Facing an onslaught of demands on its cash amid a stock market frenzy, Robinhood, the online trading app, said on Thursday that it was raising an infusion of more than $1 billion from its existing investors.Create a free Times account or log in to continue reading this articleCreate account or log inSubscribe for unlimited access.See subscription optionsYou need a subscription to continue.View subscription options.
The Securities and Exchange Commission said in a statement Friday morning that it is “closely monitoring the extreme price volatility of certain stocks trading prices” in recent days and that it stands ready to take aggressive enforcement action if market manipulation is found to have taken place.
The statement comes amid great public interest in a handful of stocks, including GameStop Corp. GME , AMC Entertainment Holdings Inc. AMC and Nokia Corp. NOK , which have been the target of professional short-selling investors who have bet these companies will fail.
“The Commission is working closely with our regulatory partners … to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing,” the statement reads. “We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.”
As the Biden administration looks to pass a third major economic stimulus program quickly, some of its allies on Capitol Hill and elsewhere are mulling mixing up the formula for payments to households, looking to make them recurring instead of the lump sums seen in the past.
The estimated 12 million people in two key pandemic unemployment programs, who were facing their last payment this weekend, will now receive benefits for another 11 weeks. Plus, all those collecting jobless payments will receive a $300 weekly federal boost through mid-March.
The caveats: Because Trump did not sign the bill on Saturday, those enrolled in the two unemployment programs will likely not receive a payment for the final week of the year. Their payments could also be delayed several weeks while state agencies reprogram their computers.
US futures and most global markets moved higher on Monday as investors welcomed the additional stimulus.
The backstory: Economists had been arguing for months that US lawmakers needed to deliver another relief package to help protect the fragile economic recovery from the pandemic. The Federal Reserve said so, too.
But getting a deal that was acceptable to both Democrats and Republicans proved to be exceedingly difficult. Trump’s 11th hour intervention — against an agreement his administration negotiated — didn’t help matters.
The deal removes two sources of uncertainty for investors. It provides some relief to struggling Americans before President-elect Joe Biden takes office next month, and keeps the US government running through September 30. That means no pesky government shutdowns until at least the next fiscal year.
China tells Ant Group to quickly overhaul its business
Financial regulators outlined a laundry list of expectations for Ant Group executives in a meeting on Saturday. The officials blasted Ant Group for having “defied” regulations, edging out rivals from the market place, harming consumer rights and taking advantage of regulatory loopholes for its own profit. They also accused the company’s corporate governance structure of being “unsound,” according to a transcript of remarks by Pan Gongsheng, deputy governor of the People’s Bank of China.
Big problems: Ant Group, which is affiliated with e-commerce giant Alibaba, offers everything from investment accounts and micro savings products to insurance, credit scores and even dating profiles. The company been subjected to intense scrutiny in recent weeks after Chinese officials shocked investors by halting its huge IPO at the last minute.
President Xi Jinping made clear at a recent conference that one China’s most important goals for next year is to strengthen anti-monopoly efforts against online platforms and prevent a “disorderly expansion” of capital.
Regulators told Ant Group executives on Saturday to “go back” and focus on its “original” payments services, among other tasks, according to Pan. Regulators also called for a “strict overhaul” of the company’s credit, insurance, and wealth management services.
“Ant Group must fully realize the seriousness and necessity of this rectification,” the regulators told the company. They added that the firm must develop a plan to implement these changes “as soon as possible.”
Ant Group said Sunday that it would take heed of the latest requirements, while focusing on innovation, serving small businesses and increasing competitiveness on an international scale for the benefit of the country.
“We appreciate [the] financial regulators’ guidance and help,” the company added.
Bitcoin prices go berserk
Bitcoin is crashing — upward. Its price briefly topped $28,000 over the weekend and may have more room to run.
The context: Bitcoin passed $20,000 for the first time just 11 days ago, reports my CNN Business colleague David Goldman.
Investors are pouring money into bitcoin and other cryptocurrencies during the Covid-19 pandemic as the Federal Reserve sent interest rates near zero (and expects to keep them there for several more years), severely weakening the US dollar. That makes bitcoin, comparatively, an attractive currency.
Also pushing the valuation: Big, name-brand investors are stockpiling it, and huge consumer companies are embracing it. For example, a top executive at BlackRock recently said the cryptocurrency can replace gold, and Square and PayPal have both embraced bitcoin.
Even with mainstream credibility, the recent cryptocurrency surge is showing signs of a melt-up — over-enthusiasm fueled by the fear of missing out, not simply market fundamentals.
You get free access to your business credit reports and scores when you sign up for a free Nav account. Checking won’t hurt your credit scores.Sign Up
What Are Business Vendors?
A business vendor (or supplier) sells goods or services to another business. If you run a clothing manufacturing company, for example, a vendor might supply you with cloth, labels, equipment, and other supplies you need to make your final product. If you own a construction business, you might purchase lumber, nails, tools, and equipment from a series of vendors as well. The vendor invoices you for those purchases, requiring you pay the balance by a specific number of days after the invoice date.
