Having Debt Doesn’t Mean Your Financial Future Is Ruined: Here’s How to Manage It

June 10, 2020 by Leave a Comment

Talking about money—with friends, with family members, with coworkers—can often inspire feelings of guilt and shame. It’s understandable: Money is a touchy topic, and everyone’s situation, goals, and opportunities are different. Talking to your friend with the well-stocked emergency fund when you’re still struggling to figure out how to get out of credit card debt can make you feel inadequate or ashamed of your own spending habits. It’s easy to feel like you’re falling behind or not doing enough for your financial future, particularly if you have debt.

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How to manage your personal finances during a pandemic

June 9, 2020 by Leave a Comment

Roughly 20 million Americans are still waiting for the stimulus check from the CARES Act to hit their wallets.

The money was targeted at individuals who made less than $75,000 or couples making less than $150,000 on their 2019 tax filings.

Since that bill passed in late March, the unemployment rate has climbed to 14.7 percent.

Half of respondents in a recent NPR, PBS Newshour and Marist poll said at least one person in their household has either lost a job or had work hours cut.

In April alone, the American economy lost 20.5 million jobs, according to a jobs report the federal government released last week.

Wednesday on MPR News with Kerri Miller, two finance experts took listener calls and questions on how to manage your money during a period of economic uncertainty.

Guests:

Jill Schlesinger is a business analyst for CBS News, a certified financial planner and the author of the book, “The Dumb Things Smart People Do With Their Money: Thirteen Ways to Right Your Financial Wrongs.”

Sandra Block is a senior editor for Kiplinger’s Personal Finance.

To listen to the full conversation you can use the audio player above. 

Subscribe to the MPR News with Kerri Miller podcast on: Apple Podcasts, Google Podcasts , Spotify or RSS

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Much Of The Stimulus Aid Sent To States Hasn’t Gone Where It’s Needed Most

June 9, 2020 by Leave a Comment

Mayor Phil Stang stands on the front porch of his home in Kimmswick, Mo., on April 7. The tiny town along the banks of the Mississippi River, normally bustling with out-of-town visitors this time of year, is virtually empty as the economic ravages of the coronavirus have shuttered shops and restaurants in the community.

Jeff Roberson/AP


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Jeff Roberson/AP

Mayor Phil Stang stands on the front porch of his home in Kimmswick, Mo., on April 7. The tiny town along the banks of the Mississippi River, normally bustling with out-of-town visitors this time of year, is virtually empty as the economic ravages of the coronavirus have shuttered shops and restaurants in the community.

Jeff Roberson/AP

On the edge of the Mississippi River, the small historic city of Kimmswick, Mo. has an archaeological site with mastodon bones, Levee High Apple Pie at its famous Blue Owl Restaurant, and a volunteer mayor, Phil Stang.

What it doesn’t have right now is money.

“They think I’m kidding but I’m not,” Stang says. “I [will] have to go and do crazy electronic stuff like GoFundMe pages, or start a lemonade stand … something.”

Kimmswick was already digging out after spending $150,000 on last year’s historic flooding. But with the cancellation of the town’s Strawberry Festival this month, and the fall Apple Butter Festival now in question, Stang needs $250,000 to keep the city operating.

“I’ve said over and over and over again, I want a grant,” he says. “And I don’t want much with all these trillions and gazillions running around.”

Congress sent more than $150 billion in aid to states and cities two months ago. Yet much of that money has failed to make it to places that need it.

A review by NPR has found in some cases, states and counties – which are strapped in their own right – are holding onto the money. Some states like Vermont, Mississippi and Alabama are locked in heated debates over who gets to spend the money.

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Other states are struggling with how to spend the money, trying to understand pages of complex rules and restrictions that have slowed government spending.

While they hesitate, officials in many cities and towns nationwide say they have been left out altogether. Stang’s county offered to share some of its federal funding with Kimmswick but required the mayor to spend city money first and get paid back later — even for protective equipment.

“Well whoop-de-doo,” Stang says. “I haven’t got any money to fight the pandemic. My fight of the pandemic is go in your house and stay there.”

Congress allocated $1.25 billion to each state and then gave some states more, depending on the state’s population. But states can’t use the money to fill budget shortfalls. The money has to be used on a COVID expense.

The result is states like Alaska and Montana with large economic woes but few COVID cases can’t shift funds.

At the same time, cities and towns with thousands of COVID cases have been left out altogether.

The streets are quiet except for a few people out for a stroll in Kimmswick, Mo., on April 7.

Jeff Roberson/AP


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Jeff Roberson/AP

The streets are quiet except for a few people out for a stroll in Kimmswick, Mo., on April 7.

