Home Ownership Pros and Cons

home ownership advantagesOwning a house is very different from renting. Understanding some of the key benefits and drawbacks of buying a house can help you decide if this is the right approach for your family. From the amount of money needed upfront to annual tax savings and even maintenance costs, here are some of the home ownership advantages and disadvantages.

Home Ownership Advantages

Build Wealth: For most of us, our home is our largest investment and one that increases in value over time. When you purchase a home, you naturally build equity as you make improvements and pay off your mortgage.

Tax Savings: The property tax and interest you pay on a home you own is tax deductible. This can add up to significant savings for you each year at tax time. If you make green improvements to a home you own, you’ll not only reduce your carbon footprint, you’ll get additional deductions as well.

More Control: From the ability to paint your rooms whatever colors you like, have as many pets as you want and even decide if you want to upgrade your exterior, when you own the home, you have creative control. You also don’t have to worry about a landlord selling your home before you are ready to move.

Privacy: Perhaps you don’t like the idea of a nosy landlord. You may simply want your own space that you don’t have to answer to anyone else about (except the bank). Either way, owning a home is the right way to go.

Advantages of Renting

No Maintenance Costs: If the air conditioning breaks, the fridge stops working or there is a plumbing fail, you’re not responsible for the repair work.

Lower Upfront Cost: Depending on the mortgage product you are interested in, renting can be less expensive up front than buying. Some loans, including VA loans are equal or even less than the cost of renting.

Flexibility: That downtown location may have seemed like a great idea when you rented the house. But now, a year later, you’re ready to move on. As a renter, once your lease ends, you’re free to move. A house will have to be sold or rented out before you can move on.

Affordability: In some markets, you can get more house or space for your money when renting. Buying could result in a higher monthly payment.

Bundled Services: Some rental locations provide utilities and other services, from trash pick up to lawn care. These additional services can save you time and money.

Home ownership advantages at the right time will ensure that you can build wealth and thrive in a home you own. For some people, renting may be the best option for now. It’s a good idea to regularly review your personal needs and goals. This process can help you decide which model is best for you and help you make the best possible decision for yourself and your family.

Types of Mortgages – VA, ARM, Conventional

mortgage typesOne of the best long-term investments that you can ever make is buying a home. Those who own a home, and live in it for an extended length of time, will likely build more personal equity than those who choose to rent. When purchasing a home, it will likely require taking out a loan. Prior to purchasing a home, and taking out a mortgage, there are a variety of mortgage types to consider.

Mortgage Types To Consider

Fixed Versus Adjustable

The first factor that needs to be considered when applying for a loan is to decide whether you want a fixed or adjustable rate mortgage. Mortgages are intended to be long-term loans, with repayment terms up to 30 years.

In most cases, people choose to lock in their interest rate for the entire term of the loan through a fixed-rate mortgage. However, these mortgages require banks to take on some form of interest rate risk for an extended length of time. Because of this, they need to charge higher interest rates to compensate for the risk.

On the other hand, adjustable rate mortgages have a fixed-rate period for a much shorter length of time. This is commonly three to seven years.

After the fixed-rate period is over, the rate will adjust to market levels. With these mortgages, a borrower will start with a much lower rate. But takes on the risk that it will increase in the future. Almost all types of mortgages can come with either fixed rate or adjustable rates.

Conventional Mortgage

One of the most common mortgage types are conventional mortgages. A conventional mortgage is one that is not, in any way, guaranteed or insured by the federal government.

Because of this, banks are taking on more risk if the loan goes into default. To compensate for the risk, banks often require larger down payments and have tighter credit and income requirements for their borrowers. Conventional mortgages can be either fixed or adjustable and can come with very low interest rates.

FHA Mortgage

For those who are entering the housing market, one of the best options for a loan is an FHA mortgage. An FHA mortgage is a loan that is fully guaranteed by the federal government.

These loans are designed to help people purchase a home if they do not meet conventional loan qualifications. FHA mortgages typically require a down payment of three percent.

They also have looser credit and income requirements than conventional mortgages. However, they can be more expensive and require the borrower to pay private mortgage insurance.