Vendors are often willing to extend short-term credit to buyers who purchase supplies from them. This is called trade credit or vendor credit. It allows your business to get the supplies or services you need now but pay for them at a later date.
Not only can vendor accounts help your business’ cash flow by letting you buy now and pay later, they can also be an effective way for your company to establish business credit. In fact, even if your business is new, you might be able to qualify for vendor accounts. These accounts are often easier to qualify for than small business loans because limits are lower (at least to start) and suppliers want your business.
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Get your full business credit reports & scores, PLUS Nav reports your account payments to the business bureaus as a tradeline.Explore Business Boost
There’s another solid perk you may be able to enjoy when you open vendor accounts. Many vendors don’t require personal credit checks nor personal guarantees. It’s often easier to qualify for this type of short term financing, plus reduce your personal liability while you’re trying to establish business credit history.
Different Types of Vendor Accounts
Vendors extend different types of trade credit to their customers. The most common types of trade credit are as follows:
The net payment terms (sometimes referred to in the industry as “net D payment terms”) refer to how quickly the customer has to pay a vendor’s invoice in full for the supplies or services purchased. Net 60 vendor accounts specifically are a type of trade credit that requires you to pay back a vendor or supplier 60 days from the invoice date. (Terms may be based on business days beyond that invoice date, rather than calendar days, so be sure to check.)
You may not even have to pay interest if you use vendor credit. But you may forgo a cash discount that is available for an early payment, so be sure to review the invoice terms carefully. You’ll often apply by contacting someone in credit sales. Your sales rep may also be able to help you initiate the application.
List of Net 60 Vendors
Typically, it’s easier to find net 30 terms from companies that are willing to extend trade credit to your business. Net 60 terms are not as commonly offered by vendors, especially to newer businesses or newer customers. Sometimes longer terms go to larger businesses, but not always.
The good news is that net 30 accounts can work very well when you’re trying to build business credit. If, however, you’re looking for net 60 terms to help stretch company cash flow a little farther, here are three options you might want to consider:
Business Credit Cards
Business owners often think of credit cards as a convenient payment option while ignoring the fact that they also offer affordable short term credit. Credit cards with grace periods allow you to “float” purchases without paying interest. They may allow you to take advantage of an early payment discount with a vendor and then have up to 60 days to pay for the purchase without incurring interest.
How does that work? Most credit cards offer a grace period, so if you pay the statement balance in full you’ll avoid interest. If you time a major purchase to occur right after the statement closing date then it will appear on the following month’s bill – giving you up to 60 days to pay for that purchase without paying interest.
Of course if you don’t pay your balance in full, you’ll be charged interest at the credit card’s purchase interest rate. And that interest may outweigh the discount you received, so be sure to set up a system to pay on time.
Brex Card for Ecommerce
On the surface, the Brex Card for Ecommerce might look like any other revolving small business credit card you keep in your wallet. However, the way the Brex Card operates makes it similar to vendor accounts in a few ways.
Most notably, the account offers net 60 terms. So, you can take a full 60 days to pay your bill and help extend your cash flow, if needed. (Keep in mind, early payments on accounts may boost your credit scores.)
Your social security number isn’t required to apply for a Brex Card. However, your business will need to be at least one year old and you need to be making $50,000 or more in monthly sales to qualify for an account.
Advantages of an Account with Brex Card for Ecommerce
Convenient and widely accepted payment method
No personal guarantee is required, and your personal credit won’t be impacted by opening an account.
Receive net 60 credit terms
Enjoy a potential credit limit of 50–100% of your future monthly sales, up to $5 million.
When choosing a vendor account, it’s a good idea to pause and ask yourself what goals you’re trying to achieve. By asking yourself the following questions, you can narrow down the right vendor accounts for your company.
Are you trying to improve business cash flow? A more flexible payment schedule can help you manage cash flow. A net 60 account will probably be more attractive to you than a net 30 account which requires a faster turnaround for payment.
Do you want to build credit for your business? Consider vendor accounts that report to a commercial credit reporting agency. Vendor accounts with net 30 payment terms are more common in this space.
Would you like to establish good business credit scores with all three of the major bureaus (Dun & Bradstreet, Experian, and Equifax)? You may need to open multiple vendor accounts that report to different business credit bureaus to accomplish this goal.
Do you need easy-approval vendor accounts because you’ve never established credit in your company’s name before? Finding vendors with less strict approval criteria should be a priority.
Once you identify the features that matter most to you (e.g. reports to one or more credit bureaus, easy approval, longer net terms etc.), you’ll be better prepared to begin your search.
You can use the BusinessLauncher tool in your free Nav account to help you look for vendors that meet the criteria that’s most important to you. Nav’s MatchFactor technology can also help you shop for small business loans such as a line of credit, invoice financing or a working capital loan.
Make the Most of Vendor Accounts
When you get vendor accounts, it’s important to manage them well. Paying invoices on time will make it more likely that the vendor will raise your credit limit and/or be more open to extending longer terms. Late payments, on the other hand, may trigger late fees and cause the vendor to lower your credit limit. In addition, those late payments may hurt your business credit. (Payments that are just one day late can appear on your business credit reports.)
