Use This Loan Calculator to Figure out Your Payments

Nelson Smith |Aug 1, 2019
This loan calculator will help you figure out what your monthly loan payments will be based on the size of the loan and the interest rate.
Use This Loan Calculator to Figure out Your Payments

Use This Loan Calculator to Figure out Your Payments

Nelson Smith |Aug 1, 2019

What Can You Afford?

Debt is an unfortunate reality for the majority of Americans.

Some people think debt is always bad. They’ll repeat mantras like “there’s no such thing as good debt,” likely remembering their days of struggling with student loan or credit card debt.

But these folks are short-sighted. The important thing to remember is debt is a tool that can be effectively used to your advantage. Borrowing $30,000 to spend on an education that will increase your earning power by $15,000 per year is a fantastic investment, even if it takes years to pay it back. So is buying a sensible car so you can get to work or getting a mortgage to protect yourself from greedy landlords raising rents in a hot housing market.

There are two important things to remember when taking out debt. The first is to always use debt to buy assets, not liabilities. Borrowing to buy a house or finance an education is fine. Using credit cards to finance a vacation or some other consumable isn’t a good idea. Second, make sure you have a good idea of what you’re signing up for. Think about your new potential debt critically before signing up. Can you really afford it? Is it really necessary?

We can help with that second part. We’ve created a loan calculator you’re going to want to consult before signing on the dotted line. Let’s take a closer look at how it works as well as some general tips for getting out of debt as quickly as possible.

The Loan Calculator

This calculator will break down what your loan payment will be, but you’ll need to provide it with the following inputs first:

Loan Amount

This doesn’t need much explanation. This is the amount you’re going to borrow. Make sure you add any loan fees (if applicable) to the face value of your loan.

Interest Rate

Another simple category. This will be prominently displayed on any loan agreement.

It’s fine to input an estimated interest rate if you’ve just begun the process of shopping for a mortgage or car loan. A little online research will reveal what the going rates are for each type of loan.

Loan Period

This is also called the amortization period. It’s how long the loan will take to be paid back. Car loans will typically stretch for anywhere from three to seven years, while mortgages are a 15- to 30-year commitment.

And that’s it. The calculator will take these variables and use them to determine your loan payment. Feel free to play around; you’ll see how extending the loan period will make a loan more affordable. But remember, doing that will increase the total interest cost of the loan.

Next we’ll take a look at different types of loans you might get, and what you’ll need to know before agreeing to the commitment.

Types of Loans

A loan can be arranged on any asset, provided you have a lender and a borrower agree to terms. But ultimately they boil down to two different kinds: installment and revolving loans.

We’ll start with an installment, or fixed, loan. This is your standard loan where a borrower takes a fixed amount and slowly pays it off over a period of time at a fixed payment plan. The banking industry refers to these as installment loans.

A car loan is an installment loan. So are student loans. A mortgage is as well, although the payment could fluctuate if you’ve taken out a variable rate mortgage. Those mortgages aren’t so common nowadays, since they didn’t tend to work out so well for borrowers in 2006-08. Most borrowers prefer the security of a fixed monthly payment.

Typically, a standard installment loan will never stretch out for longer than the life of the underlying asset. This means that a car loan must be paid off relatively quickly, since the lender doesn’t want a borrower to continue paying something off after it has become worthless. An education or a house are both assets that can last decades, so banks allow borrowers to pay them back slowly. These loans also tend to have lower interest rates because they’re backed by secure assets.

Compare that to a payday loan, a short-term loan that only lasts a couple of weeks. Payday loans come with the highest interest rates of all because they’re given to folks with poor credit who have just admitted to having money management problems. You’re looking at interest rates of 25% over just a week or two. It’s best to avoid payday loans at all costs.

Next, let's talk about revolving loans, flexible loans that can fluctuate depending on how much the debtor needs to borrow. The two main types of revolving loans are credit cards and lines of credit.

A revolving loan will give the borrower the flexibility to borrow up to a predetermined limit with interest being charged on just the balance owing. Repayment terms will be more flexible as well, with a borrower being allowed to pay as little as a small monthly minimum or a maximum of the entire balance.

