Stock Market 101: Investment Advice for Beginners

For most that do not invest in stocks, the idea of the stock market seems very risky and scary. For them, the risk appears to outweigh any potential upside. However, this is not the case!

Investment in stocks can seem intimidating, but it doesn’t have to be. This investment advice will help you start improving your investing skills today.

Stock Market 101: Investment Advice for Beginners

You may be wondering if investing is a good idea for you. Of course, it is! Every person needs to invest in order to grow their financial accounts.

Having your money tied up in traditional savings accounts alone will not do it. Not only will it provide it a low rate of return, but it probably will not even keep up with inflation.

Investment Platforms

Before we talk about the stock market in more detail, let’s talk about how you can purchase them. There are three main outlets in managing stock investments- online brokers, investment advisors, and robo-advisors.

While they are all different, one will be perfect for your personal situation and needs.

Online Brokers 

It is no surprise that many people turn to online brokers when looking to invest in the stock market. The most significant upside to online brokers is that you can handle everything entirely online. Also, you can invest in a wide variety of items.

However, online brokers are not always beginner-friendly. While they offer some investment advice, most online brokers are geared towards those with more experience and comfortable in managing their own investment portfolios.

Investment Advisors

Investment advisors are dedicated professionals that can give you personalized investment advice. These advisors work with people one-on-one and can give you direct investment advice based on your goals, timeline, and how much risk you want to take.

After discussing this with a potential investor, the investment advisor will create a diverse portfolio that is appropriate for their needs and wants. The portfolio is filled with a wide range of products.

For most beginners, it can be challenging to find an investment advisor to work with. Many advisors only work with those with an extensive portfolio or significant amount of money (starting around $250,000) available to invest.

Robo-Advisors

Robo-advisors are recent additions to the scene but have quickly become a popular way to invest in the stock market. Offering similar services as investment advisors, they do not require a high investment, making them within reach for all investors.

Just like traditional investment advisors, robo-advisors will evaluate your goals, needs, and tolerance to risk. They will create a personalized portfolio that will be filled with lower-cost products. This helps you save money as the fees will not be as high as other avenues.

Robo-advisors are available to investors, both new and established. No matter your income available for investing, a robo-advisor can create a portfolio for you!

Stocks

Stocks are a popular product to use when investing in the stock market. Usually, stocks highly outperform other investments and outpace inflation.

Many investors make stocks the primary investment in their portfolio. While they tend to diversify for lower risk tolerance, investors keep coming back to stocks for their high return.

So, how much of your portfolio should be stocks? For a conservative portfolio, a common rule is that the percentage of a portfolio that should be stocks is 120 minus your age. For example, if you are 40, 80% of your portfolio should be stocks. Then, when you turn 50, that number lowers to 70%.

Stocks to Invest In 

So what stocks should you invest in? As a new investor, you should focus on categories, not individual stocks. We will go over some of the standard and best stock categories to invest in as a beginning investor.

Value Stocks 

Value stocks trade at lower prices. These are usually companies that are recovering from some difficulty or had faced some legal issues. Because of this, their prices are lower than other stocks.

However, the benefit can be yours once the company recovers. Your investment in value stocks will likely outperform the stock market in general over the long term.

High Dividend Stocks 

High dividend stocks are just what their name suggests, a stock that pays out a higher dividend than the average. Since around half of the return on stocks comes from dividends, it just makes sense to invest in high dividend stocks.

These are also a great way to give a bit of protection to your portfolio. Having high dividend stocks can provide some level of protection during a downturn in the stock market.

Growth Stocks

Growth stocks are from those businesses that are growing faster than their competitors and other companies that are listed on the general stock market. Even though they traditionally do not pay dividends, the return comes from the rising stock price when help on to long-term.

Just a piece of investment advice on growth stocks: these are considered high risk. While the potential is strong for growth, they may also take significant hits when there is a downturn in the market. Just remember that these are a long-term return stock, and you should be OK.

Start Investing in Stocks 

Now that you know a little more about stocks and investing, you may wonder if you should get started. There are some steps you should take beforehand to ensure that you are ready!

First, you need to get a solid financial base. Some basics to follow includes having sufficient and stable income, an emergency fund that covers three to six months of expenses, and a track record of saving. This will help set you up for a solid beginning to your investment portfolio.

Second, you should further educate yourself about the different types of investments and products available in the stock market. Just remember to never invest in something you don’t understand. When purchasing a stock, you are actually investing in a specific business.

When investing in a business, you should educate yourself on that business and its industry as must as you possibly can.

Investment Advice

While all of this may seem overwhelming, there are many advisors and sites ready to help you with any investment advice that you need. Don’t let the fear of the stock market stop you from realizing your financial goals.

