If you want to be a successful forex trader, you must use a good exchange rate. For this reason, you need to be very careful when you choose your forex brokers. The problem is that with the popularity of forex trading increasing, there are many brokers around to choose from. Considering all their features and benefits, making a choice may seem rather difficult. Here are some considerations to keep in mind if you want to select a good broker for your needs.
1. Look at Regulatory Compliance
Not every forex broker is the same. Each country has its regulations, so if you are going for a specific broker, make sure that they cover your area. Look for brokers that are members of the NFA (National Futures Association) and are registered with the CFTC (Commodity Futures Trading Commission). Even if the website looks fancy, it doesn’t necessarily mean it is regulated.
2. Check the Account Features
All forex brokers have their own offerings when it comes to their trading accounts. Check their leverage and margins, while considering the spreads and commissions. For example, if you have $1,000 in your account, a 50:1 leverage allows you to hold a position capped at $50,000. This can help you increase your earnings and reduce your risks.
3. Consider Deposit and Withdrawal
Each forex broker will have a certain deposit limit. In some cases, the initial deposit may be as small as $50, whereas others may ask for much higher deposits. You may also want to check the ease of deposit and withdrawal. You should ensure they have your deposit and withdrawal method of choice (i.e., credit/debit card or PayPal). Bear in mind that the broker may charge fees for these transactions.
4. Check Currency Pairs
When you want to find on FX-list a good broker, you need to check the currency pairs that they offer. There are hundreds of pairs out there, but you want to get the ones that have the highest liquidity pairs. Moreover, while a broker may provide a huge selection of currency pairs, it doesn’t mean they have your pair of choice. Make sure that they can offer the currencies that interest you the most as a trader.
5. Verify Their Customer Support
The forex market never really stops, and you don’t know what’s going to happen overnight. As a result, you must be able to contact your broker at all times. See what contact methods they provide, and whether they have 24/7 customer support or not. A tip here would be to give them a quick call before you commit. This will give you a good idea of their responsiveness.
The Bottom Line
When choosing your FX broker, you must be very careful of the features that they provide. After all, you will put them in charge of your money, so you need to ensure they can be relied on. They should have all the necessary regulations and offer you their support whenever you require it.
Accounting software has become integral to the growth of small businesses, similar to its role in other industries. Business owners are always looking for new ways to increase productivity and save money. And that’s where accounting packages for small businesses come in handy. Accounting software is a tool that aids bookkeepers, business owners, or accountants in automating and managing accounting transactions for a business. Here are the top benefits of accounting software for startups.
Explore the benefits of accounting software for small businesses, including streamlined invoicing processes, with HVAC invoicing software from a reliable resource.
Access Financial Information Any Time
One of the leading benefits of utilizing online accounting software is that it allows individuals to access their data from any device of their choice, and at any time they want. This has a lot of advantages for all businesses, especially startups. For instance, you can develop and send invoices directly from your device while on the go, or you could generate, download, and view crucial accounting reports and statements at any time.
Automates Processes
In today’s business landscape, automation is indispensable. Using accounting packages, you can easily automate loads of processes and avoid expending time on manual activities. Here are some processes you can simplify using an accounting software:
Invoicing
Payment reminders
Importing data
Payroll invoicing
Expense management
Aids in Tax Filing
Tax season can be quite stressful, especially when you have to compile financial data and reports. To aid in simplifying this entire process, you should utilize accounting software. With accounting software, you can safeguard income statements, invoices, and receipts all in one place, making it essential for filing taxes.
Organizes Your Accounting Records
As a small business owner, sloppy books will lead to several problems for your company. Using accounting software, you can ensure that your accounting records remain nice and well-organized. You can also easily organize your receipts, invoices, accounts, and other documents. This way, you won’t stress over inaccurate records or scramble to get valuable information when necessary.
Saves Time
Similar to any new software, there is always an investment of time at first to install your accounting software. However, afterwards, it can save you lots of time weekly by automatically taking care of time-consuming manual accounting and bookkeeping processes.