Revolving loans can be secured against assets. Home owners commonly take out lines of credit that are secured by the equity in their property to pay for home improvements or to just consolidate other bills. These special lines of credit — which are called home equity lines of credit (or HELOCs) — are offered at similar rates to mortgages since they’re secured by the value of the home.

Unsecured lines of credit exist, but most folks access revolving credit through credit cards. An unsecured loan doesn’t have any specific asset a lender can seize if the borrower stops paying. These loans are only secured by the general credit worthiness of the borrower. This works most of the time, since the majority of people don’t default on debts unless they have no other choice.

Credit cards are extremely flexible and offer a low, mandatory monthly payment. Borrowers pay for this privilege through high interest rates on any outstanding balance. Credit card interest will set you back anywhere from 1-3% per month.

Remember, credit cards aren’t secured by anything physical. If you stop paying your credit card, the bank is going to have to do some work to get you to pay. Interest rates charged to credit card borrowers reflect that risk.

Picking a Lender

Many borrowers are so worried they’ll get denied a loan (despite excellent credit) that they take the first offer put in front of them. Many banks count on this when applicants want a mortgage or car loan. A little negotiation can go a long way.

It’s amazing how threatening to walk away from a loan will get a lender to lower their interest rate. Even a reduction of half a percent can mean a lot of money over the life of a loan, especially when we’re talking long-term mortgages.

It also makes a ton of sense to shop a few different lenders before making a big purchase. Leverage each lender against the previous one until you come up with the best rate. A mortgage broker can help with this when buying a house, especially if you don’t have the time nor the ambition to talk to a few different lenders.

Interest rates aren’t everything, however. You’ll also want the flexibility to make extra payments on a loan if you’re serious about slaying debt quickly. Sometimes a bank will give borrowers the lowest rate but will lock them into a contract that won’t give any flexibility.

Paying back a loan early can result in some serious savings. Say you borrow $30,000 over a five-year term at 5% interest. If you take all five years to pay back the loan, you’re looking at interest costs of almost $4,000. But if the same loan is paid back in three years, the total cost of borrowing is just over $2,300.

Who couldn’t use an extra $1,700? That’s how much you can save paying back a loan early.

Don’t forget about other factors when choosing your lender. Some banks offer excellent customer service. Others might offer free banking packages for borrowers. These perks matter, especially for somebody with good credit who is likely receiving similar offers from every lender.

Getting out of Debt

It doesn’t matter if you’re wallowing in debt or have a relatively clean personal balance sheet, it’s still a good idea to get out of debt as quickly as possible. You want to be earning interest, not paying it.

Good debt habits mirror good personal finance habits. To get out of debt quickly you’ll need to free up cash dedicated to other expenses and funnel it toward clearing up loans. This means spending less on everything, especially the big three expenses of housing, transportation and food.

One way to minimize your debt before you even start is to reduce the amount you borrow in the first place. If your bank tells you a $30,000 car loan won’t stretch your budget, opt for a $20,000 loan instead. Do the same thing with your mortgage. You’ll free up hundreds of dollars each month, which can then be thrown at the loan to pay it down all the faster.

Many people have had success using the snowball method to get rid of debt. You tackle the smallest debt first, throwing as much as possible toward it while making minimum payments on your other debts. Once the lowest balance is eliminated, move to the next lowest.

The snowball method gives borrowers psychological victories, which will encourage them to keep going. And it frees up having to make so many minimum payments. But it doesn’t factor in interest rates charged. You’ll want to do the math and maybe alter the snowball method a little before starting.

Improving your credit score is another way you’ll spend less on loans over the long-term and get out of debt faster.

While the exact formula used to determine your credit score is a tightly guarded secret, there are easy moves you can take to improve your score. You’ll want to clear up any accounts that are delinquent. Reducing your current debt-to-available-debt ratio on your credit cards will also help. Applications for new credit will also reduce your score, so keep those to a minimum.

Ultimately, getting a good credit score comes down to paying your bills on time. As long as you keep your creditors happy, it’ll be reflected in your score.

