Tag Archives: invest

Why Set Impossible Goals for 2021? [The Ultimate New Year’s Savings Hack]

In the 1980s, self-driving cars and smartphones without antennas were only things you’d see in movies — unimaginable futuristic goals. Now, these “impossible” inventions are part of people’s everyday lives. These innovative ideas were thought to be outlandish years ago until creators like Elon Musk and IBM’s team put their impossible goals to the test.

Impossible goals are things you want to achieve that seem out of the ordinary — ones that feel as if you may never reach them, even in your wildest dreams. These goals could be turning your dream side hustle into a full-time job or building your savings from zero in the next year to buy your dream home.

While the end result seems unreachable, a mix of motivation, determination, and hard work can get you further than you think. To see the strategic process of setting and achieving your biggest life goals, keep reading our jump to our infographic below.

What’s an Impossible Goal?

An impossible goal is a goal you think you could never achieve. Becoming a millionaire, buying your dream home, or starting a business may be your life goal, but one too big that you never set out to achieve. Instead, you may stick to your current routine and believe you should live life in the comfort zone.

Becoming a millionaire usually requires investing time, confidence, and a lot of hard work — things that may challenge you. But when you think about the highest achievers, most of them had to put in the effort and believe in themselves when nobody else did.

Flashback to 1995 when nobody believed in the “internet store” that came to be Amazon. While that was considered impossible years ago, Amazon’s now made over $280 billion dollars.

In other words, when you make your impossible goals a priority, you may be pleasantly surprised by your progress. We share how to set hard financial goals, why you should set them, and how these goals could transform your financial portfolio this year.

Impossible Goals Set by the Rich and Famous

4 Reasons to Reach for the “Impossible”

Impossible goals challenge you to shift your way of thinking — getting comfortable out of the safety zone. They help fine-tune your focus for daunting tasks you’re willing to put in the time and work for. Whether you’re looking to become a millionaire, buy your dream house, or pay down your debts, here’s why you should set goals for things you think you could never achieve.

1. You May Be Pleasantly Surprised

Everything seems impossible until you do it. When you’re in elementary school, maybe you thought getting a four-year college degree would be out of reach. Regardless, you put in the time and hard work to become a college grad years later. The same goes for your potential goal to write a book. You may think it’s hopeless to write a few hundred pages in the next year, but you may find it attainable once you hit the halfway point.

2. You Check Off Micro-Goals Along the Way

It’s hard to set your goals too low when you’re trying to reach for the stars. In the past, you may have set small goals like being more mindful with your money. While mindfulness practices are extremely beneficial for your budget, you may need more of a push to save for your dream home. By setting impossible goals, you may find it easier to reach your savings goal this year. You may have no idea how to do it, but your goal is to figure it out. Side hustles, a new job, or starting a business are all potential starting points.

3. It May Not Be as Hard as You Think

It can be uncomfortable to try something for the first time, so to avoid the doubts of reaching your goals, create a strategic plan. Download and print out our printable to breakdown each impossible goal. Start with your big goals and break them down into mini-goals. For example, if you want to start an online ecommerce store, researching the perfect website platform is a good starting point.

4. What Do You Have to Lose?

If you already live a comfortable life, you may only have experiences to gain and nothing to lose. When embarking on this journey, check in with yourself every month. Note all the lessons you learned and how far you’ve come. You most likely will face failures, but you’ll be failing forward rather than backwards. Your first ecommerce product launch may not have gone smoothly, but you may know how to improve for the next time around.

Impossible Goals Roadmap

Impossible Goals Download Button

How To Set Impossible Budgeting Goals in 6 Steps

If your impossible goal is related to finances, your mindfulness, time, and dedication will be required to put you on a path towards your dream life. To get started, follow our step-by-step guide below.

Step 1: Map Out Your Dream Lifestyle

  • Get out a journal and map out your dream life. Some starter questions may be:
  • Do you want to afford that house you’ve always dreamt about?
  • Do you want to have a certain amount of money in your savings?
  • Are you hoping to turn your side hustle into a full-time job?
  • What do you find yourself daydreaming about?

Track all these daydreams in a notebook and curate the perfect action plan to achieve each goal.

