📈 The broken rental market

+ which of the following areas was the most competitive US rental market in the first half of 2022

August 30, 2022 View online | Sign up TOGETHER WITH Good day—hope it's going well. Can you guess which of the following areas was the most competitive US rental market in the first half of 2022? a. San Diego, CA, b. Grand Rapids, MI, c. Miami-Dade County, FL. As usual, follow the wave 🌊 below for the answer. Here are our money topics for today: 👇🏽 Fintech lenders feeling the rate squeeze The broken rental market Tips to avoid making impulse purchases

ECONOMY Fintech Lenders Feeling the Rate Squeeze When it comes time for a loan, it’s great to have an array of options to choose from, and we can thank the fintech industry for that.  Although a fintech’s sleek UX might make it feel like an overly simple tool for borrowers, it’s good to know there’s a lot that goes into getting us those loans, and that includes getting access to the money to lend out in the first place.  And now, in the wake of quickly rising rates and an overall tighter environment, fintech lenders are feeling the pressure on all sides to keep their products afloat and affordable. Loans provided by these lenders are usually unsecured and require a personal guarantee from borrowers. Some insight The rate ricochet: Typically, fintech startup lenders aren’t banks, which means they can’t fund their loans with cash on hand, but instead they have to borrow it themselves first. When interest rates rise, borrowing money becomes more expensive, especially when they are borrowing a lot.  The bonds problem: These companies can and do raise funding through asset-backed bonds (ABS), which are bonds backed or collateralized by income-generating assets like those loans. The problem is that buyers for this type of security have grown skittish, making this source of funding harder to come by. This clampdown on financing has also caused a slowdown in lending, pushing companies like Upstart and others into a loss last quarter.  Why it crunches fintech: These fintech lenders are feeling the brunt of these impacts for several reasons, primarily because of their business model and some of the subpar consumer credit profiles they’re built to serve. While democratizing lending and getting funds to consumers that typical lenders might overlook is noble and good, it comes at the cost of increased wariness from investors, as seen from their performance in the public markets. Their purpose is still noble — just evolving Creative fintech lenders like those feeling the heat in times like these weren’t born for no reason—they were made to fill apparent gaps in the financial system and influence progress in global finance.  Alternative lending is projected to top a total transaction value of $361B in 2022 alone. This valiant sub-industry is currently valued at about $450B with a lofty compound annual growth rate (CAGR) of 27.4% through 2030. Suffice it to say it’s not going anywhere.  The pressure they’re enduring right now is hopefully a stepping stone along the way to a more well-rounded future in the world of lending, and though some companies may falter in the process, there’s light at the end of the tunnel.

HOUSING The Broken Rental Market We’ve been watching the rate of home price growth slow for some months now, and while that might be comforting, it’s nowhere near a solution to this inherently unsustainable environment.  And it’s not just unaffordable for buyers, but renters too. Everyone knows that right now is a nightmare time to venture out on your own, but the problem is that we can’t quite foresee a reconciliation in sight.  The reality is that most seemingly sudden problems developed over a long time, and the housing market is one of them.  Vanishing affordability Owning a home: Per data from the St. Louis Fed, the median home sale price in the US is now $440,000, up 27% from this time 2 years ago. If we blend the interest rates and the other costs of owning a home, the average monthly cost of home ownership was about  $1,364 in August 2020, not too bad. But, if we crunch those same numbers now, the total comes to $2,273 a month, a 66% increase in cost.  This flows to rentals: As a result, national median rent jumped by a record 17.6% in 2021, far and above the 8.86% annual average increase. Although the typical rent in 2020 was just $1,104, that number is now $1,326, and those looking to move in now have it even harder with the average asking rent topping $1,900. Supply & demand contributes to this Shortages: It’s widely known that the US is experiencing a housing shortage in the millions of units. It’s estimated that US households grew by 1.48 million last year, yet we only saw the supply of new rental units increase by 330,000. Housing starts aren’t helping much either. They fell off a cliff in 2006 and are still trying to recover, all the while we’ve got supply shortages, labor shortages, expensive materials, restrictive zoning laws, and lobbying all in the way of progress too.  Domino effect: All of this has created an inescapable toppling of negative events. More expensive housing causes more people to rent, more people renting drives up the demand, and therefore prices in the rental market too.  We can’t tech our way out either: There are a lot of proposed anecdotal, tech-oriented solutions out there that involve even more companies (both startups and large firms) buying up property than people, and they often think their innovation is the key to solving the housing crisis, but the reality is that macro-level change is the only real answer to these problems. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Buy vs Rent? Housing 6 mins