Once you have established a positive payment history don’t be afraid to ask your existing suppliers if they’re willing to offer better invoice payment terms which will allow you to pay for goods or services at a later date. As a buyer, you may have more leverage than you realize. If you already have existing vendor accounts that are set up with net 30 payment terms, you can also ask suppliers if they’re willing to increase those to net 45 or net 60 terms. You might be able to secure lengthier payment terms and transform your net 30 accounts into net 60 accounts simply by asking.
A real estate side hustle helped us make $1 million: Here are our 6 top tips
Real estate is one of the “best ways to build wealth,” writes Wealthy Nickel founder Andrew Herrig.
Published Sat, Dec 26 2020 9:15 AM ESTAndrew Herrig
Andrew and Emily Herrig grew their net worth to $1 million through their real estate side hustle.Courtesy Andrew Herrig
Amid the pandemic, interest rates have decreased and many people have been looking to move from apartments to single family houses in search of more space, so prices have gone up a lot in the last year. During this time, we’ve still been able to find good deals, but we’ve had to be patient and willing to stick with our numbers rather than getting caught up in a buying frenzy.
Here are six of the biggest lessons we’ve learned as we’ve grown our real estate side hustle over the last several years.
I definitely learned this lesson the hard way. A few years ago we bought what I thought was a great deal. It was a half-duplex in a great area. Unfortunately, what both I and the title company missed was that it had been illegally subdivided and was on the city’s records as a full duplex, which meant we would not legally be able to sell the property without addressing the title issues.
After many calls to the city, our lawyers, and the owner of the other side of the duplex, we couldn’t figure out a way to fix the issue. We eventually sold the propertyat a $30,000 loss to another investor who was more experienced in untangling the relevantlegal issues.
Looking back, most of my regrets are about not buying a certain property because it didn’t quite meet my criteria. While sticking to your buying criteria is important, such as following the1% rule for rental income (which is a rule that says the monthly rent should be at least 1% of the purchase price in order to break even on cash flow), mine was probably a little too strict.
I was looking for a home run deal every time, when I could have just as easily bought a few base hits — properties that were not quite as discounted, or cash flowed just a little bit less — and built my portfolio faster.
There are so many advantages to owning real estate like leverage, appreciation, tax benefits, that just getting an “average” deal can make for a great long-term investment. The key thing to remember is that even if the monthly rent is less than 1% of the purchase price, you are likely losing money after paying the mortgage, taxes, insurance, repairs, and adding a vacancy factor.
A new investor might assume they are set if the rent is more than the mortgage payment. But there are many other expenses such as property management, home maintenance, and vacancy that are easy to overlook.
One thing is for sure: Surprise expenses will always come up. In one particularly bad month, I had to redo almost all of the plumbing in one house, clean up the aftermath of a tree falling on another house during a storm, and replace an HVAC system that went out at another.
Luckily we set aside cash reserves every month in a separate account to plan for the unexpected and were able to cover the costs. We keep a completely separate account for our rental properties and all income, and expenses are paid from there. We set aside a certain amount of our rental income (usually around $200 per property per month) into an emergency fund and do not count that as money we can spend.
If you’re just getting started building an emergency fund, one thing that worked for me was to put any “extra” money toward it, such as bonuses, a third monthly paycheck if you’re paid biweekly, or earnings from another side hustle.
The majority of the wealth we built through real estate investing has come from appreciation, meaning the increase in value of our rental houses over time. But cash flow is key because it’s a huge lever in reducing your risk. In my opinion, buying a rental property that loses money every month in hopes of a future increase in value is gambling.
You won’t get rich off of cash flow alone. On our houses we aim for a cash flow of $200 to $300 per month from rent after deducting the mortgage and all expenses. But it sure helps me sleep better at night knowing that if I lost my day job or had other budget issues, our rental houses are earning their keep after accounting for all expenses.
Remember that your tenants are your customers. One of the biggest costs of owning a rental property is vacancy and turnover repairs when a tenant leaves.
So I always try to look for tenants who plan to stay for several years and will take good care of the property. While I certainly haven’t been successful in screening out every tenant, I do everything possible to build positive relationships with and hold on to the good ones.
Rental real estate is often thought of as passive investing, and in some ways it can be. But it will never be as passive as investing in the stock market. You have to deal with collecting rent, answering tenant calls, and managing contractors. Even with a property manager, there is still some work on your end to make sure everything is running smoothly.
While we’ve made far more investing in real estate than in the stock market, and I believe it’s one of the best ways to build wealth, it’s important to realize that there is some time and effort required. By thinking of rental properties as more like a side hustle than a passive investment, you’ll be more prepared for the work involved.
Looking back, I probably spent too much time reading books and blog articles before dipping my toes into real estate investing. While there is a lot to learn before buying your first house, some of the most important lessons I learned came from experience. There is only so much you can learn in a book about finding great tenants or managing contractors. If you’ve been in analysis paralysis mode for months or even years, maybe now is the time to get started.