Smart borrowers can also refinance debt to lessen the pressure.

Say you’re struggling with credit card debt, but still have a good credit score. You could apply for a debt consolidation loan at a much lower interest rate, which would immediately decrease your monthly payments. When done right, a debt consolidation loan will save you thousands in interest.

Many credit cards love these types of borrowers, and will offer low-interest balance transfers to entice them to switch card providers. I’d caution people to be careful before accepting one of these offers, however. Once the initial grace period runs out, you’ll be right back to the same high-interest situation with this new card. You’ll want to make sure a serious dent is made to that balance while the rate charged is low.

Ultimately, getting out of debt won’t be easy. It’ll require months — if not years — of sacrifice.

The Bottom Line

Debt gets a bad rap, especially from people who have struggled with it. Some of these naysayers go as far as calling debt “evil” and proclaiming there’s no such thing as good debt.

I disagree. Avoiding debt is a good idea, especially high interest rates offered by credit cards or payday loans. But when used intelligently, debt is a tool that can better your life in so many ways.

There’s nothing wrong with financing big ticket items like a house, car or your education, provided these are done responsibly. Keep your payments low and you’ll be fine.

This calculator will help you use debt better, and the tips provided will allow you to get out of debt quickly, minimizing the total interest.

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How to Apply for a Business Credit Card

Myles Leva | August 1, 2019

Paying for Business Expenses Applying for a business credit card is something a small business should seriously consider for itself. Business credit cards can provide a range of benefits to a business. They allow a company to build up credit for better borrowing conditions down the road. They’re also quite easy to apply for. In this article, we’ll go over how to apply for a business credit card and other important points to note. What Is a Business Credit Card? A business credit card is a credit card that is intended for business expenses. These cards are not meant for any individual’s personal use, but they are available to businesses of all sizes. What Is a Business Credit Card Used For? Business credit cards are meant for business expenses, and as such, they come with several perks that you wouldn’t get with a normal credit card. Business credit cards typically have far higher credit limits than normal cards, but they are also harder to qualify for. [youmaylike] As a business phenomenon, business credit cards vary their offers greatly, and certain cards are meant for certain businesses. They are also highly customizable when it comes to individual payment terms. Businesses don't always have consistent incomes like individuals do, and business credit cards handle this problem. These cards are used to gain access to a long line of credit, to control employee spending on business expenses and more. One of their other common uses is to make accounting easier, as putting all business expenses on one separate account makes reporting to the Internal Revenue Service easier. In the end, there are many uses for a business credit card. Why Would I Need a Business Credit Card? You might not need one, but if you run a business, you’ll be leaving money on the table by not at least looking into them. Business credit cards can solve many of the problems business owners face. If you need employees to make purchases for the business, a business credit card is the safest option. These cards can be given to authorized users, a status you can easily give to any of your employees. From here, these cards make it easy to monitor employee spending and spot any discrepancies. You can attach customized user privileges to each card to limit spending and place limits on where the card can be used. As mentioned, if you feel like your credit