TOGETHER WITH THE ENTRUST GROUP Investing in Real Estate for Your Retirement Imagine being able to invest in real estate in the same retirement account as your stocks and ETFs. This is where a self-directed individual retirement account (SDIRA) comes in really handy. With an SDIRA, you can invest in actual real estate, and not only REITs. Real estate is one of the most popular investments among SDIRA holders. Adding it to your portfolio can help increase diversification and provide a hedge against inflation. The Entrust Group provides the necessary account administration to let you simultaneously invest in real estate, stocks, bonds and mutual funds and keep it all legit in the eyes of the IRS. Learn more about investing in real estate with an SDIRA.

MONEY TIP Tips to Avoid Making Impulse Purchases Impulse spending used to be an occasional thing, maybe when you went shopping twice a month or during your weekly trip to the grocery store. Now though, it’s easier than ever to fall into the trap not only because of our growing overzealous demand for stuff (thanks Covid), but also thanks to tech as all you need to do is scroll on an app and click “buy.”  49% of users that participated in a recent Bankrate survey admitted they’d engaged in impulse buying on a social media platform (or other) that they use, and a more concerning 64% of them said they regretted at least one of those purchases.  A few ways to side-step impulsive buying Procrastinate: When you see something you’re tempted to buy, wait at least 24 hours... better yet, 36. The key here is to wait however long it takes you to forget about it, and then reassess how much you wanted it. If it’s still on your mind, add it to a wishlist of sorts and purchase it when it fits within your budget.  “Ask app not to track:” Social media is one of the biggest drivers of impulse spending nowadays, and that’s largely because advertisers know what you like, and therefore what to show you. If you have an iPhone, you can somewhat dodge this by telling your app not to track your data which should end up showing you ads less relevant to you, thus reducing the temptation.  View the item in a vacuum: They say comparison can be the thief of joy, so it’s important to ask yourself if you really want something for yourself before buying. Oftentimes, we make purchases just based on what we imagine others might think of us if we had X, Y, or Z, and not based on solely if we want or need it. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Budgeting Basics Budgeting & Saving 6 mins

🔥 TODAY'S MOVERS & SHAKERS Bed Bath & Beyond (-6.4%) after shares skyrocketing by 25% yesterday. The company will share its strategic business update tomorrow. Twitter (-1.2%) as Elon sent a second deal termination notice to pull out of his $44b deal to buy Twitter. A whistleblower's report (by former executive Peiter Zatko) is another reason why he doesn't want to buy the company. Best Buy (+2.9%) as the consumer electronics retailer reported a 13% sales drop in Q2. The company is seeing a real pullback in spending from inflation-weary shoppers. Bitcoin (-2.8%) to $19,719.30 (1D) Ethereum (-1.9%) to $1,522.03 (1D) This commentary is as of 8:45 am PDT.

🌊 BY THE WAY 🌅 Answer: Miami-Dade County, FL. Grand Rapids, MI came in at #6, and San Diego, CA was #16. A large influx of new renters seeking warm weather and looser pandemic restrictions, topped off by a wave of remote workers, has turned Florida into the most sought-after region by renters in 2022. Miami-Dade County is now the hottest rental market in the US (RentCafe) ⚾ How about them collectibles? A mint condition Mickey Mantle baseball card sold for $12.6 million last Sunday (AP News) 🏠 ICYMI. Getting equity rich (Finny) 🍿 'National Cinema Day’ in the US to offer $3 movie tickets for one day—this Sunday, Sept 3rd (CNBC) 📑 Finny lesson of the day. Speaking of collectibles, they have different capital gains tax treatment. And with the year-end fast approaching, it's probably a good time to brush up on your capital gain & loss tax knowledge here: Capital Gains & Losses Taxes 5 mins