Jeff Roberson/AP

“We have not received any dollars yet,” said Natasha Love Rogers, the chief operating officer for Newark, N.J. “The federal dollars from the Cares Act went to our county.”

That’s because another rule says only places such as cities or counties with more than 500,000 people can get direct funding from the federal government. Newark has more than 7,000 COVID cases and around 600 deaths, but only 282,000 people.

“People will have to be furloughed or laid off,” Rogers says, “and now you’re decreasing the amount of emergency personnel that are needed to deliver the emergency services during the emergency. So we’re getting into a funnel here.”

There’s no simple remedy that would allow Newark to get more funding. The rules sent out by the Department of Treasury say states and counties “should” pass the money down to their local communities. But the rules don’t say “shall,” which in government speak means they don’t really have to.

“Yeah, that doesn’t do us much good,” said Colin Wellenkamp, executive director of the Mississippi River Cities and Towns Initiative, which represents 96 cities from Minnesota to Louisiana.

New Jersey first lady Tammy Murphy, left, distributes bags containing meals and face masks, at the NAN Newark Tech World in Newark, N.J., on May 6.

Mary Altaffer/AP


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New Jersey first lady Tammy Murphy, left, distributes bags containing meals and face masks, at the NAN Newark Tech World in Newark, N.J., on May 6.

Mary Altaffer/AP

The cities account for more than 5 million Americans, but all but one of those 96 cities was shut out. “Five hundred thousand is a really high bar,” Wellenkamp says. “Not even the city of New Orleans meets that.”

For those places that do get money, puzzling restrictions await, says Brad Gair, a former federal coordinating officer for FEMA and a principal at Witt O’Brien’s, an emergency management firm.

“Everyone is confused,” he says. “They’re frustrated and they’re worried.”

Gair has helped the governments and communities manage dozens of disasters including 9/11, Katrina and Hurricane Sandy. But he says he’s never seen this kind of complexity. Recently, Gair set up a free webinar to help counties understand the rules. More than 1,000 counties dialed in.

“What is unusual in my experience ever is to have that same 1,000 there at the end of an hour-long call,” he said. “There are hundreds and hundreds of cities and towns that aren’t even applying because they don’t understand the programs and they don’t have time to figure it out.”

San Jose in the heart of Silicon Valley does have the time and the know-how, but even they are struggling.

This is “the most complicated Rubix cube of financing we have ever had to solve and we are really good at solving that kind of stuff,” says Kip Harkness, deputy city manager for San Jose.

A healthcare worker walks past people waiting to be tested for COVID-19 at Santa Clara Valley Medical Center in San Jose, Calif., on May 19.

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A healthcare worker walks past people waiting to be tested for COVID-19 at Santa Clara Valley Medical Center in San Jose, Calif., on May 19.

Ben Margot/AP

San Jose has more than 500,000 people, so it got a direct grant from the federal government of $178 million. But Harkness says they are still working through the night trying to understand the rules.

They recently discovered, for example, that they can use the money to feed homeless people within the city’s borders, but they can’t spend the money on homeless people one block over in the county.

“We’re not allowed to spend our CARES Act money in other jurisdictions,” he says. “We’re having to navigate a complex bureaucracy whereas in any other disaster this would be a shared responsibility that would fall on the state and federal government to step in and assist.”

Mayor Phil Stang, planning a lemonade stand in Kimmswick, says that particular rule is a shame.

“There’s a song about that: ‘Do You Know The Way To San Jose,'” he says laughing, “and if they happened to have $250,000 in a bag out there, I’ll be happy to travel out there and bring it back.”

Many cities will also be coping with the economic fallout from continued protests and rioting in the weeks ahead. Some mayors may be looking to move federal money from one crisis over to the next. But, that along with pages of other rules, is not allowed.

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Vivid Money launches together with solarisBank and Visa in Germany

June 8, 2020 by Leave a Comment
About solarisBank

solarisBank AG is the first Banking-as-a-Service platform with a full banking license that enables companies to offer their own financial products. Through APIs, partners gain access to solarisBank’s modular services including digital bank accounts and payment cards, identification and lending services, as well as services provided by integrated third party providers. Through this, solarisBank creates a highly developed technological banking ecosystem for fintechs and established digital companies, as well as banks and corporates.

After having established itself as the banking partner of choice for blockchain and crypto businesses, solarisBank founded solaris Digital Assets GmbH in 2019 to further drive the adoption of digital assets. The 100% subsidiary of solarisBank offers a custodial solution for digital assets to complement its existing banking services.

