Making Money

4 Tips To Generate Income During An Economic Downturn

May 12, 2021 By Susan Paige Leave a Comment

When your local economy is going through a recession, you may find it difficult to imagine how it’s possible to earn money during such a difficult period. But the truth is, it’s highly doable. An economic downturn may affect the job market, but you can also find new opportunities to address unprecedented needs. [Read more…] about 4 Tips To Generate Income During An Economic Downturn

Control and Tax Benefits of ETFs

May 8, 2021 By Max Erkiletian Leave a Comment

More investors are seeking control and tax benefits of ETFs. And the rising tide of money pouring into ETFs may soon become a tsunami. As a result, you may want to catch the wave.

ETFs have been a popular way to invest since their inception in the early 1990s. Today, there are over 7,600 ETFs bulging with trillions of investment dollars.

What Is an ETF

An ETF (Exchange-Traded Fund) is a security that tracks an index, commodity, bonds, a sector, or other assets. It owns the underlying assets and divides ownership of those assets into shares which investors buy.

A major difference between ETFs and mutual funds is that ETFs are traded on an exchange such as stocks. As a result, an ETF’s price may fluctuate throughout the trading day. Mutual funds, on the other hand, are traded once daily after markets are closed.

Low operating costs, resulting in no or low fees, have made ETFs popular. In addition, they offer diversification, because many ETFs invest in an index such as the S&P 500. However, some ETFs focus on a single industry, which limits diversification.

Flow Goes to ETFs

According to Morningstar, an investment research and management firm, in eight of the last 10 years, more investor money has gone into ETFs than mutual funds. In fact, over $900 billion has left mutual funds and $1.8 billion has gone into ETFs in that time.

ETFs function much like mutual funds in that they have investment portfolios. On the other hand, ETFs are more liquid and more easily traded than mutual funds.

The Tax Appeal

The popularity of ETFs is expected to mushroom in the years to come. That is due, at least in part, to wealthy investors seeking the control and tax benefits of ETFs.

President Joe Biden has proposed raising the top income tax rate for people making over $400,000 a year from 37 percent to 39.6 percent. In addition, he wants to tax long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6 percent on income above $1 million.

The prospect of higher taxes has sent wealth investors looking for ways to earn high returns with low or no tax consequences. They have found ETFs.

Tax Benefits of ETFs

The way ETF shares are sold has the interest of wealthy investors. Here’s how it works.

If you own shares in a mutual fund and want out, the fund manager has to sell your shares on the open market. As a result, you may have to pay taxes on any profits.

With an ETF, you sell your shares directly to another investor. That way, neither you nor the fund has made a taxable transaction.

No Commissions

Well, you say, aren’t we happy for Richie Rich and his friends. But I’m not in the top tax bracket. Why would I be interested in ETFs?

Good question. You might like ETFs because most trade commission-free, have lower operating costs, and are more flexible. That’s the control part of the ‘control and tax benefits of ETFs’.

Mutual Funds Converting to ETFs

ETFs are becoming so popular, you may already be investing in one without taking any action. That’s because some mutual funds have converted to ETFs.

History was made in late March when two Guinness Atkinson Asset Management mutual funds were converted to ETFs. In addition, Dimensional Fund Advisors has announced six tax-managed funds will convert to ETFs. That will begin June 11, when four funds will make the transformation. More conversions are expected, according to Ben Johnson, Morningstar’s director of global ETF research.

“Many of the advantages of converting a mutual fund to an ETF are synonymous with the advantages of the ETF wrapper. It’s all about where these funds will ultimately land, the packaging, the form that they’ll ultimately take. And I would argue that chief amongst those is the relative tax efficiency of the ETF packaging versus a mutual fund packaging”, said Johnson in a recent Morningstar podcast. “They avoid unlocking capital gains distributions, which have become very frequent, and in some cases, very large in magnitude within the realm of open-ended mutual funds in recent years. That’s a big benefit that would arise from a mutual fund to ETF conversion.”

Tax Impact of Mutual Fund Conversion

Cashing out your mutual fund can trigger a tax bill. However, that is not the case in a mutual fund conversion says, Johnson.

“The conversation of a mutual fund to an ETF will not be a taxable event for mutual fund shareholders”, said Johnson. “Their basis will remain intact. What, ultimately, investors will enjoy is effectively a form of tax deferral that they wouldn’t otherwise benefit from if that fund were to remain a mutual fund, seen continued in some cases in persistent outflows, which in recent years have resulted in these large and regular capital gains distributions.”

Everybody in the Pool?