Andrew Herrig is a personal finance and real estate investing geek. He is passionate about helping others achieve financial independence and documents his own family’s journey at his blog, Wealthy Nickel. Andrew and his wife were able to grow their net worth by $1 million through real estate investing in five years. They live with their two young children in Dallas, Texas.
Second stimulus check delay: When it could come now and why Jan. 15 matters
So what happens now? Anything is possible. But if the bill passes later than expected, that three-week window would shrink, with more people having to wait longer to receive their second stimulus checks. That is, unless in the 11th hour, an additional amendment to the bill’s language were to be made. Barring that, we’ve mapped out some dates your next direct payments could arrive. (Here’s how to calculate your possible stimulus check payment and what we know about a third stimulus check in 2021.) This story updates often with new information.
When could the IRS start sending new payments now?
If Trump relents and signs the new stimulus bill into law before Dec. 28 — the cutoff for the government funding shutdown — the IRS and Treasury could send the first batch of payments via direct deposit as soon as next week, compared with the 19 days it took to set up the online tools and schedule distribution of the first stimulus check.
“Most of these will be direct deposits. We call them ‘checks in the mail,’ but most will be direct deposits,” Mnuchin said. “It will be within three weeks. We are determined to get money in people’s pockets immediately. So that will be within three weeks.”
As of last summer, 75% of the first round of stimulus payments were sent straight to people’s bank accounts using direct deposit, the Treasury said, which brings hope for the majority of people to receive their second payment before Jan. 15
Possible dates a second and third stimulus check could go out
Dates for second checkDates for possible third check?House passes final billDec. 21April 5Senate passes final billDec. 21April 6President signsDec. 28April 7First direct deposits issuedWeek of Jan 4Week of April 12First paper checks sentWeek of Jan. 11Week of April 19First EIP cards sentAfter filing 2020 tax returns Week of April 26Recovery Rebate CreditAfter filing 2020 tax returnsUnknown
What does Jan. 15, 2021 have to do with second stimulus checks?
This is the cutoff date in the $900 billion stimulus bill by which time the IRS and US Treasury will stop sending checks as part of this round of delivery. If you don’t receive your full second stimulus check money by Jan. 15, you will need to claim all or part of the missing amount when you file your federal tax returns in 2021. You can also claim any money the IRS still owes you from the first round of payments as part of a Recovery Rebate Credit at that time too.
What about people getting their payments in the mail?
The Democrats moved to increase the size of the checks after President Trump threatened to oppose a more than $2 trillion pandemic aid and federal funding bill because it included $600 check to most Americans rather than $2,000.
The massive stimulus and government funding bill — which Congress passed Monday after Trump took no role in the talks in which lawmakers crafted it — included $900 billion in coronavirus relief.
House Republicans on Thursday blocked a Democratic attempt to pass $2,000 direct payments to Americans, as the fate of the massive coronavirus relief package passed by Congress earlier in the week hangs in the balance.
Congress passed the proposal Monday after Trump took no role in weeks of talks. The plan included $900 billion in coronavirus relief.
Trying to cap the plan’s cost, most of Trump’s Republican Party sought $600 in direct payments rather than the $1,200 passed in the CARES Act in March. In criticizing the year-end legislation, Trump also pointed to foreign aid spending — which Washington includes in funding bills every year.
The House tried to pass the $2,000 payments during a pro forma session on Christmas Eve day, a brief meeting of the chamber where typically only a few members attend. Democrats aimed to approve the measure by unanimous consent, which means any one lawmaker can block it.
Rep. Steny Hoyer, D-Md., offered the proposal from the House floor, but was blocked because the measure was not approved by House Minority Leader Rep. Kevin McCarthy, R-Calif.
House Speaker Nancy Pelosi said in a statement after her party’s measure failed that she would hold a full recorded vote on the proposal for $2,000 payments on Monday.
“If the President is serious about the $2,000 direct payments, he must call on House Republicans to end their obstruction,” Pelosi said.
Democrats have called on Trump to sign the coronavirus relief and government funding bill into law and to support the separate cash payment plan.
Senate Majority Leader Mitch McConnell and McCarthy, the top two Republicans in Congress, and their aides have been silent on Trump’s demand for bigger checks.
But McCarthy, in a letter late Wednesday to Republicans, described a countermove his party planned to make on Thursday that would seek changes to the foreign aid component of the spending bill.
It is unclear who would be eligible for $2,000 payments in the Democrats’ plan. In the aid and government funding bill, individuals who earn up to $75,000 and couples filing jointly who make up to $150,000 would receive the full $600. In addition, the measure would pay $600 for each dependent child. Trump did not address the payments to children.
If Trump vetoes the legislation, Congress may have enough support to override his action. However, depending on how quickly the more than 5,000-page bill gets to his desk after formal enrollment, he could let it die by refusing to sign it before the new session of Congress starts at noon ET on Jan. 3.
Along with the direct payments, the rescue package would add a $300 per week federal unemployment supplement, extends jobless benefit expansion provisions and a federal eviction moratorium, direct $284 billion to Paycheck Protection Program loans and put more than $8 billion into Covid-19 vaccine distribution, among other provisions. If Trump does not sign the legislation in the coming days, about 12 million people would lose unemployment benefits on Saturday — the day after Christmas — and the government would shut down on Tuesday.