Check out our blog for more information on how to guide your investment and enhance your ROI.

More Than One Basket. Why Every Person Needs Multiple Bank Accounts

Despite growing mistrust in the banking industry since the 2008 financial crash, we remain steadfastly loyal to our personal banks. So loyal that the Competition and Markets Authority (CMA) found that, in 2016, only 3% of UK residents switched banks. While that doesn’t reveal how many people have multiple bank accounts, it may well suggest that we’re not looking at our banking activities strategically. Having a single bank account makes things simple on the face of it. But is it sensible?

With the financial crash, which included the failure of Northern Rock, and the increase in cybercrime, we know that putting all our eggs in one basket is a bad idea. But there are a variety of reasons why it’s sensible to have multiple bank accounts. 

In the UK and across Europe, many bank accounts are free, making opening a new one easy. No matter where you’re located though, having over one bank account could have huge benefits for your finances. 

Want to know why? Keep reading and we’ll break it down. 

Protect Your Money

Spreading the risk is one of the most sensible things you can do with investing and the same goes for storing your hard-earned money. If you have just one bank account, you leave yourself open to serious problems. 

If your financial institution fails, you may lose access to the money you’ve stored with them. While it seems unlikely, the banking industry is changing at a rapid rate and instability can happen, even as stricter regulations are in the works. 

Bank Failure

In the UK, the Financial Services Compensation Scheme (FSCS) protects your money if a British bank fails. However, they will only protect your finances up to £85,000 in each financial institution. 

A financial institution is an entire corporation rather than individual banks. For example, if you have £100,000 in Natwest and the Royal Bank of Scotland (RBS) fails, you’ll only be protected for £85,000 as Natwest is owned by RBS. 

If you have split your £100,000 between two accounts, one with Natwest and one with RBS, you will still only get protection on £85,000. This is one reason you do not only need more than one bank account, but you should spread accounts across different parent financial institutions. 

Cybercrime

Cybercrime is becoming more prevalent around the world, putting banks and your money at risk. In 2017, a major cyber-attack caused havoc with multiple banking systems across the UK. There’s a continued risk of this happening again which means you’re at risk of not being able to access your money when you need it. 

If a cyber-attack affects the operating of your bank, when you have a second account with a separate bank, you’ll still have access to some of your money. 

Going Abroad

Have you ever had your card blocked by your bank when you’re away? Fraud teams prefer to be safe than sorry and you may well find yourself without access to your account at some point. 

By having more than one bank account, you can use your second account if your first is blocked by a fraud team. 

Manage a Budget

The average household debt in the UK is over £15,000 and the figures are worse in the US, where the average individual’s debt is $38,000 (£29,000). One thing is clear, we need to be budgeting more effectively. 

With one bank account, all of your income and outgoings are lumped in together. This makes it difficult to manage money for different outgoings and to save proactively. 

When you have multiple bank accounts, you can use one for day-to-day spending and others for separate purposes. This includes savings, mortgage or rent payments, self-employed tax, and whichever purposes suit your life. 

It’s easy to move money from one bank to another, allowing you to move money into savings the moment you get paid. 

Savings Accounts and ISAs

Savings accounts and ISAs often have far better interest rates than current accounts, allowing you to make money and benefit from tax-free interest. It’s wise to have designated savings accounts that you move money into and don’t use as day-to-day spending money. 

Even saving small amounts has a compound effect as you’ll earn interest on the full balance, including previous interest payments. Keeping this savings money separate from your usual current accounts stops you from seeing it easily and being tempted to spend it. 

Multiple Currencies

It’s increasingly easier to open bank accounts in other currencies. Having a Euro bank account, for instance, means you avoid foreign transaction fees and variable exchange rates. 

It also means you can withdraw money easily in Euro countries from ATMs without facing charges. 

Separating Personal and Business Accounts

If you run a business, even as a sole proprietor, keeping your personal and business finances separate will make your life easier. You’ll get a better picture of how well your business is doing and can keep track of payments and outgoings more easily. 

Some business accounts also come with added benefits such as free business advice or discounted business products. 

Joint Accounts

If you share outgoings with a partner, having a joint account can help you manage your shared responsibilities. If you jointly pay a mortgage or rent, utilities, and subscriptions, you can store this money each month in your joint account and create direct debits to pay out. 

This is a useful way of separating joint expenditure from your personal finances. This can also offer a small amount of financial protection in the event of the death of an unmarried partner. On the death of one joint account holder, the account will automatically belong to the surviving account holder regardless of marital status. 