You might think all mutual funds would convert to ETFs considering the lower costs and tax benefits. However, some mutual funds just can’t do that.

Many mutual funds have several share classes distributed among multiple platforms. Those elements make conversion difficult. Still, other funds are in pension and other retirement programs. They can not convert to ETFs.

Bottom Line

So, are the heydays of mutual funds over? The heydays, yes, but they will not disappear. Retirement accounts such as 401(k)s and other retirement accounts will probably continue using mutual funds. After all, they are already tax-advantaged. In addition, recordkeeping is easier for managers.

However, for individual investors, the future points toward ETFs.

Read More

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

Are Alt Coins the New “Game Stop” Investment?

May 5, 2021 By Allen Francis Leave a Comment

Comedian and talk show host Bill Maher recently criticized cryptocurrency and cryptocurrency hype on a recent episode of his show. His scathing commentary eviscerated people who love cryptocurrencies but don’t know what they are, how to create them, or how to make money with them.

And that is the problem with the recent cryptocurrency boom – too many people are in it for the hype, not the investment potential. The problem is that if you didn’t invest in Bitcoin, the original cryptocurrency, long ago, you will pay a lot to invest in them now. The good news is that if you are susceptible to hype investing, especially in the wake of the GameStop retail investing scandal, then you can probably start investing in alt coins. Are alt coins the new Game Stop investment? All signs point to yes – although, that may not necessarily be a good thing.

The best way to explain investing in alt coins, and why it might not be a great thing, is to first explain cryptocurrency investment in general and the Game Stop investment scandal.

Don’t worry, I will use basic, easily comprehensible terms and keep it brief. It is personal finance malpractice, and financially irresponsible, to invest in things you don’t understand based on hype.

Cryptocurrency 101

The best way to explain alt coins, which are the same things as cryptocurrencies, is to explain Bitcoin, the first cryptocurrency.

In the aftermath of the 2008 global financial crisis, economic theorists and computer programmers began developing decentralized digital currencies that could be controlled and created by everyday people.

Bitcoin was launched in January 2009. It was initially given away free or for a few bucks each – if you had invested in cryptocurrencies back then, you would have made a fortune now selling it. One Bitcoin has the trading value of $55,000.

In December 2017, the dawn of the cryptocurrency craze, one Bitcoin was worth about $$20,000.

A cryptocurrency is a digital currency that is created on a digital ledger called a blockchain. The simplest way (relatively speaking) to create a cryptocurrency is to use computers with advanced processing power called “mining rigs.”

Mining rigs solve advanced mathematical problems on a blockchain – when successful, Bitcoins are rewarded, and the transaction is logged on the blockchain.

Cryptocurrencies are not regulated or controlled by any government or central bank – that is why they are referred to as “decentralized.”

Most cryptocurrencies have a limit to how many coins can be created to help stabilize value.

However, while Bitcoin was conceptualized as a decentralized currency, it is not practical for use as money due to its slow processing times. Bitcoin is extremely volatile in financial markets. And more people use Bitcoin as an investment vehicle, wisely and otherwise, than as a currency.

If you ask anyone to name a cryptocurrency, they can probably only name Bitcoin, even though that are thousands of cryptocurrencies. (Almost 10,000 at last count)

And that brings us to alt coins.

Alt Coins

The prhase “alt coins” is just a cultural phrase that applies to any other cryptocurrency besides Bitcoin. The term stands for “alternative coin.” And “coin” is a shorthand phrase for cryptocurrency.

Ethereum is a new alt coin, created in 2015. It employs smart contracts, or digital versions of legal contracts, on the blockchain to help legally enforce transactions online. You can also use Ethereum to create your own coin for fundraising purposes.

Since almost all cryptocurrencies derive their value from market action, supply and demand, and investments, Tether was created to peg each coin to the equivalent of $1. However, it was recently discovered that Tether coins are pegged to the equivalent of IOUs offered by loan companies.

XRP is an alt coin that is optimum for use in paying for utility bills, peer-to-peer payments and various transactions. XRP wants to revolutionize how money is sent across borders.

Dogecoin was first conceptualized as a joke cryptocurrency that was not to be taken seriously. Elon Musk praised the coin and its value skyrocketed over 14,000% this year, even though it was only created in 2013.

Dogecoin, and various other alt coins, have been called the new “GameStop,” investment opportunity. The GameStop scandal of a few months ago was caused by online users on Reddit and Facebook encouraging each other to buy stocks on a grassroots level to upend the system and create losses for experienced, rich investors used to getting their way.

This process is called “mania investing,” “meme investing,” and retail investing.”

Are Alt Coins the New “Game Stop” Investment?