Many economists and Democrats have called the $900 billion relief plan inadequate after months of stalemate on Capitol Hill.
Democrats have said they plan to push for another relief bill after President-elect Joe Biden takes office Jan. 20. Biden has said he will present his own plan to lawmakers early next year and that he would push for a third round of direct payments.
Democrats have cited more direct payments and state and local government aid as their top priorities.
The White House did not immediately return a request for comment on Thursday.
Sarah MaxUpdated December 7, 2020 / Original December 4, 2020
It has been 40 years since Enjoli perfume proclaimed that women can “Bring home the bacon, fry it up in a pan,” and women haven’t only made big strides in equal pay and opportunity, they control 32% of global wealth and more than half of U.S. personal wealth.
Yet, whether because of deeply-entrenched gender roles, a lack of time, interest, or understanding—or some combination of the above—women of all ages, education levels, and income brackets are still behind the times when it comes to taking control of their big-picture financial decisions.
“As a society, we don’t think it’s very sexy when women talk about money,” says Haleh Moddasser, a senior financial advisor at Stearns Financial Group in Chapel Hill, N.C., and author of several books about women and money. She thought this might have just been the case among her baby boomer peers and clients, but apparently not. “I had a woman working for me who was in her 20s, and she ended up changing her online dating profile to take out ‘financial advisor.’ ”
Are we generalizing? You bet. But as loathsome as the notion of stereotyping women as being no-good-at-the-money-stuff is, there’s an alarming amount of data demonstrating that women in general simply don’t engage with their finances often, or thoroughly, enough.
“This is the really sad part of this whole thing: You’d think we’d make some progress, and we haven’t,” says Valerie Newell, a principal and senior wealth advisor with Mariner Wealth Advisors in Cincinnati. In fact, her affluent millennial clients are among the worst offenders, she says. Many say they just aren’t interested, or don’t see the urgency. “Younger women never think that bad things are going to happen,” she says.ADVERTISEMENThttps://85b31b355acd766eb2bddca31a6d72f2.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
In a recent survey of nearly 3,000 Americans by UBS Global Wealth Management, half of married women, and 54% of married millennial women, said they defer to their husbands when it comes to long-term financial decisions.
“It’s not that women aren’t engaged in their financial well-being, but our research shows they’re more engaged in short-term money matters than the longer-term decisions,” says Paula Polito, divisional vice chairman at UBS Global Wealth Management. But those longer-term decisions, which relate to investments, insurance, and estate planning, have the greatest consequences—particularly for women. Eight out of 10 women end up solely responsible for their fiances at some point in their lives, says Polito.
Women also have less room for error on big financial decisions. “We tend to live longer, get paid less, and go in and out of the workforce,” says Carrie Schwab-Pomeranz, board chair and president of the Charles Schwab Foundation. On average, women have significantly less saved for retirement than men, according to the latest data from the Transamerica Center for Retirement Studies. Nearly a third report having saved less than $10,000 or nothing at all.
What’s holding women back? It isn’t a lack of competency. Multiple studies have shown that when women do take the reins on investment decisions, they outperform men by one to two percentage points a year, on average. Rather, a combination of factors perpetuate the gender gap. Some are societal, some are institutional. But all need to be dismantled. Barron’s spoke with advisors, researchers, and women to better assess the problem and offer some solutions. (Also read: “Wealthy Women: How Advisory Firms Adapt Strategies to Win Huge Market.”)ADVERTISEMENThttps://85b31b355acd766eb2bddca31a6d72f2.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
Traditional Gender Roles Persist
Women have made significant leaps over the past several decades, but longstanding gender roles continue to influence how they think and talk about money. “It boils down to financial education, which is still not offered or required in most schools,” says Lynn Ballou, a senior wealth advisor and partner with EP Wealth Advisors in Lafayette, Calif. “We say make sure kids learn a foreign language, but we never say let’s teach our kids about money.”
“ It boils down to financial education, which is still not offered or required in most schools. ”— Lynn Ballou, EP Wealth Advisors
The responsibility then falls on parents, and in many households women are taught, whether explicitly or by example, to not talk about finances. “We still hear about clients who give their sons a thousand dollars to try some stock picking, but don’t have their daughters do the same,” says Kathryn George, a partner and chairwoman of the Brown Brothers Harriman’s Center for Women and Wealth. “When we ask why, they say because she’s not interested. Well, maybe she’s not interested because you’re not talking about it with her.”
The problem becomes self-perpetuating, and can have long-lasting effects. In a survey of people ages 16 to 25, Schwab found that young women aren’t lacking in financial grit. Relative to their male peers, they’re more likely to take on extra work, for example, and follow a financial plan. Yet twice as many men said they would invest spare cash; women were more likely to keep that money in checking and savings accounts.