VA Mortgage

For veterans of the U.S. Armed Forces, one of the best options for a home loan is to get a mortgage through the VA. The Veterans Association provides mortgages that are fully guaranteed by the federal government.

These mortgages are designed for members of the VA, and their surviving spouses, to purchase a home with less money down. VA mortgages tend to have higher rates than conventional mortgages, but they often require no money down at closing.

Financial Advisors Predictions for 2017

financial advisors predictionsFinancial advisors have recently begun compiling and publishing their list of top predictions for 2017. If you are a member of this industry, or someone who benefits from receiving and following these financial advisors predictions, you’ll want to pay close attention.

Financial Advisors Predictions for the Year 2017

These are the forecasts for 2017 that much of the industry is prepared to endorse and closely follow. You should be aware of these predictions. You should also be prepared to act on the practical advice that they contain.

It May be Wise to Consider Pausing Your 401(k) Contributions

One of the areas in which a financial advisor may surprise you is when it comes to your latest round of 401(k) contributions. More than a few advisors are recommending that high-income clients, who have already given the maximum amount of contributions, should consider suspending them altogether throughout the first half of 2017.

While unorthodox at first glance, this may well prove to be a wise move. This is due to the expectation of major tax cuts which are thought to be forthcoming. Channeling your 401(k) pretax contributions into a taxable brokerage account or a Roth 401(k) might prove to be the wiser investment strategy.

You Will Need to Comply with the Department of Labor’s New Fiduciary Rule

One of the biggest developments for the year 2017 concerns the passage of the Department of Labor’s new fiduciary rule. This rule has been a long time in coming.

It is intended to help make sure that millions of American citizens who are saving for their retirement will be able to have access to investment advice that is truly in their best interest. The rule is especially harsh regarding any perceived corruption or “insider knowledge” on the part of financial advisors. As a result, members of this industry will be on their guard when it comes to complying fully with the Department’s newest ruling.

Knowing the Latest Predictions is a Matter of Being Prepared to Profit

The more you know about the latest predictions being made by financial advisors, the better position you are in to profit from them. These predictions concern you directly, so it’s an excellent idea to find research them carefully.

They will have a direct effect on the way that you invest your money in the coming year. This means you may have to adjust and rethink the way you handle your investments, as well as where and when you decide to do so.

The advice of your financial advisor will be key to staying fiscally healthy in 2017. Be sure to give them your full attention.

Saving for the Down Payment on a Home

home buyingPurchasing dream home can be a reality in life, but the down payment may be a formidable obstacle. In today’s real-estate market, many lenders require a 20-percent down payment for home buying.

A home that’s worth $200,000 would require a $40,000 down payment. Don’t let this number scare you off, however, because you can save up the funds with some careful planning.

Home Buying: Tips To Save Up For Down Payment

Cut the Nonessential Elements

Sit down with your significant other and carefully analyze your spending habits. Cutting a few dollars from each day in the span of a month can create ample funds in no time.

Buying coffee, getting a pedicure and other nonessential elements should be removed from the budget. Purchase generic items at the grocery store instead of the more expensive brands. When you cut down on small items, your savings will increase. Continue to focus on your core objective so that you’re always motivated to stay in budget.

Bank Surprise Income

When you realize that there’s extra money in your bank account, the first reaction is to spend it. Try to think of that money as a savings booster and move it immediately into a savings account.

Allow it to gain interest so that your money is working for you. Income-tax refunds, promotion bonuses and other funds should be treated in this same manner. Your down payment will accumulate a lot quicker when you curb any extra spending of that surprise income.

Work Toward a Promotion

Many people simply need some encouragement to strive for that promotion at work. Saving for a down payment for home buying is definite motivation. Apply for the position, and make yourself an example.

Work hard with precision as your goal. When supervisors see your loyalty and perseverance in a current position, they’ll equate that passion to a possible promotion.

If you earn the promotion, ask about pay increases and bonuses. All these funds should be immediately placed in a savings account to further your down-payment goal.

Be Logical About Withdrawals

Don’t be tempted by funds in your retirement account to pay the down payment. Removing money from any retirement account only compromises your future comfort and costs dearly in penalty fees.