The Berlin-based company was founded back in 2016 and is led by CEO Dr. Roland Folz, board members Jörg Diewald, Dr. Jörg Howein and Thom Rasser, as well as COO Dr. Daniel Seifert and CTO Hima Mandali. To date, solarisBank has raised more than EUR 100 million from renowned investors, including BBVA, Visa, Lakestar, ABN AMRO’s Digital Impact Fund, Arvato Financial Solutions, SBI Group, finleap and yabeo.

www.solarisbank.com

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Motley Fool: Let Warren Buffett manage your money and how to save for retirement if you’re self-employed

June 8, 2020 by Leave a Comment

The Motley Fool Take

Shares of Warren Buffett’s company, Berkshire Hathaway, were recently trading at levels not seen in years, making them rather attractive for long-term investors. Its Class A shares, after reaching almost $350,000 per share, are down to the $270,000 range. Its Class B shares, which had traded at $230 earlier this year, are now around $180 per share.

Berkshire Hathaway is a diversified holding company with billions of dollars invested in dozens of stocks (including Apple, Bank of America, Coca-Cola and American Express), along with around $125 billion in cold, hard cash. More important, Berkshire has acquired dozens of solid companies over the years, with these subsidiaries including Benjamin Moore, Brooks Sports, International Dairy Queen, Justin Brands, McLane, Business Wire, Clayton Homes, Forest River, GEICO, Nebraska Furniture Mart, NetJets, See’s Candies, Shaw Industries and the entire BNSF Railway.

Berkshire Hathaway’s near-term performance will be challenged by the COVID-19 outbreak — its retail businesses in particular. But Berkshire also owns businesses that won’t be as affected by the coronavirus pandemic, such as its insurance and energy operations.

Meanwhile, Buffett is a master at making smart investments during market downturns — and he has billions at his disposal with which to do so. At age 89, he has spent decades building the company to last. He has succession plans in place, too, so Berkshire can keep growing for decades more. (The Motley Fool owns shares of and has recommended Berkshire Hathaway.)

Declining interest rates and declining dividend yields make Social Security an even more important part of retirement income.

Ask the Fool

From R.P. in Farmington, N.M.: Is it smart to sell my low-dividend-yield stocks and buy more high-yield stocks?

The Fool responds: Not necessarily. High dividend yields are certainly appealing, as they deliver significant income, but they’re not equally safe or attractive. Many solid companies pay out most of their earnings in dividends and sport fat yields. That’s great, and such stocks are good for people seeking income. But since a dividend yield is the result of dividing a stock’s annual dividend amount by its current stock price, a high yield can also reflect a stock that has fallen in price, possibly because the company is in trouble.

Also consider a dividend’s growth rate. A modest dividend today can be a fat dividend in a few years if the company is increasing its payout regularly and significantly, as many do. Some low-dividend stocks may be paying much fatter dividends within a few years.

From M.B. in Norfolk, Va.: How are stockbrokers paid?

The Fool responds: If you’re referring to brokerages, they make some money by charging trading commissions (though many brokerages now offer commission-free trading). Typically, they earn more from interest on client assets, interest on margin loans and fees for asset management and other services.

If you mean the humans who might call you and try to sell you an investment, or through whom you might buy or sell stock, they’re generally paid via salary, commissions on sales, incentive bonuses and advisory fees; the mix depends on the company they work for. Brokers who depend heavily on commissions can cost you quite a bit if they encourage you to trade frequently.

The Fool’s School

One drawback to being self-employed is not having an employer-sponsored retirement plan, such as a 401(k). But people who are self-employed can still save with traditional and Roth IRAs and can save in regular taxable accounts, as well.

In addition, there are special retirement plans for self-employed people such as the SEP IRA, the SIMPLE IRA and the Solo 401(k) plan. Each lets you deduct your contributions from your taxable income, and those contributions will grow on a tax-deferred basis until the money is withdrawn. Solo 401(k)s also offer a Roth version, where your contributions are made with post-tax money (offering no deduction), and your withdrawals in retirement are tax-free.

A SEP (Simplified Employee Pension) IRA lets employers or self-employed people contribute far heftier sums than even most 401(k)s allow. For 2020, the contribution limit is the lesser of 25% of compensation or $57,000. It’s easy to set up and has low administrative costs.

A SIMPLE (Savings Incentive Match Plan for Employees) IRA is another retirement plan that self-employed people can set up for themselves. (Small businesses can set them up for employees, too.) The contribution limit for employees is $13,500 in 2020, plus $3,000 more for those ages 50 and up. An employer matching contribution of up to 3% of income is also allowed.

