Make Investing Simple Whether you’re putting away your first $1,000 or have been saving for the future for years, you’re going to want to consider investing your funds at some point. Doing so will allow you to maximize returns and exponentially grow your savings. Unfortunately, the investment process can be pretty intimidating, especially if you are starting out on your own. It’s hard to know how to begin, where to invest, how to balance your portfolio and even what sort of fees you should expect to pay along the way. That’s where the convenience and ease of today’s best investment apps can come into play. [youmaylike] What are Investment Apps? Once upon a time, your only choice for investing was to pick up the phone and call your stock broker to initiate a trade. You were charged for the service, either based on commission or as a flat fee per transaction. While stock brokers are still an option, you can take investing into your own hands these days, without ever needing to talk to another human. And it’s all thanks to investment apps and platforms. Today’s apps offer a range of services and features. With them, users can: Research funds and individual stocks. View fees and expenses related to investment choices. Invest funds on the go, and even automate regular contributions. Automatically reinvest earnings on current investments. Adjust portfolio for personal risk tolerance. View performance projections. Choose funds or individual stocks that align with personal beliefs, through portfolios based on socially-responsible missions. The best part? Investing through trusted apps is usually cheaper and faster and you’ll have instant access to your portfolio/reports at any time of day. Not only that, but you’ll also be able to set your investment risk tolerance, rebalance your portfolio and even reinvest earnings automatically. Who are Investment Apps Designed For? Whether you’ve been playing the market for ages or are ready to invest your first $100, the right investment app is worth considering. For those new to the stock market, apps will simplify the process and put the power of investing at your fingertips… literally. From your phone or computer, you can easily see portfolio recommendations based on your own goals, savings plans and even risk tolerances. The right app will tell you upfront how much you can expect to spend in fees throughout the year, and can even allow you to automate many of the more confusing aspects, such as picking well-performing stocks or even rebalancing. While investment apps are ideal for beginners, newbies aren’t the only ones who will see the benefits. Even seasoned investors will find the process easy to use, and may even learn that these platforms can maximize returns (and save them money in fees) along the way. Not to mention, many investment apps offer additional insight into specific funds, so you can choose to invest in companies that align with your own passions and beliefs. Now that you know why you should consider using an investment app for your own savings, let’s take a look at some of the best ones available today. Best Investment Apps Great for Beginners: Acorns Fees and expenses: For investors with less than $1 million invested, fees are between $1-3 per month depending on the account option you choose. Acorns is also free for college students. Beginning investment requirement: At least $5 to start Types of investments available: ETFs (exchange-traded funds) Portfolio options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive Automatic investing?: Yes Automatic reinvesting?: Yes Automatic rebalancing?: Yes If you want an easy, hands-off approach to investing that won’t leave your head spinning, Acorns is a great first choice. This app not only simplifies investing for beginners but allows investors to completely automate the process from start to finish. After connecting the app to your debit card, the app will “round up” each of your daily purchases, putting the savings into an investment holding account. Once you reach the minimum required, Acorns will invest this money on your behalf, based on your account preferences. The app will also reinvest your earnings, as well as rebalance your portfolio when necessary. Great for Truly Free Investing: Robinhood Fees and expenses: Robinhood is a free investment platform in every sense of the word, pledging to never charge company fees or commissions to customers. Beginning investment requirement: You’ll need $2,000 to get started. Types of investments available: ETFs, stocks, cryptocurrency and options. Portfolio options: Interest-based options such as Fashion ETF, Tech ETF and Energy ETF, as well as a standard S&P 500 ETF, all with personal risk tolerance settings. You’ll also find “collections,” which are individual stocks grouped according to specific interests — such as companies with female CEOs or that are in the social media sector. Automatic investing: No. Automatic reinvesting: No. Automatic rebalancing: Yes. A great option for beginners and experienced investors alike, Robinhood makes the process both easy and affordable. How affordable? Well, it’s entirely free. By offering a truly free experience, Robinhood saves investors some serious cash over time. Additionally, the platform makes it easy to choose individual stocks or ETFs based on personal interests. If you want to invest in cryptocurrency or options, you can also do so through Robinhood. One of the biggest limitations of the platform, though, is its automation. While you can set up automatic deposits into your