is too limited, business credit cards are a sure way around low credit. According to the American Bankers Association, the average monthly payment on a business credit card is twice as high as the average payment on a normal one. If you’ve found yourself annoyed with the Internal Revenue Service over the complicated reporting processes for business owners, you’re not alone. This is where a business credit card can solve another problem. Simply handing over your business credit card statements to your accountant will make them love you. It will also provide them with the information they need to predict future spending. Another great use for a business credit card is lifting your liability for debts. Liability for credit card debt is determined by the liability offered by the card. If you’re using a personal credit card for business expenses, you are liable for all debts. On the other hand, if you use a business credit card with commercial liability, your business is liable for any debts, which changes the game. Keep in mind that some cards offer joint liability, which leaves both you and your business liable for any debts. Make sure you know what you’re getting into before signing any paperwork. Lastly, just as personal credit cards offer rewards programs, so do business cards. The main difference here is that business credit card rewards are tailored to your business needs. How to Apply for a Business Credit Card Before you apply for a business credit card, you should make sure you’re eligible. For the most part, you only require the following to be able to apply for one: A legal name for your business. A business structure to apply with, such as a Limited Liability Corporation. An explanation of the nature of your business. You’ll typically be given a list of industry types to choose from. A tax ID number issued by the Internal Revenue Service Your roll in the business you’re representing Various business/financial information including: Annual revenue. Number of employees. Length of time in business. Estimated monthly expenses. If you have this information ready, you can apply for a business credit card. At this point, it would be wise to shop around and find the best option for your business. Your decision on the business credit card you choose will have larger ramifications than your choice of a personal credit card. Applying for a business credit card is much the same as applying for a personal one. There are a few differences, but the main thing to remember is that business credit cards are taken more seriously than normal ones, so you’ll have to face a higher bar of entry. This doesn’t mean getting a business credit card is hard, but it does mean you need to arrive more well-prepared than you normally would. To make things easier, you can prepare for certain obstacles in advance. You may need to sign a personal guarantee that you will pay off any debts. Also keep in mind that if you’re the one applying for a business credit card, and your business doesn’t already have one, they will conduct a personal credit check. It may be best to try to optimize your personal credit if you plan on applying for a business credit card in the future. Some Options at a Glance Here are some of the most popular options for small business credit cards: Chase Inc Business Preferred This is a great option for a few reasons. With the Business Preferred card from Chase Inc, you get 80,000 ultimate reward points when you spend $5,000 with the card in the first three months. The card also provides generic, but highly useful benefits for business owners. Business Platinum Card from American Express The Business Platinum is ideal for businesses that spend a lot on flights and travel. This card offers numerous rewards on flight and hotel expenses and makes sure you get something serious back if you use it for these expenses. Chase Inc Business Unlimited The Chase Inc Business Unlimited offers unlimited 1.5% cash back. While we’ve said enough already, they also offer several other perks that are overshadowed by their first one.