“There needs to be better communication between parents and the next generation,” says George. “People, and especially people who have money, don’t talk about it. So kids don’t understand savings or compounding, and all of those basic skills that are the underpinning to investing.”ADVERTISEMENThttps://85b31b355acd766eb2bddca31a6d72f2.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
Money was not something Mabe Rodríguez, 52, learned about at home. “Finances were always managed by my dad,” she says. Even so, she got a “deep appreciation for cash flow” when she visited her grandparents in Venezuela, and they trusted her to help them pay bills and balance their checkbook. When she landed a job at Procter & Gamble in her early 20s, she got serious about saving and investing. “I had three goals: One was to buy my own house; two was to pay for my children’s education; and three was to retire by the age of 50.”
Rodríguez retired at 46, and has since held multiple leadership positions at various institutions and nonprofits in Cincinnati.
Wealth Advisors Could Do Better
That women are a key segment isn’t lost on the wealth management industry. Over the past decade, there has been a groundswell of women-specific studies, products, and marketing campaigns. “But these efforts are still too superficial,” says Anna Zakrzewski, a partner and global leader of wealth management at Boston Consulting Group.
In a comprehensive study, BCG concluded that the wealth management industry is still missing the mark when it comes to meeting the needs of female clients.ADVERTISEMENThttps://85b31b355acd766eb2bddca31a6d72f2.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
Among other issues, 30% of women surveyed by BCG said they believe advisors speak with them differently because of their gender. In one blatant example, “a wealthy woman, who is a high earner, told us about an advisor who, during the first meeting, spoke primarily to her husband and then sent follow-up documents addressed only to him. She received a charm bracelet,” says Zakrzewski.
“There are a lot of firms out there that say they cater to women and they basically changed the font to pink, but that’s just not going to cut it,” adds Moddasser.
To be fair, there are many male advisors who have terrific rapport with their female clients. Still, the industry is going to be prone to biases and communication misfires if it continues to be dominated by men.
“ We need to get more female advisors in our industry. ”— Julie Knight, Janney Montgomery Scott
“A big part of the problem is that most advisors are men,” says Julie Knight, an advisor with Janney Montgomery Scott in Allentown, Pa. That isn’t surprising given longstanding gender roles, she says. The problem is persistent: Fewer than 20% of all advisors are women; the same percentage as advisors over 65. In other words, there isn’t an influx of younger women advisors. “We need to get more female advisors in our industry,” she says.ADVERTISEMENThttps://85b31b355acd766eb2bddca31a6d72f2.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
Women don’t want to be patronized, but they do have different needs and communication preferences. A study by Coqual, a global think tank focused on diversity and inclusion, found that women want to work with advisors who are sensitive to their time constraints (for example, no thank you to the golf outing), and who take the time to learn about their clients’ values, aspirations, and family situations—and incorporate all that information into their recommendations.
The impression many women have of financial advice is “men smoking cigars and talking to their brokers,” says Anne Alexander, 56, who began working with Knight after getting a divorce and getting downsized from her publishing job. “What you really want to do is talk to somebody who can help you get your financial life in order and say, ‘Here’s where you are, and this is how you can get where you want to go.’ ”
Women Have a Lot on Their Plates
Lesley Shorr Klein says she’ll never forget the advice she got when she graduated from college and got her first job. “My roommate’s father sat us down and said, ‘Enroll in your 401(k), open an IRA, and invest every month,” says Shorr Klein, 51. She took that advice to heart, saved consistently, and even bought a few individual stocks.
Her enthusiasm for investing continued after she got married. “But then life got crazy. We had kids, and I left my corporate job to start my own recruiting business,” she says. “The one thing that was very easy to slice off were the finances.”
Women face many obstacles when it comes to managing their money, but some of the biggest barriers are self-imposed. Women are juggling more than their share of responsibilities—perhaps now more than ever, given the disproportionate impact of Covid-19—and if they can delegate money management to their spouses, all the better.
It’s one thing to step back from routine money matters, but the stakes are too high to keep key financial issues at arm’s length. “There’s a difference between delegation and abdication,” says Polito. “You don’t have to know everything about the markets or every aspect of financial services, but you do have to have your own road map of your financial life.” (See related article for advice on managing money from your 20s through your 50s.)
There are myriad reasons women should engage with their finances. For people who are married, equal participation in major financial decisions can have benefits beyond the bank account.
“The more successful couples I know schedule a date, once a month, to sit down to discuss strategies, big purchases coming up, when are they going to retire, and what are they going to do in retirement,” says UBS financial advisor Tracy Byrnes. “In this busy world, that’s really important.”
“ You don’t have to know everything about the markets or every aspect of financial services, but you do have to have your own road map of your financial life. ”— Paula Polito, UBS Global Wealth Management
Couples who are on the same page about money matters tend to fight less, and feel more in sync on their bigger life goals. “One of the main reasons people divorce is because they don’t communicate about money,” says Ballou, who won’t work with couples unless they both participate. “I saw early on in my career that even those with the best intentions couldn’t really know the minds and hearts of their partners. and how their goals and viewpoints might evolve. More than one client has mentioned that I might have saved their marriage.”
