Hope you all are having a great week! We hope these money topics come in handy as you navigate these crazy times and clownish markets:
To ensure you are getting The Gist every Tuesday and Thursday, please move it to your primary folder (Gmail), or add it to your VIP (Apple Mail) or favorites (Outlook)! INVESTINGDo bonds still serve a purpose?
The market has been enjoyable since bottoming last March, but let's be real. There is always going to be a tug-of-war between good and bad news as long as COVID is a thing. Overvalued stocks and complacency is always a risk for this bull market too. However, there's another significant risk that's been crushing high growth tech stocks in these last two weeks—rising bond yields. So, what does this mean for your investments? Let's break it down for you Rising bond yields are a blessing and a curse.
So do bonds still add value to your portfolio anymore? The short answer is: yes. Bonds add stability and diversification to your portfolio, especially if you have different types with multiple maturities, as they can generate strong, consistent, and most importantly, predictable profits. You can even calculate these potential gains years in advance too. And are bonds still uncorrelated to stocks? The short answer is yes, although there are short periods in history when the returns of the two asset classes moved in the same direction (e.g., March of 2020). Most recently, rising yields have made high-tech stocks look relatively less attractive. But if you look going back a little more than two years, you can see that the Nasdaq index has really taken off as bond yields have fallen.
But buyer beware By the time bond yields crossed 3% in September of 2018, high-flying tech stocks finally took their cue and sold off, sharply. For those who were invested, the final quarter of 2018 was not easy to stomach. We’re not saying this is for certain to happen again as bond yields rise, but it is something to be hyper-aware of and to watch closely. Wall Street says that bond markets are smarter than stock markets when it comes to forecasting. You may want to take heed. If you are new to investing and or need a crash course on bond basics, take this 6-minute quiz-based lesson:
PRESENTED BY BLOOOMHave you fixed your 401K or IRA yet?
Simply saving for retirement is a great first step. However, beyond that, it can get confusing real fast. Should I roll over my 401k? Which funds are the best for me? How many funds should I have? Am I paying too much for my funds? Sound familiar? If you can understand these three things about your retirement investment strategy, you will be well on your way to saving smarter. 1️⃣ Fees. Fees can significantly eat into your retirement savings. Administrative fees, internal fund expenses and management fees are important to understand but can be hard to decode. 2️⃣ Time Horizon. Create a strategy based on your retirement goals, not on the market. Plan to make adjustments as you get closer to your goal. 3️⃣ Risk Tolerance. It tells you how much of a loss you're prepared to handle within your portfolio. Some people are naturally more comfortable with risk-taking than others, so a retirement portfolio should reflect that. Great news: Blooom's tool can help you understand these investing basics. Blooom is an online financial advisor, offering tools to help you optimize and manage your retirement accounts for the fraction of the price of a traditional advisor. The company was started several years ago with the sole purpose of bringing badly needed financial advice and management to the massive number of American retirement savers that have been left behind by Wall Street and largely forced to go it alone when it comes to their retirement savings. And you can start for free or hire them to manage your account. Take back control of your hard-earned dollars.
And get $20 off if you sign up for blooom's paid service. Use promo code FINNNY (yes, that's 3 Ns!). 💸 MONEY SAVING TIPSClean up your online spending
From hidden subscriptions to shopping online, you're probably spending way more than you realize. Since we pretty much haven't left our homes for the better part of the year, this has only likely gotten worse. Without physical bills or regular reminders, it's easy to forget about what we're spending and how. This excellent article from the Washington Post makes 4 great suggestions on how you can clean up your online spending and be more mindful of your budget. Schedule a subscription intervention
Share, negotiate or take a break from accounts A surprising amount of payments, such as cable, car insurance, credit card interest rates, and cellphone service fees are negotiable. Sometimes you can lower these fees with a simple phone call or threaten to switch to another company.
