I opened it when I was 16 because I was about to start my first job, lifeguarding at our local YMCA. Eight years later, I have many more accounts.

I have some that I use, some that I am about to close, and some that have particular purposes. 

Now is a great time to look at bank accounts.

What are they?

They are more than an app and a flimsy plastic card.

Not all bank accounts are created equal. There are many different types of checking accounts, savings accounts, and hybrids in between.

I think that bank accounts are often overlooked because they can have a “set it and forget it” function.

This makes sense because as long as you have access to digital banking, you can live anywhere and still use the same account. 

I want to look at different types of bank accounts and how to shop around for the best combination of various lifestyles.

Like most products, there isn’t a ‘one size fits all,’ but there are plenty of ‘one size fits most.’ 

Checking

Most people are familiar with checking accounts.

It is almost impossible to get very far without one.

I couldn’t imagine any other form of being paid once I was introduced to direct deposit.

The purpose of a checking account is to have easy access to your funds and the ability to send or receive money.

The smallest local bank all the way to Chase or Bank of America all offer checking accounts.

They typically offer student checking, traditional checking, and business checking.

Banks want you to spend and receive money because they generate transaction fees.

In order to incentivize transactions, they usually have a $6-$12 monthly “maintenance” fee that can be waived if you meet a minimum balance requirement, use your debit card X amount of times, or have X amount deposited into your account on a monthly basis.

At the end of the day, checking accounts are not very flashy and do not typically offer any extra benefits for having them.

Some interesting accounts are the Chase’s checking with the Disney Debit card. Using this debit card gives discounts and exclusive perks at Disney world and their shops online.

Connexus Credit Union has an Xtraordinary Checking account that earns rewards when you use your debit card. Discover, and some other online banks are offering High-Yield checking accounts that generate cash back for debit card transactions. 

As you can see, there are plenty of options for checking accounts.

I do recommend shopping around and having at least one checking account that is from a large institution because they have better customer support and are familiar with transferring money abroad and other unique requests.

Savings

Savings accounts are always recommended, but they are not given the same attention as checking accounts.

At the fundamental level are only two types of savings accounts: standard and high-yield.

The main difference is the amount of interest you can earn from your account. Most banks can offer between 0.01-0.025% interest on their savings accounts.

On a balance of $10,000, that’s an underwhelming $25 in interest for a whole year.

Whereas high-yield savings accounts offer much higher rates that track the market more closely.

Even though rates are low, my interest rate on my high-yield account from American Express is 1.3%*. With the same balance of $10,000, that’s $130 in interest for the year.

Why are they so different?

Most banks that have brick and mortar branches have much higher overhead costs than online banks with centralized locations and very few branches.

Thanks to their low overhead, they are able to offer a much more competitive rate. 

Combining Accounts and Building Credit

I recommend having two checking accounts and two savings accounts because you won’t have all your eggs in one basket, and it is easier to set and track financial goals. 

*High-yield rates fluctuate with the market. When I opened my account a few years ago, I think my rate was 2.1%. Since the economy is down due to COVID-19 and the Fed has slashed rates, this is reflected in all interest-bearing accounts. As you can see, it is still MUCH higher than the average bank. 

The post How to Choose the Best Checkings and Savings Accounts for Your Lifestyle appeared first on Welcome.

I double-majored in Accounting and Finance. During college, I interned at a wealth-management firm, and professionally I have been an accountant at two, reputable Private Equity firms that invest in real estate. 

I invest some of my money in the stock market, sometimes I make a trade or two on my Robinhood account, and many of my mentors manage investment funds in various asset classes.

Do any of these make me an expert investor?

Absolutely not.

What they do make me is informed when it comes to the concept of investing.

I love finance, and I love growth and success. I want everyone to participate in the capital markets in some way because that is the best way to learn how the economy really works. 

It seems like everyone knows that ‘investing’ is a great idea, but it is a nervewracking experience to move money from your bank account into an unknown void of hoping for the best.

I want to break down what investing is and how to do it safely because it truly is the best way to build wealth, AND it’s fun.

What is investing?