Step 2: Outline Micro-goals to Reach Your Financial Goals

Now, list out mini-goals to achieve your desires. Start with the big “unachievable” goal and break it down into medium and small goals, then assign each mini-goal a due date. For example, saving $10,000 this year may take more than your current monthly earnings. To achieve this, you may create passive income streams. If that side hustle is to start a money-making blog, you may need to research steps to successfully launch your website.

Step 3: Believe and Act Like Your Future Self

Think of yourself as the future self you want to be. You may picture yourself with a certain home, financial portfolio, and lifestyle, but your current actions may not reflect your future self. Your future self may invest, but your current self is too intimidated to start. To act like your future self, consider doing the research and finding low-risk investments that suit you and your budget.

Step 4: If You Fail, Learn from Your Mistakes

When working towards your dream life, you may hit roadblocks and experience failures. As Oprah explains it, “there is no such thing as failure. Failure is just life trying to move us in another direction.” While failure may happen, you’re able to learn from it and pivot. Every mistake you make, analyze it in your journal. Note what worked, what didn’t, and what you want to do better tomorrow to surpass this roadblock.

Step 5: Track Your Results Consistently

Host monthly meetings with yourself to see how far you’ve come. Consider creating a goal tracking system that suits you best. That may include checking your budgeting goals off in our app month after month. Find a system that works for you and note your growth at the end of each month. If you’re putting in the time and hard work, you’ll get closer to your goals in no time.

Step 6: Be Patient With Your Budget Goals

Throughout this journey, practice patience. Setting goals may be exciting and motivating, but when you’re faced with failures, you may feel hints of disappointment. To avoid a failure slump, be patient and open to learn from your mistakes. If you didn’t make what you wanted from your side hustle the first year, you’re that much closer than you were last year.

Why set your sights on hard goals? Everything feels out of reach until you do it. All it takes is motivation and determination to achieve the impossible. To boost your lifestyle, budget, and drive this New Year, consider setting goals that feel out of reach. Keep reading to see why these goals may be perfect for you. Why Set Impossible Goals for 2021? [The Ultimate New Year’s Savings Hack] appeared first on MintLife Blog.

Source: mint.intuit.com

The Risks of Playing The Stock Market

child's hand playing chess

To the uninitiated, the stock exchange can seem like a casino, with news and social media feeds sharing stories of investors striking it rich by playing the stock market. But while there are winners, there are also losers—those who lose money playing the market, sometimes pulling their money out of the market because they’re afraid of the potential of losing money.

Playing the stock market does come with investment risks. For new investors learning how to play the stock market can be a frustrating, humbling, and in some cases, incredibly rewarding experience.

While investing is a serious business, playing the stock market does have an element of fun to it. Investors who do their research and tune into the news and business cycles can take advantage of trends that might better enable them to earn good returns on investment.

This is what you need to know about how to play the stock market, the risks involved, and what makes the market so alluring.

Playing the Stock Market: What Does it Mean?

Despite the phrase “playing” the stock market, it’s important to make the distinction between investing and gambling up front.

safe investment—in a way each investment can feel like a gamble. However, it’s important to keep in mind that the market is not a casino, and just because there’s risk involved doesn’t mean that “playing the market” is the same as playing roulette.

So what does “playing the stock market” actually mean? In short, it means that someone has gained access to and is actively participating in the markets. That may mean purchasing shares of a hot new IPO, or buying a stock simply because Warren Buffett did. “Playing,” in this sense, means that someone is investing money in stocks.

Playing the Market: Risks and Rewards

Learning how to play the stock market—in other words, become a good investor—takes time and patience. It’s good to know what, exactly, the market could throw at you, and that means knowing the basics of the risks and rewards of playing the market.

Potential Risks

In a broad sense, the most obvious risk of playing the market is that an investor will lose their investment. But on a more granular level, investors face a number of different types of risks, especially when it comes to stocks. These include market risk, liquidity risk, and business risks, which can manifest in a variety of ways in the real world.

A disappointing earnings report can crater a stock’s value, for instance. Or a national emergency, like a viral pandemic, can affect the market at large, causing an investor’s portfolio to deflate. Investors are also at the mercy of inflation—and stagflation, too.

For some investors, there’s also the risk of playing a bit too safe—that is, they’re not taking enough risk with their investing decisions, and as such, miss out on potential gains.