So, are alt coins the new GameStop investing method? Yes.

Unfortunately, that is not good. GameStop’s stock plunged after the retail investing calmed down. That is because people invested based on hype, a meme they saw online, or for the sake of “sticking it to the man,” instead of projecting an ROI based on a realistic investment plan.

Some salt coins, like Dogecoin, don’t have a cap on coin creation, so while its value is skyrocketing now, it is bound to crash. Many people have lost fortunes investing in Bitcoin without understanding what it is.

Cryptocurrencies are not regulated. They are not stable vehicles to store financial value. Cryptocurrencies are not minted or controlled by governments.

And cryptocurrencies are created via algorithms and mining rigs – they inherently have no value without zealot cryptocurrency believers or willing investors.

Don’t invest in alt coins unless you have an understanding of their function and get advice from a financial advisor and cryptocurrency expert.

What Is the Minimum Wage In Boise, Idaho

Hungry? Check Out 3 of the Cheapest Meal Delivery Services

Best Places to Put Savings From A Side Hustle

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

Copper Looks Like an Investment With a Bright Future

May 2, 2021 By Max Erkiletian Leave a Comment

Copper futures hit highs not seen in a decade last month and are up 90 percent over last year. The good news for small investors is that there are cheap, though risky, ways to jump on the copper bandwagon.

The government; business pledges to reduce carbon emissions; a copper buying spree by China; and an infrastructure plan for the United States all bode well for the prospect of a copper boom.

Copper is used in a vast array of consumer and industrial applications. It can be found in everything from electrical wiring to batteries, pipes, motors, household appliances, heating and cooling systems, jewelry, and many more.

American Jobs Plan

President Joe Biden proposed a plan to repair and improve the nation’s infrastructure at the end of March. He pushed that plan again in an address to a joint session of Congress this week.

Under Biden’s American Jobs Plan, about $2 trillion would be spent to improve the nation’s infrastructure and boost green energy. Much of those improvements would involve the use of copper.

For example, one part of the plan includes $105 billion for the Department of Transportation to make repairs on buses, rail cars, and stations. In addition, the plan seeks $174 billion to help American manufactures make electric cars, batteries, and charging stations. Other parts of the plan would require even more copper.

Electric Cars Rev Up Copper Demand

Some automobile manufacturers have committed to producing all-electric vehicles within five years. About One hundred electric cars are set to be on the market by the end of 2024. With the increase in electric vehicles, demand for copper is expected to increase rapidly.

Electric cars use copper in batteries. In addition, copper is used in motors, wiring, radiators, connectors, brakes, and bearings.

China Is a Buyer

About half of the copper mined in the world is bought by China. Subsequently, Chinese companies use copper to manufacture things such as refrigerators, microwave ovens, and washing machines.

Like most industries, the pandemic had a negative impact on copper prices, and fewer goods were produced. However, China is again grabbing as much copper as it can. As a result, prospects for demand are increasing and so are copper prices.

Maike Group, a Chinese metal trading firm, recently predicted copper prices will climb to an all-time high within a year. China’s commitment to clean energy will be a major factor in that price increase, according to Maike Group.

Once in a 100-year Event?

“The price of copper will hit a record high in the coming year,” He Jinbi, Maike Group founder said in a written response to Reuters. “The market will gradually accept it, because with the recovery of the global consumption market there will also be a shortage of copper in the European and American markets.”

Part of the reason for the optimism on copper prices is the pandemic-induced reduction in mining and copper reserves. As a result, copper is in short supply. However, an expected acceleration in demand is also a factor.

“Copper is going through a once-in-a-hundred-year pivot with this global transition to electrification,” Gianni Kovacevic of CopperBank Resources told Investing News Network. “The Green New Deal and on top of that the restimulation of the global economy, which is now well in excess of US $10 trillion dollars — they all help copper.”

A Lot of Money To Be Made – Or Lost

So, it looks like the demand for copper is going to increase dramatically. That’s great, but how do you make money from that?

Firstly, understand that you are really investing in copper production, not copper. Copper does not have the intrinsic value of diamonds or gold. You are only making money in copper if your company is producing it for sale.

Secondly, you make money when there is a short supply and high demand for your product. That is the case with copper.

Mining Stocks

The simplest way to invest is to buy stock in a copper company. That usually means a copper mining company. Mining stocks are usually cheap, trading in the penny range. However, they are often volatile.

Some investors approach mining stock investments the same way they might approach a roulette table. The catchphrase is: “never bet what you can’t afford to lose”.