Stay Safe with Multiple Bank Accounts

There are many benefits of having multiple bank accounts and having only one puts your money at risk. Having more than one account helps protect your money from bank instability and cyber attacks, enabling you to access part of your wealth. 

It’s also helpful for travelling abroad and saving for your future. You can take advantage of better interest rates, separate savings from everyday spending, and see business finances clearly. 

To learn more about the global financial world and keep on top of news, check out our Editor’s Picks

Prepare Them For The Future: 5 Unique Ways To Teach Kids About Money

Did you know that 62% of parents give their kids an allowance? 

But it’s not enough to just hand your kids money. You need to teach them the value of a dollar and how to spend it. 

Teaching kids about money doesn’t have to be hard. Money is one of the greatest stressors for adults. But if you can teach your kids early how to budget, you can save them a lot of heartache later on. 

This article will give you 5 ways to teach your kids about money. 

1. Match Allowance to Chores

Don’t start giving your children money until they’re old enough to do chores.

If you give your child an allowance when they’re very young for doing nothing, they’ll question why they have to work for their money later on. 

When your child is old enough to do housework, be sure to match the money you give to the work they do. 

For instance, offer a certain amount for each chose. Vacuuming could be one dollar, washing the dishes could be two dollars. 

It’s important to break down the value of each piece of work they do. This will teach them how labor gets exchanged for money. 

Make a chore chart so they know what they’re in charge of each day. Set a “payday” on Fridays so they have money to spend over the weekend. 

This traditional work schedule will get them used to waiting for their money and spending it wisely. If they don’t do their chores, don’t cave and give them the allowance anyway. This isn’t how money works in the real world and you’ll be sending them the wrong message about hard work. 

2. Make Them Pitch In

There is no way your seven-year-old can pay for every toy they want.

But this doesn’t mean they can’t pitch in a portion. When your child asks for a major game or toy, always make them pay for a small portion.

Even if it only takes them saving their allowance for two weeks, this simple act will make them value the toy more.

if you constantly give your child toys without them having to do any work, they won’t appreciate them. The toys will become something they’re entitled to rather than something they had to work for. 

3. Talk About What You’re Buying

Your kids are always listening to you. 

They hear you talk to your spouse about big purchases coming up. Next time you buy something large, include your child in the conversation.

Explain to them how long it took you to save up for that item. This way, when a brand new minican arrives in your garage, your child doesn’t think it got there by magic. They will start to understand that all those days you go off to work, you were earning the minivan. 

Talk about how long it will take to pay off the minivan if you haven’t already. 

When you go to an ATM, tell your child how much money you’re taking out. Don’t make the process of withdrawing money look easy. 

4. Cook More Meals

Eating out every night and buying your child food from the drive-thru sets the wrong precedent.

It teaches your child that food comes easily and that it’s accessible when you want it. Your child will have no framework for how much it really costs to feed themselves.

Instead, focus on cooking the meals you put on the dinner table. 

Take your child to the grocery store with you and get the ingredients to make the food he or she loves to eat a restaurant.

For instance, if her favorite restaurant food is a burger and fries, then go to the store and buy those ingredients. Add up how much each ingredient costs together and compare that number with how much you would have spent at the restaurant. 

You’ll notice that getting food in the grocery store is far less expensive- and your child will too.

Then take the ingredients home and cook together. This will teach your child the importance of working for the food they ear. 

5. Use a Clear Piggy Bank

As an adult, you know what to look for in a bank, but your child doesn’t 

Sure, traditional piggy banks are cute. But they’re also impossible to see in without opening them.

You want your child to store their money in a clear receptacle so that they can see how much is in there. 

This will help them understand the process of earning and saving money. They can visually see how much further they have until their goal. 

A good practice is to teach them to wait until the piggy bank is full before spending the money. Maybe offer them a couple of bonus dollars if they keep the money in the piggy bank long enough. Think of this as teaching them how interest works. 

So Now You Know The Importance of Teaching Kids About Money

Remember, teaching kids about money is crucial to their success later on. 

High school courses don’t often cover important topics like how to spend money, and once your kid is in college it will be too late. 

You want them to be smart about earning money early so they don’t make mistakes later on. 

On the flip side, remember that your child is still a child. Don’t overstress them about money issues that you’re having. It’s important they know how the world works, but they shouldn’t be so worried about finances that they can’t sleep at night. They’ll have the rest of their lives to worry.

Wondering the best adult bank to save your money? Check out our advice here. 

Don’t Gamble With Your Future: Why Everyone Needs a Financial Advisor

50% of Americans don’t have anything saved for their retirement. Another 34% have nothing in their savings account at all. Part of this problem is the inability to understand personal finance and planning. A financial advisor is trained and experienced in the art of how to save and use your money.