Potential Rewards

Risks reap rewards, as the old trope goes. And generally speaking, the more risk one assumes, the bigger the potential for rewards—though there is no guarantee. But playing the market with a sound strategy and proper risk mitigation tends to earn investors money over time.

Investors can earn returns in a couple of different ways:

•  By seeing the value of their investment increase. The value of individual stocks rise and fall depending on a multitude of factors, but the market overall tends to rise over time, and has fully recovered from every single downturn it’s ever experienced.
•  By earning dividend income. Dividends can also be reinvested, in order to further grow your investments.
•  By leaving their money in the market. It’s worth mentioning that the longer an investor keeps their money in the market, the bigger the potential rewards of investing are.

How to Play the Stock Market Wisely

Nobody wants to start investing only to lose money or otherwise see their portfolio’s value fall right off the bat. Here are a few tips regarding how to play the stock market, that can help reduce risk:

Invest for the Long-term

The market tends to go up with time, and has recovered from every previous dip and drop. For investors, that means that simply keeping their money in the market is a solid strategy to mitigate the risks of short-term market drops. (That’s not to say that the market couldn’t experience a catastrophic fall at some point in the future and never recover. But it is to say: History is on the investors’ side.)

Consider: If an investor buys stocks today, and the market falls tomorrow, they risk losing a portion of their investment by selling it at the decreased price. But if the investor commits to a buy-and-hold strategy—they don’t sell the investment in the short-term, and instead wait for its value to recover—they effectively mitigate the risks of short-term market dips.

Do Your Research

It’s always smart for an investor to do their homework and evaluate a stock before they buy. While a gambler can’t use any data or analysis to predict what a slot machine is going to do on the next pull of the lever, investors can look at a company’s performance and reports to try and get a sense of how strong (or weak) a potential investment could be.

Understanding stock performance can be an intensive process. Some investors can find themselves elbow-deep in technical analysis, poring over charts and graphs to predict a stock’s next moves. But many investors are looking to merely do their due diligence by trying to make sure that a company is profitable, has a plan to remain profitable, and that its shares could increase in value over time.

Diversify

Diversification basically means that an investor isn’t putting all of their eggs into one basket.

For example, they might not want their portfolio to comprise only two airline stocks, because if something were to happen that stalls air travel around the world, their portfolio would likely be heavily affected. But if they instead invested in five different stocks across a number of different industries, their portfolio might still take a hit if air travel plummets, but not nearly as severely as if its holdings were concentrated in the travel sector.

Use Dollar-cost Averaging

Dollar-cost averaging can also be a wise strategy. Essentially, it means making a series of small investments over time, rather than one lump-sum investment. Since an investor is now buying at a number of different price points (some may be high, some low), the average purchase price smooths out potential risks from price swings.

Conversely, an investor that buys at a single price-point will have their performance tied to that single price.

The Takeaway

While playing the market may be thrilling—and potentially lucrative—it is risky. But investors who have done their homework and who are entering the market with a sound strategy can blunt those risks to a degree.

By researching stocks ahead of time, and employing risk-reducing strategies like dollar-cost averaging and diversification when building a portfolio, an investor is more likely to be effective at mitigating risk.

With SoFi Invest®, members can devise their own investing strategy, and play the market how they want, when they want. Whether you’re interested in short-term trading or have your eyes on a longer-term prize, SoFi Invest is a way to dip your toes into the stock market and start investing today.

Find out how to get started playing the stock market with SoFi Invest.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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The post The Risks of Playing The Stock Market appeared first on SoFi.

Source: sofi.com

10 Money Management Tips to Teach Your Kids About Finance

Knowing how to handle finances is one of the most basic and important life skills. When you understand how to handle your money, you can avoid falling into financial problems and risks. So teaching your children about money is a key step in preparing them for adulthood. Teach them values and terms, such as saving, and they will grow to possess good money habits even up to adulthood. Broaden your knowledge of finance and money matters and pass them to your kids by reading up. Read LoanStart blog for financial advice and learn the intricacies of financing and loans and how they can help benefit your current financial situation.

1. Integrate Money Into Daily Life

Get your children involved with money. For example, you can have a young child join you at the grocery store to help with shopping. Ask them to compare prices of similar items and discuss why the items may be different. For older children, you might allow your child to watch or participate when you pay bills. Explain the process to them. Let your child know how much money comes in each month and how much you spend on expenses. Show to them how expenses add up.

