🌊 Things are rough

in this weird housing market & what outlier really means

October 25, 2022 View online | Sign up TOGETHER WITH Good Tuesday. Of all the plastic waste generated by US households in 2021 (51 million tons) can you guess what percent of it was actually recycled? a. 5%, b. 25%, c. 55%. Follow the wave 🌊 below for the answer. Today's money topics are: The weird housing market Have you checked your credit report lately? The outlier

HOUSING The Weird Housing Market A unique set of circumstances has brought all housing market participants a weird, never before seen scenario. We find ourselves dealing with a confluence of factors that are leaving the whole market with a sense of disarray. Give and take  On the buyer's side, things are rough. Interest rates have risen about 120% since January, tacking on 6 figures of interest to many home purchases. Combine this with home prices having soared over 40% over the last two years and an already restricted inventory, and affordability is looking bleaker than ever.  On the seller's side, things aren't all sunshine either. Because of the same reasons cited above, more potential sellers are reluctant to sell simply because of how much it would cost to replace their current home. Home sales have slowed drastically, and fewer prospective buyers are able to get approved for mortgages given higher borrowing costs. Existing home sales are falling faster than during the global financial crisis The big picture This is a weird predicament, and it's unlike 2008 in a few ways. Yes, rates are rising rapidly, but lending standards are far more stringent, and we have far fewer homeowners relying on adjustable-rate loans as most have locked in lower fixed rates.  These factors, combined with things like an extremely low supply are dampening a free fall in home prices, and why most predictions are calling for only a small slump or even a slight rise in 2023.

MONEY TIP Have You Checked Your Credit Report Lately? It's easy to take the passive route on your credit report, especially if you haven't been racking up debt, but that can still be a mistake. Keeping a watchful eye on your credit report is a vital part of a healthy financial routine, even if you're someone with an 800+. With the 3 major credit bureaus extending the availability of a free weekly report through 2023, now is a better time than ever to start.  3 things to do with your credit  Check it consistently: Checking your report at least once a year is a necessity. You just might be surprised by what's on there. Not only is it important to confirm everything looks right, but this is also preventive maintenance that can help you spot errors and even identity theft.  Seek ways to improve: If you're like many of us without a perfect credit score, checking your credit report can induce the mindfulness needed to spark consistent improvement. Look for pain points in your report that could be dragging down your score like high utilization (your balance as a percent of your available credit), late payments, and more. Check multiple sources: Your credit report won't show your actual score, but rather it's what curates the end score. This is why it's important to check your report and score from multiple sources, and even multiple scoring models like FICO, VantageScore, and more to see your profile from all angles. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Credit Report Basics Credit Scores 8 mins

TOGETHER WITH FINMASTERS Stock Wars: Compare Investments in Stocks & Funds Have you ever wondered how much a $100 investment in Intel 20 years ago would net you out today? And how much more you would've had today had you picked the Apple stock instead? That's where FinMasters' Stock Wars tool comes in really handy. Here you'll find out that a $100 investment in Apple 20 years ago would net you out roughly $75K more today than the same investment in Intel. You can use the Stock Wars tool to compare stock or fund performances over time and start thinking about your next bet. Check out Stock Wars by FinMasters. It's fun, educational, and totally free.

INVESTING The Outliers Much of what we do in the world of investing is guided by conventional wisdom, which is often a distilled-down version of what the data tells the experts. From things like the 60/40 portfolio yielding a 7% annualized return to tens of other portfolio variations out there, everything is ultimately driven by statistical probabilities.  Most of the data we use is heavily reliant on assumptions — namely, that the most likely scenarios are the most important to get right. But what about those fringe situations or anomalies?  Enter the 5% club The bell curve: Outcomes in reality almost always mimic the shape of a bell curve, with the majority (95%) of events occurring within 2 standard deviations of the center, with the extreme outliers hanging on the fringes. While we might not use the bell curve to directly craft a portfolio, those assumptions about the most common outcomes occurring can be found in the way we invest.  Assuming the best: When we utilize those popular retirement calculations that suggest $X dollars invested for Y years will likely yield a net balance of $Z amount, we're assuming they mean well. And since these calculations are almost always based on historical data, it's never an exact science.  Accounting for the 5%: What if a massive downturn occurs right before retirement? What if we don't make an expected 7% annual return on a 60/40 portfolio over a decade of investing? Basically, what if a 5% outcome happens? While there's no single solution to avoid all risks, it's good to be aware that fringe events will happen. And to better account for such tail-end events, one way to think about your investing strategy is to invest with an objective towards meeting your goals (goals-based investing) versus some target market return.