Personal financial planners help everyone from recent graduates to those trying to save for their retirement. While they aren’t free, the money they can potentially save you, in the long run, is worth their advice.

Keep reading to learn more about planning your future and why you need a financial advisor.

Ignoring Your Finances Will Not Make Them Better

Besides the obvious fact that ignoring your finances will not make them better, it will also negatively affect your well-being. One study found that how you perceive items like your current financial situation as well as how well you’ve planned for the future, affects your well-being. These perceptions about your financial state impact everything from your job satisfaction to your physical health.

Needless to say, then, if your finances aren’t in order, the idea of going through them is probably scary. And that’s especially true if you know you’re in a lot of debt, but you’re not sure how much (or how to get out of it). 

The solution to that problem is not to ignore the issue but to tackle it before things get even worse. If you don’t know where to start, that’s where a financial advisor comes in.

More Money

Tackling your money problems with a financial advisor leads us to the next reason you should consult a financial advisor. That is, a financial adviser might actually be able to put more money in your pocket.

Financial advisors help you accomplish this in three ways:

  • They help you manage your income more effectively. 
  • They help increase your cash flow through tax planning, expenditure monitoring, and careful budgeting.
  • They increase your capital by increasing cash flow for potential investments

Overcoming Personal Biases

The benefit of managing your own money is how much you save. But the main disadvantage of having sole insight into your finances is that you have personal biases that are difficult to overcome.

Your biases impact your decisions, and that includes important financial ones. For example, people who lost money in the tech bubble in 2000 might be reluctant to reinvest in this sector, even if the potential for return is great. A financial planner can help you overcome those personal barriers.

At the same time, a financial advisor can help guide you through difficult financial situations wherein your emotions can get the best of you. If you’ve invested in the stock market, for example, a steep decline in the market may lead you to panic where a financial planner knows when to stay calm. With their experience, you can make logical and reasonable decisions with your money even throughout tough financial times. 

A Trustworthy Relationship

You can – and should – trust your financial advisor. These are professionals who have taken a fiduciary oath. That is, they are legally bound to putting your needs before their own.

Some financial advisors are also C.F.P. board certified. This certification indicates that your financial advisor follows a certain level of competency standards set by the Certified Financial Planner Board.

A Financial Planner Can Help You Achieve Long Term and Short Term Goals

Financial planners do exactly what their name indicates: they help you plan your finances for both the long and short term. If you, like most people, struggle to set, prioritize and reach your financial goals, a financial planner will show you how to reach your long and short term goals.

In the long term, a financial advisor can assist with paying off student loans, maximizing your 401k, or becoming consumer debt-free. In the short term, a financial planner helps with building emergency funds, paying for a wedding, or buying your first property.  

Plus, you’ll learn from your financial advisor and the plan they help you build. When you help create a financial plan, you follow it closely, and you reap the results, you’re perspective on controlling your finances is likely to change.

Professional Advice and Knowledge

Let’s be honest, you might know how to set up your online bank, you might even have tried your hand at playing the stock market, but you’re not an educated, certified, or experienced financial professional. A financial advisor has the credentials to handle all of the nuances of your finances and to find things that you’re likely to overlook.

A financial advisor will take an unbiased and holistic look at your finances and offer advice on where you can improve your savings and cash flow. But they can also help you with more complicated financial items like taxation, estate planning, and how to handle your debt.

Keep in mind, too, those finances are dynamic. They’re impacted by volatile markets and economic cotexts that grow and change. Your financial advisor helps you plan for those transitions and changes – and for the ones in your own life (i.e. retirement, career changes, etc.).

More Advice Than a Financial Advisor

Visiting a financial advisor is a good idea at all stages of life, regardless of your financial situation. Whether you’re ready to start saving for retirement, you’ve just graduated from college, or you’re preparing to buy your first property, a financial advisor can help you achieve those goals. 

While the cost of a financial advisor is a hindrance for some people, a financial advisor can actually help put more money in your pocket. They can show you how to better use your income, ultimately increasing your cash flow and your capital. 

But for even more advice than a financial advisor can give you, check out our financial advice blog. It’s full of all the financial information one could need.

Don’t Wait Until You’re Older. Start Saving For Retirement Now

Saving for retirement is so stressful when you feel like it’s all you can do to make it to the next paycheck. With more than half the American public feeling like they’re behind on their retirement planning, that’s a lot of stressing out! 

In the following article, we’re going to address what you can do to turn the tide. But first, let’s look at the obstacles that are keeping you from it.

Why You’re Not Saving

Saving is easy once you get started doing it. But it can be very difficult taking the first step. This is usually due to us believing certain falsehoods we’re about to get into, but also could be due to some seemingly legitimate reasons.

