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Investing is an essential aspect for growing any kind of significant wealth throughout one’s life. The meaning of ‘wealth’ here is relative to each individual, and their personal financial goals. Some people have plenty of money to invest, and know exactly how to build a successful investment strategy. Others, however, feel like they don’t make enough to invest or aren’t informed enough to invest successfully over time. The good news for those who feel this way is that there are now apps to help with both of these investing concerns! We will highlight some of our favorites below to help you find the one that fits your personal situation best.

Acorns

Acorns is the perfect concept for those who feel they just don’t have enough money to invest in the market. They have an automated investing feature called Round-Ups that invests money for you automatically. Every time you use your credit card, Acorns will round up to the nearest dollar and invest the difference into your account! This makes investing seamless and pain free for you because you will hardly notice it is happening. They offer various investing options, and have low monthly fees ($1, $2, and $3 monthly). Once your account grows and surpasses the $5,000 mark there is simply a flat fee of 0.25% per year. To help even further, Acorns offers free services for college students with valid .edu email addresses. They offer free services for up to 4 years.

Stash

Stash is another investment app that is built for those who feel they don’t have enough to invest. With monthly fees as little as $1 per month for the beginner package, you can learn the proper investment strategies for a small fee. Combine that with the fact you only need $5 to open your account and begin investing, this is affordable for any budget. Similar to Acorns, once your account grows beyond $5,000 they charge the same 0.25% annual fee.

Robinhood

Robinhood is an investment platform for those who already have a decent handle on how to invest. The benefit here is they have zero-fee transactions. Most trading platforms will charge anywhere from $2-7 per transaction. That means if you have a smaller trading account and you trade frequently, these fees can start adding up over time. Don’t forget that these fees are based on each transaction, and each trade has 2 transactions. That could add up to $14 per trade ($7 for buying then $7 for selling). Robinhood has been a growing company and now offers a wide variety of investment options, now including Bitcoin and Ethereum.

Webull

Webull is very similar to Robinhood, offering no-fee investing. They offer account opening fees of $0, account management fees of $0, and trade commissions of $0. Certain investment options within their platform will come with fees from the SEC and FINRA, which are unavoidable on any trading platform. These fees can range from $0.01-5.95 per transaction. They have a wide variety of investment options and investing tools to help you make more informed decisions with your hard earned money.

Betterment

Betterment builds a personalized portfolio and uses algorithms to automatically invest for you. These algorithms are also constantly rebalancing your portfolio for you. This is as hands-off as active investing gets since everything is automated. They offer low-fee investing plans, with their digital plan having a 0.25% fixed annual fee. There is no minimum deposit for the digital plan. Potentially the biggest benefit Betterment offers is their automated tax-loss harvesting strategies. They constantly rebalance the portfolio to minimize the impact of taxes as best as possible. Betterment also offers their own high-yield savings account, offering up to 2.38% interest with Betterment Everyday.

Wealthfront

Wealthfront is similar to Betterment by offering automated investing using algorithms to invest for you. They also programmed similar tax-loss harvesting tactics into their algorithms to minimize the blow from taxes related to investing. Wealthfront gets its edge over competitors by offering no fees on managing up to $10,000! Above this threshold, they charge a flat 0.25% management fee. Additionally, they offer a variety of specific investment plans/services for some of life’s big dollar items. They have a college tuitions savings account offering for parents and retirement planning accounts. They have some unique software services as well that provide home-buying advice to help you with the stressful task of buying a home. Wanting to take a sebatacle to travel the world, but not sure how long you can conservatively cut loose for? They have a software program that evaluates your full financial picture and helps you plan the trip of a lifetime. Take a look, you may discover you can take off far more time than you thought and still be in good financial health!

This article is for those who have read all other ‘Stock Market 101’ articles and now want to know their investment options for their capital based upon our current market outlook.

Market Risks

There’s no doubt that the stock market has been on an incredible run, and if you’re a wise investor, you have benefited greatly from it. However, investments are all about risk versus rewards and selecting favorable outcomes. Let’s take a look at the risk:reward breakdown based on where the market might be heading.

Our view is that due to all the factors discussed in previous articles, the upside reward potential is roughly 5%. This means that IF the market continues it’s historic bull run, we don’t believe it will gain any more than 5% above it’s previous highs.  So if that’s the reward, what’s the risk?

It’s hard to say for certain, but if the market crashes like it did in 2001 or 2008, the terrifying downside risk would be around a 50% loss. Yes, you read that correctly, half of the money you’ve been diligently saving over years, or maybe even decades, could be wiped out.  If you find that number absurd and don’t believe it can happen, we encourage you to take a look at what happened in 2008. Read some of the stories of those on the brink of retirement who, in a matter of a few months, could no longer afford to retire.

You’ll often hear people say things such as “just ride the wave” or “you can’t time the market”. Those phrases serve no purpose other than to deter you from trying to make sense of what’s happening in our financial world. Timing the market is only something active traders and hedge fund managers need to worry about because that extra 1% means so much more to them.