A Solo 401(k) plan, also known as a One-Participant 401(k) plan, is a traditional 401(k) plan for a business owner, or for the owner and his or her spouse. The owner can make both elective-deferral contributions from compensation of up to $19,500 in 2020 ($26,000 for those ages 50 and up) and employer nonelective contributions, with all contributions (except catch-up contributions of those 50 or older) totaling no more than $57,000.

Each of these plans has a few more rules to know about regarding how to set them up, contribution limits and withdrawals. Learn more before deciding which is for you, because the rules or limits might make one option better than others. However you go about it, it’s vital to be saving and investing for your future.

This photo illustration shows a Vietnamese cryptocurrency investor looking at Bitcoin values in 2018.
This photo illustration shows a Vietnamese cryptocurrency investor looking at Bitcoin values in 2018.(NHAC NGUYEN / Getty Images)

My Dumbest Investment

From M., online: My dumbest investment was jumping onto the Bitcoin train near its all-time high — when I knew nothing about cryptocurrencies. I was hoping it would continue to skyrocket, but shortly after I got in (at around $19,000 per token), it crashed. Lessons learned: Don’t be a sheep following the herd, and learn before you earn!

The Fool responds: Those are two excellent lessons. It’s always best to think for yourself when investing, because lots of people in the crowd don’t know what they’re doing. Indeed, if they panic about a short-term problem facing a company and sell out of it, that can be a good time to buy —and if they greedily snap up shares of a company, sending the stock price soaring, it’s often best to steer clear, as it’s likely overvalued and may soon fall.

Many people have invested in Bitcoin and other cryptocurrencies without really understanding them — and they’re not easy to understand. They’re also highly volatile and risky, and are best avoided by most of us.

Bitcoin was briefly above $20,000 per token in late 2017, only to dip below $6,000 a few months later and end up near $3,000 a year later. More recently, Bitcoin has been trading near $9,000. You can learn much more about investing in Bitcoin and cryptocurrencies from The Motley Fool at Mot.ly/crypto-things-to-know.

outside of a Walgreens advises that no COVID-19 testing is done inside the store in Dallas on April 25. This location began testing for the new coronavirus the day before with a drive-through process and is provided to eligible individuals at no cost. Persons wanting to be tested are asked to go online to their website to determine their eligibility. The test is self-administered with directions from store pharmacists.

Who am I?

I trace my roots back to my 1979 founding by game designers from Atari; that was followed by the success of Chopper Command, River Raid and Pitfall. My current name reflects a 2008 merger with the developer of Warcraft. Today, based in Santa Monica, Calif., I oversee many game franchises, such as Call of Duty, Skylanders, World of Warcraft, Overwatch, Diablo, Candy Crush and Bubble Witch. With a market value recently topping $55 billion, I rake in more than $6 billion annually, and nearly 500 million users play my games per month — in 196 countries. Who am I?

Last week’s trivia answer: Johnson Johnson

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Samsung wants to help you manage your money with its new debit card

June 7, 2020 by Leave a Comment
samsung-pay-card

Samsung’s first debit card for the US market will arrive this summer.


Samsung

Samsung’s getting into the personal finance game — with its new, no-fee Samsung Money cash management service and debit card for Galaxy device users, launching later this summer.

The company on Wednesday shared details about its service, which is offered through a partnership with online personal finance company SoFi. Its debit card, which will be available via Mastercard in the US, will have no fees, including those related to overdrafts and transfers and through the use of certain ATMs in the US. 

Samsung Money users will be able to check their balance, review past statements and search transactions through the Samsung Pay app. They’ll also be able to flag suspicious activity, pause or restart spending, freeze or unfreeze their card, change their PIN and assign their trusted contact, all through the app.

While the service is predominantly virtual, there also will be a physical card with no numbers, just like the Apple Card. 

“We knew that, as a tech company, we had an interesting opportunity to really provide tremendous innovation and disruption in this space, primarily by bringing more value, convenience and security to consumers,” Sang Ahn, general manager of Samsung Pay, said in an interview with CNET ahead of the announcement. 

Samsung is just the latest tech company to expand into personal finance. Instead of offering a credit card like Apple, Samsung opted for a debit card. Two out of every three card transactions made in the US are via pre-paid and non-prepaid debit cards, Ahn said, citing a Federal Reserve study. But that same study found that the value of credit card payments exceeded the value of debit card payments by almost 30%.

Samsung Money has some limitations. For one, there’s currently no way to add physical cash to the account. And there’s no cash-back option like with Apple’s credit card. Users will collect Samsung rewards, which can be used in Samsung’s store and with other partners. As a one-time offer, Galaxy users with at least 1,000 Samsung Reward Points will be able to redeem points for $5, which will be deposited in their Samsung Money accounts.  