🔥 TODAY'S MOVERS & SHAKERS Medpace Holdings (+35.6%) as the company that manages clinical trials for drug companies researching new products well-surpassed Wall Street's revenue and earnings for the quarter; 2023 guidance was also much stronger. Calix (+16.8%) as the company that provides cloud, software platforms, systems, and services to communications service providers reported stronger than expected earnings today;  JetBlue (-5.3%) after reporting lower bottom-line results; JetBlue's CFO, Ursula Hurley, wrote in a note to employees that it won't post a full-year profit in 2022 "after the bumps we faced in the first half of the year with the Omicron variant and operational challenges." S&P 500 Index (+1.2%) to $3,843.78 (1D) Bitcoin (+1.7%) to $19,658.10 (1D) Ethereum (+4.1%) to $1,399.50 (1D) This commentary is as of 8:30 am PDT.

🌊 BY THE WAY ♻️ Answer: 5%. Titled "Circular Claims Fall Flat Again," the study found that of 51 million tons of plastic waste generated by US households in 2021, only 2.4 million tons were recycled, or around 5%. After peaking in 2014 at 10 percent, the trend has been decreasing, especially since China stopped accepting the West's plastic waste in 2018 (CBS) 🤔 Why investors aren't going green (CNN) 🧊 ICYMI. Should you freeze your credit? (Finny) ⚛ NanoVMs has a new operating system that runs cloud workloads faster and safer. The Silicon Valley deep-tech company has 4 patents issued, 3 more filed and 3 grants awarded from the NSF, US Air force, and Dept. of Energy. Learn more & invest in NanoVMs*. 💟 Finny lesson of the day. Benefits open enrollment happens at different times throughout the year depending on your company. Many companies do go through this exercise in the fall though, so every edition of The Gist this month will highlight a lesson related to helping you decode a work benefit: Selecting Health Insurance Insurance 6 mins

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Finny is a financial wellness platform on a mission to make your money work for you. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. The content team: Austin Payne, Carla Olson, Chihee Kim. Finny does not offer investment and stock advice. We're thankful for the support of today's brand sponsor⁠—FinMasters—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

🪙 Best place for a loan?

Maybe your family & the power of AI

October 20, 2022 View online | Sign up TOGETHER WITH Good day! Housing bubbles are a tricky thing. One telltale sign of one is when home prices decouple from local rent prices and wages. Based on data from the Real Estate Bubble Index by UBS, which examines 25 global cities, which of the following cities has the highest real estate bubble risk? a. Toronto, b. Hong Kong, c. Miami. Follow the wave 🌊 below for the answer. The topics for today are: The power of AI Best place to get a loan? Maybe your family Refinancing vs. repricing

INNOVATION The Power of AI AI generated image "Finny in the style of Picasso" from DALL·E 2, OpenAI Artificial intelligence has been looming on the horizon for what seems like decades now. It's become increasingly common to casually see the tools of AI progress in action.  The progress of AI Applications: From AI-generated art, articles, and even dissertations, to applications across industries like healthcare and manufacturing, we've come a long way from just teaching computers to play chess. "Every single company on the planet will be an AI company in the future," according to Bernard Marr, author and strategic business & technology advisor to governments and businesses. Projections: AI isn't quite classifiable as an "industry" yet, but with its growth expectations, it could soon arrive there. Most projections have the AI niche reaching over $420B in total market size by 2028, a compound annual growth rate (CAGR) of 39.4%.  Blowing up: AI and machine learning startup businesses raised $115B in 2021, which is more than one-third of the total venture capital raised for all startups throughout the year. Funding is down this year in comparison, but it's down across the board — the trend remains clear.  Adoptions: About 26% of companies say they've implemented AI in widespread production — up from 12% last year — and 92% of large companies said they're notching a noteworthy ROI on their investment into data and AI. The inevitability of the future There are some harbored fears surrounding AI ranging from doomsday scenarios to simple ethics concerns, but the overall trend is clear, and investors seem to have confidence that humanity will make the necessary adjustments to coexist with this new tech.  AI's rapid pace and progress will continue for the foreseeable future. Whether through business or investment, getting some exposure to this budding sector is probably unavoidable. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Investing in Sectors Advanced Investing 7 mins