As an average person with a 401k for retirement, you shouldn’t care if you miss the top or bottom of the market by 5%, because the risk is so much higher. In general, things fall much faster than the time it takes to build them, the stock market is no different.

I’d rather be out of the market I wished I was in, than in the market I wished I was out of.

Safe Investment Options

The first thing you should do upon finishing this article is to check your current asset allocation. There are standard guidelines/recommendations for the mix of investments you should be in, and they vary with age. Early on in your career, you should be more heavily invested in riskier assets like stocks. As you approach retirement, you want to make sure you’re reducing your risk by adjusting where your money is invested.

Check to make sure you’re in the appropriate range based on your age. Taking action one step further, you may want to consider pulling some, or all, of your money out of the market until things become more clear from a global economic standpoint.

So, you’re likely asking yourself what you can do with your money if it’s not in the market. There are a number of options you can research to find what fits you best. Some of our recommendations, and the strategies we have personally taken, are:

  • Gold – a safe harbor for cash in times of market turmoil. Throughout history, gold has an inverse relationship to the market.
  • Bonds – have a guaranteed low rate of return. You know exactly the result you’ll be getting when you invest in bonds.
  • Cash – not the greatest of options because you earn no interest on your money, but you’ll be glad you’re in cash if a recession does rear its ugly head.

If you have a financial manager, it may be a good time to bounce these concerns off her/him. At the very least, make sure you are not over-leveraged in risky assets, like stocks, based on your age and retirement goals. Stay safe and happy investing!

Medical expenses continue to be one of the biggest expenses during the golden years of retirement. In fact, the average couple aged 65 in 2019 will spend $285,000 on medical expenses during retirement, according to a Fidelity Investments study. Even if you’re well above average when it comes to personal finances, this number can be shocking and intimidating. You’ve likely heard all the generic financial planning advice: max out your 401k, open a Roth IRA, contribute to personal savings regularly, etc. The purpose of this article is to introduce another layer you can add to your personal finance portfolio to obtain your long-term retirement goals. More specifically, planning to save the necessary funds to cover your medical expenses. The method we will introduce here is investing your HSA funds.

In fact, the average couple aged 65 in 2019 will spend $285,000 on medical expenses during retirement…

What is an HSA?

Let’s start with the basics, an HSA is a Health Savings Account. It is an account that allows you to save for both short and long-term medical expenses, as well as reduce your current years’ taxable income (more on that later). The first step is determining if you’re eligible for an HSA. To be eligible you must:

  • Be at least 18 years of age
  • Be enrolled in a qualified HDHP (high-deductible health plan)
  • Not be enrolled in Medicare
  • Not be claimed as a dependent on another’s tax return

Now that you can verify if you’re qualified, let’s move on to step 2, opening your own HSA. Most health insurance providers offer an HSA plan through their services. If yours doesn’t, however, you can open one with any healthcare provider that does. Check with your employer or current health insurance provider to open your account today. Once enrolled, the third step is funding your HSA. Just like your 401k, the IRS has contribution limits for HSA plans. Each year you can contribute a maximum of $3,500 for an individual plan, or $7,000 for a family plan. If you’re 55 or older, you can contribute an additional $1,000 in “catch up” funds annually. Make sure you set your contributions at each health insurance open enrollment period.

We’ll cover the fourth, and least known, step in detail in the next section.

Investing Your HSA Funds

The average life expectancy continues to rise as us humans continue to make medical advancements, and make our lives safer in general. A boy born today has a life expectancy of 88.8 years. Compare this to a 65 year old man born on the same date and entering retirement with a life expectancy of 85.5 years (using the Social Security Administration Life Expectancy calculator). That may not sound like much, but that’s an additional 3+ years of expenses that need to be planned for! So how do you bridge this ever-increasing gap? Investing your available HSA funds is a lesser-known trick that can certainly get you over the hump.

HSA plan providers will allow you to invest most of your funds into a variety of options. The options available to you will be determined by the provider you use. If you are searching for your own HSA plan, and available investment options are important to you, make sure you do some upfront research before selecting a plan. Some of these plans can be very limited in the number of available investments. The trick here is to keep your investment selection simple. The goal with HSA investing is simply to grow your account more than it would sitting there earning nothing. We recommend you choose something with a modest average annual return with low risk. Even if it ends up averaging a measly 3% annually over your lifetime, that still adds up to a nice buffer come retirement.

Here’s what that “measly” 3% would look like, if you contribute and invest $2,500 annually ($2,500 was chosen to assume a single person plan, maxing out your contribution, and using $1,000 annually for medical expenses):

Like we said, this strategy can more than bridge the medical expense gap we mentioned earlier!

Triple Tax Advantage

As eluded to earlier, HSA accounts have some of the best tax benefits you can find. Not only will your annual contributions reduce your taxable income each year, but they also won’t be taxed on the way into your account. Additionally, you will experience tax-free growth on the money you make through your HSA account. Cue the infomercial because WAIT, THERE’S MORE! Your funds are not taxed on the way out when you use them for approved medical expenses either! The only catch here (because there’s always a catch) is that funds MUST be used for approved medical expenses. Check out this list of all HSA approved medical expenses, some may surprise you!

