The following is a guest post by Orion Talmay, of Orion’s Method.
Dealing with finances can be stressful and leave you feeling overwhelmed. It’s all too easy to ignore mounting debts or believe you’ll never save up a significant amount of money. But taking control of your life and changing the way you think can make a huge difference. We take a look at why financial productivity begins with a positive mindset.
The Impact of a Positive Mindset on Financial Productivity
Whether you want to work your way out of debt or save up to buy a house, with the right mindset and some hard work, those financial goals are possible. However, you have to start by getting out of a negative thought cycle—if you believe there’s no point trying, then you’ll never achieve them. Therefore, you might be tempted to make choices that make your financial position worse.
Even with a positive mindset, you won’t achieve your goals overnight. But it’ll put you on the right track to take more control over your finances.
How to Achieve a Positive Mindset
Achieving a positive mindset can be difficult, but you can adopt some proven techniques that’ll help you:
Take care of yourself
Know where you stand
Set achievable goals
Make small changes
Try to see the positive
Take Care of Yourself
If you’re struggling with a negative mindset, you might slip into bad habits throughout your life, not just when dealing with your finances. Learn to take care of yourself and prioritize your own well-being.
Start with the basics—make sure you’re exercising regularly, eating a balanced diet, and getting enough sleep. These might seem obvious, but a bad routine leaves you tired, stressed, and unhealthy, which all have a big impact on your mind.
Treat yourself well, and get into a good routine that helps you stay in control. You’ll see an improvement in your physical and mental health, which puts you in a better position to make informed financial decisions.
Know Where You Stand
It’s tempting to bury your head in the sand when it comes to finances. However, not knowing exactly where you stand will add to your stress.
Open those bills and credit card statements you’ve been ignoring. Check your bank balance, work out your incoming and outgoings. Get a clear picture of your current financial situation and understand what bills and repayments you need to make and when they’re due.
It might be hard to start with but it’ll improve your mindset and put you in a better position to get on top of your money.
Set Yourself Achievable Goals
It’s easy to feel negative if you can’t see a way out of your current situation. So, once you know exactly where you are, come up with some realistic targets that you can achieve within a certain time frame.
For example, if you want to save up for something, set a savings goal and decide how much you can realistically put aside each month, and how long it’ll take to reach your target.
The important thing with your goals is to make sure you’re sticking to them. If you put money towards debt or savings but you don’t have enough left to cover the rest of your bills, you’ll be tempted to borrow money from somewhere else.
Make Small Changes
Don’t try to overhaul everything in your life all at once. Make small, manageable changes that you’ll actually stick to and that will help you feel more positive. There are some really simple money moves that’ll make a noticeable difference. Start by looking at all your subscriptions and recurring payments—consider canceling the ones that you don’t use or can live without.
If you buy your lunch during work every day, get into the habit of making it at home. Make small switches to your grocery choices, and try to stop buying things that you end up throwing out. Cut down on impulse buys—for nonessential purchases, make yourself wait a couple of weeks to consider whether you really want or need it.
Try to make one or two small changes each week that you can follow through on. It’ll improve your mindset if you can stick with these habits long-term, rather than trying to do everything at once and feeling like you’ve failed when you slip up.
Try to See the Positive
Often easier said than done, but try to get out of the cycle of negative thoughts. Revisit your goals each day to remind yourself what you’re trying to achieve and what you should be focusing on.
When you have a negative thought, where something seems impossible or too difficult, stop and think about ways around it. Don’t get stuck on things that can’t or won’t happen and focus on solutions, workarounds, or breaking it down into smaller steps to get through it. If you struggle to focus on the positives, meditation can help you to manage your thoughts and give you more perspective.
Why a Positive Mindset Matters
Everyone feels unmotivated and disenfranchised from time to time. It happens to the best of us. However, if you really dig deep and find what’s causing your low energy, you’ll be better equipped to find the root and weed it out. Try to channel your energy into more productive outlets, and make changes whenever they take a toll on your mental state. That’s the key that’ll enable your long-term success.