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Finny is a financial education platform on a mission to make your money work for you. We offer a customized financial learning platform through bite-size, jargon-free lessons, money trends & insights. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. Finny does not offer investment and stock advice or endorsements. The Gist content team: Chihee Kim, Austin Payne, Carla Olson.  We're thankful for the support of today's sponsor & partner⁠—The Entrust Group—as they make rewards on our platform possible. If you're interested in sponsoring The Gist, please reach out to us. And if you have any feedback for us, please contact us. © Finny 2022. All rights reserved. 736 Paloma Ave, Burlingame CA 94010 Unsubscribe Preferences Privacy Policy Terms of Service

🐶 Chasing market swings

+ hoarding cash at the wrong times & bundling insurance

August 23, 2022 View online | Sign up TOGETHER WITH Good Tuesday to you. Can you guess what's the average length of a bear market (going back to 1928)? a. 96 days, b. 9.6 months, c. 19.6 months. Follow the wave 🌊 below for the answer. Our topics for today:👇🏽 Relief rallies in a bear market Hoarding cash at the wrong times Worth bundling your insurance?

MARKET OUTLOOK Relief Rallies In a Bear Market It was a brutal six and a half months in the markets to start 2022—the S&P 500 was on pace to log its 7th worst year ever at its low point.  Since mid-July though, the winds seemed to shift. The S&P 500 was up about 12% since mid-June, and the Nasdaq bounced up even higher at 15% after recording its best July ever—only to crash back down over the last couple trading days. Given these recent sharp and positive bounces in the market, we can’t help but ask: Are these temporary green spurts just relief rallies, or is it a sign that we'll soon be entering greener pastures? The bullish outlook—optimism Inflation drops: The US just clocked its second official CPI reduction of the year, and it was 3x more than the 0.2% drop in April. When markets are up, they are hopeful inflation has peaked.  Good news for stocks: Elsewhere, we know valuations are down across the board, and both companies and indexes have shaved off some fat gained over the last two years. Earnings from Q2 were also less dismal than expected as 77% of the S&P beat EPS estimates.  The recession: The average duration of a recession going back since WW2 has been just 10 months. If we’re truly in one based on the technical definition of two consecutive quarters of negative GDP, that would put this recession having begun in January, meaning that, historically speaking, we’re almost out of it. The bearish outlook—pessimism Inflation’s still bad: While it’s nice to see inflation finally drop a bit, we could also definitively state that it’s still historically high. That means it has the potential to remain unresolved if the slightest thing goes awry in the global economy again. The threat of this alone could give us yet another spike and bring the bears back out.  The recession: Although it is possible that if we’re in a recession, we may be almost done with it, it’s also possible that it hasn’t even begun. Why? Well, since 1950, each time inflation has exceeded 4% while unemployment dipped below 5%, we’ve seen a recession sometime within the next two years. We won’t know til’ we know While it’s still nice to have a general idea of what to expect, the reality is, that nobody knows. The foolproof outlook is to invest for decades no matter what happens and adjust your short-game fun money strategies according to what happens. Be diligent in the long game and fluid in the short, some combination of Taoist and stoic with the markets.

SAVING & INVESTING Hoarding Cash At The Wrong Times This year, a lot of people have been saving more money in fear of the red we’ve seen in the markets and the general uncertainty that abounds. Recent surveys show that just 1 in 4 people think now is a good time to invest, and a whole 65% say they’re keeping more cash out of the markets than they should.  It’s often the case that our base instincts are the exact opposite of what’s most beneficial, and it can be very easy to get led astray by those natural inclinations. And the stock market is a prime example of this. Investors tend to flee when tickers are red and come back when they’re green—the exact opposite of a profitable strategy. It’s herd mentality at its finest, and a natural reaction that can be overcome.  Fix it with intentionality Save for the right reasons: If you’re someone who’s keeping money out of the markets because you’ve been dedicating it to building up an emergency fund or some short-term concrete expense, that’s a good reason to be hoarding cash. On the contrary, if you’ve already established those baselines for yourself and you’re still holding out, that could be costly.  Invest for the decades, not days: Many of us are scared off from investing during tumultuous markets like this one, mostly due to just how bad and uncertain it looks. But, what’s important to remember is that you’re not investing in this market, you’re investing for 5, 10, 20, even 30 or more years from now, and it’s compounding that will help drive those returns higher the longer you invest consistently.  Don’t miss out on a good sale, right? When we find an item on sale, we see it as saving money, but when we see stocks on sale, we see it as a potential for loss. Fear of loss has been found to outweigh the potential of gain in the mind, and this makes a lot of sense as to why we’re so fearful of down markets. Nevertheless, the reality is that millions are made in recoveries, and buying in when everyone is fearful is more likely to benefit us in the long run. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Time In The Market Beats Timing The Market Investing Basics 1 mins