Increases Accounting Security
Cloud-based accounting software safely secures all your accounting information because they are stored in the cloud. Your accounting data is protected under various layers of high-class encryption algorithms, ensuring that your financial records are safer than just staying on the shelf. By saving your accounting records on the cloud, you eliminate every chance of them getting erased or corrupted.
Lowers Cost and Saves Money
A significantly small number of businesses outsource their accounting and bookkeeping processes. This means that the majority of companies manage their accounting and every related paperwork themselves, reducing the time employees have to handle their other operations. By installing accounting software that appeals to your business needs, you will save on outsourcing your accounting processes without having to compromise the development of quality accounting statements. Furthermore, as an added perk, you will also save on paper costs.
With these benefits listed above, you can see just how useful accounting software can be to your business’s growth. Accounting packages aid companies in keeping up with the demands of today’s digital landscape.
There are a lot of psychological elements that play a role in how comfortable we are with risk and what we’re willing to lose in order to gain. These elements are an integral part of our financial lives and how we invest money.
For example, there’s a term called loss aversion, which is a cognitive bias that means that your losses hurt twice as much as any equivalent gains. This relates to risk aversion as well.
Risk aversion is your tendency to try and avoid risk. In investing, this would describe someone who focuses on preserving their money instead of going for potential returns that are higher than average.
Risk is price volatility in investing, and if you make a volatile investment, it can lead to wealth or it can also deplete your savings.
Low risk is more stable, but your returns might not be impressive. The flip side is that you have an almost zero likelihood of losing your original investment. The problem is that along with not generating much wealth, you might not even be able to keep up with inflation over time if you only stick with low-risk investments.
We can think about the stock market and other financial investments as well. For example, buying a second home as a vacation rental can be a high-risk but high-reward investment.
Smart investors know how risk-averse they should be based on their situation, and they’re also willing to take risks.
If you have your money sitting in a savings account and that’s it, you may be extremely risk averse.
The following are things to know about being less risk averse for better possible returns but knowing how to keep a sense of balance.
First, is your retirement account growing at a very slow pace? You might want to gain more exposure to risk, especially if you have a long time until retirement, which would give you a chance to make up for losses.
Other signs you’re too risk-averse can occur in different parts of your life. Maybe your career is stagnant, or you’re afraid to invest in yourself by doing something like going back to school. You might refuse to move for a job, even if a better opportunity came along, or maybe you’ve been toying with the idea of starting your own business, yet you won’t take the leap.
Inaction can be as detrimental to your life and goals as too much action. Sometimes, it’s more harmful.
Start Small
If you’re someone who has essentially zero risk tolerance, start small with decisions that aren’t going to be life-altering. Maybe, for example, instead of deciding you’re going to go back to school, you take a course online.
If you own a business, maybe you decide to diversify your product offerings, but you start with a digital product that’s low-cost to produce and gives you a chance to experiment a bit.
You don’t have to be all-or-nothing when it comes to increasing your risk tolerance.
As far as investing, maybe you put a small amount of money in a single stock rather than a mutual fund or ETF. Do some research to find one you believe in, and only put money in that you’re okay with losing.
Then, depending on how these smaller decisions go, you might be willing to take larger risks going forward.
Framing these small decisions as experiments can be more appealing, especially when you realize even the downside possibilities won’t mean the world comes to an end. You’ll build more confidence with each risk that you take.
Create a Portfolio of Options
You’ll often hear people talk about a portfolio of options in business. This means you aren’t going all-in on one thing. Instead, you’re offering yourself a lot of possibilities that could lead to successful outcomes.
If you can put together a group of initiatives, it seems less scary if one fails because you know that some of them might succeed.
If you think about this in terms of investing, it’s essentially diversification. You’re spreading out your options. If you’re diversifying your investments, your portfolio will include assets and also asset classes that aren’t all correlated with each other. If some of your securities fall for a period of time, others might rise, and you’re offsetting your losses.
Stop Making Perfect Your Goal
If you’re aiming for perfection in any part of your life, whether your business or career or your finances, you’re always going to fail because it’s not possible.
For example, maybe you want to write a book. You’ve started working on it, and it’s nearing a point of completion where you could potentially earn money from it. Unfortunately, you never think it’s good enough, so you never take the risk to put it out there. Again, it will never be perfect, so let it be good enough.