Involving your children in household finances will help build their financial knowledge at an early age.

2. Give Your Child an Allowance, But Consider the Frequency and Amount

There are several benefits to giving an allowance. For one thing, when your child has money of their own that they can spend at their discretion, they will be incentivized to learn how to handle it. Once the allowance is gone, your child will have to save up to buy necessary items. You can teach your child to be responsible for money management and living within their means by sticking to the rules. Disperse allowance on a regular schedule, and never extend "credit."

Some financial experts recommend giving out an allowance to be budgeted once a month rather than once a week. This gives the child a longer amount of time on how to manage a given amount of money. Also, the larger the amount of money, the more management skills are to be learned.

3. Model Good Financial Behavior

Your children look up to you, so your decisions with money will set an example. Are you late on your bills? Are you living beyond your means? Get your financial situation in order and be honest with your children. Let them know the reason behind your financial behavior so that you can discuss financial planning and management as a family.

4. Teach Your Children About Choices

Let them know the reason behind your financial behavior and embark on sound financial planning and management as a family.

Make sure your children know that there are more ways to use money beyond just spending it. Teach your child to save, invest, or donate to charity, and explain why these options are worth the effort, even if they do not offer the short-term satisfaction that comes with making a purchase.

5. Provide Extra Income Opportunities

Occasionally, you can offer your child an opportunity to make a small amount of extra income by having them do some chores around the house. This will teach them early on about the value of earning money. You can then help them decide what to do with the extra money they have earned.

6. Teach Your Child How to be a Wise Consumer

Before your child buys something new, discuss with them the alternative ways of spending money to emphasize the value of making choices. Teach them to compare shops and items for prices and quality. Show them how advertisers persuade people to buy their products. Encourage your kids to be savvy and critical of ads and commercials.

7. Teach Your Child a Healthy Attitude Towards Credit 

Teach your child how to handle credit. When you think they are old enough to understand what credit is, allow them to borrow an extra amount of money from you to make a major purchase. Talk to them and negotiate how much amount your child will pay you each week from their weekly allowance, and then collect the money and keep track of the remaining balance each week until the debt is repaid.

8. Involve Your Child in Family Financial Planning

Let your child see how you plan your budget, pay bills, how you shop carefully, and how you plan major expenditures and vacations. Explain to them that there are affordable choices, and allow the kids to participate in the decision-making process. You can set a family goal that everyone can work towards.

Explain to your kids that there are affordable choices, and allow them to participate in the decision-making process.

9. Avoid Impulse Buys

Children are prone to impulse buys when they find something cute or eye-catching. Instead of giving in and buying the item for them, let your child know that they can use their savings to pay for the item. However, encourage your child to wait at least a day before they purchase anything above a given benchmark–for example, 15 dollars. The item will still be there the next day and they will have properly decided with a level head if they still want the item.  

10. Get Them Saving for College

College is an important phase that can affect the future of your child. There’s no time like the present to have your teen saving for college. If they plan on working a summer job you can take a portion of that amount and put it on a college savings account. Your child will feel more responsible since their future is at stake with how much they save.

Source: quickanddirtytips.com

Why You Need to Open a UGMA/UTMA Account for Your Kids

From the Mint team: As you know, Mint is a free product you can use to help stay on top of your finances. So, how do we make money? We get paid by the advertisers on our site. This compensation may affect how and where products appear on the site (and in what order). Mint.com does not include all products or all available offers. Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

 

Saving and investing for college expenses may seem overwhelming, but setting aside even small amounts can give your child a head start. While many people are aware of tax-efficient investing accounts like 529 plans, you may not know about UGMA/UTMA accounts – another way to save for educational and other expenses.

In this article, we’ll take a look at UGMA and UTMA custodial accounts, what they are, and how to determine the best way to save for your kids’ future, while getting tax advantages.

What are UGMA and UTMA accounts?

UGMA stands for the Uniform Gifts to Minors Act and UTMA stands for Uniform Transfers to Minors Act. Account-holders are “custodians,” and may transfer money into the account to benefit the minor, but the money is managed by the custodian. Typically the money is released to the minor at the age of majority (usually 21 but sometimes 18 or other ages).

How do UGMA and UTMA accounts differ from 529 plans?