Having a positive mindset is the foundation for taking control of your money and becoming more financially stable. Setting yourself goals, addressing bad habits, and learning how to get a handle on your thought processes will help you to manage your finances and put you in a better position with all aspects of your life.
With two stimulus checks under our belts, planning is currently underway for President Joe Biden’s $1.9 trillion COVID relief package. If passed, it would supply Americans with a third round of stimulus checks.
A quick recap—the first stimulus checks made the rounds in April 2020. Individuals with an income of up to $75,000 received $1,200. Meanwhile, married couples who made up to $150,000 received $2,400, along with $500 per child. The second wave of stimulus checks, coming in at only $600, arrived in December 2020 and January 2021. Married couples received $1,200, with an additional $600 per child.
With almost a full year between the last stimulus check over $1,000 and now, people’s finances are suffering. In a poll published by NPR in September 2020, 63% of those polled in Houston, TX faced serious financial issues due to the pandemic. Additionally, 57% of those polled reported that someone in their household either lost their job, were furloughed or had their hours or wages reduced since the pandemic started.
Needless to say, people need financial relief. And while it looks like a stimulus relief package will probably pass, there are a few details still on the table. The biggest points up for debate? Who should get a stimulus check in 2021—and how much they’ll get.
Who Will Get a Stimulus Check?
President Biden has been adamant that the households that qualify should receive a $1,400 stimulus check. Based on the most recent proposal under consideration, households earning $75,000 or lower would receive $1,400 checks. Meanwhile, married couples who earn $150,000 or less would receive $2,800, along with $1,400 per child.
While it looks like this plan will stick, it’s worth noting that a group of Republicans have created a plan that’ll send $1,000 checks to individuals earning $40,000 or less and couples earning up to $80,000. This relief package targets lower-income households while leaving out a lot more people than President Biden’s plan.
When You Can Expect Your Check
In order to speed up President Biden’s stimulus relief package, Democrats are using a budget reconciliation process. In a nutshell, this would allow Democrats to approve the stimulus package without Republican votes. While the stimulus package is being sped up, a few more details have to be ironed out before the package is drafted and voted on.
All that to say—it could take several weeks for you to get your $1,400 stimulus check. Even when the package is passed, it still has to be signed by President Biden and sent out by the IRS. So be on the lookout, but know that you’ll likely have to wait at least a few more weeks. It is worth noting, however, the House is planning to get the stimulus package approved in the next two weeks.
How Should You Spend Your Stimulus Check?
Ultimately, how you should spend your check is up to you. Everyone is in a different financial situation, so you might spend your check differently than others. But if you’re wondering how to spend your third check, you have a few options:
Use it to cover the basics. If you’ve been struggling to pay for your basic needs, like groceries and rent, you can use your stimulus check to cover the bills.
Pay down debt. The past year has taken a toll on a lot of our finances. If you’ve racked up debt in 2020, you could use your stimulus check to help pay down some debt.
Put it in savings. It never hurts to save some money for a rainy day. You can put some or all of your stimulus check in a high-yield savings account until you need it.
Donate it. If you’re doing pretty well financially, you might want to consider donating your stimulus check to a good cause or to support small businesses.
Again, you should take a serious look at your finances and your needs before you decide exactly how to put your stimulus check to use.
The Next Round of Stimulus Checks Will Probably Happen
As of right now, things are looking pretty good for the third round of stimulus checks. But who qualifies and who doesn’t could still be on the table. In the meantime, if you need some financial guidance, take a look at our COVID financial resource guide.
While college students can get their own federal student loans without a cosigner in most cases, there are some situations where a cosigner is required. Federal Direct Parent PLUS loans, for example, can actually be taken out on behalf of dependents to help pay for higher education. Students can also apply for private student loans to pay for college. These loans tend to have high credit requirements that make it difficult for young people to qualify on their own.
But should you really cosign on student loans for your child? And should you cosign on any loans they can’t qualify for on their own? You can certainly consider it, but it helps to enter the situation with eyes wide open and understand all the pros and cons.
The main advantage of cosigning is the fact that you’re helping your child (or dependent) pay for higher education when they may not be able to otherwise. However, it can also be a huge risk. Here’s everything you need to know before you sign on the dotted line.
