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.
Investing Wisely
For many investors, picking and buying individual stocks is an integral part of the investment game. It can be fun choosing a company that has historically performed well or that is near to your heart and backing it with your hard-earned money.
However, sifting through the thousands of options available to you and picking the right stock — one that offers you a handsome return and keeps your money safe — can be difficult. Considering that choosing the wrong one could mean losing your entire investment, learning how to successfully pick stocks is an important skill.
Different Stock Options
If you are thinking about investing in stocks, you have many options at your fingertips. The right one for you, though, will depend on your own financial situation as well as the stock research you conduct before moving forward.
There are six stock types to choose from. These include:
- Common stock
- Preferred stock
- Company size
- Industry
- Location
- Style
The two biggest categories of stocks are common and preferred. If you own common stocks, you will both share in the company’s profits and also have the right to vote within the company. These stocks also have the potential for much higher returns, though they are often more volatile, and while dividends are often available, they are not guaranteed.
Preferred stock, on the other hand, is a bit more stable. The stocks themselves aren’t as volatile, dividends are guaranteed and fixed, and shareholders are even more protected against bankruptcy or company liquidation.
Of course, as you know by now, if an investment is risky, the reward (return) is often higher. If an investment is lower risk, the return is usually reduced. This is the case with common and preferred stock, too: common stock is more volatile but typically earns more in returns, while preferred stock is safer but more of a long-term (and slow-growing) investment for shareholders.
What You Should Know Before Buying Stocks
Long before you ever click that purchase button, there are a few important things you need to know about buying stocks.
The first is that you don’t need to choose individual stocks in order to maximize your investment returns — this is a common misconception. Instead, opting for ETFs (exchange-traded funds) or index mutual funds might actually be a much better decision when starting out.
That’s because choosing these funds spreads your investment across a number of different stocks, instead of putting all of your proverbial eggs into one basket. That protects you against any number of events that could affect individual stocks, limiting any loss that you might have experienced.
Next, you’ll need to choose a broker or brokerage firm. This decision shouldn’t be made lightly, as it will impact you financially for a long time to come. This broker(age) will determine which investments you’re able to choose, the fees you’ll pay, and can even have an impact on the returns you’ll see down the line. Do your homework and choose wisely!
You should remember that volatility is the name of the stock market game. Your investment is not only subject to the natural ups and downs of our economy, but is impacted by industry changes, trends and even decisions made by the company itself. Mentally prepare for this, knowing that high risk and high reward typically go hand in hand.
How to Buy Stocks
So, you’re ready to buy your first stocks? Great! But where on earth should you begin?
Many investors enjoy the ease of online buying and selling, through companies such as E-Trade and Ameritrade. These sites usually charge lower commissions than in-person brokers or large brokerages, saving you quite a bit of money in fees over the years.
Of course, you can always buy or sell stocks in person, directly through a broker. Full-service brokers will be able to guide you through this process, not only facilitating a purchase but also conducting research and helping select the right stocks for you. Some brokerages offer in-person services in addition to online platforms where you can easily manage your portfolio.
Lastly, if you want to save even more in commissions and fees, you can opt to buy stocks directly from the company itself. Not all companies offer this option, but of those that do, this is much more affordable than using a broker to facilitate the sale. Of course, buying stocks direct also means you’ll need to do all of the research yourself, so decide first if you’re up for the challenge.
When Should You Purchase Stocks?
There is no perfect formula for determining when you should purchase a stock; if there were, we would all have very impressive portfolios, I would imagine.
However, there are a few instances when it makes sense to buy, especially if you were already watching a particular company’s stock. These include times when:
- You’ve done your homework and believe the stock is in a great place
- The stock hits your buy price
- The stock goes on sale
- The stock is determined to be undervalued
What to Avoid
In order to be successful in your investment journey, there are a few things you will want to stay far away from. These have the potential to trip up even the most seasoned investor — if you’re new to the game, though, it is even easier to fall into these traps.
Being Too Bold
In the beginning, you are probably eager and excited to start investing. But whether you have dreams of sniffing out the next Amazon or want to net a modest return on your savings, being too aggressive with your investments can derail your plans.
Instead, start low and slow until your portfolio builds (and is diversified), and until you feel more comfortable with your own investing prowess as well as that of your broker. This might mean choosing an ETF or mutual fund to begin, guarding you against volatility.
Paying Fees
It’s impossible to invest without incurring some fees. However, the more you can limit these out-of-pocket expenses, the more money you’ll keep in said pocket.
Many brokerages will offer commission-free buying for mutual funds and/or ETFs. You can also shop around for reasonable fees on individual stock purchases, to reduce your annual expenses.
Buying Hot Stocks
We’ve all heard the stories of that one guy who jumped into the right trendy stock at the right time and made millions. And while this can certainly happen, odds are that once a stock becomes wildly popular, most of the “make millions overnight" potential is lost.
Take Bitcoin for example. It spent two years on a volatile roller coaster; at its peak, first-time investors everywhere were clamoring to get their hands on it. However, no sooner than many of these investors had bought in for the first time, the hot cryptocurrency tumbled, losing many people a lot of money overnight.
Do your research and find a broker you trust, rather than hopping onto the investing bandwagon with whatever’s hot at the moment.
Not Doing Enough Research
Before you go and put your hard-earned savings into any stock, you need to spend the time researching it. Check out the company with a fine-toothed comb first, evaluating P/E ratios, their debt and equity, and even the strength of the industry in which they perform. If there are whispers of national policy changes, up-and-coming competitors, etc. that could impact its performance, chances are you can find mention of this in your research.
By doing the adequate legwork beforehand, you could save yourself quite a bit of anxiety and money down the road.
Buying stocks for the first time can feel nerve-wracking, especially if you’re not really sure where to begin. Picking the right brokerage and then the right stock(s) can make all the difference in the world for your peace of mind and your wallet. Just remember to start slow and do your homework — you’ll be well on your way to a successful investment portfolio in no time.