The importance of money in relationships is a common refrain. “I don’t know if I would be with my husband today if my relationship to finances was what it was in my early 20s,” says Hannah Carpenter, 35, a film editor who moved to New York after college. Carpenter got serious about budgeting and saving when a co-worker introduced her to her mother, financial advisor Rosemarie Dios at UBS. By the time Carpenter met her now-husband, she was saving and investing regularly. Her husband earns more and came to the marriage with more assets, she says, but it’s a marriage of financial equals because of the steps she took to be independent. “That was important to both of us,” she says.
Whether single, married, divorced, or widowed, knowing where you stand financially is empowering. When Shorr Klien divorced this spring, she realized just how checked out she’d become. “I chose to disengage entirely because I had so much on my plate,” she says. With the help of her financial advisor, and ex-husband, she has become reacquainted with her finances and now knows where things stand “down to the penny,” she says. In the process, she’s ramped up her charitable giving, incorporated environmental, social, and governance values into her portfolio, and gotten more proactive about financial decisions related to her business.
Equal Treatment, Different Approach
So, what do women need that’s different? Advisors say—and studies support this—that when it comes to big money moves, and investing in particular, women tend to consider their decisions in the context of their overall lives, as opposed to looking at investment returns or other key numbers at face value.
“Men are usually more focused on returns, and women are more focused on security,” says Moddasser. “So if you’re talking to a male advisor and he keeps pressing you on how something is undervalued or has a certain standard deviation, they’re speaking completely different languages.”
Sometimes they really are speaking a different language. “One of the problems with the industry is that there’s a vernacular, there are more acronyms than I think in any other industry,” Byrnes says. “And if I start throwing acronyms at you, I’ve lost you.”
What can happen, she says, is women are embarrassed or don’t want to slow down the conversation by asking too many questions. At the same time, they tend to want to get more information before they make big financial decisions.
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“Once women have the information needed to make a well-informed decision, and that’s an important thing, their investment profile is relatively similar to that of men,” says Zakrzewski. When women don’t get adequate answers, however, they are likely to hold onto too much cash. In the BCG study, women had 30% of their holdings in slower-growth assets. That can lead to a wealth deficit that is exacerbated by longer life spans.
”Studies show that women are not more risk averse, but rather men are overconfident, which is why women are often better long-term investors,” says Moddasser. “They don’t chase returns, they chase security.”
“With our good friends and partners, we talk about our dreams all the time, but we don’t talk about the money,” says Elizabeth Ortiz, 41, who is an assistant professor of communications and co-owns a restaurant with her husband. “With financial advisors, you traditionally talk about money but not your dreams, and it’s like wait a minute: We should probably talk about those things together for the best future.”
Suze Orman: Don’t pay off debt with a second stimulus check — here’s your ‘first priority’
Forget about credit card debt and focus on building an emergency fund, the financial guru says.
Published Tue, Dec 8 2020 3:54 PM ESTRyan Ermey@RYANERMEY
Suze OrmanSource: CNBC
The U.S. economy may soon be getting a shot in the arm. Lawmakers are in negotiations over a bipartisan $908 billion Covid-19 stimulus proposal that some on Capitol Hill expect President Donald Trump and Senate Majority Leader Mitch McConnell to back. The proposal would reinstate the $300-per-week federal unemployment benefit but would notably exclude a second round of $1,200 stimulus checks.
If you do eventually end up receiving another check in the mail, you’ll likely have no shortage of ideas for what to do with it. When it comes to prioritizing uses for extra cash, focus on getting your feet under you, recommends financial expertSuze Orman, bestselling author of “Women & Money,” and the host of the “Women & Money” podcast.
“The most important building block, so that you can grow, financially speaking, is that you have a financial foundation you can stand on,”she says. “So when something goes wrong, it doesn’t collapse.”
In other words, “Would I be spending that money to pay down credit card debt?” she says. “No way.” Instead, “the first priority is save, save, save.”
The March CARES Act and other early coronavirus relief programs made the priorities for recipients of stimulus rather straightforward, Orman says. “They’re not making you pay your mortgage. You don’t have to pay your student loan. You don’t have to pay your automobile insurance,” she says. “You have all of this chance to save money. So anything that comes in, just save it, save it, save it.”
The provision in the CARES Act that granted a payment freeze to 41 million federal student loan borrowers was recently extended but by just one month, through January 31. Legislation that barred your lender or loan servicer from foreclosing on your home, as well as a provision giving you the right to request mortgage forbearance due to Covid-19-related financial hardship, expires on December 31.
“Now you’re going to have to prioritize. Where do you have to spend that money?” Orman says. First save as much as you can.”Next, prioritize the must-have bills that you must pay. You must have money to pay your rent, your car payment, your insurance, your student loans.”
The pandemic has shown us how long a crisis with the power to cripple your finances can last, Orman says. Accordingly, she adds, the long-held rule of thumb among financial advisors — that you should hold 3-to-6 months worth of expenses in your emergency fund — needs updating.
“Even eight months of an emergency fund isn’t enough. It is eight months since this started. It’s longer than that. It could be even longer than a year,” she says. “So the truth of the matter is, it’s probable that you should have one year of an emergency fund right now.”