529 plans differ from UGMA/UTMA account in a few key areas:

  • 529 plans can only be used for educational expenses, while UGMA/UTMA accounts can be used for anything that benefits the child. .
  • 529 plans are owned and controlled by the person who created the account – with UTMA/UGMA accounts, the funds are transferred to the beneficiary at the age of majority.
  • Unlike 529 plans, custodial accounts are considered the property of the child, which means that it counts for a higher percentage in financial aid calculations.

The two types of plans share some similarities:

  • Both types of accounts are considered custodial accounts that can be used for the benefit of a minor.
  • Anyone can contribute to either type of account — there are no restrictions based on one’s personal income

If you have a medium to long-term horizon, either a UGMA/UTMA account or a 529 account is usually better than just putting your money in a savings account at a low-interest rate. And don’t forget that it is possible to have both a 529 plan AND a UGMA/UTMA account for the same child.

Why You Need to Open a UGMA/UTMA Account for Your Kids

Unlike with a 529 plan, the funds in a custodial account do not have to be used solely for higher-education expenses. The custodian can withdraw money in a UGMA/UTMA custodial account for any expense that benefits the child, like technology, transportation, housing, or any other expense for the child.

The biggest advantage of UGMA/UTMA custodial accounts is their flexibility. Because they can be used for a wide array of expenses, you can use the money in the account even if your child chooses not to go to college. While earnings do not grow completely tax-free like in a 529 plan, earnings in a UGMA/UTMA account are tax-advantaged, but in a different way.

Depending on how you file your tax return, a guardian can choose to include their child’s unearned income with their own tax return. Unearned income is money that doesn’t come from employment, like from interest or investments. In 2020, the first $1,100 of a child’s unearned income can be claimed on the guardians’ tax return tax-free, and the next $1,100 is taxed at the child’s tax rate, which is likely much lower than their parent’s.

Things to watch out for with UGMA or UTMA accounts

If you’re looking to save money or transfer assets to your kids for a variety of expenses beyond education, a UGMA/UTMA custodial account can make a lot of sense. One thing to watch out for is that a UGMA/UTMA account is tied specifically to one named beneficiary. Unlike a 529 plan, where you can transfer the money in an account to a sibling or other beneficiary, with a UGMA/UTMA account, any unused funds must be used or distributed by the time the child reaches their age of majority or their state’s maximum age for custodial accounts.

Apps like Acorns are making it easy to start a UTMA/UGMA account with their new product, Acorns Early. You can start in under a few minutes and set Recurring Investments starting at $5 a day, week, or month. Fun fact: If you invest $5 a day from birth, considering a 7% average annual market return, you could have more than $70,000 by the time the child turns 18. To learn more, visit Acorns.com/Early.


The post Why You Need to Open a UGMA/UTMA Account for Your Kids appeared first on MintLife Blog.

Source: mint.intuit.com

Here are Safer Alternatives if You’re Too Obsessed with the Stock Market

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We’re big on investing. It’s an important way to grow your money and set yourself up for retirement someday.

But is it dangerous to be too obsessed with the stock market?

You bet it is. Our financial advice columnist, Dear Penny, recently heard from a reader whose husband stopped funding his 401(k) so he can bet on the stock market, instead.

Is it OK that he’s stopped contributing to his 401(k) so he can trade stocks? the reader asked. How do I ask him what he’s actually investing in? I’m worried that he’s gambling money that we need for our retirement.

That’s not the way to go. Here are five safer ways to invest and grow your money.

1. Just Steadily Invest Like a Normal Person

Instead of betting all your money on the stock market, just steadily invest in it. Take the long view. The stock market is unpredictable, which means that sometimes stock prices go up, and sometimes they go down — but over time, they tend to go up.

If you haven’t started investing and have some money to spare, you can start small. Investing doesn’t require you throwing thousands of dollars at full shares of stocks. In fact, you can get started with as little as $1.*

We like Stash, because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it simple by breaking them down into categories based on your personal goals. Want to invest conservatively right now? Totally get it! Want to dip in with moderate or aggressive risk? Do what you feel.

Plus, with Stash, you’re able to invest in fractions of shares, which means you can invest in funds you wouldn’t normally be able to afford.

If you sign up now (it takes two minutes), Stash will give you $5 after you add $5 to your invest account. Subscription plans start at $1 a month.**

2. Grow Your Money 16x Faster — Without Risking Any of It

Save some of your money in a safer place than the stock market — but where you’ll still earn money on it.

Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, 0.06% is nothing these days.)

But a debit card called Aspiration lets you earn up to 5% cash back and up to 16 times the average interest on the money in your account.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

3. Stop Paying Your Credit Card Company

One way to make sure you have more money is to stop wasting money on credit card interest. Your credit card company is getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

4. Cut Your Bills by $540/Year

Another way to grow your money: Stop overpaying on your bills.

For example, when’s the last time you checked car insurance prices? You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be.

A website called Insure makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options — and even discounts in your area.

Using Insure, people have saved an average of $540 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

5. Add $225 to Your Wallet Just for Watching the News

Here’s a safe way to earn a little cash on the side.

We’re living in historic times, and we’re all constantly refreshing for the latest news updates. You probably know more than one news-junkie who fancies themselves an expert in respiratory illness or a political mastermind.

And research companies want to pay you to keep watching. You could add up to $225 a month to your pocket by signing up for a free account with InboxDollars. They’ll present you with short news clips to choose from every day, then ask you a few questions about them.

You just have to answer honestly, and InboxDollars will continue to pay you every month. This might sound too good to be true, but it’s already paid its users more than $56 million.

It takes about one minute to sign up, and start getting paid to watch the news.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He tries not to be obsessed with the stock market.

*For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Accredited Asset Management Specialist (AAMS)

What is the AAMS certification?New financial advisors need something to help them stand out. Consequently, the AAMS does just that. Designed for newcomers to the financial advice business, the AAMS trains advisors to identify investment opportunities as well as help clients with other financial goals. It also gives more experienced advisors a fast and simple way to learn more about asset management and improve their credentials. Here’s how it works.

AAMS Defined

An Accredited Asset Management Specialist (AAMS) can advise clients on college savings, taxes, and retirement savings. The course and tests for this certification are designed to ensure advisors can assist clients with their complete financial needs. It emphasizes evaluating the client’s assets and making appropriate recommendations.

The AAMS certification is granted by the College for Financial Planning, a unit of the Kaplan Company. The college oversees a large number of financial certification programs, including the Certified Financial Planner designation, one of the most valued certifications in the field.

AAMS Certification Requirements

What is the AAMS certification?

To receive an AAMS, students first have to complete a 10-module education program provided by the College for Financial Planning. Then they have to pass an examination. Finally, they must agree to abide by a code of ethics and promise to continue their education.

The courses are online and can be delivered in self-study or instructor-led formats. Courses are open-enrollment, therefore students can begin at any time without waiting for the next session.  The 10 modules cover the following material:

1.:The Asset Management Process

2. Risk, Return & Investment Performance

3. Asset Allocation & Selection

4. Investment Strategies

5. Taxation of Investments

6. Investing for Retirement

7. Deferred Compensation and Other Benefit Plans

8. Insurance Products for Investment Clients

9. Estate Planning for Investment Clients

10. Fiduciary, Ethical, and Regulatory Issues for Advisors

The College of Financial Planning provides everything necessary to study for and complete the modules and take the test. Students have access to the study materials and tests through an online portal.

Streaming video lectures, audio files, and interactive quizzes also can be found through the college’s site. Meanwhile, students can access live classes online and contact professors with questions and issues.

The AAMS Test

To get the AAMS certification, students have to pass just one test. However, they have to make their first attempt at the test within six months of enrollment and pass it within a year.

The fee for the first attempt at taking the test is included in the course tuition. There are no prerequisites for signing up to take the AAMS course.

Time and Money Requirement

Tuition for the AAMS courses is $1,300. This includes the fee for the first attempt at passing the certification exam. It also includes all needed course materials. Each additional attempt costs $100.

Students employed with certain financial services firms may be able to get tuition discounts. The college may also provide scholarships.

The College for Financial Planning recommends students plan to spend 80 hours to 100 hours on the course. Since the course is self-study, this amount of time is flexible.

To maintain AAMS certification students have to commit to completing 16 continuing education credits every two years. Also, continuing education has to cover one or more of the topics covered in the AAMS coursework.

AAMS certificate holders also have to agree to follow a professional standard of conduct. As a result, they have to maintain integrity, objectivity, competency, confidentiality and professionalism in providing financial services.