You’re obligated to repay the debt no matter what
Whether you take on a Parent PLUS loan or you cosign with your child for a private student loan, the first thing you have to understand is that, no matter what, you’re obligated to pay that debt back. If your child stops making payments, you’ll be required to make them. If your child flat-out refuses to get a job and completely defaults on their responsibilities, you will need to repay that loan.
Cosigning on a student loan is similar to buying a house with someone or cosigning on a car loan. You’re both jointly responsible for repayment regardless of what the other person does. That can be a huge problem if your child doesn’t take their bills very seriously, but it may not be an issue if they treat their credit with care and stay on top of their bills.
Student loans are almost never discharged in bankruptcy
Another detail to understand is the fact that student loans are rarely ever discharged in bankruptcy. For the most part, they’ll stick around forever unless the borrower dies or you can prove you have some inescapable hardship.
As a parent, you’re probably trying to save for retirement and reach other financial goals, so it’s important to understand that the student loans you cosign for will never go away until you pay them off — once and for all.
There’s no going back
When you cosign on a student loan, you can’t just change your mind and back out of the deal. Your child may be able to refinance their student loans in their name, but only if their credit score is good enough to qualify for student loan refinancing on their own. And if that was the case, they wouldn’t have needed a cosigner in the first place.
Your finances may be perfectly fine right now, but you should think through how they may be in five or 10 years. If you’re nearing retirement, you may not want to put yourself in a situation where you’ll be stuck paying off a child’s student loans. Plus, you never know how your health will be or the status of your career several years from now. Cosigning for student loans leaves you on the hook no matter what, and it’s hard to change that after the fact.
Cosigning on a loan could affect your credit score
When you cosign on a student loan, you have to remember that you’re jointly accepting responsibility for the debt and any consequences that arise out of late payments or delinquency. So you should only cosign if you know your child or dependent is dedicated to paying their bills on time and avoiding default at all costs.
If you’re not paying attention, you could easily take a huge hit to your credit score without even knowing. Since payment history makes up 35 percent of your FICO score, it’s easy to see how even one late payment could cause major damage. Just think of what could happen if the student loans you cosigned for were paid late month after month. If you’re not also receiving a bill in the mail, you may not find out until the damage is already done.
The bottom line
There are situations where it can make sense to cosign on a student loan, but this decision should never be taken lightly. You may be helping your child earn their degree, but you’re taking a significant risk. (See also: Should You Co-Sign a Loan?)
You may want to assess the career field they plan to enter into and figure out how much they might earn upon graduation before you cosign. Some fields have plenty of promise right now, while others offer almost none, and you should know either way before you make any type of financial commitment. Maybe your college student could even spend time improving their credit score so they can qualify for student loans on their own.
Cosigning on student loans should be a last resort for parents, not an easy fix for students who don’t take time to consider all their options.
GameStop, a dying video game retailer, has blown past epic proportions to the point of hitting all-time highs in the stock market.
A few weeks ago, the company (stock trading as ticker: GME) traded around lows of ~$19. As of January 27th, 2021, the GameStop stock has reached an all-time high of $350. That’s a ~1700 percent increase! Currently, GameStop’s market capitalization is $24 billion, previously $500-$700 million.
Before its euphoric rise, GameStop was on a slow demise to bankruptcy, as it faced significant challenges to its business model from the internet. Similar to BlockBuster, people stopped buying video games in-person at retail stores. “Downloads became a thing, and GameStop’s business declined,” says Michael Pachter to BusinessInsider, who covers the video game industry.
Alongside GameStop’s faltering business model, GameStop also ran into issues with its poor business decisions. They embarked on new initiatives, including the acquisition of Spring Mobile in 2013. The company had bet on making money by buying smartphone stores. By 2016, GameStop had owned and operated approximately 1,500 mobile-phone stores under the Spring Mobile name, and in 2018, had sold the whole mobile-phone business.
So how did GameStop rise from the ashes?