Everything You Need to Know About Filing Your Own Taxes

Katie Macomb | August 1, 2019

It's Not Fun, but It Has to be Done Benjamin Franklin wrote a 1789 letter that states, “But in this world nothing can be said to be certain, except death and taxes.” Even at the United States’ early beginnings, federal taxes were a necessary evil to fund various public projects and administrative costs. Today, federal taxes serve much of the same purpose. While virtually no one likes to prepare and file their taxes, it is a necessity if you want to avoid fines and further hassle. It is no secret that preparing and filing your taxes is notoriously complicated. Many people lament that it should not be so difficult to pay the government. However, some of the complications allow people to save money if they discover specific tax benefits. Knowing how to file your own taxes may be a good option if your tax situation is relatively straightforward, or if you are willing to learn the process. Why Do You Need to File Your Taxes Every Year? The short answer is that federal law requires that most individuals file taxes annually. Income taxes are assessed every year based on your income earned during that period. You then pay a percentage of that income to the government, less any deductions, adjustments, or credits that you qualify to receive. If you do not file (and pay) your taxes, then you may be assessed penalties and interest. The Internal Revenue Service (IRS) can even go as far as garnishing your wages and repossessing your property if you do not file and pay as required. The Benefits of Filing Your Own Taxes If you are one of the 43% of Americans that are doing your own taxes, you are certainly not alone. Roughly 53 million people prepared and filed their own taxes in 2018. There are many benefits to filing your own taxes, including: Saving money: Hiring a tax professional is expensive, and many people can prepare and file their returns on their own, completely free of charge. Control: Some people like knowing the exact information that is included in their return and being able to control the data, and for some, knowing precisely how the numbers work out, is comforting. Gain helpful information: When you prepare your taxes, you can see what items saved you money this year or which issues you should address so you can save money next year. While filing your own taxes is complicated, it can be beneficial under the right circumstances. There are several programs online that walk you through the process to help ensure you are taking advantage of all of your available deductions and credits. The Drawbacks of Filing Your Own Taxes In addition to the benefits, there are also some disadvantages to filing your own taxes. These include: Time and effort: Preparing and filing your taxes takes time and work You have to sift through financial information and deal with concepts that you may not understand well. The process can be frustrating and take a considerable amount of time. Error risk: If you do not completely understand how your taxes work, you run the risk of making a mistake because of misconceptions. If that happens, it could lead to underpayment and audits down the road. Questions: Even if you use a tax preparation software, you may still have questions that will remain unanswered unless you do significant research or reach out to a tax professional. For some people, the risk of having a substantial error that triggers the IRS’s attention is enough to scare them away from preparing their own taxes. Preparing for Filing Your Taxes When you begin work on your taxes, you should have information gathered throughout the year. Some of the most common items that you will need include: Social Security numbers for you, your spouse, and any dependents Information about wages, such as W2s or 1099s Investment income information Documents that represent any other source of income Information regarding adjustments to income, such as student loan interest paid, IRA contributions, and health savings account contributions, just to name a few Information regarding potential credits, including, for example, child care expenses, education expenses, or retirement savings contributions Data about any tax payments that you may have made throughout the year Keeping good records will help make tax preparation easier at the beginning of the year. [youmaylike] The Basics About What You Can Claim When Filing You must pay income taxes on all your income earned throughout the year. However, that income is reduced by a few things. The further you can reduce your taxable income, the less you tax you will pay. There are three general categories of tax reduction methods: Standard or Itemized Deductions Everyone can claim either the standard or itemized deductions. Standard deductions are a set amount that is based on your filing status. Itemized deductions are based on actual expenses that you incurred throughout the year. You can choose to use the higher deduction. The higher the deduction, the less tax you will have to pay on your income because your income decreases on paper. Itemized deductions include things like medical expenses, state and local tax payments, and home mortgage interest deductions. Itemized deductions will only decrease your income by a certain percentage, or up to a specific point. Adjustments Some adjustments to your income may also be available. These include things like paying student loan interest or alimony. Adjustments are more valuable compared to deductions because they decrease your income dollar for dollar. Credits A credit decreases your taxable income as well. Some credits are refundable while others are not. For example, you get a child tax credit simply for having children that qualify for that credit, but that credit will not be paid out to you if you do not have any tax obligations. On the other hand, the Earned Income Credit, which is available for low-income filers, will be refunded to you even if you do not owe any taxes. There are a wide variety of deductions and credits available. Take a look at the federal forms and related schedules to determine whether you might qualify for any of these. How to File Your Own Taxes If You Live Overseas If you earned income in the United States as a U.S. citizen or resident alien, you likely need to pay taxes on that income. This is true even if you live overseas. You can still choose to e-file or mail your tax return to the IRS once you have it prepared, just as if you physically lived in the United States. In some cases, you will be taxed on the income that you earned throughout the world. However, you may be able to deduct a portion or all of the revenue that was not made in the United States in some circumstances. Filing Online The IRS offers an online filing option that is free for individuals that have an adjusted gross income below a specific threshold. Generally, your income must be below $66,000 to qualify for this service. You can also file online by using a commercial tax preparation software. Examples of this type of software include: H&R Block TurboTax TaxCut TaxSlayer There are many programs available that will file your taxes for you, often for a fee. Knowing how to file your own taxes can be a great way to save money, but it can be tricky as well. If you want to file your taxes yourself, be sure to read the form instructions thoroughly and get familiar with various tax saving opportunities before you begin preparing your return.

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What Exactly is an Investment Property Loan?