AAMS Certificate Holder Jobs

AAMS certificates are generally earned by entry-level workers in the financial advice business. Consequently, AAMS holders are typically trainees. In some cases, they may provide support services to more experienced and highly credentialed advisors.

The AAMS designation does not confer any special powers or privileges. Instead, it’s an optional credential that students may obtain to advance their careers and enhance their knowledge of financial advice.

Comparable Certifications

What is the AAMS certification?

In addition to the AAMS, the College for Financial Planning offers an Accredited Wealth Manager Advisor (AWMA) certificate. This is a somewhat more advanced designation. As a result, it requires a course equivalent to three graduate level college credits and requires 90 hours to 135 hours to complete.

Chartered Mutual Fund Counselor (CMFC) is sponsored by the Investment Company Institute along with the College of Financial Planning. It is similar to the AAMS certificate except it focuses on mutual fund assets.

Accredited Financial Counselor (AFC) is a general personal finance advice certificate from the Association for Financial Counseling and Planning Education. First, it requires 1,000 hours of financial counseling experience. Secondly, it demands three letters of reference. Finally, applicants must both complete coursework and pass an exam.

Bottom Line

The AAMS designation is usually for newly minted financial advisors, but even experienced pros can use it to bulk up their credentials. The courses and tests associated with the AAMS teach advisors how to evaluate assets and make recommendations.

While this certification doesn’t give an advisor any real powers, it’s a sign that they can identify investment opportunities specific to their clients. Above all else, it can be a great relief to a client who has a child going to college or a retirement house on their wish list. As a result of obtaining an AAMS, and advisor can point them toward the right investments for their goals.

Investing Tips

  • If you’re looking to identify investment opportunities, consider using an AAMS as your advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • An AAMS can help you with college savings, taxes, and retirement savings if you know what your goals are. However, if you are unsure how much you want to invest, what your risk tolerance is, or how inflation and capital gains tax will affect your investment, SmartAsset’s investing guide can help you take the first steps.

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Should You Prepay the Mortgage or Invest Instead?

It’s been a while since I last posted a mortgage match-up, so without further ado, here’s the latest installment: “Prepay the mortgage or invest instead?” There are likely thousands of articles that deal with this very subject, all with plenty of differing opinions, but we are in unprecedented times. Mortgage rates have never been lower [&hellip

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Retained Earnings vs. Net Income

finance bar chart mobile

Companies have several different types of earnings, each of which provide different information about their revenues and insight into their financial health. On a company’s balance sheet—which is a key piece of information in evaluating a company’s stock value—it will report details about its expenses and earnings, including retained earnings and net income.

Net income (NI), or net earnings, is the amount of money a company has left after subtracting operating expenses from revenue. Retained earnings goes a step further, subtracting dividend payouts to shareholders.

This article will cover how to calculate and interpret retained earnings and net income, the differences between them, and why they’re important for investors who are trading stocks online.

What is Net Income?

Net income (NI) is an indication of how profitable a company is. It is a basic calculation showing the difference between its earnings and expenses, which can include labor, marketing, depreciation, interest, taxes, operational expenses, and the cost of making products.

How to Calculate Net Income

Use the following formula to calculate the net income of a company:

Net Income = Revenue – Expenses

For example, if a company makes $50,000 in revenue during an accounting period and has $30,000 in expenses, their net income is $20,000.

Understanding Net Income

Net income is often referred to as the bottom line, since it appears on the bottom line of a company’s balance sheet and is the basic calculation of a company’s profit.

NI is used to calculate earnings per share, and is one of the key figures investors use when evaluating companies. When people talk about a company being in the red or in the black, they are referring to whether the company has a positive or negative net income.

It’s important to note that net income can be manipulated through the hiding of expenses and other means. It can be hard to figure out if this is happening, but investors might want to be wary of this and look into what numbers are being used in the net income calculation.

What Are Retained Earnings?

Retained earnings (RE) may also be referred to as unappropriated profit, uncovered loss, member capital, earnings surplus, or accumulated earnings.

paying out dividends to please shareholders. After a company completes dividend payouts, they retain the amount of earnings that are left, and may decide to reinvest them into the business to continue to grow, pay off loans, or pay additional dividends.