At its core, investing is putting money into a venture with the expectation of financial gain in the future.

Some examples are: buying shares of stock, purchasing a restaurant franchise, or investing in an early-stage startup company as an angel investor. 

All three of these have different levels of risk, require a wide range of funds on hand, and are in entirely different markets.

What they all have in common is that they are all forms of investment. You are not loaning money to anyone in these cases.

Instead, you are hoping that the money invested will grow at a higher rate than it would in a high-yield savings account or under your mattress. 

*For the rest of this post we will primarily look at financial products in the capital markets since they are the most accessible

How do I invest?

The simplest way to invest is to use a brokerage service.

These services link buyers and sellers for financial products. Institutions like Vanguard, TD Ameritrade, Charles Schwab, or Robinhood all make creating an account safe and straightforward.

Once you make an account, you can buy and sell pretty much anything you want.

I would recommend transferring a very trivial amount of money into the account at first so that you can learn the mechanics.

Enough so you won’t be at any severe financial risk. Ideally, $500 or more would be a great goal because, as the market moves, you’ll have a good gauge of what it does to your portfolio (a group of stocks).

What do I invest in?

Time has proven that Index Investing is one of the safest and most efficient ways to build wealth in the stock market.

Wait what? 

Okay, an Index is simply a bundle of different companies’ stock that is all under a similar umbrella. If I say that “I invest a lot in tech stocks,” then you can guess that I probably own shares in companies like Apple, Uber, Amazon, Google, etc.

This is a simplified version of an index. One of the most famous indices is the S&P 500. This is where I recommend everyone invests some portion of their money.

The reason that everyone should own some of the S&P 500 is because that particular index is comprised of the 500 largest companies in the US.

Investing in the S&P essentially means that you are investing in a large portion of the US economy, and with an average annual return of 9.8% over the last 90 years, it is certainly nothing to look down on.

How do you actually invest? You buy shares of a mutual fund, which is a group of stocks, or you buy shares of an exchange-traded fund (ETF), which is a more tradable version of a mutual fund. 

If you want to buy shares of a particular stock that you have on your wishlist, maybe Twitter, then you would put their symbol (TWTR) in your search bar and buy as many shares as you want.

Will the market go up or down? 

Yes. 

When you buy stocks or invest in mutual funds, then your maximum loss is 100% of your investment because the business you own a piece of went out of business. 

If the entire S&P 500 went to $0.00, we all would have a MUCH BIGGER PROBLEM than our portfolio’s performance.

This is why investing in an index is less risky than solely owning shares in a single company. Index investing has diversification.

Diversification is a fancy word for holding different stuff.

For example, Apple may go up, and Amazon may go down or vice versa. If you own both, you have a less volatile portfolio, and if you own pieces of 500 stocks, then the impact is even less.

Once you have a solid foundation, then invest in what you know or would like to learn about.

My good friend buys one share of a stock he may be interested in owning to see how it behaves for a little while before putting more money into that company. I like that strategy.

The market can be very emotional.

Headlines seem to always read “all-time high” or “all-time low” because that’s what draws the most attention.

These headlines shouldn’t affect your behavior because the market consistently goes back up because the economy always comes back. 

What is the ultimate goal?

The ultimate goal is financial stability and peace.

By putting a little money in at first, doing more research on what index you’re interested in, and eventually developing a routine of investing a little more in your portfolio, you will continue to see your money grow.

It will go down sometimes, but when you stick to a routine, the power of compounding will result in a substantial piece of wealth versus leaving everything in your bank account and hoping for the best.

Once you dip your toes in the pool of investing, you’ll realize it isn’t that scary if you practice good habits.

You will have impressive wins and sad losses, but you will come out on top if you stay the course and let your money work for you. 

A great side benefit of participating in the market by investing is that you will learn so much by osmosis.

You’ll find yourself reading the news more intentionally. You’ll see how the Federal Reserve or a strike at a factory impacts everyone at large because you now have a finger on the pulse of the economy. 

The post How to Invest: for Beginners appeared first on Welcome.

The economic ripple effect of Covid-19 continues to spread and cause trouble for more and more Americans.