The debit card marks the latest evolution of Samsung Pay. It will join Apple’s credit card — called Apple Card — and a rumored debit card from Google. The companies have all been looking for ways to expand beyond letting people pay for items with their mobile devices. Offering a credit or debit card is a way to build customer loyalty amid fierce competition for smartphone customers. It also comes when people are closely watching their budgets in light of the global novel coronavirus pandemic. 

“We’re in a time where consumers and people are looking a lot closer at how they spend their money,” Ahn said. They’re trying to physically touch things less often, as well as be aware of where their money is going, he said. “We want to help them do more with the money that they are spending and saving,” he said.

Samsung payments history

Samsung launched Samsung Pay, its mobile payments service for its smartphones and wearables, in 2015. The idea was for users to pay for items by waving their Galaxy device near a store’s checkout register instead of swiping a credit card. It was much like Apple Pay, which went live a year earlier, but it didn’t require special point-of-sale terminals that had tap-to-pay NFC technology. Instead, Samsung Pay worked with NFC, magnetic stripe and EMV (Europay, MasterCard and Visa) terminals for chip-based cards.

Since that time, Samsung Pay has given users the ability to add loyalty cards, receive cash back for making certain purchases and take advantage of promotions. That includes bonus Samsung account points and vouchers with a number of participating retailers. Chase Pay users can also link their existing digital wallet with Samsung Pay and people can use Samsung Pay to pay for mass transit.   

Apple introduced its Apple Card last year and started letting people sign up for its physical credit card in August. It’s designed for iPhone users, has no fees, offers daily cash-back rewards and works with Apple Pay. It also exists as a physical titanium credit card. It’s part of Apple’s effort to expand beyond being the “iPhone company” and into making recurring money from services. 

And Google is believed to be developing physical and digital debit cards, which would be tied to an app for payments, managing purchases and checking balances. The goal is to make the card the foundation of the search giant’s Google Pay mobile payments service.

Samsung earlier this month said it planned to introduce a debit card as its Samsung Pay service turns five.

Show me the Money

When it comes to Samsung Money, users can open an individual or joint cash management account. The debit card has a 0.2% annual percentage yield, and deposits are insured by the FDIC for up to $1.5 million.

If taking out cash at an ATM, you’ll be reimbursed for the fees if you’re accessing one of the 55,000 machines in the Allpoint Network. In San Francisco, that includes getting cash at the checkout in Walgreens and CVS pharmacies (which is also free for other debit card holders), as well as Allpoint ATMs in places like taquerias and grocery stores. But if you use your card at out-of-network ATMs, including overseas — when we’re allowed to travel again, that is — you’ll be responsible for covering the fees charged by those ATMs. 

samsung-money-by-sofi-color-backgroundEnlarge Image

Samsung Money has a physical debit card with no numbers on it to protect your privacy.


Samsung

Samsung and SoFi have “a pretty robust pipeline of product innovations” planned for Samsung Money, SoFi CEO Anthony Noto said in an interview ahead of the news. The upcoming functionalities, which he didn’t detail, will give “you greater control of how much you spend and how much you save, but also to look back at recent transactions and better plan in the future.”

Currently, there’s no way to add physical cash to Samsung Money accounts, but Noto said that’s something his company is working on. The idea is a user would be able to deposit money through a partner ATM, he said. 

Before Wednesday’s announcement, Samsung already offered one form of debit card, called Samsung Pay Cash. It doesn’t have a physical card but allows users to create a digital, prepaid card that they can store within Samsung Pay and use to make purchase online and in stores where Samsung Pay and Debit Mastercard are accepted. 

Samsung Pay cash won’t be going away when Samsung Money is live, Ahn said.

“There are two very different use cases,” he said. “Samsung Money by SoFi is really for … anyone who wants a high end, … innovative, no fee, high yield cash management service,” Ahn said. Samsung Pay Cash, on the other hand was aimed at people who wanted a way to move money from one account to another and use it more like a prepaid card, he said. 

Starting Wednesday, the Samsung Pay app will include information about Samsung Money, with its own dedicated tab. Galaxy device owners can register for alerts about the new service before being able to sign up for accounts later this summer. 

When the service is available, would-be Samsung Money users can get approved instantly through the Samsung Pay app (assuming they meet identification and other qualifications). They’ll then receive their physical debit cards in the mail in about 10 business days and can activate the cards through the Samsung Pay app. 