MANAGING DEBT Best Place To Get A Loan? Maybe Your Family We all know someone with a story about their uncle that still owes them five grand for a truck, right? Mixing family and financial affairs is usually a no-go for most of us, but sometimes, if done properly, it can be an excellent cheat code to save a lot of money.  And that's exactly what some people are doing now. With mortgage rates hitting a 20-year high, intra-family mortgages have suddenly become an intriguing option.  What to know about family lending Formalizing is key: When you obtain a mortgage from a traditional lender, the details of that contract can consume dozens of pages. The details matter, and maybe even more so with a family loan. Make sure to spell out all the important nitty gritty of this transaction, and plan for future contingencies as well.  Interest is applied: For this transaction to be a legitimate loan and not considered a gift, it must be formalized, which, per the IRS, means interest must be charged on loans of $10K or more. The rate is negotiable, but the IRS does set a limit on how low it can be via the "Applicable Federal Rate," which is currently 3.30% for a long-term loan like a mortgage.  Incorporating gifting: For 2022, individuals are allowed to give up to $16,000 to any number of people, and spouses are allotted up to $32,000 per person. Even if you exceed this, no taxes will be due unless you've exceeded your lifetime estate exclusion limit of $12.06M, but the extra paperwork might be annoying. Gifting can be incorporated into this loan process in the form of paying for down payments, repairs, upgrades, etc.  It's not for everyone though: If we're being honest, most participating in this type of lending are wealthier families that have some funds to spare to help their relatives, most often children. Additionally, some people might not be comfortable giving their children money or forming a bank-like partnership with them.

TOGETHER WITH TALLY Outsmart Your Credit Card Debt How can you outsmart your high-interest credit card debt? Meet Tally.Their lower-interest line of credit was designed to get people out of credit card debt faster and save big. Featured in CNBC, Forbes, The New York Times, and Yahoo Finance, Tally is here to get you credit card debt-free, ASAP. Check your rate without hurting your credit score. Learn more about Tally today. *See disclosures.

MONEY TIP Refinancing vs. Repricing With interest rates on the rise, fewer current homeowners are refinancing — 84% less than this time one year ago and now sitting at a 22-year low. However, this record drop is bound for an eventual rebound. And before they do, it's probably worth clarifying the difference between refinancing and repricing.  Into the details Their differences are clear, even though they share similar goals. Refinancing refers to closing out your current home loan and replacing it with a new one, whereas repricing is simply a re-negotiation of terms with your current bank.  The costs: A refinance is typically more expensive (the US average is $4,345 on a $160K mortgage), varies depending on the principal value of the loan, and can take up to a few months to complete. Repricing on the other hand is a flat fee charged by the bank, usually costing between $500 and $1,000 depending on the size of the loan, and can be finalized in less than a month.  The decision process: Looking at the differences here, a logical decision-making process is to first investigate repricing a loan with your existing bank, then to explore a refinance to see if the difference is worth it.  Make it count: Make sure the savings are worth the fees, time, and hassle it takes to go through the process, and if the difference is negligible, wait until it's not. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Mortgage Options Housing 6 mins

🔥 TODAY'S MOVERS & SHAKERS Allstate (-11.5%) after the insurance company said it would report Q3 earnings losses. Catastrophic claims will increase due to Hurricane Ian. Tesla (-5.8%) beat earnings expectations for the current quarter, but revenues fall short. The EV company cut its full-year growth expectations but per Elon Musk, the company will "sell every car that we make for as far into the future as we can see." S&P 500 Index (-0.2%) to $3,719.29 (1D) Bitcoin (+0.3%) to $19,191.80 (1D) Ethereum (+0.5%) to $1,291.38 (1D) This commentary is as of 9:45 am PDT.