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MONEY TIP Worth Bundling Your Insurance? Love it or hate it, insurance is kind of a necessary evil of modern life, and it can be a true wallet saver when it’s needed. Insurance companies know this, and they want as much of your business as possible, which is why most will offer discounts if you elect to “bundle” or combine multiple policies with them.  It can seem like a great idea on the surface, but there also might be just enough cons to balance out the pros depending on your situation. The ups and downs of bundling Upside—convenience: This one speaks for itself. It can be a true pain to have to wrangle multiple insurance policies across multiple companies for all your assets, and having them all conveniently held and managed in the same place can be a real stress reducer.  Upside—actual savings: If you’re lucky enough to be able to get the coverage you need and save money by bundling with one provider, that’s a win-win situation, and in this case bundling makes sense.  Downside—policy cost: Sure, bundling policies might save you money, but what if that individual policy is noticeably cheaper on its own from a competitor? This is a real risk, which is why it’s important to compare policies first.  Downside—quality: The details of your insurance policy matter, they’re quite literally the life of the coverage. If you’re bundling to save money but the bundled policy in question is sub-par, those savings could easily come back to bite you in the event the coverage is needed. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Insurance Basics Insurance 6 mins

🔥 TODAY'S MOVERS & SHAKERS Zoom (-15%) beat on earnings but fell short of the street's revenue expectations; the video conferencing company cut it's full-year forecast.  Palo Alto Networks (+11%) shares are up as the US cybersecurity company reported better than expected quarterly earnings, issued positive full-year guidance and announced a 3-for-1 stock split. Bitcoin (+0.45%) to $21,493.50(1D) Ethereum (+0.8%) to $1,637.85 (1D) This commentary is as of 8:30 am PDT.

🌊 BY THE WAY 🗓️ Answer: 9.6 months. The average length of a bear market in the S&P 500 Index since 1928 is 289 days, or about 9.6 months. That’s significantly shorter than the average length of a bull market, which is 991 days or 2.7 years (Hartford Funds) 💻 Apple will let you repair certain MacBooks yourself beginning today (CNBC) 🐻 ICYMI. Some bear market survival tips (Finny) 🐔 Burger King is going big on fake chicken (Takeout) 🎓 Biden admin is ‘talking daily’ about student loan forgiveness, expects decision in ‘next week or so’ (CNBC) 🏙️ Finny lesson of the day. If you're a renter, ever wonder why and when you might need renters insurance? If so, take this lesson that unpacks the jargon: What's Renters Insurance? Housing 6 mins

What did you think of Finny's The Gist today? (Click to vote) 👍 Interesting, helpful or food for thought 😐 Hmm... it was OK 👎 Not interesting to me Refer friends to Finny

Finny is a financial education platform on a mission to make your money work for you. We offer a customized financial learning platform through bite-size, jargon-free lessons, money trends & insights. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. Finny does not offer investment and stock advice or endorsements. The Gist content team: Chihee Kim, Austin Payne, Carla Olson.  We're thankful for the support of today's sponsor & partner⁠—Lemonade—as they make rewards on our platform possible. If you're interested in sponsoring The Gist, please reach out to us. And if you have any feedback for us, please contact us. © Finny 2022. All rights reserved. 736 Paloma Ave, Burlingame CA 94010 Unsubscribe Preferences Privacy Policy Terms of Service

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