“Once the account is created, the virtual debit card will be provisioned immediately into the Samsung Pay wallet so you can use it right away,” Ahn said. “Mobile-first financial services will play an even more important role going forward in a post-coronavirus world.”

Stay in the know. Get the latest tech stories from CNET News every weekday.

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COVID-19 and your money: How to manage finance during uncertain times

June 7, 2020 by Leave a Comment

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These money and investing tips can help you manage the ‘new abnormal’ realities of the coronavirus-damaged economy

June 7, 2020 by Leave a Comment

Don’t miss these top money and investing features:

  • Despite the stock market’s breathtaking rally, investors are closer to despair
  • Dud stock picks, bad industry bets, vast underperformance — it’s the end of the Warren Buffett era
  • Warren Buffett hasn’t lost his touch and Berkshire Hathaway’s critics — as usual — are short-sighted
  • If you could buy only one stock ETF, this would be it — and it doesn’t track the SP 500
  • Managing cash with interest rates low

These money and investing stories, popular with MarketWatch readers this past week, offer ways to manage your financial portfolio and to invest strategically as we all come to terms with the “new abnormal” life the coronavirus pandemic has brought us.

INVESTING NEWS TRENDS
Despite the stock market’s breathtaking rally, investors are closer to despair

Most sentiment gauges are pessimistic, which contrarians say is bullish for stock prices, writes Mark Hulbert.
Despite the stock market’s breathtaking rally, investors are closer to despair

Dud stock picks, bad industry bets, vast underperformance — it’s the end of the Warren Buffett era

The chairman of Berkshire Hathaway seems to prefer the SP 500 to his own company’s stock.
Dud stock picks, bad industry bets, vast underperformance — it’s the end of the Warren Buffett era

Warren Buffett hasn’t lost his touch and Berkshire Hathaway’s critics — as usual — are short-sighted

Keep expectations real when a skilled investor lags the market, writes Mark Hulbert.
Warren Buffett hasn’t lost his touch and Berkshire Hathaway’s critics — as usual — are short-sighted

This settles the stock-market valuation dispute between billionaires David Tepper and Nelson Peltz

When coronavirus has made earnings and revenue forecasts difficult, look to the Q-Ratio.
This settles the stock-market valuation dispute between billionaires David Tepper and Nelson Peltz

Fed says pandemic has created U.S. financial sector fragility that will last for some time

The Federal Reserve said the coronavirus pandemic has created U.S. financial sector “fragilities” that will last for some time.
Fed says pandemic has created U.S. financial sector fragility that will last for some time

Insiders are making cautious moves with their company stock after April’s big market surge. Why it matters

One beaten-down industry sees buying, but most corporate insiders aren’t biting.
Insiders are making cautious moves with their company stock after April’s big market surge. Why it matters

What’s the most shorted sector? The answer might surprise you

The biggest bets among the most bearish investors might be instructive for the rest of us.
What’s the most shorted sector? The answer might surprise you

These are just some of the ways ETFs and index funds are making financial markets more unstable

Investors with indexed portfolios are vulnerable to increasing market volatility, writes Satyajit Das.
These are just some of the ways ETFs and index funds are making financial markets more unstable

Now we know: ETFs have made the investing world a better place

Exchange traded funds used to be tied to higher volatility and even fraud. It’s worth remembering their advantages.
Now we know: ETFs have made the investing world a better place

The rich are getting richer among high-yield ETFs, too

Investors trying to front-run the Federal Reserve’s purchase of below-investment grade bond ETFs are further concentrating the market for these funds.
The rich are getting richer among high-yield ETFs, too

ETF survival of the fittest shows just what’s going on in financial markets

There’s a lot more signal and a lot less noise in the ETF space as a few clear winners and losers emerge.
ETF survival of the fittest shows just what’s going on in financial markets

Investment giants seek stricter definition of what makes an ETF

BlackRock Inc., State Street Global Advisors and other large money managers are asking exchanges to enforce a more narrow definition of exchange-traded funds.
Investment giants seek stricter definition of what makes an ETF

If you could buy only one stock ETF, this would be it — and it doesn’t track the SP 500

This internet ETF has outperformed not only the SP 500 and Dow Jones Industrial Average, but also the Nasdaq.
If you could buy only one stock ETF, this would be it — and it doesn’t track the SP 500

This strategy may help stressed-out retirement investors

An idea for sidestepping spikes in market volatility
This strategy may help stressed-out retirement investors

Managing cash with interest rates low

How investors can get the most bang for their buck through savings accounts.
Managing cash with interest rates low

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‘Financially Responsible’: App Aims To Help Children Keep Busy, Learn How To Manage Money

June 6, 2020 by Leave a Comment

PITTSBURGH (KDKA) — Kristi Woolsey has two sons, and she is concerned about their future.