Sharing your subscriptions or pausing your accounts if you're on the fence can also be a great way to bring your expenses down. Comparison-shop on delivery apps Before shopping for groceries or ordering delivery, compare prices between different apps, compare the delivery fees, and other service fees. But if possible, just order from the restaurant or grocery store directly. They'll get a larger share of the profits instead of a crushing third-party fee. Bring your cloud storage bills down to earth Figure out how much storage you actually need, audit your Amazon, Google, Apple, Dropbox, and Microsoft storage, and cut your costs. You're probably paying so much more than you actually realize because you likely signed up for multiple services when you ran out of space. QUICK TAKEMeme stock mania
If you think skydiving is fun, try fighting the suits on Wall Street and winning. That meme stock short squeeze last month was a revolution, thanks to an army of retail traders beating hedge funds at their own game. But it's back, as we've seen $GME stock price practically quadruple over the last couple of days. So, where do we go from here? Well, nobody can predict the future. But the suits and the SEC are undoubtedly on notice. And there are no signs this is going away anytime soon. Should you consider joining? Only you can answer this question. But remember, herd mentality can be a very, very dangerous thing when investing. If you believe in the vision of WallStreetBets and the Reddit way of trading, then good luck to you. Our take. It's always best to do your own research and due diligence on specific stocks and fundamentals rather than following a crowd. Leverage Finnyvest to get an unbiased pros & cons analysis of your prospective investments. Rule of thumb for the long-term? It's probably better to use Warren Buffet as a guide than Roaring Kitty. Even if Roaring Kitty is the flavor of the month. TRENDING ON FINNY AND BEYOND
How did you like Finny's The Gist today? (Click to vote) That’s it for today. If you’ve enjoyed today’s edition, please invite your friends to join Finny. Have a great rest of the week! The Finny Team Finny is a personal finance education start-up offering free game-based personalized financial education, a supportive discussion forum, and simple stock and fund tools (aka Finnyvest). Our mission is to make learning about all things money fun and easy!The Gist is Finny's newsletter to our community members who are looking to save and make more money, protect their finances, and be their own bosses! It's sent twice a week (Tues/Thurs). The editorial team for this edition comprises Matthew Levy, CFA and Chihee Kim.Sponsors are mission-aligned partners that offer unique and valuable services at little to no cost for our users. We only feature those partners we love using ourselves. And we're thankful for their sponsorship to enable Finny to operate! Here's our advertiser disclosure.If you have any feedback for us, please send us an email to feedback@askfinny.com.
If you liked this post from Finny: The Gist, why not share it? © 2021 FinnyNL Unsubscribe
|
Thursday, February 25, 2021
🤲 Do bonds still serve a purpose?
Re: Instagram Collaboration
If you are interested in this project please be so kind and write directly to our Instagram account @backpacks.smart and our IG manager will explain everything step by step. ;)
Tuesday, February 23, 2021
👩🏽🏫 They deserve better
Happy Tuesday everyone! Here are the money topics we'll cover today:
Check out our money-saving "tip of the day" from a member of Finny's own community below! RETIREMENT PLANNINGOur teachers and nurses deserve better
In the last year, we've gone through a hell of a lot. We've all witnessed the special teacher who worked double-time while spending their own money to get their students learning and engaged online, or the nurse who consistently put others' health ahead of their own. And while it’s often said that no one becomes a teacher or a nurse to get rich, there’s no reason why they shouldn't be able to retire with dignity after years of service to their communities. The good news is that teachers and nurses who work in the public sector get access to a workplace retirement savings plan called a 403(b), which looks like the 401(k) for private sector employees. Contributions are automatically deducted pre-tax from their pay, and their money grows tax-deferred until it’s taken out in retirement. But there's a big downside to 403(b) plans... And it's the investment options. Teachers and nurses often must select from a confusing menu of options, and their choices are often overloaded with insurance products like annuities that have low returns and high fees. Some insurance companies go as far as charging 120 basis points for an S&P 500 index fund offered within the 403(b)! 120 basis points means that for every $1,000 invested, $12 goes to the fund issuer every year. That may not sound so bad (I mean, a sandwich costs you this much!), but bear in mind that the best-known S&P 500 funds in the industry cost only 3 basis points. And remember, investment expenses are cumulative and compounding! What’s the long-term impact of high expenses? The Securities and Exchange Commission (SEC) released a bulletin reminding investors that a 100 basis-point fee can reduce a $100K portfolio earning 4% a year by almost $30,000 compared to a 25-basis-point fee over a 20-year period. But that’s not the worst. Some 403(b) plans offer only variable annuities with high “surrender fees," a charge incurred if you sell an annuity within the first six to eight years after purchase. To add insult to injury, annuity-based 403(b) plans that are not subject to federal protections can also have annual fees as high as 250 basis points. At that cost basis, one should consider alternatives. So what should you do if you’re stuck with a bad 403(b) plan?