It’s useful to understand RE when looking into companies to invest in, because they show whether a company is profitable or if all of their earnings are going towards dividends. If a company’s retained earnings are positive, this means they have money available to invest and put towards growth.

On the other hand, if a company has negative retained earnings, it means they are in debt, which is generally not a good sign.

How to Calculate Retained Earnings

Use the following formula to calculate the retained earnings of a company:

Retained earnings = Beginning retained earnings + Net income or loss – Dividends paid (cash and stock)

All of this information is available on a company’s balance sheet. In order to find beginning retained earnings one will need to look at the previous period’s balance sheet.

For example, if a company starts with $8,000 in retained earnings from the previous accounting period, these are the beginning retained earnings for the calculation. If the company makes $5,000 in net income and pays out $2,000 in dividends to shareholders, the calculation would be:

$8,000 + $5,000 – $2,000 = $11,000 in retained earnings for this accounting period
Since retained earnings carry over into each new accounting period, profitable companies generally have increasing retained earnings over time, unless they decide to spend them.

Understanding Retained Earnings

The calculated retained earnings show a company’s profit after they have paid out dividends to shareholders. If the calculation shows positive retained earnings, this means the company was profitable during the specified period of time. If the retained earnings are negative, this means the company has more debt than earnings.

Companies can use this figure to help decide how much to pay out in dividends and how much they have available to reinvest.

Although negative RI isn’t ideal, investors should consider the company’s individual circumstances when evaluating the results of the calculation. There are some instances in which negative retained earnings are fairly normal and not necessarily a reason to avoid investing.

How to Assess Retained Earnings

When assessing the retained earnings of a company, the following factors should be taken into account:

•  The company’s age. If a company is only a few years old, it may be normal for it to have low or even negative retained earnings, since it must make capital investments in order to build the business before it has made many sales. Older companies tend to have higher retained earnings. If a company has been around for many years and has low or negative retained earnings, this may indicate that the company is in financial trouble.
•  The company’s dividend policy. Some companies don’t pay out any dividends, while others regularly pay out high dividends. This will affect their retained earnings. In general, publicly-held companies tend to pay out more dividends than privately-held companies.
•  The period of time used in the calculation. Some companies are more profitable at certain times of year, such as retail businesses. If one looks at retained earnings during the holiday season or other popular times for retail, the company may save up their profits from those times in order to get through slower times. For this reason, the same company might show different retained earnings depending on what time period is used in the calculation.
•  The company’s profitability. More profitable companies tend to have higher retained earnings.

What’s the Difference Between Retained Earnings and Net Income?

Although retained earnings and net income are related, they are not the same. While net income helps with understanding profit, retained earnings help with understanding both profit and growth over time.

At times, a company may have negative retained earnings but positive net income. This is what is known as an accumulated deficit. Or the opposite may occur. For example, if a company earned $60,000 in revenue and they have $40,000 in expenses, their net income is $20,000. If they then pay out $10,000 in dividends to shareholders, the retained earnings calculation would be:

$0 + $20,000 – $10,000 = $10,000 in retained earnings

If a company has a healthy net income and retained earnings, this may be a good time for them to reinvest some of their money into growing the business. In some cases, retained earnings and net income may be the same—as when a company doesn’t pay out dividends and has no retained earnings carried over from the previous period.

Why do Retained Earnings and Net Income Matter?

Investors are often interested in retained earnings and net income because they help show the long-term financial health of a company. Figures such as revenue and expenses vary with each accounting period, and they don’t give as accurate a picture of debt and opportunity for growth.

debt-to-equity ratio, which is a measure of how much debt it takes for a company to run its business.)

Retained earnings are also useful for companies to help determine how to spend their money. If retained earnings and/or net income are low, it might be best for the company to save their money rather than reinvesting it or paying out dividends. If the numbers are high, they can consider spending it.

The Takeaway

Net income and retained earnings are two useful calculations that can help investors assess a company’s health, and that can help a company decide what to do with their earnings. They’re a key part of a company’s overall financial picture.

The big difference between the two figures is that while net income looks at revenue minus operating expenses, retained earnings further deducts dividend payouts from NI. Both can help form an overall view of the profitability and risk of a company.

Investors ready to start buying and selling stocks might want to consider a SoFi Invest® account, which offers complimentary advice and other benefits that can help individuals set and work toward their personal financial goals.

Find out how to open a SoFi Invest account today.


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