Not Enough Income

Living paycheck to paycheck is an unfortunate reality for millions of people. If it’s all gone by the time the next check comes around, how could you possibly find enough wiggle room to put back for your retirement?

Failing to Track Your Spending

Some families don’t make enough money. That’s indisputable. But a large number of us also spend more than we intend to by failing to scrutinize the things we’re buying with meaningful detail. 

Convincing Yourself You Cannot Afford It

Sometimes you can afford more than you think but you’re so downtrodden from the feeling of not getting ahead that you fail to realize the opportunities. We’re going to say something crazy here, but it’s true. You can always afford to save something.

Spending Therapy

This is one a lot of us have been guilty of. We’re so dejected by the lack of extra money each pay period that we get fed up with never having the chance to enjoy life and end up spending more than we should, thanks to weak sales resistance, a lack of willpower, and a little plastic.

Now you know the behaviors and situations that are causing the drama. It’s time that we looked at some solutions for what to do about it. Follow as many of these as you can, and you’ll have a retirement account before you know it.

1. Design the Lifestyle You Want

Before considering a savings account or any other financial instrument, get your goals in order. Don’t obsess over the harsh reality. Picture where you want to be.

What is a realistic lifestyle you would like to have if you were to ever pay your way out of debt? What does fiscally responsible behavior look like and how does it balance with what you like to buy or do? 

2. Assess Where You Are

Still not quite ready for the retirement account. Instead, it’s time to assess where you are. And we mean where you truly are.

Go over your ongoing expenses with a fine-toothed comb. Account for every dollar you make. Compare the two to see how much discretionary income you have (or how much more you’ll need to earn). 

3. Start Small

The smart saving habits have nothing to do with volume. Few people ever get rich overnight. They do it by incremental savings over time, thanks in part to the concept of compounding interest.

Enjoying any of that, however, requires that you save something, even if it’s just one percent of what you make. Get comfortable saving before upping the ante.

4. Know When to Get More Aggressive

Another important thing to learn when investing money wisely is that there will come a time when you can and should be more aggressive. Many analysts suggest taking the risk on more volatile investments (like emerging markets) when you’re in your 20s, for instance. Then, work in more conservative investments the closer you get to retirement.

That’s ideal. But it may not be for everyone. People who start late and are trying to catch up to their retirement number, namely. 

The point: there’s a time to be aggressive and a time to be conservative in your investment decisions. Learn when those times are for you.

5. Choose the Right Financial Instruments

There are many retirement accounts and investment options to choose from. Employees often have the option of saving pre-tax dollars through a 401k. Self-employed individuals prefer the Roth IRA, which can be withdrawn at retirement tax-free.

You also might consider round-up accounts that go up to the nearest whole dollar and are tied to your debit card transactions. For every purchase you make, whatever change gets you to the next whole dollar goes into an investment portfolio.

6. Target the Amount You Will Need to Retire Comfortably

Use a retirement calculator to gauge how much money you’re going to need for retirement. From there, play with the numbers to see how aggressive you need to be in your savings for where you are at this moment in life.

7. Make More Money

Easier said than done, right? Not necessarily. The Internet has opened up a plethora of ways we can use our existing talents to make extra money on the side.

If you do start a side gig, however, make sure you hold out 30 percent for tax purposes. That’s considered self-employment money, so you won’t have an employer to pay half of your Social Security and Medicaid costs.

8. Cut Unnecessary Expenses

Are there any entertainment subscriptions you can live without? What about meals and coffees out?

Scrutinizing your spending will highlight opportunities to reduce your output. It won’t solve all your problems, but it will free up some money to go into a retirement account.

9. Capitalize on Your Benefit Offerings

This isn’t for everyone. But if you do work with an employer that offers a 401k with matching, take advantage of it. That’s like getting double for each contribution you make, up to three or five percent anyway.

10. Invest in Life Insurance

We recommend this because a) some life insurance builds cash value that can be withdrawn or borrowed against, and b) it will leave your family with options in the event something happens to you and you haven’t saved any money for retirement or unexpected expenses.

Yes, insurance is an ongoing expense. But it also provides you with enough peace of mind to not be discouraged when your retirement planning falls behind.

11. Enjoy Your Money When You Can

You can’t take it with you, and you’re only young once. Take advantage of a healthy mind and body by finding some room to enjoy your money when you can. Do it without feeling guilty, too.

Saving for Retirement Doesn’t Have to Be a Chore

Saving for retirement can be gratifying when you see those small contributions start to add up. Whatever you do, don’t be discouraged by a lack of progress. Start saving whatever you can now, and you won’t regret it.