account, you will need to manually invest those funds and then reinvest (or withdraw) your dividends. Stash Fees and expenses: $1 per month fee for those with less than $5,000 invested, or $2 per month for retirement accounts with less than $5,000. For users under 25, fees on retirement accounts are waived. If you have more than $5,000 invested, your fee will be 0.25% annually. Beginning investment requirement: You’ll need at least $5 to begin investing (fractional shares are available) Types of investments available: ETFs (exchange-traded funds) and fractional stock shares Portfolio options: Too many to name, ranging from things you Want (portfolios that are conservative to aggressive mixes), things you Believe (such as groups of companies that believe in clean energy, LGBT rights, etc.), and things you Like (tech, retail and social media companies). Automatic investing: Yes. Automatic reinvesting: No. Automatic rebalancing: No. The closest competitor to Acorns, Stash seeks to make investing easy for everyone, regardless of your goals and passions. They have three account options to choose from, allowing you to manage your investment and retirement accounts, or even a child’s education savings through custodial accounts. With Auto-Stash, you can set any number of automatic investment options and transfers. However, Stash will not rebalance your portfolio for you, nor will they reinvest dividends on your behalf. Wealthfront Fees and expenses: 0.25% annually. Beginning investment requirement: $500 minimum initial investment. Types of investments available: ETFs (exchange-traded funds), individual stocks, retirement accounts (401k, IRA), 529 savings plans and trusts. Portfolio options: 11 asset classes to choose from, including natural resources and real estate. Automatic investing: Yes. Automatic reinvesting: Yes. Automatic rebalancing: Yes. Wealthfront’s investment platform is designed to be friendly for users of all experience levels. If you’re a seasoned investor, you’ll enjoy all of the options available to you, including the ability to manage your retirement accounts, education savings and even non-profits or trusts. If you’re a newbie, their free financial expertise center is the perfect place to learn all about investing and your future. TD Ameritrade Fees and expenses: The managed, automatic portfolio investment option (called Essential Portfolios) is available with a 0.30% advisory fee. Beginning investment requirement: $5,000 minimum for managed portfolios (no minimum requirement for traditional trading). Types of investments available: Stocks, ETFs, options, mutual funds, futures, bonds/CDs, Forex and cryptocurrency. Portfolio options: Essential Portfolios (EP) offer investors a range of options from Conservative to Aggressive, based on your passions, preferences and tolerances. Automatic investing: Yes, with EP. Automatic reinvesting: Yes. Automatic rebalancing: Yes. A more traditional brokerage app, TD Ameritrade is one of the most recognizable names in the industry. You can easily educate yourself on all things financial, thanks to their free videos and posts. If you want a traditional experience, you can choose your trades and pay per transaction. Prefer a more streamlined, automated approach? Opt for their Essential Portfolios, a hands-off investment option (robo-advisor) that charges a flat monthly fee and requires little-to-no oversight from you. Plus, their app makes the investing process easier than ever with a user-friendly interface, price alerts and no minimum to get started. If you prefer a desktop experience, this is also available to you through TD Ameritrade. Bottom Line Getting started with investing can be intimidating. With all of the terminology and account options out there, it’s easy to want to run and hide. Thanks to some of today’s best investment apps, though, you can not only get started with your first portfolio but also watch your money quickly grow… no matter how much of a beginner you may be! It’s important to choose an app that offers you the portfolio options and features you want most, with fees and deposit minimums that match your financial needs. The five apps above are our favorites for beginners, making that first foray into investing easier than ever before. The hardest part will be choosing the one you love most!
What Kind of Vehicle Can You Afford?
Welcome to My Finance Mastermind’s custom auto loan calculator. Are you considering purchasing a vehicle, but you can’t afford to pay for it in cash? There’s nothing wrong with taking out an auto loan. In fact, it can be a smart financial decision that can help you drive off the lot in your dream vehicle sooner.
By completing a few simple inputs in our auto loan calculator, such as the loan amount, the length of time and whether the vehicle is new or used, you can figure out how much your monthly auto loan amount would be to see if it’s affordable and makes sense.
In this article we’ll also look at refinancing your auto loan, gap insurance, how to avoid high interest, how to keep monthly payment down and more.
Basic Functions of the Custom Auto Loan Calculator
To get the most out of the custom auto loan calculator, you’ll need to fill in some basic information. Here are the fields.
- How much you are looking to borrow: This is the total amount of money you need to borrow to purchase the vehicle. It’s the purchase price of the vehicle minus your down payment. The difference between those two figures is how much you’ll need to borrow as an auto loan to purchase the vehicle.