The money you receive from any future stimulus check won’t cover a year’s worth of expenses, but stashing a chunk of that cash in a savings account can be a good place to start.
If plunking in a lump sum sounds daunting, you can also build an emergency fund gradually. Contributing $36 a paycheck will get you to $1,000 in a year. To reach $3,500, the amount Bankrate says an emergency typically costs, you’d have to put aside $135 per pay period.
If money is tight, Orman says, working to pay off debt should be low on your to-do list. Instead, she says, “I would be paying the minimum payment due on all credit cards. And I don’t care what the interest rate is.”
That’s because, if you’re low on cash, and the money you have coming in is from government stimulus or unemployment benefits, you need to save as much as you possibly can, she says. And unlike, say, a mortgage or auto loan, in which the item you’re financing is used as collateral for the debt, “credit cards are unsecured debt. If you have to, you can always get them discharged,” she says. “Obviously, it would ruin your FICO score, but you would be able to continue to live your life.”
Living through this crisis underscores the importance of being prepared, Orman says. If you still have a paycheck coming in, she says, it behooves you to make sure you have credit cards with plenty of available limit on them. And if you own a house, it’s worth considering applying for a home equity line of credit, which could provide you with access to cash in case you lose your job or face unexpected expenses, she says.
“All of those things are essential lessons that we should have learned to prepare us for the unknowns of the future,” Orman says.
When it comes to financing investment properties, lenders will want to look at various information about you and the property in order to see if they can justify making the loan. And a look at the borrower’s income and employment history is often a big part of it.
This might not sound like a big deal if you have a steady paycheck from a job you’ve worked at for several years, but not everyone falls into this category. What if you own your own business or are a freelancer? Or what if you work for an employer, but your income is largely based on commissions or tips? In this article, we’ll discuss what implications this has when trying to obtain conventional financing for investment properties, as well as the main alternative to consider.
Conventional investment property financing
If you’re self-employed, own your own business, or work a commission-based job, your income is probably less consistent than the average 9-to-5 employee.
If you’re buying an investment property by yourself (as opposed to with partners), obtaining a conventional mortgage — one that meets Fannie Mae (OTCMKTS: FNMA) or Freddie Mac‘s (OTCMKTS: FMCC) lending standards — can be the preferable way to go. These loans tend to have the best interest rates and repayment terms, as compared to asset-based investment property loans (more on that in a bit).
The problem with conventional financing is that it’s income-based, meaning your income must be sufficient (and consistent) enough to justify not only the mortgage payments but your other debts as well. This can be a major obstacle for investors, as your income must be enough to justify the payments on your primary home as well as the investment property.
Specific requirements depend on your situation, but just to name one example from the latest Fannie Mae Eligibility Matrix, an investor purchasing a two-unit (duplex) property would need a 25% down payment, as well as a debt-to-income ratio of less than 45% if they have a credit score of 680 or higher.
Now, when it comes to inconsistent sources of income like self-employment or commission-based sales, lenders have different methods of determining your income for qualification purposes. For example, my last lender looked at a two-year average of my self-employment income. As long as you have an established track record of income that could justify the loan, it’s entirely possible to get conventional financing for an investment property.
Asset-based lenders: a great alternative
If a conventional investment property mortgage is too difficult, or impossible, to obtain because of the nature of your income, there could be another option: asset-based investment property loans. In recent years, the number of reputable asset-based lenders has soared. Just to name a few, Lima One Capital, Lending One, and Visio Lending make investment property loans that aren’t based on your income.
As the name implies, asset-based real estate loans are primarily based on the underlying asset, meaning the property you’re planning to buy. Typically, the borrower will still need to submit to a personal credit check, and you’ll need a substantial down payment (25% is usually expected), but otherwise the loan will be based on the property itself, not your personal income, employment, or assets.
The important number most asset-based lenders focus on is the debt service coverage ratio, or DSCR. This is the ratio of the property’s expected rental income to the expected mortgage payments (including taxes and insurance). While requirements can vary from lender to lender and may depend on your credit score, most want to see a DSCR of at least 120%, and higher is better.
To be sure, asset-based investment property loans tend to have somewhat higher interest rates than conventional loans and may have slightly less favorable repayment terms (like a prepayment penalty), but these can still be valuable tools for real estate investors.
The Millionacres bottom line
It can be more difficult to finance an investment property — or any type of real estate purchase — if you have any type of income other than a steady paycheck from an employer. Trust me, as a self-employed freelancer myself, I know this firsthand.
However, don’t get discouraged. While documentation requirements might be more intense, it’s certainly possible to get a conventional investment property mortgage with a nonconventional income. And even if traditional mortgage lenders say no, there are some excellent asset-based lenders who would love to fund solid investment property opportunities.
Unfair Advantages: How Real Estate Became a Billionaire Factory
You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.
But in 2020 the barriers have come crashing down – and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.
To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate – and have made it available for FREE today. Simply click here to learn more and access your complimentary copy.
The Motley Fool has a disclosure policy. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from Millionacres is separate from The Motley Fool editorial content and is created by a different analyst team.
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