This is something you have to embrace throughout your life, and it’s tough, especially if you are someone who’s very risk averse, but if you understand you’ll never achieve perfect, you’ll be able to make a lot more progress.
People who always aim for perfection tend to get stuck and be more stagnant.
Finally, don’t focus too much on your end goal. That’s going to make you scared to take risks, and you might be paralyzed in your decision-making. The first step is what you need to think about—not the end outcome. That could be years away. Taking the first step, as cliché as it might sound, is the most important thing you’re going to do.
If you’re nervous about something, break it down into very small steps, and make the first one as easy as you can on yourself. For example, if you want to start saving for retirement, start an account and put aside $20. That’s all you have to do, and you’re started working toward your goal.
After the COVID-19 pandemic, many people were left cash-strapped. In 2022, 11.1% of Americans have bad credit scores, which makes it difficult to acquire loans. Loans are necessary to buy a house, further your education, or grow your business, but lenders are cautious in giving loans to people with bad credit, as they sometimes cannot pay it back. Even if you have low credit, you can still acquire loans. Here are a few ways you can get loans on bad credit.
Source: https://unsplash.com/photos/j5NU6WZN1nA
1. Find a Co-signer
One way of getting a loan with bad credit is by having a friend or family member co-sign the loan with you. Ensure the co-signer has a steady income and a strong credit report. The cosigner’s high credit will satisfy the lender. This method can also allow you to get loans with low-interest rates and easy installments, so you can quickly and comfortably pay back the loan.
Sometimes co-signers can be apprehensive about putting their names down because they will have to step in and help if you cannot repay the loan. Convince them by showing them your plan for repaying the loan.
2. Peer-to-Peer Loans
Peer-to-peer (P2P) lending is a loan-acquiring process between two individuals, removing the financial institution as the middleman. P2P lending websites will directly connect you to a lender or an investor. The interest rate on these websites is decided upon your credit score. Your low credit will likely only get you high-interest loans. If you are willing to pay high-interest rates, you can find a loan option on P2P lending sites. Regardless of whether you obtain a loan, you will have to pay the website a fee to initiate the process.
3. Payday Loans
If you want to achieve small loans, consider taking a payday loan. They only provide you with up to $500 in loans, and you need to repay it by the next time you receive your salary. Only consider getting payday loans for emergencies, as they have incredibly high fees. Their interest rate can be anywhere between 150% to 600%.
4. Unsecured Personal Loan
You get loans on low credit through an unsecured personal loan, but you will have to use some of your belongings as collateral. Such as a property, vehicle, or certificate of deposit. Unsecured personal loans are also given at high-interest rates. Only consider this option if you can pay back the loan, or you will lose your collateral.
5. Tradelines
Tradelines are accounts listed on your credit reports, such as credit cards, mortgages, and student loans. They contain information on each account and show your payment history. Even if you have bad credit, lenders can look at this tradeline’s good payment history to approve your loan. To further improve your chances of getting a loan, you can purchase more tradelines from companies like tradeline supply. Read the tradeline supply company review to determine if it is the right match for you.
Endnote
Loans are necessary to improve your financial situation as they help you start businesses, get higher education, and provide relief in emergencies. A bad credit score may prevent you from getting loans. Options like payday loans, personal loans, peer-to-peer loans, co-signers, and tradelines let you achieve loans even on low credit, but these loans come at high-interest rates. To ensure you repay the loans on time, you must devise a repayment strategy. Otherwise, your credit score can drop further.
Unemployment is one of the most devastating situations to be in. It affects your social, financial, psychological, professional, and emotional well-being. This is because most people attribute their sense of self-worth and identity to their careers and jobs. As scary as loss of employment is, you can get through it. If you were recently downsized, laid off, or resigned from your position, here are six tips to help you survive unemployment.
Like other kinds of loss, such as death or breakup, you will likely experience grief due to the sudden loss of your source of income. Embrace the different stages of grief, including denial, anger, and bargaining. You should accept your situation and not be too hard on yourself.
