A good question for the New Year: is 2021 a good time to start investing in stocks?
In turbulent times like these, it’s hard to take the right financial steps. Much of the tried and tested advice that we have always relied on no longer seems relevant. Is Now a Good Time to Invest? Should I focus on paying off debt? Or save?
It is helpful to consult with a professional. So we asked Robin Hartill, a certified financial planner and editor and columnist on financial advice for The Penny Hoarder, for advice.
Here are six financial questions that readers have asked us lately:
1. “The costs of waiting are high”
Question: “Is 2021 a good time to invest or should I wait for the market?”
Hartill’s advice: think long term. The stock market will add your money to over time, so you may as well get started sooner than later.
“The timing of your investment is much less important than the time you have to invest,” says Hartill. “The S&P 500 has achieved inflation-adjusted returns averaging about 7% per year for the past 50 years. The cost of waiting for the perfect time to invest is high. You’re missing out on long-term growth. “
Investing profitably is about thinking long term. Not sure how to start? With an app called Stash, you can start with just $ 1. *. You can choose from hundreds of stocks and funds to build your own investment portfolio. It makes it easy by dividing them into categories based on your personal goals.
“If you were hoping to make money quickly in the stock market, now may not be a good time,” said Hartill. “We are still in recession, but the stock market has recovered. But real investing is not about making quick money. It’s about growing your money over time. “
She recommends budgeting a certain amount of money every month, no matter what.
If you Sign up for Stash now (it takes two minutes) Stash will give you $ 5 after adding $ 5 to your investment account. Subscription plans start at $ 1 per month. **
2. “There is only so much fat that you can cut”
Question: “My monthly expenses are increasing all the time. Something I can do? “
“There is only so much fat that you can cut out of your budget. At some point you start to lose muscles and bones, ”said Hartill. “Cutting costs is often a great way to meet your shorter-term goals, such as: B. Saving for a vacation or a down payment. But for the really big long-term goals like retirement and protecting the family from a worst-case scenario, the cut will only go so far. “
However, if you do need cuts, take a close look at your mandatory monthly bills – like auto insurance. When was the last time you checked prices? You should buy your options every six months or so.
And if you have a digital marketplace called. search SmartFinancial, you could get pricing as low as $ 22 a month – saving you more than $ 700 a year.
It takes a minute to get quotes from multiple insurers so you can see the best rates side by side. Yes – in just one minute you could save yourself $ 715 this year. That’s a lot of money back in your pocket.
So if you haven’t checked the car insurance rates for a while, let’s see how much you can save with new politics.
3. “When you have your expenses under scrutiny …”
Question: “My budget is tight. Which debts should I focus on? “
“The only way to get out of debt is to spend less than you make,” said Hartill. “But if you have your expenses under control, a debt consolidation loan can help you get out of debt faster.”
She added a caveat: “This option only makes sense if it lowers your interest payments. Many people who do not have good credit actually find that the interest rate they have been approved for is even higher than what they are currently paying. “
There is a quick way to find out if this would work for you. It only takes a few minutes to view your options on a website called. to check AmOne. If you owe your credit card company $ 50,000 or less, you can get a low-interest loan that can be used to pay off every single one of your balances.
The advantage? You have to pay an invoice every month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you become debt free The much faster. Plus: No credit card payment this month.
It takes two minutes to See if you qualify for up to $ 50,000 online.
4. “You don’t have to be satisfied with anything”
Question: “My savings account has bottomed out. Are there currently other ways of generating passive income? “
“While interest rates will stay low through at least 2023, that doesn’t mean you have to be content with not making anything on your savings,” Hartill said.
Most banks these days pay account holders virtually no interest on their savings. Try switching to one aspiration Account. You can earn up to 5% cashback and up to 16 times the average interest on the money in your account every time you swipe the card. Plus, you never pay a monthly account management fee.
To see how much you could make, enter yours Email address here, link your bank account and add at least $ 10 to your account. And don’t worry. Your money is FDIC insured and is subject to military encryption. This is nerd talk for “that’s perfectly safe”.
5. “Most of us don’t earn enough”
Question: “How can I even earn enough to ever retire?”
Hartill shared a brutal truth with us: “The overwhelming majority of us do not earn enough to save the road to retirement.”
Ouch, that hurts. But wait, it offers a solution: “Spend money by investing it in the stock market and get returns that add up to more money.”
“If you needed a $ 500,000 nest egg to retire, you’d have to cut $ 10,000 off your budget for 50 years just to get there from savings alone. But if you invested just $ 5,000 a year and got a 6% return, you could do it in less than 34 years. “
6. “The only practical way to keep your family safe”
Question: “I have a family. How can I ensure that you are protected in these uncertain times? “
“Spending money on life insurance is the only practical way to give your family the security they deserve,” said Hartill. “Your life insurance needs are greatest when you have young children. Fortunately, this is often a time when you’re still young enough that life insurance is relatively cheap. “
Maybe you think: I don’t have the time or money for that. But that takes minutes – and you could buy your family up to $ 1 million at a company called. leave To lend.
We hear people are only paying $ 8 a month. (But every year if you wait it gets more expensive.)
It only takes a few minutes get a free quote and see how much life insurance you can leave your loved ones – even if you don’t have seven-figure amounts in your bank account.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He’s not a certified financial planner, but he stayed at a Holiday Inn Express.
* For securities priced above $ 1,000, fractional share purchases start at $ 0.05.
** You also bear the standard fees and expenses reflected in the prices of the ETFs in your account, as well as fees for various ancillary services charged by Stash and the custodian.
This article originally appeared on www.thepennyhoarder.com