This final week of May offers a glimmer of hope as some states allow non-essential businesses to experiment with reopening under strict distancing guidelines.

Your favorite restaurant or retailer may be open now, YES! However, before you sprint over to get that lobster roll, you’ve missed so much I want you to check your credit score.

Why?

Things are different now. Unfortunately, the world didn’t merely hit ‘pause,’ wait for the pandemic to leave then hit ‘play.’

The reality is that over 20 million Americans are now without a job, and many businesses have closed their doors permanently.

If you can take a step back and check your credit score, then you may have an opportunity to put yourself in a better financial situation. 

The Score

 The FICO score is the most widely used metric for gauging a consumer’s creditworthiness. Not only does it dictate IF you qualify for a line of credit, but it also determines the interest rate you pay. Look at the two examples below:

they are both for the same loan amount and period. The critical difference is the interest rate. If you look closely, you can see that even though the interest rate is double, the total interest paid is more than double due to the power of compounding.

The same way compounding works for your benefit with investments; it works against you as a borrower. 

 This is where your credit score comes in. The five factors that create your FICO score are:

Payment History – your percentage of on-time payments vs. late

Amounts Owed – How much money do you owe in total. This one is a little tricky because having a loan can help your credit score as long as your debt/income ratio is acceptable. 

Length of Credit History – What is your oldest account? That is where credit bureaus base this factor on. This is why it is vital to look at the age of your accounts before canceling any. 

New credit – How often are you applying for new credit cards/loans? Too many hard pulls on your credit can lower your score. 

Credit Mix – What type of accounts do you have? A blend of mortgage, credit card, student loans, etc. shows lenders that you are responsible for multiple types of credit. 

Checking Your Score

If you don’t know where to check your credit score sites such as Experian, Free Credit Report, and Credit Karma all offer free reports and scores. 

It’s hard to make progress if you don’t know where you are. Checking your credit score is a great way to find your financial footing. Is it Poor, Fair, Excellent, or somewhere in between?

Most reports breakdown each factor and how it influences your score. FICO scores range from 300-850, with 850 being perfect. 670 and up is considered “Good,” and 740 and up is “very good.”

If your score is good or higher, focus on keeping the course and letting it grow since it is probably a length of accounts or utilization issue.

If your score is below good, then do not apply for any additional credit. Although you may be approved, you will have a very high-interest rate.

Scores that are below “good” typically have one or two identifiers – missed payments or balances that are too high.

I would recommend calling a credit counselor ASAP because they can offer much more specific advice to your situation, as well as hold you accountable for your improvement plan. 

Bringing it all Together 

Now that we’ve checked our scores and understand what they mean let’s look at the next steps.

If your credit score is in a happy place, then you may consider refinancing some loans or lines of credit to reduce the interest rate and pay less over time.

If your score needs some extra love for a few months, call a counselor and make a plan. Your score is not set in stone, and a few tweaks can put you on the road to an 800 FICO score. 

The post Is My Credit Score Relevant Right Now? appeared first on Welcome.

Unemployment is at an all-time high, businesses are scrambling to keep their doors open, and travel has come to an abrupt halt.

This environment has placed many travelers and business people on alert and is forcing them to justify the expense of premium credit card fees.

Under normal circumstances, the Chase Sapphire Reserve (CSR) is a vital tool in the traveler’s tool belt, even with the recently increased annual fee of $550.

Travel insurance, travel credits, lounge access, and a plethora of other valuable benefits PLUS the phenomenal Ultimate Rewards Program more than pay for this card.

However, borders are closed and airports are a potential hazard for Coronavirus. Is the card worth it this year? Depending on a few factors I think it is.

Description

When the Chase Sapphire Reserve launched it took the travel world by storm.

The Amex Platinum now had a true rival to contend with.

Boasting an amazingly flexible $300 travel credit, free Priority Pass Membership, 3x points on travel, AND dining redeemable through so many travel partners, there wasn’t a NOT reason to have it.

Booking two trips essentially paid for the annual fee (originally $450) if you used the travel credit and took full advantage of your lounge access.