Consider unemployment as a temporary setback and stay positive. Exercise regularly, maintain a proper diet, get adequate sleep, and engage in other activities that make you feel good about yourself to keep despair, anxiety, and stress at bay.
2. Update your budget
If you do not have a household budget, set one up. If you already have one, consider updating it to suit your current financial status. By revising your budget, you can identify unnecessary expenses you could eliminate or areas you could save cash. For instance, you could consider streaming your favorite shows instead of paying for cable, raising your car and home insurance deductibles to reduce premiums, and canceling some of your subscriptions.
You could also identify and plan for core essentials such as medication, transportation, food, and utilities like water, electricity, and gas. If you are struggling to pay for basic expenses, check Ontario Works eligibility to determine whether you qualify for financial relief to help you manage bills before you get another job.
3. Create an emergency fund
Do not waste or misuse any penny you trim from your expenses when updating your budget. Instead, place the money in a high-yield savings account to build an emergency fund. An emergency fund can help you cater to your family’s needs until you secure another position.
4. Look for temporary employment
Securing your dream job could take some time. Instead of staying idle while your bills pile up, consider applying for temporary work to generate a little income. You could apply for seasonal employment, work online, or start a side job.
5. Connect with your network
Contact friends, family, acquaintances, and former colleagues, and let everyone know you are hunting for a new job. While you do not have to divulge the details of your current unemployment status, allowing your network to know you are on the market will increase the chances of landing another position quickly. You could also update your resume and post it on the internet to enable potential employers to find and contact you.
6. Register for unemployment benefits
Some states often provide financial relief for a specific period to individuals who lose their employment. For this reason, if your loss of a job is not our fault, consider applying for employment benefits. Check your state’s guidance on unemployment registration to determine the eligibility criteria, the application process, the expected amount, and the required documentation.
Endnote
Unemployment may be scary, but you can survive it. Take time to grieve the job loss, update your budget, build an emergency fund, secure temporary employment, connect with your network, and apply for unemployment benefits to get through your current financial situation.
There is no doubt that debt may make people feel like they are being swept away by a tide of unfavorable money, but there are ways they can change their experience with debt and, more specifically, with loans. Individuals can take control of their obligations and move toward a stronger financial future by considering alternatives, such as refinancing a vehicle loan through a trusted platform like RateGenius. However, people should ask themselves, “Should they refinance their car?” and then they must examine more closely what refinancing entails in actuality and its benefits for a vehicle credit.
Read on to know if restructuring your vehicle loan is an intelligent choice for you.
What Does an Auto Loan Refinance Mean?
When a lender agrees to issue new credits to a customer with conditions that are ideally advantageous to the customer, whether that be a lower interest rate, lower repayments, or some other incentive as a consequence of new positive development in the customer’s finances, that is referred to as refinancing. Refinances often occur when interest rates have changed or when a consumer’s credit has improved and they are now eligible for better lending terms.
Benefits:
A person’s specific scenario will determine how a refinanced vehicle loan affects them. Hence, as they go through the advantages of refinancing a vehicle credit, they should be mindful of keeping their budget and way of life in order.
Avoid Paying Additional Interest: Refinancing any form of loan is frequently done by customers to benefit from cheaper interest rates. You might be able to acquire lending with a lower interest rate if your creditworthiness has improved or if national interest rates have decreased. As a result, you save money and should be able to pay off your debt more quickly.
Debt Consolidation: The option to combine debt is another benefit borrowers enjoy when refinancing an auto loan. In essence, debt consolidation implies that you would have one obligation to worry about in place of several monthly lending installments. Some people find that this structure’s simplicity makes it easier to make monthly installments and maintain their finances.
Reduced Loan Terms: You could consider repaying your credit quickly if you want to close the debt. Depending on your lending arrangement, you might make additional payments to reduce your obligation with refinancing, but ensure there are no early repayment charges.
Easier to Manage Installments: Refinancing could help folks decrease their monthly installments if they’re having trouble with their vehicle lending payments.
Remember that your credit’s term will extend if you reduce your monthly repayments.
