Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.
How to Begin Investing
If you’re brand new to the world of investing, you might feel a bit overwhelmed by the idea of it. Analyzing stocks, balancing portfolios, saving up thousands of dollars to get started — admittedly, it all sounds pretty intimidating.
There’s some good news, though: it’s actually a lot easier (and less painful) to begin investing than you may realize. You don’t need a ton of money, you don’t need a lot of experience or a stock broker on speed dial, and you can start growing your investments today — no matter your age or financial situation.
Let’s talk about the best way to start investing, and how the process can be as simple as possible for anyone.
When to Start Investing
No matter your age, where you are in your career, or how much money you have, today is a great time to start investing. When it comes to growing your money, the earlier you start the better; “today” is always a better choice than “tomorrow.”
You are never too young or too old to start investing, either. Yes, your investment choices will be affected by your age and tolerance (how risky you can afford to be with your money, based on when you plan to retire and will need to pull from those funds). However, it’s never a bad time to let your money grow.
With that said, there are a handful of financial priorities you may want to focus your efforts on first, before you jump into the world of investing. If you are currently walking around with high-interest debt, such as credit card balances, it makes more sense to aggressively pay those down first. Then, you can begin investing whatever savings your cash flow will allow each month.
Which Types of Investments Should You Choose?
Now that you know when to get started (reminder: it’s today), you might be overwhelmed by the actual investment options available to you.
Investments involve a range of products and accounts, intended to generate a profit for you over time. These products include things like:
- Mutual funds
- ETFs (exchange-traded funds)
- Stocks
- Bonds
- Options
- Cryptocurrency
- Index funds
You may also choose to invest in a tangible product, such as real estate or precious metals (gold, silver, etc.). Regardless of where you choose to start investing your savings, there are some key benefits and downsides to consider.
Determine Your Risk Tolerance
Your current financial situation, total savings, personal preferences, retirement plan and even age will factor into your risk tolerance. This is a gauge of how risky you are willing to be with your investments, in order to balance earnings with potential losses.
Markets are not linear: over time, you will see your investments both lose value and gain value. The key to true growth is staying strong when those values drop, rather than panicking and selling. Only you know how you’ll react when your portfolio loses money, though, so you need to determine just how much you’re able to withstand before deciding how to proceed with investing.
You’ll also want to consider risk tolerance as it pertains to retirement. If you are younger, you have plenty of time to ride out any market waves that may come before you’ll need to actually pull from your portfolio. This allows you to be a bit riskier with your investments, and potentially earn a lot more.
Conversely, if you are nearing retirement, you won’t necessarily have enough time to wait out an unexpected recession or other market decline. In this case, you have a much lower risk tolerance and will need to choose investments that reflect such.
Diversify Your Portfolio
You’ve heard the saying about never putting all of your eggs in one basket, right? Well, the sentiment applies to investing, too.
You’ll want to build a portfolio that includes a variety of different investments. This will not only help maximize earnings over time, but also provide a buffer against loss as the market waxes and wanes.
Rebalance Over Time
As the years go on, and as your risk tolerance changes, you will want to occasionally rebalance your portfolio. Rebalancing allows you to maintain your desired portfolio ratios after factoring in earnings, investment performance and desired risk.
How Much Money Do You Need to Start Investing?
The funds you’ll need in order to begin investing really depend on where and what you plan to invest in first. However, you can technically get started with just a few dollars, so don’t think you need to have thousands stashed away in order to become an “investor.”
Certain investments will have specified starting thresholds, which can be limiting for some beginners. For instance, many mutual funds require a minimum investment in order to start (often between $1,000 and $3,000), and even some savings accounts will have minimum deposit limits.
With that said, though, it’s certainly possible for anyone to begin investing, regardless of how much money you have at your disposal.
You can begin earning in a high-yield savings account with less than a dollar. Just be sure to find an account without monthly fees that also offers a high interest rate. This is a safer way to start earning as your money won’t ever be at risk — no matter what the future of the stock market holds.
If you want to dive into “true” investing but don’t have a lot saved, you can start with an investment platform such as Stash. This app will round up your debit card purchases and invest the change, starting as soon as you have a mere $5 in your account. The process is also automated, so you don’t have to worry about researching investments or monitoring each step.
Have a nice little nest egg saved? You can begin investing in a more aggressive (and higher-earning) vehicle, such as an ETF or even individual stocks. Which one you choose will largely depend on your own personal risk tolerance.
Things to Remember Before Investing
There are a few things you’ll want to keep in mind before you start investing that will save you money and stress along the way.
Start with tax-advantaged options. The smartest way to optimize your journey is to utilize all of the benefits available to you. This means starting with tax-advantaged investment accounts, such as 401(k)s and IRAs. These will save you a pretty penny in taxes, putting even more money back in your pocket down the line.
Don’t pass up free cash. Many companies offer retirement matching as part of their employee benefits package. If your employer is willing to match your retirement contributions — either by giving you an additional percentage or dollar amount — it’s wise to at least invest enough to take advantage of the full match. Failing to do so is the same as leaving free money on the table at the end of the year.
Automate the process. If you want to make investing easy, especially when you first start out, you need to put it on autopilot. By using one of the many robo-advisors on the market today, you can automate everything from deposits, investing, re-investing and even rebalancing your portfolio. Many of these charge lower fees than traditional advisors, and some are even free.
Do what you can... but do it now. When it comes to investing, the most important part is to start as early as you can, even if it only means investing a few dollars at a time. By waiting, you will miss out on the key component of financial growth (and compound interest): time.
Investing can seem intimidating, especially when you’re brand new to the concept. However, by familiarizing yourself with the ins and outs of investing you can set yourself — and your finances — up for many years of success.