury Inflation Protection Securities, or TIPS. These bonds come with two methods of growth. The first is a fixed interest rate that doesn’t change for the length of the bond. The second is built-in inflation protection that is guaranteed by the government.

For example, you might invest in TIPS today which only comes with a 0.35% interest rate. That’s less than the certificate of deposit rates and even basic online savings accounts.

That isn’t very enticing until you realize that, if inflation grows 2% per year for the length of the bond, then your investment value will grow with that inflation and give you a much higher return on your investment.

TIPS can be purchased individually or you can invest in a mutual fund that, in turn, invests in a basket of TIPS. The latter option makes managing your investments easier while the former gives you the ability to pick and choose with specific TIPS you want.

Want to protect your portfolio from inflation? Purchase TIPS through a great broker like:

• TD Ameritrade

• Ally Invest

8. US Savings Bonds

US Savings Bonds are similar to Treasury Inflation-Protected Securities because they are also backed by the United States Federal government. The likelihood of default on this debt is microscopic which makes them a very stable investment.

There are two main types of US Savings Bonds: Series I and Series EE.

Series I bonds consist of two components: a fixed interest rate return and an adjustable inflation-linked return. They are somewhat similar to TIPS because they have the inflation adjustment as part of the total return. (You can see the current rates on Series I Bonds here)

The fixed rate never changes, but the inflation return rate is adjusted every 6 months and can also be negative (which would bring your total return down, not up).

Series EE bonds just have a fixed rate of interest that is added to the bond automatically at the end of each month (so you don’t have to worry about reinvesting for compounding purposes).

That equates to approximately a 3.5% return on your investment. If you don’t hold to maturity you will only get the stated interest rate of the bond minus any early withdrawal fees.

Another bonus to look into: if you use EE bonds to pay for education, you might be able to exclude some or all of the interest earned from your taxes.

Looking to purchase some Series I or Series EE Bonds? You can do that directly through TreasuryDirect.gov.

9. Annuities

Annuities are a point of contention for some investors because shady financial advisors have over-promoted them to individuals where the annuity wasn’t the right product for their financial goals.

They don’t have to be scary things; annuities can be a good option for certain investors who need help stabilizing their portfolio over a long period of time.

If you’re in the market for an annuity, however, be aware of the risks and talk with a good financial advisor first.

Annuities are complex financial instruments with lots of catches built into the contract. Before you sign on the dotted line, it’s important to understand your annuity inside and out.

There are several types of annuities, but at the end of the day, purchasing an annuity is on par with making a trade with an insurance company. They’re taking a lump sum of cash from you.

In return, they are giving you a stated rate of guaranteed return. Sometimes that return is fixed (with a fixed annuity), sometimes that return is variable (with a variable annuity), and sometimes your return is dictated in part by how the stock market does and gives you downside protection (with an equity-indexed annuity).

If you are getting a form of guaranteed return, your risk is a lot lower. Unlike the backing of the Federal government, your annuity is backed by the insurance company that holds it (and perhaps another company that further insurers the annuity company). Nonetheless, your money is typically going to be very safe in these complicated products.

10. Cash Value Life Insurance

Another controversial investment is cash value life insurance. This life insurance product not only pays out a death benefit to your beneficiaries when you die (like a term life insurance policy) but also allows you to accrue value with an investment portion in your payments.

Whole life insurance and universal life insurance are both types of cash value life insurance. While term life insurance is by far a cheaper option, it only covers your death.

One of the best perks of using cash value life insurance is that the accrued value can not only be borrowed against throughout your life but isn’t hit with income tax.

While cash value life insurance isn’t for everyone, it is a clever way to pass some value onto your heirs without either side being hit with income tax.

See our recommended life insurance companies.

Medium Risk Investment Options

All of these options carry more of an average risk profile and are variations of traditional stock/bond investing. You may want to consult a financial advisor when looking at these options.

11. Crowdfunded Real Estate Investing

If you like the idea of investing in real estate but shudder at the thought of being a landlord or home prices where you live are too expensive, real estate crowdfunding could be the solution!