Final Thoughts:
Should your car be refinanced? It depends. Before deciding if refinancing is worthwhile, you should consider how the possible benefits and drawbacks will affect your financial profile.
Use platforms like RateGenius to evaluate your refinancing possibilities and the lenders who would offer the lowest rate or repayment.
These platforms incorporate your credit score, loan information, and other pertinent elements of your financial history to assist you in making wise and sound financial decisions and strengthen your connection with money management.
The class “Personal Finance for Young Adults” usually isn’t part of a high school curriculum – an unfortunate oversight that leaves many young people clueless about how to manage their money, apply for credit, and stay out of debt. Now that you’re in college, it’s likely that you’re in charge of your financial affairs more so than when you lived at home and mainly functioned in the realm of your parents’ economic universe. Indeed, you have more freedom to decide where and how to spend money.
But with that freedom comes the responsibility to spend money wisely. That’s what it’s like when you’re on your own – you get to decide. And you also get to experience the consequences of your choices, both good and bad. Soaring tuition costs coupled with financial unpreparedness spell a recipe for financial setbacks. Accordingly, it is crucial to understand basic financial tips for students and other core lessons about money.
9 Practical Financial Literacy Tips for College Students
While you may be forgiven for being nose-deep in your books, it’s time to reflect on how you manage your money. Do you have a budget? Or are you spending it on the go? Remember that the younger you are, the more time your savings and investments will grow – the sooner you start, the better. Here are some practical, real-world financial tips for college students you can take advantage of to reinforce your saving and spending habits.
Create A Budget
Carefree high school students frequently spend whatever is in their bank account, living off their parents’ generosity or the spoils of a part-time job. Once that student moves to college, a budget becomes indispensable. Making a monthly or semester budget is the first step toward staying on top of your finances. Budgeting gives you a big-picture view of your money, so you can make informed spending and saving decisions. Start by identifying your income for the semester or year, including paychecks if you have a job, loans, grants, and family contributions. Accounting for your inflows gives you an idea of how much to spend each month. Thereafter, plan for essential needs like transport and food. In whatever is left, you can save a fixed percentage and spend on other expenses like trips or simple pleasures. Remember to stick to your budget because straying from your financial blueprint defeats its purpose and risks pushing you into debt.
Practice Self-control
One simple but effective financial tip for college students is always paying with cash, not credit. You’re lucky if your parents taught you self-control. If not, understand that the sooner you learn the essential life skill of delaying gratification, the sooner you’ll keep your personal finances in order and as a habit. Put your money for everyday purchases on a debit card instead of a credit card. A debit card attracts no additional fees when making transactions, unlike a credit card with a high-interest charge. Use credit cards only for emergencies.
Track Your Spending
Write down every purchase you make or use a budget app. Create a routine that includes a regular accounting of your finances. Simply tracking what you spend can help you notice patterns and understand where your money is going. It also enables you to identify if you need to make a change. This financial self-knowledge will make your life calmer and allow you to focus on more important matters like your grades.
Exploit Student Discounts
College students should become masters in exploring ways their educational status can save them money. Restaurants, local venues, vendors, and services near college campuses often offer student discounts that can save you big money. What’s more, you should learn the value of hunting down great deals by looking for bargains. Being discount-obsessed is also an excellent financial tip for high school students since many companies offer discounts in the form of student memberships.
Use Cheap Essay Writing Services
It’s essential to make time for fun and relaxation even as you juggle academic work, family obligations, and social life. Sometimes students feel zapped from energy because they have too much on their plate and end up buying expensive college essays online. Luckily, you can use cheap but reliable and trustable professional essay writing help without breaking the bank.Custom Writings is a college paper writing service that offers affordable academic writing help from scratch for students in the USA and worldwide. Their writers deliver subject-savvy, content-rich custom college essays and research papers that help students fulfill their educational goals without blowing holes in their budgets. More free time, better grades, and financial wellness are three key benefits you get from using their services.
Set Financial Limits
Imposing financial limits for necessary items is another way to curb impulse buying. Setting a spending limit doesn’t necessarily prevent you from making impulse purchases but helps you pause and assess whether the new iPhone is necessary. By setting a relatively low limit, say $100 per month, you get a wiggle room without having carte blanche when it comes to spending power. Add the non-essential money into your student’s proposed budget, separate from basic expenditures on food and gas.