Good luck! And if you’d like any help with retirement questions or other financial advice, try our Letters to the Editor feature today.

How Many Bank Accounts Should I Have? (At Least Three)

In the past, people had a checking account and a single savings account. But those were the days when you paid by check and had to go into the branch to do any banking.

Times have changed! We can now send and receive money with a click of a button on your smartphones. So why are we still stuck in the same account habits? 

If you’ve asked yourself, “how many bank accounts should I have?” read on. We’ve got all the answers. 

How Many Bank Accounts Should I Have?

The average American has between $6000-$9000 in their checking accounts. But if you are one of those people, your money isn’t working as hard for you as it could be.  

The great thing about multiple bank accounts is that you can separate your money for different purposes.

You can keep your money that is reserved for a vacation or emergency car and home repairs separate from your account that pays your monthly bills.
When your money is altogether in one lump sum, it is easier to spend money on things it wasn’t intended for.

Keep in mind that having multiple accounts is only beneficial if you aren’t paying a lot in fees and if the account doesn’t have minimum balance requirements. 
Here are some of the best ways you can separate your money into various accounts. 

Accounts for Saving

A savings account has many useful benefits. For one thing, these accounts tend to offer you higher interest rates.

Sometimes, these accounts place limits on how often you can withdraw from them. This might help you think twice about taking money out of your savings.
A lot of people have two different bank accounts: one savings and one checking.

But, two or more savings accounts are very useful for people who live paycheck to paycheck. Two or more savings accounts is a digital version of the jar saving system.

But instead of separating your savings into a jar labelled, car, school, and vacation, you have multiple accounts.
Here are some of the saving accounts you might have. 

Emergency Fund

An emergency fund is a separate saving account that you use to save for unexpected costs.

For example, you could stash some funds in this account to save for job loss, unexpected car repairs and so on. Experts recommend 3-6 months of income be saved in this account. 

Treat this account like a fire extinguisher in a glass case. You only break the glass and take out your money in a true emergency.

To grow this account, set an automatic transfer from your checking account on payday. It’s fine if you only deposit a little bit into this account each time you get paid. Over time, this fund will grow.

Short-Term Savings

A separate savings account can be set-up for your short term saving goals such as money for Christmas presents, a holiday or specific expenses like new tires for your car.

The goal of this account is to keep your money safe from accidental spending. You might have one for all your short-term saving goals, or you may prefer to have one for each goal.

The great thing about online banking is that you can name your accounts whatever you want. So you can make it clear what the purpose of each account is. Try to put a set amount into this account each pay period.

One way to help you stay on track is to figure out the total amount you need and when you need it by. Then divide that number by how many paychecks you’ll get until the goal date. This helps you figure out exactly how much money you need to set aside each pay to reach your goal on time.

Like the emergency fund, you do not use this money for bills, going out to eat or other superfluous expenses.

Long-Term Savings

You should also have an account for your long-term savings. You can save for things such as retirement or post-secondary education.
A regular savings account might not be the best place to grow your money.

Learn about investment management to help your money the most.

How Many Checking Accounts Should I have?

Now let’s talk about checking accounts. These accounts allow unlimited transactions such as withdrawals and purchases.

You may opt to have one checking account where you do all your spending. This means your paycheck gets deposited into this account. You also pay your bills from this account and buy groceries, gas for your car and go out to dinner from this account.

You can see how this may be problematic. The last thing you want is to spend money only to realize that now you don’t have enough for your rent or mortgage.
One of the best ways to avoid this is by having two checking accounts.

One account should be for your incoming funds such as paychecks. You should keep the funds you need for all your monthly bills in here.

Then, move the remainder of your money to a separate checking account. This is the account you can use for day-to-day spending. By doing this, you avoid spending money meant for your bills.

Final Words

There you have it. A complete guide to help you answer the question: “how many bank accounts should I have?”

Keep in mind that you may need to adjust this guide to suit your specific financial situation. You might find you need fewer accounts than we’ve suggested.

As long as you have a system that lets you divide your money into manageable and purposeful ways, that’s all that matters.

At CFI.co, we report on business, economics and finance to give you the information you need. Learn more about CFI here.

The Top 7 Best Private Banks Around the World

Exclusivity comes with a winnowing set of risk and a growing set of rewards. It costs money to reach for higher financial status, but obtaining such comes with a bevvy of perks.

It gets harder to manage everything the higher up you go, which is why specialized services come into being. Among the most broadly useful special services for the wealthy is the private bank. A place to house your wealth where it does work instead of collecting dust.