Real estate crowdfunding became popular after Congress passed the 2012 Jobs Act, which essentially allowed real estate investors and developers to raise money from the public to fund their projects.

Let’s say a developer has plans to build a 200-unit condominium in Las Vegas. In the past, he could only raise funds for this project from private investors in his network. These days, however, he can list his project on a real estate crowdfunding platform and anyone in the public can invest!

Fundrise operates like Lending Club, except all of the investments are geared toward real estate. They keep risks low and interest high by carefully vetting the projects they invest in.

Invest in Real Estate

• Minimum investment of $10
• Diversified real estate portfolio
• Portfolio Transparency

12. Dividend-Paying Stocks and ETFs

One of the easiest ways to squeeze a bit more return out of your stock investments is simply to target stocks or mutual funds that have nice dividend payouts.

If two stocks perform exactly the same over a given period of time, but one has no dividend and the other pays out 3% per year in dividends, then the latter stock would be a better choice.

With dividend stock mutual funds, the fund company targets stocks that pay nice dividends and does all of the work for you.

13. Corporate Bonds

Unlike U.S. Treasury bonds, corporate bonds are not backed by the government. Instead, a corporate bond is debt security between a corporation and investors, backed by the corporation’s ability to repay the funds with future profits or use its assets as collateral.

Since you are taking on risk by investing in a company, the returns on corporate bonds are higher than other types of bonds, no matter how creditable the company’s reputation is. While that’s reassuring enough for some investors, if you’re looking for truly low-risk corporate investing, you should consider bond funds.

Bond funds come in the form of ETFs or mutual funds and help to diversify your investment across a number of bonds.

Robo advisors provide a great opportunity for investing in bond funds. If you’re looking to choose what types of funds to build into your portfolio but don’t want to deal with the hassle of constantly balancing your account and re-allocating funds, these might be best for you.

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14. Municipal Bonds

When a government at the state or local level needs to borrow money, they don’t use a credit card. Instead, the government entity issues a municipal bond. These bonds, also known as munis, are exempt from Federal income tax, making them a smart investment for people who are trying to minimize their exposure to taxes.

What makes municipal bonds so safe? Not only do you avoid income tax (which means a higher return compared to an equally risky investment that is taxed), but the likelihood of the borrower defaulting is very low. There have been some enormous municipality bankruptcies in recent years, but this is very rare. Governments can always raise taxes or issue new debt to pay off old debt, which makes holding a municipal bond a pretty safe bet.

You can buy individual bonds or, better yet, invest in a municipal bond mutual fund at brokers like:

• TD Ameritrade

• Ally Invest

• E*TRADE

15. Preferred Stock

Adding on to the dividend stock theme is preferred stock. Preferred stock is a type of stock that companies issue that has both an equity (stock) portion and a debt portion (bond). In the hierarchy of payouts to forms of investments, preferred stock sits between bond payments (which come first) and common stock dividends (which come last).

Preferred stocks are not traded nearly as heavily as common stock, but do have less risk than the common stock. It is just another way to own shares in a company while getting dividend payments.

You can track down preferred stock investments at:

• Ally Invest

The Bottom Line on Low Risk Investments in March 2024

As you get closer to retirement, it’s important to reduce your risk as much as possible. You don’t want to start losing capital this late in the game; since you have many years of retirement ahead of you, you want to preserve your cash.

The best low-risk investments can help you do just that. By letting you earn nominal amounts of interest on your money with little risk, you can help your nest egg keep up with inflation without losing your shirt. Just remember to read the fine print and educate yourself along the way. And if you’re ever in doubt over an investment product or service, speak with a qualified financial advisor and ask as many questions as you can.

Check out some of our individual stockbroker reviews to help you get a better grasp on what will meet your investment needs:

• Betterment Investing Review

• TD Ameritrade Review

• E*TRADE Review

FAQs on Low to Medium-Risk Investments

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