Consider this money to be off limits unless it really is for retirement needs. This may mean that you have to drain most of your personal savings, but these accounts can be replenished with no charges to the funds.

Some families may want to turn to loved ones and borrow money. Although this situation can be beneficial, be aware that these funds need to be paid back.

If the money isn’t returned, your loved ones will technically own your home. Ideally, use your own savings to secure a home. The value will only grow in time.


Gold – Tips on Investing in Physical Gold

gold investmentDespite ever-changing global economic conditions, gold has retained its value throughout the decades. It comes as of no surprise why people are considering gold investment. That provides either capital appreciation, wealth protection, or both.

And while there have been different forms of gold investment. From futures to mutual funds, physical gold remains the top choice. Here are five tips on a profitable  gold investment for both the novice and savvy buyer alike.

Profitable Gold Investment Tips

Have a Plan of Attack

Any investing venture must be guided by a strategy or business plan. This will maximize profitability and minimize capital risk both from short-term and long-term obstacles. Such as market fluctuations and account overhead fees.

As a rule of thumb, treat gold as a contrarian investment. Meaning you can make a hefty ROI only if you purchase the precious metal when valuations are at the bottom. Hold onto it until an eventual run-up in price. The risk, however, is that your capital can get tied to the asset for years. But the returns can be phenomenal if timed correctly.

Buy from the Right Source

Before you focus on finding and comparing prices, look for a precious metals dealer who is licensed to transact precious metals. Even if prices are competitively low, consider holding off any payments until you can verify their credentials as a precious metals dealer.

A legitimate dealer will be able to help you understand the different policies concerning the sale of gold, such as tax filing.

Diversify Your Investment Portfolio

Buy physical gold in different forms including bars, coins, and jewelries. For coins, some of the ubiquitous choices in the market are American Buffalo and American Eagle.

When you diversify your gold portfolio, it minimizes risk in that supply and demand can offset the losses in a particular form of gold investment.

Pick Out a Safety Deposit Box

It makes sense to have a secure container for your gold bullion. You don’t want something as valuable as gold to be lying around the house unchecked. It must be stored somewhere that is out of sight.

In addition to the risk of getting stolen, gold left unattended can get damaged thereby potentially reducing its value. Pick out a quality safety deposit box or just have it stored at your local bank to save you the time and hassle of shopping for the right box.

Choose a Payment Method

Aside from upfront cash, there are a few other payment methods available for the would-be gold investor. Credit and debit cards are the most commonly accepted payment method, irrespective of the dealer you intend to purchase from.

Paper checks and bank account wires are also available options and is specifically ideal for buyers who do not have the immediate funds to pay upfront.

Real Estate Investments – Rental Homes

real estate investmentsReal estate investments for retirement or as “passive income” has long been touted as the way to create wealth and increase net worth. While it’s true that real estate certainly can do all of those things. It’s important to take a look at the realities and requirements of this type of investment.

Financial Requirements of Real Estate

One of the main points to understand with all real estate is the amount of “leverage” that it offers you. Leverage is when you purchase an asset by putting down a percentage of the purchase price and financing the rest. Thus, leveraging a relatively small investment for potentially much bigger returns.

In order to purchase any real estate, having the funds to purchase and maintain the property is critical. In addition, being considered “credit worthy” is important in determining the types of interests rates that a lender will offer.

Investment property financing comes with higher interest rates than purchasing a primary residence. The terms and conditions are also far more stringent. As lenders find these to be a riskier investment than home ownership.

Time Requirements of Real Estate Investments

Many people often talk about how they “just sit back and collect the rent check!” While that may be true on occasion, real estate definitely requires a time commitment.

Finding tenants and showing the property takes time at the outset of the investment. Making sure that you find the right tenant is critical. It cuts down the amount of time and effort your investment requires each year. The wrong tenants can cause damages to the property or not make rent payments. Which will greatly increase your time commitment to either take them to court or fix the issues at the property.

Property maintenance is a major time commitment that many forget to factor into their analysis. Murphy’s Law of what can go wrong, will – happens frequently in real estate. Knowing how to fix and make repairs certainly comes in handy. And if that’s not in your skill set, having the right people that can do that is certainly a major plus when something happens. That just leaves the overseeing and managing the repairs to the owner.