These banks offer more to their clients than other banking organizations. They offer fine-tuned control and added value to the banking experience, which explains why the largest private financial organization takes care of over 2 trillion USD

But which bank does one chose for their own needs? A lot of factors go into making such a choice but this list will provide criteria and options. 

Private Bank Offerings

The majority of what exclusive banks offer is hands-on experience and attention. Instead of dealing with a banker that deals with dozens, if not hundreds, of accounts, each getting a bit of nodding and hand waving when customers ask about their interest rates or money, a private bank offers professionalism.

Wealth Management

The growth and management of wealth ranks among the best private banking services. 

The overlap between wealth management services and private banking is so large that it’s more worth mentioning how they are different. The largest benefit of a bank over a management service is accessibility.

Finances in a bank are more available in a moment without taking time to untie or vest before moving. Not all funds deposited stay completely accessible, but more so than with a management service. 

Dedicated Personnel

Instead of having one banker with quotas and customers, you gain access to a dedicated person looking after you. This person may even be a team of people, depending. Their job is to work with you and your wealth to increase your bottom line and keep you aware of opportunities for growth.

You save time through individual attention. No going through a file each time you call to remember who you are. They know you and your needs on a personal level.

Dedicated Attention

The attention you receive from a personal representative bleed over into personal assistant territory. They anticipate your needs and offer additional help in planning and creating.

Network of Specialists

Your personal banker and banking team also bring you the benefit of other specialists. At some point, you will need to encounter and deal with tax attorneys, trust managers, and estate advisors. 

your personal banker can offer referrals for each of these that they have personal experience working with. This saves you the time to vet and research for these people.

Perks in Pricing

Offerings, in terms of services, from a private bank contain everything you would see at a lower bank but with incentives woven throughout.

You can expect to see discounts and freebies on some services. It’s quite common to be offered free personalized checks or a safe-deposit box. While it’s not everything, can save upwards of $300 annually on a box.

Of course, most private banks have some fees for their services but it’s nice to see the value additions they supply.

Private Bank Profiles

Now that you have an idea of what types of services you’ll find in a private bank, you can evaluate the following. Each of these excels in their service, security, and returns tho their clients. 

1. DBS Private Banking

This Singapore-based institution offers top-class digital transformation. They have trademarked the term iWealth to show their dedication to digital movements.

Their personnel are well versed in tech and connected to Asian and pan-Asian markets that seek to expand influence through the region. They’ve shown impressive growth in the last few years as well, jumping over 31% in assets in 2018.

2. J. Safra Sarasin

For those looking for a social-minded banking experience, Sarasin leads in programs bolstering societal goals. 

The bank has been in operation since 1841 as a family-owned business. They have spent the better part of three decades building a reputation for sustainable technology. 

They’ve grown while doing so, 23% in 2017 alone. They show that responsibility and social awareness can be profitable endeavours.

3. U.S. Trust

This top private bank offers a somewhat different set of offerings than others. Rather than focus on business owners and hairs, they work with executives and heads of industry.

The bank itself is part of a structure, as such, it is more branding than individual institutions. They work on stock options and retirement benefits for industry employees, which gives them substantial assets. Ideally, they work most often with C-Suite executives. 

4. UBS

The top holding private bank is the world’s largest financier. It gained this honour after smart mergers between its U.S. management and its international operations. together they aim to provide the best and most complete investment and client services. 

5. BBVA

Most private bank accounts start at $1 million in holdings. A few offer accounts for less, especially to financial movers, those with a definite possibility of increasing their portfolio rapidly.

BBVA works with a floor of $340,000. 

Currently, it is involved with large housing markets in Spain and holds a presence in Latin American markets. These growing sectors provide new investment opportunities for clients. 

6. Citi Private Bank

On the other hand, if you are looking to work with much more than the minimum, Citi Private is looking for that demographic. The bank caters to those with $25 million or more in assets.

They operate with a global strategic view, considering their high-end clients to be global citizens.

They work with multimillion-dollar investments and huge, intricate hedge funds. Their growth of 18% in 2017 shows they know who to influence and call shots.

7. Pictect

For those looking for something a bit more local, Pictect caters to the Western European market. An old-line Swiss bank in operation since 1805 with a foothold in Asia. 

They work it old school, using investment banking and cross-selling of credit to bolster dividends. Pictect offers a small, cosy feel with a lot of clout in the world.

Finance a Future

Few people get to experience the thrill of shopping for a private bank. It’s not everyone that has the assets to qualify for joining one of these venerable institutions. 

For further information on the banking industry and its impacts, read more here

Opening Your First Account: What to Look for in a Bank

Are you considering opening your first bank or looking for one for your child? Don’t just go with the one down the block due to convenience. There are actually more options out there than you realize – and some that can save you money and keep your cash safer for the long term!