Specifically, as it relates to spending money.

“I want to raise my kids to be financially responsible,” Woolsey said.

A co-worker told Kristi about “BusyKid,” a modern-day method that pays kids for doing chores.

It’s a free app designed and created by a certified financial planner.

“They do those chores, mark them off. We keep track of that,” says app designer Gregg Murset. “Then literally on a Thursday, you’re going to get a message that says, ‘Hey, tomorrow’s Friday. It’s payday. This is what the kids have earned. Do you want to approve the payroll, yes or no?’”

(Photo Credit: Provided)

In two years, Woolsey’s two boys learned quickly.

“If I want something, I have to earn it. I have to go get it,” Woolsey said.

Murset says that is the first valuable lesson of BusyKid.

“I call that OPM — other people’s money. When kids spend OPM, they don’t really care. But when they spend their own, they care a lot,” Murset said.

Woolsey’s older son, Miles, can earn up to $15 per week by doing his assigned chores around the family’s Pittsburgh home.

He also gets paid money for brushing his teeth every night and walking the family’s two dogs.

The app appeals to kids because they embrace new technology quickly.

It also takes advantage of the idea that money and finances are largely digital these days.

Gone are the days of paying the weekly allowance with dollar bills and spare change.

Murset says you would never say, “Here’s a pig, and we’re going to put bills in it and coins in it. Like what? No, Nobody does that anymore. If they do, they should maybe rethink it because that’s not the real way that money works anymore. It is numbers on the little screen.”

On pay day, money from Kristi’s checking account is transferred to her son’s BusyKid debit card. It also is split into three categories: to give, save and spend.

Parents and kids decide how much of their money they want to designate into each of those three categories.

Kids have the opportunity to buy fractional shares of stock in real companies – companies they know like Tesla, McDonald’s, Nike and Netflix. They also can choose where they want to donate some of their money.

BusyKid has been around for a while. Woolsey has used it for the last two years.

However, in April, Murset says 47,000 people signed up.

“Nobody’s going to school. They’re all at home, like, Holy smokes, what are we doing? We need a little structure,” Murset said.

For Murset, it is critical kids understand how to earn money, how to save, how to invest and how to give to the charities of their choice.

He says it sets them up for lifelong financial success.

“They are going to make better decisions. And if you look at that out into the future, boy, you really changing the game for these kids,” Murset said.

If you choose to provide a “BusyKid” debit card, there is a $7.99 per child per year fee for the card, but that is the only fee you will pay.

BusyKid is available for Android and Apple devices and can be downloaded for free.

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How to Make a Budget and Track Your Money

June 6, 2020 by Leave a Comment


Financial Literacy

By

Originally posted May 12, 2020

Updated on May 13 at 5:05 pm

Sometimes personal finances can be overwhelming. Maybe you feel like you have too much debt, are spending too much each month or have no idea how much money you’re really making. If so, you may realize that a first step to getting hold of your financial life is budgeting. In this article, I will teach you how to make a budget so that you can manage your personal financial life.

A couple at their laptop making a budget to track their financial life.

What Exactly Is a Budget?

A budget is a plan. More specifically, it is a financial plan that tells you how much money you are earning and spending each month. The first step to improving your financial life is knowing where you currently stand.

According to Debt.com, only about one third of Americans actually keep a regular household budget. No wonder so many people feel like they have money problems!

Your money life doesn’t manage itself. You need to be an active participant. Creating a budget to track things like total assets, total debt, net worth and monthly income and expenses is the first step to a future of financial freedom.

Why Should I Keep a Budget?

You may be wondering whether you should really go through the hassle of keeping a budget. If you are a living, breathing, eating and sleeping human being, the answer is yes.

As the famous philosopher Francis Bacon (not the painter, the philosopher and founding father of science) once said, “Knowledge is power.” You can’t successfully navigate or manage your financial life if you don’t know what’s going on.

Creating a budget is the perfect way to know what money you have, what money you need and what money you’ve spent. Also, it will give you great insight into how far away you are from your financial goals.

How Do I Even Get Started?

You may be wondering how to even get started making a budget. It might feel overwhelming. But it doesn’t have to be. In fact, the first step you need to take is simply to make a choice. You need to be willing to make one – and to do the work.

Sometimes making a major life decision is the hardest step of all – but it doesn’t have to be. The guys at Lifehack.org have some tips for how to make big choices that can empower you to handle your life – and go through with the decisions you make.