- For how long: Auto loans are usually between two and eight years in length. However, try to limit yourself to a maximum of five years, otherwise you could end up in a situation of negative equity, where you owe money on a vehicle that no longer works.
- If your vehicle is new or used: This is self-explanatory. Select whether your vehicle is new or second hand.
- Your interest rate: This is the interest rate you’re being charged on the auto loan.
Once you enter the above information, the auto loan calculator will output the following helpful information.
- Estimated monthly payments: This is the estimated amount you’re required to pay for the auto loan on a monthly basis. Make sure the payments fit within your budget. If the payments are too high, you might consider making a larger down payment or buying a cheaper vehicle.
- Total principle paid: Each payment is made up of a portion of principal and interest. This is the total amount of principal you’ll pay over the life of the auto loan.
- Total interest paid: This is the portion of interest you’ll pay over the life of the auto loan. The longer the length of the car loan and the higher the interest rate, the more this will be. By limiting both, you can save yourself some interest.
Refinancing
Do you currently have an auto loan, but you feel that the monthly payments are too high? Or perhaps you feel that the interest rate is too high. Refinancing your auto loan could help you save money. When you refinance your auto loan, you replace your existing one with a new auto loan that has different terms. You do that by paying off your existing auto loan with a new auto loan
There are several reasons you might want to refinance your auto loan. For instance, let’s say when you were approved you had bad credit. For that reason, it comes with a higher interest rate. But if your credit has improved since then, you could refinance your auto loan and save on interest with a lower interest rate. Instead of accepting a lower monthly payment, you could choose to keep your monthly payment the same and pay down your auto loan even more aggressively.
Another common reason to refinance your auto loan is to lower your monthly payment. For example, if you find the payments are unaffordable or you’re looking to qualify for a mortgage, but the auto loan payments are hurting your ability to qualify, you might consider refinancing. You can lower your monthly payments in a couple ways: by lowering the auto loan’s interest rate or by stretching it over a longer period. Just keep in mind that by stretching your auto loan out over a longer period you’ll pay more by way of interest over the life of the auto loan.
If someone has co-signed on your auto loan and you want to remove them, you might consider refinancing your auto loan. However, in order to be able to refinance you’d need to be able to qualify for the auto loan on your own.
These are just a few of the most common reasons why you might choose to refinance.
Interest Rates
Besides the auto loan amount, the interest rate has a major bearing on how much the auto loan will cost you over its lifetime. If you have a higher interest rate, you will end up paying more toward interest on your auto loan than toward the principal. Furthermore, having a higher interest rate on your auto loans means that you’ll qualify for a lesser auto loan amount.
The interest rate you pay on your auto loan depends on several factors, including your credit score, where interest rates are at and competition among lenders.
If you have a good credit score, you should have no problem getting an auto loan at the best interest rate available. However, if your credit score is damaged, you’ll likely have to pay a higher interest rate.
Likewise, where interest rates are at also has a bearing. For example, if interest rates are currently high, you’ll likely have to pay a higher interest rate on your auto loan than at a time when interest rates are low.
Competition can also influence the interest rates on your auto loan. All things considered equal, the more competition among auto loan lenders, the more likely the interest rate is to be lower.
Gap Insurance
Gap insurance is an optional type of auto insurance you may have heard of. Gap insurance, short for guaranteed auto/asset protection, protects you in case your vehicle is stolen or totaled. It’s also referred to as gap protection, because it covers the gap between what your car is worth and the amount you owe on your auto loan.
Gap insurance comes in handy in situations where your auto loan amount is greater than the market value of your vehicle. Auto dealerships usually offer it when you’re buying a new car.
Gap insurance is often an overlooked type of insurance coverage, but it can come in handy in certain instances. For example, when you buy a new car, it almost always loses value the moment you drive it off the lot. This creates a gap right off the bat between how much the car is worth and the amount of your auto loan.
Some vehicles don’t hold their value as well as others. If you own a vehicle that depreciates quickly, it can put you in a negative equity situation.
If you stretch your auto loan out over seven or eight years, this has the potential to create a gap between your auto loan and your vehicle’s value.
For the three reasons mentioned above, you might consider signing up for gap insurance to protect yourself.
Understanding the Break-even Point
It’s not a pleasant situation to be shopping for a new car when you owe more on your existing one than it’s worth. The break-even point of an auto loan refers to when your vehicle’s trade-in value is roughly the same as the amount that is currently outstanding on your auto loan.