The Precheck/Global Entry credit sweetened the deal further by reimbursing the cost of either of these programs which enable you to have an expedited experience through airport security.

Trust me, nothing sets the mood for a great trip like breezing through security and being greeted at a lounge with a glass of champagne and a plate of piping hot pasta.

Those were the golden days that seem so long ago. Now that we are grounded at home let’s see what the CSR has to offer, and if it is worth the fee in a Covid-19 world.

Travel Credit

This is the make or break credit for most of us who signed up for the CSR in the first place.

$300 towards travel is incredibly useful, and it also is very liberal in what qualifies to trigger the credit. I’ve had parking garages, Ubers, and of course flights and airline incidentals credited back to my on my statement.

This credit is so easy to burn through that I intentionally hide my CSR until I am ready to book a trip.

Since it is so easy to use I would like to think that everyone who has the card was able to use some of the 2020 credit before quarantine began.

Fortunately, I spent most of mine on a road trip to New England so I got my money’s worth.  If you had a similar experience then you may as well head down to the other benefits.

For those who were saving their credit or have not had the opportunity to use it yet, there is still the entire second half of the year waiting for you.

Some possibilities for maximizing your travel credit would be to book a trip towards the end of the year, or even into 2021.

Why?

Fares are SO LOW.

Most of the airlines have ludicrous deals running 24/7 so that someone, anyone, will book a flight.

If you book your trip now and need to move it later, you will still get a refund or reimbursement, but you will be safe in the knowledge that you maximized your credit and scored a great deal in the process.

Doordash

I honestly was not aware of the Doordash credit/Dashpass benefit until earlier this week.

However, I was STOKED when I learned about it and proceeded to immediately order takeout. This is one of those little lifesaver benefits that are great for quarantine.

Chase is giving Reserve members $120 in credit to Doordash through 2021 in $60 annual allotments.

It is important to note that, unlike the Amex Platinum Uber credit, you can use this credit however you want.

All at once or broken up over time the choice is yours which is a nice feature.

Dashpass is a subscription service that Doordash offers at $9.99 per month which offers subscribers $0 delivery fees with orders over $15.

They claim that the average user saves over $20 a month even with the subscription price

CSR holders have this benefit included with their annual fee, and I can honestly say it was a noticeable savings when I ordered Doordash for the first time.

Simply add your CSR into the payment info in the Doordash App, and it automatically recognizes the card and enrolls you in the program.

This is a phenomenal quarantine benefit because it takes some of the added cost of takeout out of the equation. 

5x Points on Groceries Up to $1,500 Per Month through June 30th

This is a major incentive for CSR holders to hold on to their cards, at least through June.

Since travel and dining are so reduced, the addition of 5x points on groceries is a great way to recoup lost earnings.

The best part is that superstores like Walmart and Target are included in this promotion as long as they have a grocery section. This is worth up to 15,000 ultimate rewards points which is huge.

These are the three most valuable tools to CSR holders during the COVID crisis.

Supplemental benefits like travel insurance and trip delay insurance may still provide some value, but I see these three benefits as the primary lifesavers and reasons to hang on to the CSR during the quarantine.

Alternatives

If you were already on the fence about the CSR to the fee increase or another reason here are a few alternatives to consider:

Chase Sapphire Preferred

If you have the Sapphire Reserve you probably upgraded from the legendary Sapphire Preferred. This is a great alternative because the fee is only $95, Dashpass membership is included, and they are offering 3x points on groceries through June 30th. The most important factor is that you will retain your hard-earned Ultimate Rewards Points which do not work with other Chase products.

Chase Freedom

If you need to drop the fee entirely the Chase Freedom is a great choice. Rotating rewards categories, and a generous sign-up bonus make this a great contender.

Amex Green

If you are looking for something completely different, or an easy way to supplement your Membership Rewards earnings check out the Green Card from American Express. The fee is $150, and it comes with great travel and dining earning at 3x per dollar. Added credits like Clear and lounge buddy make it a great option for travelers who want lounge access and a lower fee. 

The post Is the Chase Sapphire Reserve Worth Keeping During Quarantine? appeared first on Welcome.