Avoid Full-price Textbooks
Ah, the textbook – the budget breaker for college students everywhere. While it’s true that some professors change and update texts practically every year, the vast majority use the same textbooks each academic year. Students shouldn’t have to shell out hundreds to shop for books before class. As a student, you can exploit many ways to save money on college textbooks, such as shopping for second-hand books from Amazon. You can also rent a book online or borrow local libraries. This financial wellness tip helps you recoup some of the cash spent on buying books.
Get A Job
Of course, college should be fun. The freedom of being on your own is something to be savored, and the social aspects of college are nearly as vital as classes. But if you can, adding a part-time job to the equation can significantly boost your income. Many college jobs have flexible schedules built to accommodate students. So, find a job that fits your workload without spreading yourself too thin. That extra cash can make a huge difference in managing a budget.
Collaborate with Roommates
Having roommates in college is pretty much a necessity. So, if you’re doing college solo, you have set yourself up for a much more expensive ride. Undoubtedly, living with roommates can be a challenge, but saving on housing can make it worthwhile. It’s crucial to go beyond having roommates to cut down on housing costs.
The Bottom Line
Your financial decisions during college have a lifelong impact, which is why it’s important to have financial literacy. You don’t need an MBA in Finance or even specialized training to become an expert at managing your personal finances. Following these basic financial tips for students can lead you to financial security, which forms the cradle for building the rest of your dreams. Remember, these ideas are not just for college students but also practical financial tips for high school students.
Your financial future depends entirely on several habits that may not seem to have anything to do with money or finances. Getting the right information from online tools like Velocity trader reviews is one way but are there other ways? The answer is yes. The journey to financial freedom can be shorter and less arduous if you adapt these six habits.
Remain Poised
Like many aspects of life, it is important to remain agile and poised through all aspects of financial situations, good or bad. Losing composure often leads people down a financial rabbit hole chasing high-profit, low-risk investment ghosts that leave them financially drained. Practice keeping a level head through tough times by learning and experimenting with low-cost situations.
Consistency
No habit will significantly impact your life unless you consciously and consistently implement it. It takes about a month to get acclimated to a new habit and start enjoying yourself. The first few days are always the hardest. Encourage yourself to stick to new habits, make bad habits hard to physically achieve, and implement visual reminders to keep yourself on track. In time, your efforts will pay off by being reflected in your bank account.
Use the Best Trading Tools
Trading tools are especially useful if you are looking to invest, which is a crucial habit to initiate in search of a brighter financial future. Tools like Velocity trader reviews give you an upper hand in making crucial financial decisions. Numerous financial tracking tools on the internet help you make the right financial decision for future gain. Make use of these free tools and any other that may require regular subscription fees but add actual value to your life.
Knowledge is Power
If you are determined to make a true difference in your financial journey, you will take measures to increase your knowledge base about money. It is common knowledge that schools do not teach us about money management, so it is important to enlighten yourself using free data littered across the internet. So instead of spending your lunch break scrolling through a social media app, grab a pen and paper and get learning.
Plan for Everything
Monthly or annual budgets and goals will save you a lot of financial chaos and turmoil. Making shopping lists is also a great way to plan for each aspect of your spending. The key to planning is using measurable and timed goals to create plans, so everything falls perfectly in place when the time comes. Planning may also involve identifying areas where the opportunity to save arises.
Discipline
Setting financial goals and making budgets are useless if you have difficulty sticking to the plan. Discipline is a habit that will put you in the top 5% of any crowd. Most people find it difficult to stay disciplined because of external forces, so it is important to forge your focus skills. Always keep your focus fixed on what needs to get done at the moment. One small at a time is the way to go.
The Takeaway
Your financial freedom is entirely in your hands, affecting you and your future generations. Don’t get left behind; take matters into your hands, start practicing these habits, and give yourself a financial leg up.
More and more mortgage loans are getting approved by the Bank of England every year. In April 2021, 86,921 of them got approved which was an 81% increase year-over-year.