Phil Sykora | August 1, 2019

The Impact of Investing in Property Loans Real estate investment is a great way to create generational wealth – but to buy that fixer-upper property across town, you need a way to get the money. Enter: Investment Property Loan. Investment property loans are conventional, HELOC and private money loans that lenders make, using investment properties as collateral. Each of them is capable of providing the much-needed cash to start construction on your first (or twentieth) real estate investment deal. Different Types of Investment Property Loans How do you know which investment property loan is right for you? The answer will vary based on many factors. According to the Urban Institute, somewhere between 13-16% of investment property loans are declined. By understanding the various types of investment property loans, you’ll be better equipped to choose the right property financing for your next investment and get approved for your next investment property loan. [youmaylike] Conventional Bank Loans When you think of getting a loan, you probably think about banks first. Traditional lenders can be a great option. To secure a bank loan for an investment property, you’ll need great credit (680 or better) and a little buffer time before you need to close. These loans will take longer (about 30-45 days according to Investopedia) to close, but the rates will be more competitive than hard money and private money. Requirements vary by lender, but generally, lenders require borrowers to have the following: 25% down payment. A 680+ credit score. A DTI (debt-to-income) ratio of below 50% (although it depends on the loan type and the income from the property can be forecasted to your current income). Documentation: two years of tax returns, two years of W-2s and two months of bank statements at a minimum. Hard Money Loans Hard money loans are a great way to secure investment financing quickly, especially if your credit isn’t awesome. Because of the quick turnaround and flexible requirements around credit score, you’ll likely be agreeing to a higher interest rate. Many hard money loans only require you to make interest payments on the amount that they give you. This means you keep more cash in hand while working through your project, which generally lasts between 6-18 months. You can make a large payoff once you’ve sold the property or refinanced into a longer-term loan. While hard money loans are more accessible and offer faster closing times, the rates are typically much higher than conventional loans. Hard money loans also typically use the property itself as collateral (or some other type of collateral that you can offer, such as your car or primary residence). If you end up failing to make the payments, the lender can seize these assets, making hard money loans a bit riskier than many other options. Private Money Loans Private money loans are obtained through an individual – usually a family friend or someone in your community or network. Each investor has unique expectations: They may even have no set requirements other than a cool project on a street they like. The investor sets the terms – perhaps relaxed payment expectations and low-interest rates – and can work with you to adjust those as issues come up in the project. Since it’s an individual deciding what to do with their own money, a private money loan can be less reliable than an institution. Yes, they can adjust when your needs change, but may just as quickly pull back their investment when their needs change. The best part is building a relationship. You have the opportunity to partner closely with someone on the project. This brings returns to both you and someone you trust (rather than a large institution). If things go south, it can be easier to reason with an individual, as well. Tapping Home Equity (HELOC or Cash-Out Refi) Tapping into your home equity requires prior investment in your primary property. That could be either through value-add improvements or equity that’s built up over time. You may also be able to tap home equity through a cash-out refi. You essentially take out a new loan for more than you currently owe on your house. The amount beyond paying off the previous mortgage becomes cash in hand to put toward your next investment property. How To Decide Which Type Of Investment Property Loan Is Right For You There’s no one-size-fits-all investment property loan. Talk to trusted advisors, take time to analyze the investment property and think about your exit strategy for the property financing. All of these considerations will impact which loan will work best for you. Take a look at some safe investments for seniors.