🌊 BY THE WAY 🍁 Answer: Toronto sits atop the list, with Hong Kong sitting at #5, and Miami at #10 (Visual Capitalist) 📈 The IRS is increasing the standard deductions for 2023 as inflation intensifies (NPR) 💕 ICYMI. Open enrollment power tips for spouses (Finny) 🛍️ Retailers are sitting on a $548.8B  pile of inventory and will soon fill store shelves with leftover holiday inventory (Reuters) 💳 Inflation-slammed Americans are piling on credit card debt (CBS) Finny lesson of the day. With open enrollment fast approaching for many of us, every edition this month, we'll highlight a lesson related to benefits offered at work: HSA Fundamentals Benefits @ Work 7 mins

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About Tally Technologies, Inc.  NMLS # 1492782 NMLS Consumer Access, [See Licenses]. Lines of credit issued by Cross River Bank, Member FDIC, or Tally Technologies, Inc. ("Tally"), as noted in your line of credit agreement.  Loans made by Tally pursuant to California FLL license or other state laws. To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300. About Finny Finny is a financial wellness platform on a mission to make your money work for you. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. The content team: Austin Payne, Carla Olson, Chihee Kim. Finny does not offer investment and stock advice. We're thankful for the support of today's brand sponsor⁠—Tally⁠—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

✨ Big influence

+ home builders selling in bulk & keeping financial secrets

October 11, 2022 View online | Sign up TOGETHER WITH Good day. If you're a homeowner and thinking about selling your home, painting your front door a particular color could add up to $6,500 to your house value, according to real estate experts. Can you guess what color that is? a. red, b. indigo, c. black. Follow the wave 🌊 below for the answer. Today's money topics are: The pension fund problem Home builders are selling in bulk Keeping financial secrets

ECONOMY The Pension Fund Problem The UK just put on our closing act of Q3, and unfortunately, the curtains of an already grim quarter were closed on an ominous note. What happened? The British bond market along with the Pound took a precipitous tumble to close out September. Triggered by surprise news of unfunded tax cuts, this announcement spooked markets into widespread selling as prominent pension funds in the UK began falling prey to margin calls. Why? Pension funds use what’s known as a liability-driven investment strategy (LDI) to ensure they can pay retirees. These strategies involve holding stocks, bonds, alternatives, and derivatives in enough quantity such that their value matches the fund’s liabilities — what they owe retirees. Funds have to post cash as collateral against their holdings, and the amounts fluctuate with the value of their assets.  Bailouts: So, when the bond market plummeted, pension managers needed to post a lot more cash and fast. As a result, the Bank of England decided to go against the grain on its monetary tightening path, buying millions of pounds of bonds in this temporary rescue mission. Why we’re concerned Pension funds are big players with a big influence in the markets. The exact numbers are unclear, but we know these funds own and weigh on large swaths of both the stock and bond markets, meaning what happens to them matters to us.  Watching something like this unfold across the pond sends a warning signal to the rest of the world, and the US is no exception with data pointing to dropping asset values across funds, and subsequently declining funded ratios too.  Ultimately, all of this serves as yet another reminder that we’re still surfing the ripples of the pandemic and all of its economic side effects years later. It won’t be as straight of a path back to “normal” as we had hoped. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: How Bonds Work Investing Basics 6 mins

HOUSING Home Builders Are Selling in Bulk After setting the woods on fire for over two years now, the housing market saw average home prices surge over 40% during that time. Fueled largely by bidding wars and a fervent demand outstripping the supply, we’re only now seeing some relief.  Cooling off Demand drop: Demand elasticity is finally back in the housing market this year. August marked the 7th straight month we watched existing home sales decline — the longest-tenured slump since 2007. Sales were down 0.4% month-to-month and almost 20% year-over-year. Rates hurt too: Every purchase comes with a cost-benefit analysis, and homes are no exception. With rates topping 15-year highs and pushing 7%, it just got a lot more expensive to buy a home. A 30-year mortgage on a $400K house would’ve cost about $1,940 per month back in early 2020, but now that number is more like $2,568, and over $220K in extra interest over the life of the loan. But at what cost? More inventory, more problems: We had 14% more homes under construction this August compared to last year. Elsewhere, the median days on the market for any given home has been rising since July, and our monthly supply of new houses is at its highest peak since 2010.  Falling into the wrong hands: With many families being pushed out of the market by rising rates, home builders are having a tougher time selling properties, and as a result, they’re offering them in bulk to investors at a discount. Inventory is blooming and demand is drying, but families might not be the ones getting a break. Taking a step back These happenings shouldn’t come as a revelation to us, and it’s a natural course of action for both parties involved to take.  It doesn’t mean the end is nye and all homes will soon be owned by giant real estate investors, but it does have the potential to somewhat complicate, and prolong, the cooling off that both homebuyers and renters are desperately hoping for. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Home Buying Power Tips Housing 5 mins