Do you have a mortgage as well? Are you almost finished paying it off or did you remortgage it and are now deeper in debt than ever?
A mortgage is good debt, but does that mean that you should hold off on paying off your mortgage and invest instead? This is an age-old debate in financial circles and among homeowners – ‘pay off my mortgage or invest?’
Each individual will be different in which course they should choose. Keep reading for some factors that can help you decide.
Pay Off Your Mortgage Quicker
If you are the kind of person who stays up at night worrying about your mortgage and the debt that you are under, then your best course of action is to pay off your mortgage quicker. There’s no need to become an anxious wreck or deteriorate your mental and physical health because you are constantly worrying about your mortgage.
Also, consider that inflation is causing interest rates to rise rapidly. If that’s a concern of yours, then paying off your mortgage early is a good way to boost your finances.
Pros
There are many pros to paying off your mortgage quicker:
You become debt-free and that frees you up in a way
You don’t have to pay exorbitant amounts for interest payments
Once you pay down your mortgage you are free to use that additional income as you wish
Don’t make the mistake though of paying down your mortgage, only to use that leverage to buy some other big-ticket items, like a car or a world cruise.
Cons
Some cons to consider when paying off your mortgage sooner:
There are prepayment penalties to paying off your mortgage sooner
You are going to miss out on all tax deductions and advantages of having a mortgage
If your mortgage is your only investment, then you are in big trouble. That’s because you are missing out on all the other potential investments you could undertake.
Putting Your Money Into Investments
Some folks are firmly entrenched in the ‘save for retirement first‘ camp. The main reason for this? The power and magic of compound interest over time.
Pros
If you start investing when you are in your 20s, you have to invest less money over your lifetime, than someone who pays off their mortgage first and then starts investing in their 40s or 50s.
Let’s look at the numbers. If you start saving in your 20s and invest $100 every month for 40 years, you would end up with a neat $1.17 million after.
A friend of yours who waits until their 50s to start investing, even if they invest $1000 a month for 10 years, would only have $230,000. This assumes a 12% compound rate on your investments.
But, the conclusion is quite clear. Waiting to invest can rob you of all that precious compound interest and growth time. You would have to invest more money each month if you start later and you won’t even end up with that much more despite the additional investment.
Another big pro to investing your money starting now, rather than waiting until you pay off your mortgage is that you can take advantage of any employee matching programs that your job might offer. This is essentially free money that you can pour into your investments at no disadvantage to you.
Cons
Not to say that there are no cons to this way of doing things. No matter if you are putting money into investments each month, your debt is still looming large over your head.
Your mortgage is there in the background, constantly reminding you that you are in debt and your assets aren’t liquid. You can’t stop making mortgage payments, and that can put a dire strain on your finances as you try to juggle both investments and mortgage payments while trying to live a reasonable quality of life.
Some folks live an extremely frugal life because they don’t have enough income to balance both mortgage and investments at the same time. But if that’s not something that appeals to you, then this option might not be up your alley.
Doing Both in Moderation
When you can’t figure out if one way or another works for you, then the middle way seems like the best option. Instead of pouring all your disposable income into paying off your mortgage or investing, how about you put a moderate amount into both?
This way you don’t have to sacrifice your current lifestyle for your future self. You can still enjoy an occasional meal out and a bit of travel each year. And you can splurge on big-ticket items when the need arises.
You can make decent progress towards both goals by tamping down on your impatience and taking it slow and steady. You might not pay down your mortgage in 15 years or you might not make millions from your investment, but at least you will be able to live a balanced lifestyle while taking care of your financial future.
Everyone reading this article is working with a different life situation. We can’t tell you which option is best for you. You would have to decide that for yourself, but the information above should make your decision easier.
Question: Pay Off My Mortgage or Invest?
This question might seem simple, ‘pay off my mortgage or invest,’ but the answer is quite complicated indeed. Take your time and use all the information presented above to make the best judgment for yourself.
There isn’t a ‘wrong’ answer to this question. It’s just what you are comfortable with and what risk and debt level you can handle. If you would like to read more articles on retirement to build up your knowledge base, keep browsing through our blog.