A Guide to Gold Investment Companies

Phil Sykora | August 1, 2019

Finding the Best Investments For thousands of years, gold has captivated our attention and has remained a constant high-valued commodity. Since as early as 4000 BC, gold has been seen as a treasure for its unique and appealing qualities. Not much has changed today: gold is still seen as a precious metal that holds value. In modern society, we often hear about stocks, bonds, and real estate investing, but what about gold investing? In this guide, we’ll be covering the basics of gold investing, along with four gold investment companies to consider. What Is Gold Investing? Gold investing refers to allocating capital to purchase and hold gold as an investment. Despite gold having high value for thousands of years, it wasn’t until 1975 that gold investing really took off. Because of the Gold Reserve Act of 1934, it was illegal for individuals and institutions to hold or trade gold titles or certificates. Today, investors choose gold for a variety of reasons, including portfolio diversification and protection against economic uncertainties. Gold has a low correlation to other asset classes, which acts as a great portfolio diversifier since its value tends to increase during times of economic crisis. This is because people tend to turn to tangible assets during times of economic uncertainty to preserve their wealth. On top of that, gold can act as a hedge against inflation due to its intrinsic value. If the purchasing power of the US dollar begins to erode from inflation, the variable cost of gold will increase as a result. [youmaylike] With that being said, it’s important to keep in mind that just like any investment, the price of gold is not guaranteed to increase. Even though it can help diversify your investment holdings, it’s generally recommended to invest no more than 5-10% of your portfolio. How Can I Invest In Gold? If you’re new to gold investing, you might be wondering how you can add it to your portfolio. Since gold is a physical commodity, there are several ways to invest in gold, such as: Physical ownership (e.g., gold coins, bullion or jewelry). Gold exchange-traded funds (ETFs) and mutual funds. Gold futures and options contracts. Another great way to get exposure to the gold industry is by purchasing gold mining stocks, however, these company’s share prices do not directly track the value of the gold itself. To keep your gold investments in a tax-sheltered retirement account, it’s recommended to open a gold IRA through a special custodian or broker. Once you have a gold IRA set up, you can buy and sell any gold-related investments. Although a gold IRA has to be held separately from other retirement accounts, rules regarding contribution limits and distributions still apply. The Best Gold Investment Companies Now that you know the basics of gold investing, we can dive a little deeper. Below, we’ve compiled the best gold investment companies where you can hold a gold IRA. American Hartford Gold For those who are looking for low fees, look no further than American Hartford Gold. This company doesn’t charge any fees for account setups, transfers or annual maintenance. In addition to that, they also offer frequent promotions to waive storage fees and have a no-fee buyback program. American Hartford Gold requires a minimum order size of $10,000 for their gold IRA, which is a relatively smaller initial investment size than other companies, making it more accessible for smaller investors. Though their no-fee business model is certainly appealing, keep in mind that there’s still a $50 fee for the account custodian to establish your precious metal IRA, and the buyback program offers lower prices than the purchase price. Birch Gold Group Birch Gold Group is another gold IRA company that would suit a fee-conscious investor. With full-fee transparency on their website, there shouldn’t be any surprises. They charge flat fees, so no matter how much you have in your account, the fees remain the same. The company recommends investors start with an initial investment of $10,000. Larger investors are not only incentivized by the flat fee but also by a promotion that waives all first-year fees with a transfer over $50,000. Birch Gold Group’s fee structure is enticing for larger investors, however, it may not be as worthwhile for smaller investors since the flat fee will be a larger percentage of your holdings. Augusta Precious Metals If you’re a large investor, Augusta Precious Metals could be a great fit. They offer lifetime customer support and assign each investor a customer success agent for direct contact. Additionally, they offer one-on-one web sessions for investors who hold over $100,000 and have a plethora of educational content in the form of videos and articles. The main drawback of Augusta Precious Metals is the minimum initial investment of $50,000, which requires a fairly large portfolio to meet that requirement. The company also does not list fees on its website and requires potential investors to speak to a representative to obtain that information. Goldco Known for their superb customer service and high client satisfaction ratings, Goldco is another great option to invest in. Similar to Augusta, they have plenty of resources for clients including how-to videos and actionable tips related to gold investing. Investors also get the choice to receive their distributions as physical gold or have Goldco convert it into cash. To open a gold IRA with Goldco, investors need to start with a minimum initial investment of $25,000. Final Thoughts Overall, if you’re looking for a way to diversify your investment portfolio and protect yourself from economic fluctuations, gold investing can be a great addition. Paired with the tax advantages of an IRA, it can be held long-term and included as part of a well-balanced retirement plan. However, just like any investment, the value of gold is not guaranteed to rise. It’s highly recommended to do your own in-depth research or seek the advice of a financial advisor to see if gold investing is right for your portfolio. Check out some investment apps for beginners.