Many Influences

If you decide to wager on a mining company, you should do exhaustive research taking into account the company’s financial stability, current production, and location of mines. Mining in some parts of the world is not welcome. One mining official labeled violent protests at one Peruvian mine “anti-mining terrorism”.

Mining stocks are subject to forces of nature and market forces. In addition, there are external forces. As an example, the governments in many countries want a larger share of copper profits. Last week Chili and Zambia proposed additional fees on copper companies. In addition, the frontrunner in Peru’s presidential election, Yonhy Lescano, says he wants more mining revenues to stay in the country.

Regardless of external forces, most analysts see a bright future for copper. RBC Capital Markets recently raised its price estimate of copper from $3.25 to $3.50 an ounce along with other analysts.

A Safer Bet

A few copper EFTs offer a more diversified investment. That diversification spreads the investment risk.

It is always exciting to catch an investing wave. However, a balanced and diversified portfolio provides the greatest stability.

Read More:

What Are the Best Paying Jobs in Alabama?

April 16, 2021 By Kathryn Vercillo Leave a Comment

Do you live in Alabama? Are you thinking about moving there? With a low cost of living, it can provide a lot of benefits to people interested in saving money. But of course you’ll save more if you make more. So you might want to take a look at the best paying jobs in Alabama.

Doctors Have the Best Paying Jobs in Alabama

The best paying jobs vary from state to state. In some states, tech jobs pay the highest. However, the best paying jobs in Alabama belong to medical professionals. USA Wage reports that in 2020 the highest paying job in the state was physicians and ophthalmologists, except for pediatric physicians. However, general pediatricians had a higher starting salary and were second on the list of best paying jobs in Alabama. And dentists came in at number three.

How Much Do Medical Professionals Earn in Alabama?

Those non-pediatric physicians that are ranked at #1 earned an average 2020 salary of $195,750. However, their starting salary is just under $60,000. Therefore, it’s a career with a lot of growth potential but you don’t start off with the highest pay in the state. On the other hand, general pediatricians earn slightly less on average ($169,770) but have a starting salary of more than $84,000.

General dentists are comparable to general pediatricians. They have a slightly lower average salary at just under $169,000. However, their entry level salary is about $10,000 higher at $94,290.

Other Best-Paying Medical Jobs in Alabama

The USA Wage report lists the top 100 best paying jobs in Alabama. As you see, the first three are medical professionals. The top ten also includes three other medical professions: nurse anesthetists, psychiatrists, and pharmacists.

Here are their approximate average 2020 salaries and entry level wages:

Nurse anesthetists: $160,000 / $93,000
Psychiatrists: $160,000 / $90,000
Pharmacists: $127,000 / $91,000

As you can see, all three of these jobs pay $90,000 or more to start. That’s enough for a good life in Alabama. Of course, then over time you can earn more.

Best Paying Non-Medical Jobs in Alabama

What if you don’t want to go into a medical profession? Although six of the top ten best paying jobs in Alabama are in that field, you do have other choices. Managers, engineers, and CEOs are all top earners in the state as well.

Chief executives have the fourth highest paying job in the state. They earn over $160,000 annually on average. However, you don’t start off with high pay. This job is the lowest starting rate on the top ten list at under $50,000.

In contrast, architectural and engineering managers have the highest entry starting rate in the top ten. They earn over $94,000 to start. Their average annual salary is about $145,000.

Computer and information systems managers make the top ten best paying jobs in Alabama. They start off earning about $76,000. They climb to an annual salary of over $123,000.

Number ten on the Top 100 list is all other engineers. They start at about $67,000 and get to an average of about $123,000.

Best Paying Entry Level Salaries in Alabama

What if you don’t want to wait to make as much as you possibly can? If that’s the case, then you’ll want to find the Alabama jobs that have the highest entry level starting pay. The top ten jobs based on starting salary are:

Nuclear engineers: $103,000
Architectural and engineering managers (as shared above)
General dentists (as shared above)
Nurse anesthetists (as shared above)
Pharmacists (as shared above)
Airline pilots, copilots, and engineers: $91,000
General pediatricians (as shared above)
Computer and information research scientists: $77,000
Computer and information systems managers (as shared above)
Air trafic controllers: $74,000

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

Top 5 Paying Jobs In Real Estate Investment Trusts

April 9, 2021 By Susan Paige Leave a Comment

Nowadays, people are more reluctant than ever to put all their savings into investment. There’s no denying that everybody’s main goal when investing is to make money fast, but factors such as the lack of accurate or approachable information and the fear of losing all their money may hold people back from stepping up and initiating their investment efforts. [Read more…] about Top 5 Paying Jobs In Real Estate Investment Trusts