Affirmative Investment Management (AIM) announced today that it has entered into a definitive agreement to be acquired by MetLife Investment Management.
(MIM), the asset management business of MetLife, Inc. (NYSE: MET). The acquisition is subject to regulatory approval.
MIM is a global public fixed income, private capital and real estate investment manager that provides tailored investment solutions to public and private pension plans, insurance companies, endowments funds and other institutional clients. MIM has over 150 years of investment experience, with offices in the US, Europe, Latin America and Asia comprising over 900 investment professionals and US$590.9 billion in assets under management, at 30 June 2022. AIM focuses on mobilising mainstream capital to address the major challenges the world faces. Its mission is to manage fixed income portfolios that generate positive environmental and social impact without compromising financial returns. As the ESG impact and transition bond markets continue to expand, the opportunity to offer investment solutions to meet client demand has broadened from impact into transition, and public into private debt and real estate finance. MIM provides AIM with additional depth and breadth of complementary investment capabilities and resources that allows us to build upon our industry leadership and expand our impact and transition investment solutions in the future.
MIM will integrate AIM’s investing experts, processes and research capabilities to drive excellence in sustainable investing, develop new investment solutions and enhance MIM’s fundamental research, underwriting and security selection processes.
“We are pleased to be able to join a world-class institutional investment firm in MIM and continue our mission to deliver mainstream financial returns along with positive environmental and social impact” said Stephen Fitzgerald, who co-founded AIM in 2014. “Upon integration with MIM’s investment teams, we believe that we will deliver differentiated impact and transition investment insights and solutions to our combined roster of global clients while continuing to support positive environmental and social change.”
“By combining AIM’s expertise with MIM’s longstanding commitment to sustainable investing, we will be even better positioned to provide more comprehensive insight and counsel to clients and consultants on the changing market dynamics related to ESG and impact considerations,” said Steven Goulart, president of MIM and executive vice president and chief investment officer for MetLife. “MIM will maintain its fundamental investment processes, while AIM brings us additional capabilities to go deeper for clients on evaluating sustainability and risk considerations across all of our core competencies in public fixed income, private fixed income and real estate.”
AIM remains committed to its existing clients in Australia, Europe, Japan and US to deliver mainstream bond market returns along with environmental and social impact. As part of MIM, AIM will continue in its ambition to deliver best in class ESG impact and transition investment solutions to existing and prospective clients.
About Affirmative Investment Management
Affirmative Investment Management (AIM) is a leading global environmental, social and corporate governance (ESG) impact fixed income investment manager with deep capabilities in impact investing, verification, reporting and engagement. Established in 2014, AIM focuses on mobilising mainstream capital to address the major challenges the world faces. Its mission is to manage fixed income portfolios that generate positive environmental and social impact without compromising financial returns. AIM’s highly experienced team is solely focused on investing in, and expanding, the impact bond market with a rigorous approach to building impact bond portfolios and generating returns.
AIM has won numerous ESG and impact related industry awards, most recently Best Sustainability Reporting by a Fund Manager at the 2022 Environmental Finance Sustainable Investment Awards, Best ESG Investment Fund: Fixed Income at the 2022 ESG Investing Awards, Impact Asset Manager of the Year at the 2021 Australian Impact Investment Awards, and Impact Report of the Year (for investors) at the 2021 Environmental Finance Bond Awards. About MetLife Investment Management.
MetLife Investment Management, the institutional asset management business of MetLife, Inc. (NYSE: MET), is a global public fixed income, private capital, and real estate investment manager providing tailored investment solutions to institutional investors worldwide. MetLife Investment Management provides public and private pension plans, insurance companies, endowments, funds and other institutional clients with a range of bespoke investment and financing solutions that seek to meet a range of long-term investment objectives and risk-adjusted returns over time. MetLife Investment Management has over 150 years of investment experience and, as of June 30, 2022, had US$590.9 billion in total assets under management. About MetLife.
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help individual and institutional customers build a more confident future. Founded in 1868, MetLife has operations in more than 40 markets globally and holds leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East.