How to Use a 529 Plan to Help Cover Education Costs

Tedra DeSue | August 1, 2019

Saving for Further Education Putting a child, or even yourself, through college has become increasingly financially burdensome as tuition costs continue to outpace incomes. If you or your child are planning to pursue higher education, there is financial help outside of scholarships and loans available. One popular option is the 529 savings plan. This is a savings plan packed with tax advantages that encourage people to save for their educations. Let's take a look at the 529 college savings plan. Sponsored by states, state agencies and/or education institutions, the plans have the blessings of the IRS whose Section 529 code authorizes them. Here, we’ll go over the basics of 529 plans to help you determine if they are right for you. 529 College Plans in a Nutshell 529 plans can be used to save for certain educational expenses for any student. These educational expenses include: Tuition. Room and board. Mandatory fees. Books. Computers. Software. You can invest in any state 529 plan that has approved them, and that’s most of them. The plans cover costs at any college as long as it qualifies under the plan’s rules. You could reside in Georgia, invest in a Colorado plan and send your child to a post-secondary institution in California. notes: "In most plans, your choice of college is not affected by the state that sponsored your 529 college savings plan. You can use your 529 plan at more than 6,000 U.S. colleges and universities and more than 400 foreign colleges and universities." To find out if your preferred institution is eligible under the 529 rules, visit its website. Two Options 529 savings plans come in two forms: a prepaid tuition plan and an education savings plan. Every state and the District of Columbia sponsor at least one of them. Let’s start with the prepaid plan. Prepaid Plan These plans allow people to set up specific accounts they can use to prepay all or part of their tuition costs. Funds in these accounts can cover the costs of in-state tuition, or be converted to cover tuition and other costs at out-of-state colleges and universities. Prepaid tuition plans have some caveats. These include: Residency requirements. Restriction on where the credits can be redeemed. What the credits can cover, which is usually tuition and mandatory fees. If, for some reason, your child doesn’t attend a participating college or university, the prepaid tuition plan may pay less than expected, according to the U.S. Securities and Exchange Commission (SEC). It oversees and regulates securities, such as stocks and bonds. The SEC states that only a small amount could be paid based on the original investment. When considering a prepaid tuition plan, you should understand the restrictions and limitations of the plan, including the extent to which your money is guaranteed and what happens to your money if the beneficiary doesn’t attend a participating college or university, according to the SEC. [youmaylike] Education Savings Plan Next, we will discuss education savings plans. Like prepaid accounts, they allow people to open investment accounts to save for their children’s futures. The plans cover the same things as prepaid plans. However, education savings plans are not limited to covering higher education costs. They can also cover tuition for elementary schooling, such as private schools. An additional feature of education savings plans is that they can be used to pay up to $10,000 per year per beneficiary for tuition at any public, private or religious elementary or secondary school. The SEC also points out that savers using this plan can choose from a range of investment portfolio options, which often include mutual funds and ETFs. It states: "If you are using a 529 account to pay for elementary or secondary school tuition, you may have a shorter time horizon for your money to grow. You also may not feel comfortable taking on riskier or more volatile investments if you plan on withdrawing the money soon. Because of these things, you may consider different investment options depending on when you plan to use the money that is invested." All education savings plans are sponsored by state governments, but only a few have residency requirements for the saver and/or beneficiary. State governments do not guarantee investments in education savings plans. Understand that investing in an education savings plan doesn’t qualify for federal guarantees. As with most investments, investments in education savings plans may not make any money and could lose some or all of the money invested, the SEC also points out. Unique Circumstances You could be one of those fortunate 529 savers who still have money in their account after your student graduates. Be forewarned that if you use the money for purposes other than paying for qualified higher education expenses or tuition for elementary or secondary school, you could be hit with a penalty. Specifically, the earnings portion of any non-qualified withdrawals will be subject to federal income tax as well as a 10% penalty, according to the SEC. Also, understand you could face penalties for failing to use the money in your 529 account for qualified higher education expenses and/or tuition. This applies regardless of the plan you choose. Withdrawals can be subject to state income tax if you claimed a deduction or credit for your contributions. If a scholarship was accepted, you may have to pay taxes on any income earned. In its bulletin, “Investor Bulletin: 10 Questions to Consider Before Opening a 529 Account,” the SEC states: "You may be able to avoid paying any penalties and taxes if you change the beneficiary of the 529 account or transfer the assets to another 529 account, in both instances to a person in the same family. Or you could keep the savings in the 529 account if your student is considering graduate school. Make sure you understand the tax implications of investing in a 529 account and consider whether to consult a tax adviser." Time Is of the Essence No matter which type of 529 plan you choose, you should start saving as soon as possible. One of the benefits of 529 plans relates to the earnings potential that grows over time. The SEC states: "The longer the money is invested, the more time it has to grow and the greater your tax benefits. You will lose some of these potential benefits if you withdraw money from a 529 plan account within a short period after it is contributed."