Well, A Trading Euphoria Caused By …
An army of traders from the Reddit r/WallStreetBets has been at the center of the GameStop saga. WallStreetBets (WSB), a community of Millennial and GenZ traders, have helped drive a to-the-moon surge of GameStock’s stock price while halting trading multiple times, crashing Reddit, and even forcing the subreddit to go private. With 3.5 million traders following the subreddit, WSB users are known for purchasing extremely risky products, including leveraged ETFs, financial call and put options, as well as shorting equities.
These Reddit users have blown everyone’s expectations out of proportion. No one expected a group of online traders would have a massive effect on the stock market.
Most notably is perhaps the loser of this David and Goliath saga – Citron Research and Melvin Capital. Both of these investment firms took huge bearish bets against the GameStop stock, and even Citron had announced on Twitter that “GameStop buyers at these levels are the suckers at this poker game.” For those of you unfamiliar with stock trading, the two firms had shorted the GameStop stock by borrowing the stock to sell at a given price, with the idea that they will purchase back the stock later.
In this case, assume an individual sells short one share of GME at $19 in their margin account. What happens is they receive $19 from selling the share on the stock market, but they still owe their broker one share of GME. So, in this individual’s ideal scenario, they will want to buy back GME at a lower price to profit on the trade.
But in this trading saga, Reddit users had driven up the price by buying so much. Hence, increasing GME’s stock price. So, the individual holding the short position would have to purchase the stock back at a much higher stock price on the settlement date; thus, losing money.
The Squeeze
Due to the rampant rise in GME’s stock price, Citron Research and Melvin Capital had been taking on significant losses, and with due time, they would eventually have to close their position. Closing their position would squeeze them out of their position. For a short squeeze to happen, the firms’ losses have to be so high that the broker requires more capital to keep the position open. As of January 27th, both firms have closed their positions. Since then, hedge funds Citadel and Point72 have invested $2.75 billion into Melvin Capital.
The Question Still Remains – Why Did r/WallStreetBets Target Melvin Capital and Citron Research?
Greed has been present on Wall Street since the inception of the securities market. During the 2008 financial crisis downturn, banks were giving loans to anyone to make more and more money while selling mortgages to poor credit individuals. Their greed eventually reached a point where many homeowners could not make their mortgage payments causing foreclosures, and eventually, a recession. In the end, the banks received a bailout, and similarly, Melvin Capital received a bailout from other hedge funds.
In this ordeal, the two hedge funds shorting GME had become too greedy as they had driven GME’s share price from $20 to $10 and to $4. There was no means to an end for their greed and their hope for GameStop to go bankrupt. In part, short selling wipes out businesses. Elon Musk has also laid criticism to short-sellers, tweeting “short-sellers are jerks who want us to die.”
So, how does greed tie together with shorting a stock, hedge funds, Reddit users, and a video-game selling retailer?
Well, someone on WallStreetBets had noticed these hedge funds had sold short 140% of all shares available. The rule to short-selling is that ALL the shares they borrow MUST be paid back. Realizing these hedge funds had shorted GME by a ridiculous amount, these retail investors on Reddit (ordinary people like you and me) bought every share they could get their hands on. Thus, driving the price up like crazy and perhaps creating an arbitrage opportunity.
>> Learn more about investing in stocks with our investment guide for beginners.
Why?
These hedge funds would eventually HAVE to buy back these shares at whatever price they could purchase. They don’t have a choice. So, these Redditors bought all the GME shares they could buy and drove the prices up to ridiculous prices. Buying back these shares of GME would cost these hedge funds an arm and a leg.
Fast forward to today, January 27th, 2021, WallStreetBets users are creating memes, as well as notable people, including Elon Musk and Chamath Palihapitiya, who have influenced more people to buy GME stock. Hence, destroying these greedy hedge funds in the process.
Additionally, many Redditors felt crude sentiment towards these financial institutions as numerous Reddit posts complained about these institutions’ predatory actions. Even AOC tweeted, “Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino.”
Notable People’s Influence Behind The GameStop Stock Rally
As it’s been interesting to watch GameStop’s stock rally, there have been notable individuals placing their own opinion. Michael Burry, best known from “The Big Short” as one of the investors who had made money from the 2008 financial crisis, had been holding onto GameStop since 2019. Although he has a 2.4 percent stake in GameStop as of Sept 30, 2020, he has stated, “there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous”.
