📊 What's the best way to invest?

+ How to budget for student loans & navigating financial advice on social media

03/21/2024 Bite-sized money insights across a broad range of topics—from budgeting, taxes, buying a car or home, to investing, equity comp, crypto and more.     Here's the Gist today   Happy Thursday Origin Member.   Opinions about money have become extremely accessible thanks to social media — but can you guess what portion of Gen Z says they get their financial advice from there? A. 43% B. 55% C. 61%   Here are the topics for today: What's The Best Way to Invest? Here Are Some Great Methods Keys to Budgeting For Student Loan Repayments What to Know About Financial Advice on Social Media     What's The Best Way to Invest? Here Are Some Great Methods     Investing can get complicated if you let it. There's an endless list of market methodologies and varying approaches you can take when it comes to your portfolio, and it's easy to see how this could quickly become overwhelming.    The best way to avoid this stress and unwarranted hand-wringing is by settling on an approach that works for you and sticking with it — don't give in to the temptations of second-guessing.    Let's narrow it down — here are a few time-tested strategies and options   Strategies   Dollar-cost-averaging involves adding regular amounts of money to the market at regular intervals — like $300 every time you get paid. This is the most sustainable, stress-free approach to investing available. Lump-sum investing is exactly what it sounds like, investing large swaths of cash into the market, usually at irregular intervals. If you have a lot of money to invest, this approach can often provide higher returns because more money with more time to compound and grow = greater returns. However, for most investors who are investing with each paycheck and don't have a lump sum of excess cash, DCA is the way to go. A mix of both can be okay too. Say you get a $1,000 bonus at the end of the year and want to break your DCA approach by adding that $1,000 to your portfolio all at once — that's okay too.   Composition   All equity: Stocks are considered somewhat of a "risky" investment due to market volatility and economic cycles, especially as you age. However, investing in 100% stocks alone can be suitable for younger investors, as they can both withstand market cycles and reap higher gains over time as a result. But, it's probably a risky idea to stay in 100% stocks forever. Target-date funds: Although they may have some shortcomings, target-date funds are for the most part a solid investment for long-term investors. With their sliding allocation scales that skew more towards bonds and cash-like assets as you age, investors can get the benefits of higher risk, higher growth in their younger years, and a mix of safety and growth as they age. Custom allocations: There is no one-size-fits-all approach to investing, and going with a custom allocation can be just as valid as any other common method. Maybe instead of target date funds or all equity, you want a straight 80/20 split and you want to keep it that way until you're 55. The renowned 60/40 portfolio: The 60/40 portfolio is a somewhat risk-averse, commonly accepted portfolio composition that includes 60% stocks and 40% bonds. Although it's pretty risk-off, its returns have been consistent and valid at an average annual return of about 8%.    These are the factors you should consider when choosing your ideal method.   Which approach you choose ultimately comes down to your situation and preferences. You'll need to factor in things like — age, time horizon, risk tolerance, and retirement goals into your decision, and even then, it may change over time.     Keys to Budgeting For Student Loan Repayments     About 43 million Americans currently have student loan debt, and in October, repayments due on that debt resumed after 3 years of moratorium.    Of those borrowers, payments were set to resume for some 22 million of them, but only 60% of those had actually made a payment by mid-November.    Why is that?   This gap is due to several factors such as the new income-driven repayment plans being offered, the one-year "on-ramp" period, and also just run-of-the-mill confusion or procrastination.    But this period of grace isn't likely to last forever. Although the Biden admin has announced plans to pursue alternative routes to forgiveness, this idea has long odds at best, and borrowers who haven't had to make a payment yet should be planning for when they will.    How to prepare and budget for student loan repayments   Prepare for a post-SAVE world: Over 3M borrowers have qualified for $0 monthly payments as a result of the new SAVE repayment plan. This is great for now, but borrowers must re-certify their income again this year depending on when they enrolled in the plan. If your income increases, you may no longer qualify for that $0 monthly payment. Start budgeting for it now: The average student loan payment is over $500 per month, an amount that's likely to make a noticeable dent in most borrower's monthly budgets. As a result, it's best to start estimating and planning for your student loan payment ahead of time. Don't procrastinate: The worst possible thing a borrower can do is nothing. By being proactive and contacting your servicer, borrowers can prevent default, preserve their credit score, and avoid interest on the right payment plan. And, if your situation + income qualifies again in 2023 for this year's recertification, you may even qualify for $0 monthly payments for another year. Go ahead and pay it off in full: While most borrowers can't afford to pay off the whole thing at once, going this route could save you a lot on interest if you can afford to do it, and is worth the risk if you believe it's unlikely the government will ever absolve the debt during the period yours is due. Deferment: If your situation warrants it, you can submit a request to put your student loans in deferment for up to 3 years. Be aware though, that you may still be responsible for covering the interest that accrues during that time depending on the types of loans you have. Forbearance is another option similar to deferment, but the difference is that interest will be incurred and owed on all loans regardless of type. Forbearance is also easier to qualify for, hence its lack of lenience toward interest costs.     What to Know About Financial Advice on Social Media     In recent years, financial advice has become 'democratized', for lack of a better term. Quiet luxury, girl math, loud budgeting, house-hacking, day-trading, the list of financial ideas we can reap from social media could go on forever.   Opinions, perspectives, and advice can be found almost too easily on some platforms. While a lot of this is helpful information, it's also something we should treat with care.    A few tips to navigate social media money talk   Don't assume the competence of whomever the information is coming from. Take the time to do your own due diligence on whatever it is being discussed, and make sure to verify information and gather other perspectives before taking something as truth. But also, don't be too nihilistic. There is some genuinely valuable insights, stories, perspectives, and tips to be found about finances on social media. Don't write it off in its entirety, glean what value you can from it and use it to grow your own knowledge base with a grain of salt. Utilize social media as a source of inspiration. Although the takes you come across might not be financial gospel, they're also not to be ignored completely. You can use social media as a way to access differing opinions and approaches to all aspects of your financial life and broaden your horizons along the way.      By the way   📱Answer: It's B. — 55%. (CNBC)   🧾 Tax refunds are up compared to last year (CNBC)   🤖 Humanoid robots may be building your next Mercedes (Axios)   💪 'Strengthening the economy' is a top priority amongst Americans in 2024 (Pew)      How did you like today's newsletter? How did you like today's newsletter? (Please vote only once.)   🔥 Great stuff — keep it up. - 🤔 Alright, but could be better. - 👎 Not my thing.      Blend Financial Inc. dba Origin 177 Huntington Avenue Ste 1703, PMB 50966 Boston, MA 02115-3153     Unsubscribe from this e-mail     Advisory services are offered through Origin Advisory Services LLC ("Origin RIA"), a Registered Investment Adviser registered with the Securities and Exchange Commission and a wholly-owned subsidiary of Blend Financial Inc. DBA Origin Financial. Origin RIA's registration as a Registered Investment Adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The Origin app is only available to U.S. based members.