If you trade in your car before the break-even point, you could end up having to fork over some of the money from your savings to cover the auto loan. Why? Because you might owe more on your loan than your car sold for.
If you’re financing a new vehicle, the break-even point usually occurs four or five years in with most auto loans. By knowing the break-even point, you can decide when is the best time to sell or trade in your vehicle.
How to Avoid High Interest
The simplest way to avoid high interest is to negotiate a lower interest rate, and to shop around for the best auto loan.
By negotiating a lower interest rate, more money of every auto loan payment will go toward principal and less toward interest. This in turn will help you pay off your auto loan sooner.
It’s also a good idea to shop around. Don’t simply go with a dealership or car company for your auto loan because it’s the most convenient. See what else is out there and try to negotiate a better deal.
If your credit score is an issue and you don’t plan to apply for an auto loan for a while, you can take steps to improve it. By doing that, your credit score can be better when you apply for an auto loan, helping you negotiate a lower interest rate.
How to Keep Monthly Payments Down
You can keep your monthly payments down on your auto loan in three simple ways: by making a larger down payment, negotiating a lower interest rate or by stretching your auto loan out over a longer period.
If you can afford to, you might consider making a larger down payment on your vehicle. When you do that the monthly payment on your auto loan will be lower since you’re borrowing a lower amount.
Another way to keep your monthly payment down is by negotiation a lower interest rate on your auto loan. By shopping around on your auto loan and negotiating, you can get a lower interest rate.
Last, but no least, you can stretch your auto loan over a longer period. This can make sense if you’re qualifying for a mortgage, but the high monthly payment on your auto loan is preventing you from qualifying for as much as you had hoped. Before doing this, be sure to consider how much more in total interest it will cost you by stretching out the auto loan over a longer period to make sure it makes sense.
Banks versus Dealerships
When it comes to taking out an auto loan, you can go through your bank or the dealership/car company. Whether it makes sense to go through one over the other depends on the auto loan terms being offered.
My best advice is to shop around. A dealership or car company is a good first stop for financing, but it shouldn’t be your only stop. By shopping around at banks, you can see what else is being offered.
If you’d prefer to take out your auto financing with your bank, but you’re being offered a better deal from the auto dealership, you might consider showing your bank the better deal you’re being offered. Your bank may in turn be willing to match it. The bottom line is that you have nothing to lose by shopping around.
Getting Pre-qualified
Before shopping for a vehicle, it’s a good idea to get pre-qualified. Getting pre-qualified on a vehicle is a lot like getting pre-qualified on a home. When you get pre-qualified for a vehicle, the bank or dealership looks at your income, down payment, credit score and any other debt you might have (i.e. credit cards, student debt, mortgage, etc.). Based on this, you’ll find out how much you qualify to spend on a vehicle.
It’s important to keep in mind that just because you qualify to spend a certain amount on a vehicle, it doesn’t mean you should spend that much. Find out what the monthly payments would be and how much interest it would cost you over the life of the auto loan and see if you’re comfortable before taking out an auto loan for this amount.
Co-signing Tips and Considerations
If you’re having difficulty qualifying for an auto loan, you might consider getting a co-signer. A co-signer is someone who helps you qualify for an auto loan. The co-signer’s income, down payment and credit score are all considered when approving the auto loan.
As such, you’ll want to look for someone who is strong in all those areas. For example, if your uncle has a lower credit score than you, it probably doesn’t make sense for him to co-sign, but if he has a better credit score than you, that’s when it can help your auto loan application get approved.
If you’re thinking about co-signing for someone on an auto loan, before signing on the dotted line, make sure it’s someone you trust. If the individual you’re co-signing for were to miss any of the auto loan payments, it will be as if you missed the payments yourself.
Not only that, you’ll be responsible for making those payments. Being asked to co-sign on an auto loan isn’t a decision to be taken lightly. It’s important to sit down with the individual and make sure you both are on the same page and understand each other’s role and responsibilities. The last thing you’d want is the co-signing of an auto loan to ruin your relationship.
Factoring in Taxes and Fees
When buying a vehicle, it’s important not to overlook taxes and fees. Taxes and fees are the so-called hidden costs of buying a vehicle. Taxes and fees will depend on the state you’re in buying in, so it’s a good idea to ask about them ahead of time and do your homework.
You may be required to pay the taxes and fees out of pocket, or you may be able to roll them into the auto loan. If you’re required to pay them out of pocket, you’ll want to hold some money back from the down payment on your auto loan, so you have enough money to cover them.