Another helpful tip is to articulate your choice to other key stakeholders or even just a friend. Verbalizing your intentions and your choice gives you a sense of accountability. And you can have these people check in to make sure you are sticking to your decision.

With that said, it’s time to get down to the real nitty-gritty of how to make a budget.

How to Make a Budget: A Step-by-Step Guide

Making a budget takes some work. But it’s work that’s more than worth doing if you want to take control of you financial life and build your wealth.

Here’s your step-by-step guide to making a budget:

1. Figure Out Your Assets

Before you figure out where you want to go when making a budget, you have to know where you are right now. This means figuring out what your personal assets are.

This, of course, includes the cash in your checking and savings accounts. But it can be much more than that. You may own a home or car, and you may have a 401(k), an IRA or a Roth IRA.

Adding up all these assets will give you a better sense of how much money you have. Of course, that may make you feel better or worse. But as I said, knowledge is power, and if you don’t have the wealth you’d like, now is the time to change that.

2. Figure Out Your Debt

The next step in making your budget is to do the same with your debt. Your debt is any money that you owe to a creditor. One classic form of debt is credit card debt. And there are pros and cons to this kind of revolving debt.

Also, you may very well have long-term debts of varying lengths. For example, perhaps you took out a mortgage on your Long Island split-level house. Or borrowed to buy a 2020 Lexus with the fancy security system you wanted.

Maybe a student loan or two?

In this step, it’s very important to be honest with yourself. The more honest you are in accounting for your total debt, the more making a budget can be of help in paying it down.

3. Calculate Your Net Worth

When making a budget, the next step is to calculate your net worth. The definition of net worth is very simple: It is the sum of your total monies, or assets, minus the sum of your total debts, or liabilities.

And the good news is that thanks to steps one and two, you already have the tools to do this. You can take your final number from step one, your total assets, and subtract the total debt you calculated in step two.

Voila! You now know your net worth. The only problem is that you may not like the number you see. In 2017, 14% of households had a negative net worth. And the problem may be even worse now.

If this is you, do not panic. That is exactly why you are making a budget. Let’s continue.

4. Determine Your Monthly Income

Every month (hopefully) you earn a certain amount of money. Much of this probably comes from wages or salary from your primary job. Keeping track of this is essential to making your budget.

But there may be much more income per month that you aren’t considering. Here are some potential examples

  • A secondary job or side hustle
  • Passive income from investments in stocks or bonds
  • Rental income from an apartment you lease to tenants
  • Monetary gifts from family members
  • And there could be even more.

All of these sources of income should be included when you make a monthly budget.

5. Determine Your Monthly Expenses

This is likely the most important part of making a budget. You need to account for all your monthly expenses. Do not fudge this for you will only be cheating yourself.

Your expenses are not going to be exactly the same each month – they will fluctuate, and that’s fine. Instead of trying to estimate from one month of expenses, average together your monthly expenses from the past three to six months. Then you will have a good idea of what you are spending each month.

This step in the process is key because it will help you determine in future months whether you are over- or underspending compared with your monthly average. If this turns out to be the case, you will likely need to adjust your spending or saving habits.

6. Enter Your Numbers Into a Tracking System

Once you have collected all this data about your finances, it is time to actually make your budget. And trust me: You are not going to want to do this by hand, on sheets of paper.

One easy to way create a budget is to build it in Excel. I used to use this method, and it works well enough. Excel is software you likely already have and use. But the downside to making your budget in Excel is that you will have to enter your monthly transactions manually.

If automating this process appeals to you like it does to me, there are plenty of budgeting apps you can use to help you. In fact, Investment U has put together a list of the best budgeting apps around.

Two of the budgeting apps that didn’t make this list that I personally love are Everydollar and Personal Capital. When you connect your financial accounts – such as bank accounts, credit cards or 401(k)s – to them, they automatically add the transactions from those accounts to your budget.

The Bottom Line for Making Your Budget

After you’ve taken all these steps, you will have a working monthly budget that will help you manage your financial life and well-being. Each month, you will be able to see whether you’ve spent more money than you’ve earned or whether you’ve been able to save some money in a bank or investing account.

Of course, as you go, you will likely see that you need to adjust both your budget and your spending and saving habits. This is normal, and doing so will be key to helping you reach your short- and long-term financial goals.

Now that you know how to make a budget, why don’t you take your personal finances to the next level? You can sign up for our free Investment U e-letter in the subscription box below to receive daily tips on how to manage your money, invest and build wealth.


About

Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.

He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.

His primary interests at Investment U include personal finance, debt, tech stocks and more.

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