FEATURING FINMASTERS A Dollar-a-Day: Understanding The Power of Compounding Interest One of the best things you can do in investing is to invest consistently—put some money into the stock market every day or every month. Many have struggled to understand this concept, so that’s why the team at FinMasters came up with an illustrative calculator called a Dollar-a-Day. This calculator allows you to visualize the return you’d be generating had you consistently invested a dollar each day since your birth date.  Dollar-a-Day illustrates the power of compounding interest—a key rule in investing. Some people call it math magic. You can use this calculator to show your family and friends that investing a small chunk of money every day can help you build a fortune over time. In fact, that’s how many people get rich. Check out Dollar-a-Day by FinMasters. It’s fun, educational, and free.

LOVE & MONEY Keeping Financial Secrets For better and for worse, money is an integral part of our modern way of life and is ultimately necessary to help facilitate the world as we know it. However, that can also cause problems too, as money’s importance means it both gives and takes away depending on our relationship with it.  It’s the number one cause of divorce, and undoubtedly a common pain point of arguments too. Much of these situations arise from a lack of healthy communication though, especially when we keep secrets.  A recent survey shed some real light on this Good with the bad: It’s inevitable for money to come up at some point, but how we talk about it matters. The data shows that 83% of American couples do talk about money, but only 10% say they’ve never had a conflict over it, 20% are afraid to discuss it for fear of starting one, and 50% said they had kept financial secrets from their partner.  How it’s divided: 46.3% of couples surveyed said they managed their money together whereas about 31% did so separately. The number of couples managing their money together increased to 66% among married people, but a popular alternative was a combination of the two, which also accounted for 22.8%.  Money reveals things: About 15% of survey participants found some degree of difficulty to discuss finances with their partner. Similarly, about 15% of respondents also said talking about money had a negative impact on their relationship, pointing to some differences that should be addressed.   Our take In most cases, making money work together for both parties is a requirement for making the relationship work. Talking about money can reveal differences, and it opens the door to reconciling them.  Even if you find that talking about money has no significant impact on your relationship dynamics, it’s probably still a positive thing to do.

🔥 TODAY'S MOVERS & SHAKERS LYFT (-10.3%) and Uber (-8.5%)—both ride-hailing apps—are lower today on reports that the US Department of Labor (DOL) will soon release a proposal to make companies reclassify independent contractors as employees. Weber (+12%) as shares of the US manufacturer of outdoor grills and accessories are higher on no new reports today and on the heels of USB's report that the stock poses downside risk. S&P 500 Index (-0.3%) to $3,599.49 (1D) Bitcoin (-0.2%) to $19,095.10 (1D) Ethereum (-0.3%) to $1,287.58 (1D) This commentary is as of 8:30 am PDT.

🌊 BY THE WAY ◼️ Answer: Black. If you're researching 'what adds the most curb appeal,' you are likely to hear a lot about the power of a front door. A black front door can simultaneously improve your curb appeal – and your house value ($900 - $6,500 more than similar homes in the area), according to Kerry Sherin, a consumer advocate at home valuation company, Ownerly (Homes & Gardens) 📱 Parental tech support: everything you should fix on a senior’s phone (Washington Post) 👍 ICYMI. The 28/36 mortgage rule of thumb (Finny) 📦 Amazon Prime Day: what to expect from the Early Access Sale (Yahoo Finance) 🎢 iPhone 14 crash detection feature reportedly dials 911 from roller coasters (Fox Business) 💰 Finny lesson of the day. As we settle into Q4 and look back at our losses and gains this year, refresh yourself with some of the special US rules for taxing capital gains and losses: Capital Gains & Losses Taxes 7 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 wellness platform on a mission to make your money work for you. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. The content team: Austin Payne, Carla Olson, Chihee Kim. Finny does not offer investment and stock advice. We're thankful for the support of today's sponsor & partner⁠—Finmasters—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