The Best Personal Finance Summaries – 13 January 2019
Last week we talked about passive investing and how you can do better than most unit trust fund managers without putting any time in.
The interest was overwhelming so we spent this past week creating this page for you to sign up and qualify for RM10 free from us.
So if starting to invest is one of your goals for this year, check it off by opening and funding your Stashaway account (and yes, it's completely free).
[VIDEO] Book Summary: The Automatic Millionaire
Did you know that it's possible to create a system that will automatically make you a millionaire over time? We have summarised the most important parts of this great book so that you don't have to read it all.
Reply to this email to let us know what you think or what you would like us to summarise in the future!
Money in Daily Life
So you want a work from home job. I will show you the 10 most common and best work from home jobs, plus how to get double the salary while working remotely.
So, here are the 10 best work from home jobs, summarised in a table:
|Virtual Assistant||This demanding job is suitable for those who are highly organised, can prioritise tasks and keep confidential information. You could earn $20K to $75K a year.|
|Writer/ Editor||If you can churn out quality writing work with urgent deadlines, you could consider to take up this job. One could earn $40K to over 6 figures annually.|
|Teacher||Remote teachers are high in demand as well. The pay varies – but one could earn on par with an average teacher would make.|
|Tech Support||You will be doing troubleshooting or guiding people through the installation of software. Averagely, the salary is $34K per annum.|
|Customer Service||Nowadays, people work remotely from home as a customer service rep. Expect to make $30K per year.|
|Web Developer||This job is perfect for those who know about tools required to design a website. You could earn up to $63K a year.|
|Designer||If you have an artistic sense and know how to use computer designing tools, you could expect up to $40K per year.|
|Sales Rep||You can also be a sales rep if you know your way around sales and marketing. One could earn $55K to over 6 figures annually.|
|Marketing Specialist||Knowing SEO, PPC, affiliate or email marketing can let you make around $50K to $60K a year.|
|Database Manager||Thanks to the rise of cloud computing, you can now work as a database manager remotely. You could expect an average pay of $70K per annum.|
We interviewed several financial advisors to find out which steps they think nearly everyone could benefit from in 2020 and beyond, and here’s what they said.
1. Increase your contributions to tax-advantaged retirement accounts
In 2020, the Internal Revenue Service (IRS) increased the maximum contribution for 401(k) account to $19500. Thus, it is a great time to re-evaluate your retirement allocation.
2. Take stock of changes in your life that took place over the last year
Set some personal time aside to review the significant life changes that happened in the past year. Update your beneficiary designations to reflect your latest wishes.
3. Learn to live within your means
Invest in the lifestyle you want and spend what is left over. Try not to overspend at all.
4. Pay off credit card debt
The credit card has a high-interest rate (>17%)! Over some time, the interest can accumulate and snowball into a big lump sum. Thus, thrive to pay off your credit card debt！
5. Access your insurance needs
Review your life insurance needs and make sure you are adequately protected. You should always find comparable coverage for a better price.
6. Start using a budget
Try budgeting your income. Review your expenditure and eliminate those which are unnecessary. Also, budgeting can help you to move closer to your financial goals.
7. Improve your credit score
Decrease your total credit utilisation. Aim for a ratio below 30% to ensure you are capable of paying off your debt!
Want To Have Your Money Accelerate Your Goals?
Grow Your Wealth
Learn everything you need to know with our beginners guide to online investing.’
What Kinds of Returns to Shoot for?
There’s a saying in the investing rule: “average returns are hardly average.” Take stocks, for example, which have an average of 8% per year.
|Investments||Annual Return||Poor Return||Strong Return||Examples|
|Low risk||1 to 2%||0%||3%||Bonds and savings accounts.|
|Average risk||3 to 8%||0% or worse||12% or better||Stocks, funds and ETFs.|
|High risk||-5 to 10%||-15% or worse||20% or better||Real estate, penny stocks, venture capital and cryptocurrency.|
Options for Investing Online
|Online Brokerages||They can give you plenty of research data and charge a lesser fee.|
|Mutual Funds||Fund managers will pick and choose investments but charge a higher fee.|
|Robo-advisors||They will gauge your risk tolerance and preferences. Then, they will invest for you at a low annual fee.|
|Non-Traditional||Online investing can include the usage of P2P technology and other new but risky ways.|
Things to Invest Into
|Stocks||A piece of ownership in a company.|
|Mutual Funds||A collection of several to hundreds of related individual investments.|
|Index Funds||Passively-managed funds.|
|Target-Date Funds||A target-date fund based on when you expect to retire.|
|ETFs||Exchange-traded funds work like normal funds, but they trade easily like stocks.|
|Bonds||A debt security for a business or municipality.|
|Treasuries||A type of bond backed by the federal government.|
|Savings Accounts||Pay a minimal amount of interest, but risk no principal.|
Opening an Investment Account
Here are five of the most popular sites for opening an online investment account:
- TD Ameritrade
Developing Your Plan and Strategy
Your ultimate plan should depend on your goals, your risk tolerance, the amount you have to invest, and your period for investing. Here are a few tips to help you create a strategy.
- Invest in What You Understand.
- Pay Yourself Regularly.
- Diversify Your Investments.
- Don’t Panic.
- Don’t Invest What You Cannot Afford to Lose
- Don’t Put Off Starting to Invest
Knowing how to invest in stocks is an important step you can take to achieve financial freedom.
What is an Index Fund and How Does It Work?
An index is simply a basket of securities within an asset. For example, the S&P 500 is a collection of the 500 most prominent companies in the US. An index fund aims to mimic an index. The fund managers invest in securities in the same proportion as they are found in the market. Thus, it is passive. Also, Index funds are low-cost because they don’t charge you the fund manager’s fees and admin costs (as in mutual funds).
The Best Index Funds to Choose From
1. US Stocks
- Vanguard 500 Index Fund Admiral Shares(VFIAX): the pioneer of index funds (Expense ratio: 0.04% and Minimum Investment: $3,000)
- Schwab’s S&P 500 Index Fund (SWPPX) or Fidelity 500 Index Fund (FXAIX): (No minimum investment requirements)
- Vanguard Total Stock Market Index (VTSMX): (Expense ratio: 0.14% and Minimum Investment: $3,000)
2. US Bonds
- Vanguard Total Bond Market ETF (BND): low risk-low return (Expense ratio: 0.035% and Minimum Investment: $3,000)
3. Real Estate Investment Trusts (REITs)
- Vanguard REIT ETF (VNQ): (Expense ratio: 0.12% and Minimum Investment: $3,000)
4. International Stocks and Bonds
- Schwab International Index Fund (SWISX): (Expense ratio: 0.06% and no minimum investment)
- Vanguard Total International Bond Index Fund Admiral Shares (VTABX): (Expense ratio: 0.09% and Minimum Investment: $3,000)
Best Options for Buying Index Funds
Through your 401(k) and Roth IRA accounts.
Considerations and Tips Before Investing Into an Index Fund
As a thumb rule, do not invest in index funds that cost more than 0.20%.
If you’re investing into a smaller broker, check their returns and make sure they’re matching their benchmark as expected.
3. Checking investments every day
Index funds are the safest and best way to invest in stocks. Take advantage of it and don’t get worried with day to day drops.
Set up an automatic monthly investment into index funds.
A way for females to get free insurance
We were talking to our super humble financial advisor friend one day and she started talking about some insurance product for females that provides coverage for all these female related illnesses. But more importantly, the contract also states that all the premiums will be returned at the end of the contract.
Seriously something for all females to consider!