Read on for our top tips on what to look for in a bank so that you can store your wealth the smart way. 

1. What Kind of Account Do You Need? 

Some banks offer you more perks for checking accounts versus savings accounts, and the other way around. This can be due to higher interest rates, convenient mobile checking deposit options, or banks that don’t charge you monthly fees. 

If you don’t want your money to stagnant in a savings account and want to save more, then a high-interest savings account may be for you. Although many brick-and-mortar banks don’t offer very high interest, many online banks do. 

Perhaps you want to replace your current checking out. Larger banks offer more options if you want flexibility, and there are also high-yield checking accounts that are offered by online banks, credit unions, and community banks. 

2. Avoid Minimum Balances

Some banks require you to have hefty minimum deposits, which essentially locks your money up in an account for the foreseeable future without earning much interest. Online banks such as Ally Bank and Capital One 360 offer checking accounts that don’t require a minimum balance. Smaller banks and credit unions are also less likely to require minimum balances. 

3. Avoid Overdraft Fees

Overdraft fees are one of the biggest penalties to hit consumers. Banks can charge $35 or more for each overdraft to your account if you’ve opted for overdraft protection, which can become a vicious cycle. The bank is essentially giving you a loan with a hefty fee attached. 

Overdraft protection isn’t required, even though banks will try to push you towards it. When you don’t have overdraft protection, your purchases or ATM withdrawals are simply declined if you have insufficient funds. Remember to read the fine print of whichever bank you choose and go with the option that has fewer fees, or no fees at all. 

Some banks will allow account holders to link a savings account or credit card to your account and transfer money if you have insufficient funds. You’ll avoid large fees, but you’ll also be able to complete your purchases. 

You’ll also want to see if your bank is capable of sending you text alerts if you have a low-balance or have crossed a threshold you’ve indicated. With banks that offer mobile apps, you’ll have a much easier time monitoring your account’s balance. 

4. Consider Accessibility 

Although online banks come with a lot of perks, they can lack the convenience of big brick-and-mortar banks. If you’re having issues with an account or need to deposit cash, this is much easier with a traditional bank. 

Many online banks require you to mail in your cash if you need to make a deposit. If you’ve noticed any fraudulent activity on your account or need some assistance, you’ll need to chat with a customer service representative online or call. Depending on how effective their customer service is, this can either be a convenience or a major hindrance. 

Carefully think about your accessibility needs and choose the bank that makes your life easier for the longterm. 

5. Consider Spending Habits

You’ll also want to consider your lifestyle. If you’re making an effort to save money, many financial advisors recommend you go with a bank that allows you to open and name multiple accounts. This enables you to have one checking account and separate savings accounts for all your different savings goals, such as emergency money, gift funds, and travel funds. 

Portioning out your money this way makes it far easier to budget. When you access your account online, you’ll see right away how much money you have available to spend and how much you need to save. 

6. Digital Features

There are a lot of digital features available now that make your life a lot easier and your account more secure. This includes the ability to transfer funds, deposit checks, and pay bills all through an app.

Some banks offer the ability to immediately lock a debit card or customize it to not allow international purchases or purchases out of your local area. Overall, banks are pushing towards more high-tech solutions, including utilizing IoT

If you’re predominantly a debit card user, this kind of peace of mind is invaluable. Make sure to browse a bank’s website and read their app reviews to see how convenient and developed their digital features are. 

7. Read Terms & Conditions

It may seem unnecessary, but you really should read the fine print before opening a bank account, especially one that you’ve found online. Here are a few things you should check for: 

  • Monthly service fees
  • Out-of-network ATM charges
  • FDIC insured savings accounts
  • Promotional deals that are expiring

You need to know exactly what you’re getting into before you join a bank or open one for your child – this saves you future headaches. If you find that you want to open a checking account with one bank and savings with another, ask yourself if this will suit your lifestyle and if you’d be able to keep up with it. 

What to Look for in a Bank: Secure Money that Grows

When you consider what to look for in a bank, it’s all about finding one that suits your lifestyle, keeps your money secure through insurance and smart digital features, and doesn’t let your money stagnate.

For instance, if you have thousands of dollars worth of savings, keeping it in a savings account with a low interest rate for years will actually be losing you money. Inflation rates rise while your purchasing power diminishes. You would do better to store this in a CD or high-interest savings account.

If you have a teenager that’s opening his or her first bank account, maybe they would do better with an account that offers the ability to open multiple savings accounts. This will help them learn how to budget effectively.

If you found this article helpful, keep reading our banking section for the latest news and analysis of banking policies around the world!