Legal Requirements of Real Estate

Any time there is a landlord – tenant relationship, there are certain do’s and don’ts that the property owner needs to be aware of. Missing some of these can open up legal issues that are best avoided. Luckily there are several sources online that cover the basics and speaking with an attorney that specializes in this area as well is critical.

In addition, an attorney can insure that you have the best lease for all of your tenants that protects you. The lease is the binding agreement between all parties and having a lease that protects the landlord will give the owner an additional level of security.

Real estate investments offer many opportunities for investors. Whether it’s as an additional part of a portfolio or starting a new portfolio. Knowing what to anticipate and preparing for it will make the entire process easier and far more successful.


Stock Market Investing – Yes or No?

Stock Market InvestingWhen you are considering what type of investments are right for you, it is important to take a look at stock market investing. You will find that there are many great opportunities when it comes to investing in stocks.

However, the stock market isn’t for everyone. You need to decide if you are ready to invest in stocks before you start throwing all your savings into the market. There are some things that you should consider before you make your decision whether or not stock market investing is right for you.

Protection Against Inflation

We all know about the rising cost of living. No matter who we are, we have had to deal with inflation. When we invest in the stock market we are going to be protected against this inflation. However, this is something that isn’t guaranteed.

It is never 100 percent sure that your stocks will always go up. There are index funds that are pretty solid when it comes to steady growth. Stock market investing, when done in a conservative manner, can help you to protect yourself against the rising cost of living and inflation.

The Risk of Loss

When you are looking to grow your money, stocks are not the safest bet. There are other financial tools that will offer much less risk. Stock marketing investing can give you some great returns, but it is never set in stone how much these returns will be.

You must understand the risks associated with stock marketing investing before you put all your savings into the stock market. There are different personalities when it comes to investing. You need to make sure that you have the ability to deal with high amounts of risk if you are looking to get into stock marketing investing.

Unclear Gains Mean It Can Be Difficult to Plan Your Finances

If you are counting on your stocks as a large part of your financial future, you will soon learn that there is very little planning that can be done for these gains or losses. It is extremely hard to predict what will actually happen to your money in the market.

This can make planning for your financial future a hard thing to do. When you are looking into what type of investment is right for you, assessing the uncertainty of the investment is an important thing to do.

The stock market can be a great place to invest your money over the long run. You need to ask yourself if you are someone who can deal with the risk and uncertainty of the stock market. This will be a big indicator of your success in the future of your stock market investing. If you find it difficult to deal with uncertainty and high risk, it could be a good idea to invest with tools that are more reliable and predictable.

Sometimes the only way you can find out if the stock market is right for you is by investing. If you enjoy your experience, continue to invest in the market.


Home Ownership for Veterans – Is It Worth It? Depends…

Home OwnershipTo purchase or not to purchase? That seems to be a consistent question among U.S. veterans. When frequent relocations have been such a regular part of life, it can sometimes be difficult to understand the benefits of home ownership.

So the question is, is owning a home worth it? The answer is – it depends. Determining whether purchasing a home is best for you depends on several factors. Here are some things to keep in mind as you contemplate becoming a home owner.

Long-Term Residency

Home ownership is a great option for people who plan to stay in the home for several years. It takes roughly 5-7 years to break even on a home purchase, after including the costs to purchase the home, and sell the home. If you sell too early after purchasing, you could end up losing money.

In general, housing prices tend to go up over the long term. But, if you plan on moving in a year or two, renting is probably a better financial decision. When you purchase a home for short-term occupancy, you run the risk of short-term market fluctuations decreasing the selling price of your home. If you are only holding on to a home for a few years, you are more susceptible to market turns and might have to sell at a loss.

Home Ownership Tax Considerations

Owning a home is a great benefit when tax season approaches. All the money you have paid towards interest in your mortgage payments is considered a tax write-off. That means you can deduct the amount of interest you paid from your gross income, which effectively lowers the amount of taxes you’ll be required to pay. For some people this is a huge benefit, and could be a great reason to consider buying a home.