Still not convinced you should open an HSA and invest your funds? Well, here’s your cherry on top: once you turn 65, this HSA essentially operates as an IRA. You can used the funds you have stashed away for anything you’d like, however, you WILL be taxed for using any funds on non-medical expenses. If you’ve been paying attention and following along, you’ll see that we’ve essentially uncovered a loophole into the maximum annual contributions of an IRA for you. We’ve found a way to boost our contribution limits by an additional $3,500 or $7,000 annually ($4,500 or $8,000 for those 55 and over)!

Most people we encounter in our lives live by the ‘Deferred Life Plan’, which means putting endless hours of work in now for the hopes and dreams of a glorious retirement. History has shown us over and over again that far too often this isn’t the result. Thankfully, we’re about to share with you an investment strategy that has beaten the S&P 500 for over 100 years in a row and is profitable in ANY market environment!

Most people are truly lost when it comes to retirement planning and investment strategies that meet their individual goals, especially when they are just starting out on this venture. They simply have no idea where to begin, so don’t be one of them! Just by reading this article you will be more prepared than the rest.

How Much Money Will I Need to Retire?

The first step in a successful retirement plan is calculating how much money you’ll need when the time comes. Retirement is an expensive endeavor, and you should be prepared for that when doing your planning. Experts have estimated that you’ll need between 70% and 90% of your income before retirement in order to keep the same standard of living. Understand these needs early on in the planning process so that you won’t become frustrated later. Here’s how to do that:

Calculate your average cost of living today and multiply it by 0.7-0.9, depending on how conservative you want to be with your calculations (the higher the number in this range, the more conservative). That will tell you how much money you’ll need each year during retirement. Now, look at the tables above to find out how much you need to start saving today in order to hit your retirement goals.

Start Saving for Retirement Now!

Ask any financial adviser and they will tell you the most crucial part of building a solid nest egg for retirement is starting early! It doesn’t matter if you feel like you’re already late to the party or if you’re only 16 and making minimum wage washing dishes at a restaurant, make today the day you put thought into action. Something as little as a $50/month contribution can go a long way in the big picture.

Still not sold that you should start today? Do yourself a favor and check out this compounding interest calculator and play with monthly contributions to see how far just a few more dollars per month adds up to significant sums over 20, 30, or 40 years! Using an average annual interest rate of 7-8% is a good place to start when running various scenarios (the average returns of the S&P over the last 30 years).

Once you figure out the amount of money you need to invest on an annual (and then monthly) basis, the next step is making the decision on which investment strategy is best for you.

An Alternative ‘Time-Tested’ Investment Strategy

In a perfect world we would be able to put our money in a clearly defined place with little to no risk and a high rate of return. Unfortunately, investing for retirement is not that easy. You can invest in stocks (volatile), bonds (low interest rates), CD’s (low interest rates), and a number of other individual strategies that just aren’t ideal.

An all-to-unfamiliar investment vehicle that few utilize is something called participating whole life insurance. You might be surprised, and comforted, to hear that this alternative investment strategy is one used by some of the wealthiest individuals ever to walk the planet. Not only can this type of long-term investment provide generational wealth to be passed down, but it also provides you with a tax-free income stream!

Here’s a rough estimate of how much someone can invest with this strategy and the results they’d achieve:
*These are averages. Each person will have a different amount based on his/her overall health, family lineage, habits, etc. You will receive a personalized plan from the provider of your custom-built plan.

*Females: Your rate (investment) will typically be even lower than males!
**These investments are also going to leave hundreds of thousands, if not millions, of dollars to your family when you pass away! Retirement income AND generational wealth is the goal.

Most people look forward to their retirement, especially after they have been working for several years. They believe retirement will be a wonderful time when they can do things they could not during their working years. This can only be accomplished by taking action today with your retirement. Do yourself a major financial favor, and do some additional research on this alternative investment strategy!

Other Retirement Investment Strategies

If you choose not to partake in the participating whole life insurance investment strategy, that’s totally fine! Another step you can take is to make sure to diversify your investments over time in a retirement portfolio. This is a crucial technique, as it will reduce the amount of risk that you have when you are playing the market. If you are not having success, take some time off to study what you need to do to maximize your earnings.

Utilizing paid retirement services and managers in the beginning is well worth the investment. Find a financial manager today and begin developing a relationship. You will quickly find that the financial options for your retirement savings are nearly limitless. Working with a financial manager, who does this day in and day out, is the best way to narrow down the field and relieve the stress of starting on this endeavor. Do upfront research on management fees and find a conservative middle-of-the-road fee. This will ensure they aren’t a bottom of the barrel manager, yet won’t rob you blind through fees. The money spent early on in the retirement process will go a long way to achieving your dream retirement. Start with a quick math lesson on how compounding interest works and how even a little bit of money early on goes a very long way in the retirement process.