Want to brush up or learn more about common retirement plans offered at work? Take our bite-sized quiz-based lesson:
💸 MONEY SAVING TIP OF THE DAY"Try a no-spend challenge for one month."If you’re not sure where all your money is going or you need to wipe out some debt, try cutting down your expenses as much as you can for one whole month. No-spend means cutting out "nice to haves" from your spending across all categories. This could be a great financial exercise! It may also be easier to stay focused on your goal if it’s game- or challenge-based. Hold yourself accountable by inviting family members or friends to join in. To make things more fun and motivating, consider a fun (and affordable!) reward at the end of the month. Thanks to @Trevor330 on Finny for this tip! Share your money-saving tips in our discussion forum and we'll feature one of them in our next issue!
SIDE HUSTLEThe mindset of successful side hustlers
You may have read about this 28-year old who turned his college side hustle into a $1.3B unicorn backed by Jeff Bezos and thinking, "Darn it, I should start something now!” Side hustles are the thing to consider these days: an astounding 70% of Americans want to pursue a side gig for additional income, according to CNBC. And they can be extremely fulfilling, especially since it usually doesn't take a lot of money to get started. If you are considering a side hustle, here are a few pointers to make it a success: 🍋 Choose something you're passionate about. The only way you’ll be able to fearlessly pursue your side hustle and continuously invest time in it is if you choose something you truly love. After working a 40-hour week, plus family obligations and errands, you’ll need to carve out time for a side hustle. All that can be draining. Side hustling requires passion to keep you motivated. 🍋 Play the long game. Side hustles rarely become overnight successes. It takes patience, practice and perseverance to reach your goals. As you grow your business, invest back in it and develop processes & tools that will help you scale it and save you time. 🍋 Forego your fears. When you're starting out, it's normal to be a little fearful. Worrying about making mistakes or wondering if your services are truly worthy is normal. To push your fears aside, you need to be aware of them and bold enough to experiment and learn from failures. Remember, it's never productive worrying about something that may or may not happen in the future. If things go really poorly, it's probably nothing like the worst-case scenario you’ve been playing over and over in your head. So do you think a side hustle is for you? To find out the answer and learn some helpful stats, check out our bite-sized, quiz-based lesson:
INVESTINGThe meme stock revolution & proofing your investments
It’s been fun watching the latest stock investing episode of David vs. Goliath. The retail frenzy that erupted as everyday investors flooded into names like Gamestop and AMC became emblematic of the rise of the retail investor. In such circumstances, FOMO inevitably kicks in. Your rational brain tells you to stay out of those risky bets, but your greedy alter ego dreams of winning big and shooting for the stars like there's no tomorrow. As this movement stimulates your curiosity and interest in meme stocks (or ETFs), the one thing that’s clearly missing about these newly popular securities is education. Here's a quick plug for Finny's own investing tool, Finnyvest, where you can get an unbiased, rules-based bull- and bear-case analyses of US stocks and funds. Rules-based in key—as the same criteria are applied to all stocks (or funds)—so you know you’re not getting just another person’s opinion. The Finny Score then tallies up the bull- and the bear-case using a simple scoring methodology between 0 and 100. Sizing up the pros and cons of a single investment is an important first step, especially when you ‘fall in love’ with a stock. Investment mistakes can be costly, and a splash of cool water, i.e., getting an unbiased view before making any trades, can save you some heartache. Try Finnyvest for free for 7 days, and get 20% off the regular price ($80 charged annually). Offer valid through the end of February. ✨ TRENDING ON FINNY AND BEYOND
How did you like Finny's The Gist today? (Click to vote) That’s it for today. If you’ve enjoyed today’s edition, please invite your friends to join Finny. Have a great rest of the week! The Finny Team Finny is a personal finance education start-up offering free, game-based personalized financial education, a supportive discussion forum, and simple stock and fund tools (aka Finnyvest). Our mission is to make learning about all things money fun and easy!The Gist is Finny's newsletter to our community members who are looking to make and save more money, protect their finances and be their own bosses! It's sent twice a week (Tues/Thurs).Sponsors are mission-aligned partners that offer unique and valuable services at little to no cost for our users. We only feature those partners we love using ourselves. And we're thankful for their sponsorship to enable Finny to operate! Here's our advertiser disclosure.If you have any feedback for us, please send us an email to feedback@askfinny.com.
If you liked this post from Finny: The Gist, why not share it? © 2021 FinnyNL Unsubscribe
|