However, if the amount of interest you’re paying doesn’t exceed the standard exemption amount, currently $6,100 for individuals and $12,200 for married couples filing jointly, you may not see much benefit.

Maintenance and Repairs

Many people want the ability to customize their home as they see fit. From renovations to landscaping, many people love having the final say in the look and feel of their property.

With so many older homes on the market, it can be undesirable to rent a home that does not appeal to your tastes. On the other hand, many people choose to rent simply because they don’t want the financial commitments and time requirements associated with maintaining a property.

When you purchase a home, you’re responsible for everything – from a leaky roof, to a broken water heater, to a flooded basement. If you are handy around the house or don’t mind paying for a professional handyman, home ownership is a good option for you. If you feel more comfortable simply calling the landlord when something goes wrong, you probably should consider a rental property.

Owning a home comes with many advantages, but it may not be for everyone. Do your research to determine which path is best for you.


Stock Investing Without Too Much Risk

Stock Investing for Millennials

Stock InvestingMillennials are more likely than other generations to be risk-averse.

They hold 52% of their savings in cash and only 28% in stocks, according to a UBS study. For other generations, the weightings are nearly the reverse: 23% in cash and 46% in stocks.

A 2013 Accenture report found that 43% of Millennials identify as conservative investors, whereas just 27% of Gen Xers and 31% of Boomers do.

And 43% said they would never be comfortable investing in the stock market, in a MFS Investment Management study.

Invest Aggressively Now

But investing conservatively — or investing very little and holding your money in cash — runs counter to conventional investment advice for the young, which says, invest aggressively now, while your long time horizon will allow you to recover from any losses, so you can reap the compounding benefits of growth.

If you’re a gun-shy Millennial investor or a risk-averse investor of any age, learn how to try out stock investing without getting burned.

5 Tips for Stock Investing

1. Learn about the various types of investments.

2. Invest in a broadly diversified portfolio of low-cost ETFs (exchange traded funds) and index funds. 

3. Don’t try to beat the market; participate in it.

4. If you want to try investing in stocks, set aside a small percentage of your portfolio — and be willing to lose it all.

5. To mitigate the risk even further, look into Motif Investing.

Get all the details here.


Buying Precious Metals – A Beginner’s Guide

Guide to Buying Precious MetalsSince the dawn of time, gold and silver have been recognized as valuable. And even today, buying precious metals has its place in a savvy investor’s portfolio. But which precious metal is best for investment purposes? And why are they so volatile? If you’re just getting started in precious metals, read on to learn more about how they work and how you can invest in them. There are many ways to buy into precious metals like gold, silver and platinum and a host of good reasons why you should give in to the treasure hunt.

Gold – Granddaddy of Precious Metals

We’ll start with the grand-daddy of them all: gold. Gold is unique for its durability (it doesn’t rust or otherwise corrode), malleability and its ability to conduct both heat and electricity. It has some industrial applications in dentistry and electronics, but we know it principally as a base for jewelry and as a form of currency.

The value of gold is determined by the market 24 hours a day, nearly seven days a week. Gold trades predominantly as a function of sentiment; its price is less affected by the laws of supply and demand. This is because new mine supply is vastly outweighed by the sheer size of above-ground, hoarded gold. To put it simply, when the hoarders feel like selling, the price drops. When they want to buy, new supply is quickly absorbed and the gold prices are driven higher.

The Silver Bullet

Unlike gold, the price of silver swings between its perceived role as a store of value and its very tangible role as an industrial metal. For this reason, price fluctuations in the silver market are more volatile than gold.
So, while silver will trade roughly in line with gold as an item to be hoarded (investment demand), the industrial supply/demand equation for the metal exerts an equally strong influence on price.

Platinum Bombshell

Like gold and silver, platinum is traded around the clock on global commodities markets. It tends to fetch a higher price than gold during routine periods of market and political stability, simply because it’s much rarer; far less of the metal is actually pulled from the ground annually.

Buying Precious Metals – Get the Beginner’s Guide

Learn more about buying precious metals: A Beginner’s Guide To Precious Metals | Investopedia