Contrarian Chamath Palihapitiya has also played a part, as he tweeted his purchase of $125,000 out of the money call options on GameStop.
For those unfamiliar with call options, call options are a financial derivative used to make speculative bets on the rise or fall of stock prices. In this case, Palihapitiya made a speculative bet for the increase of GameStop stock.
Elon Musk, well-known for the tweeting habits that have gotten him in trouble with the SEC, has also taken part in the GameStop rally by tweeting a subtle “Gamestonk!!”
How Does Reddit Feel About This?
Reddit’s r/WallStreetBets have broken all-time traffic records this week as millions of visitors flocked to the subreddit. According to Mashable, r/WallStreetBets received approximately 74 million page views in the past 24 hours. Note, Reddit had 52 million daily active users in October 2020.
One WallStreetBet moderator felt compelled to address the backlash with the narrative that the forum “is disorderly and reckless” and is involved in manipulation. He wrote, “What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living.”
Can Regulatory Bodies Do Anything?
The trading activity on GME reminds me of the old pump and dumps that ultimately harmed many traders. The stock gets hyped up way out of proportion to its actual intrinsic value and essentially benefits the ones who are hyping it. Will the stock really retain its value over the long haul? If not, then the people who heard the hype and came late to buy it could suffer. – Eric founder of Mindful Trader
As the trading volatility ensues, regulators are becoming increasingly worried about all the signals this volatility is sending to traders, like TD Ameritrade and Schwab. Both brokerages have restricted certain kinds of trades in GameStop and AMC. TD Ameritrade said there was “an abundance of caution amid unprecedented market conditions and other factors.”
Regulators have been mindful of the action, as William Galvin, Massachusetts secretary of the commonwealth, told Barron’s that he was watching the story play out.
Regulators do monitor trading for any signs of market manipulation and what people say about stocks in public forums, according to Amy Lynch, a former SEC regulator. However, merely announcing to people that you are buying a specific stock and telling people they should as well have no legal repercussions.
The End of the GameStop Saga?
Ultimately, the GameStop saga has not run its full course, as trading is still occurring for the crazy stock. But, the two hedge funds that started all of this? They are entirely out. One hedge fund has wholly gone bankrupt, and other hedge funds have funded the other hedge fund. Will we be seeing this hedge fund enact vengeance on these Reddit users? Most likely not.
The takeaway we can all get from this whole ordeal is don’t mess with Reddit users, and perhaps the next generation of Millenials and Gen Z have more impact than we imagined?
Really, I gotta feel sorry for all the kids born this year because from now on, they’re going to tell someone the year they were born and it’s just going to be cringes and, ‘Oh…that suuuucks!’
But putting the year behind us also means getting ready for 2021 and how to invest!
Over the next two months, we’re going to be talking a lot about 2021 investing strategies including what to invest in and how to be ready but first, I wanted to do a higher-level guide for you. Look at where the market is at, what I’m watching and where I’m investing in 2021.
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Good Riddance 2020, Hello 2021 Investing!
Nation, it has been a CRAZY market this year! From the 35% stock market crash to surging higher 60%, the world’s wealthiest have become $813 billion richer this year!
But not everyone has been so lucky. A lot of investors panicked when stocks crashed and didn’t benefit fully from the rebound.
This is your second chance though, a chance to be ready to invest for 2021 and why I think it could be an even bigger opportunity!
In this video, we’ll start by looking at where the stock market is at heading into 2021. I’ll then show you what to invest in now and how to be ready for anything next year. Stick around because I’m going to be revealing the step-by-step investing strategy I’ll be using towards the end of the video.
Where is the Stock Market Heading into 2021?
We’re going to start with that stock market update…and I know this isn’t as sexy as picking stocks or that how to invest strategy but please, PLEASE watch through this part because understanding this big picture stuff is going to help you make better decisions on how to invest when we get to that strategy and then to those individual stock picks over the next two months.
How Expensive are Stocks 2021
Nation, the market is undeniably expensive. This is a chart of the market PE ratio, so the price investors are paying for total earnings reported by stocks in the S&P 500, and what you see here is the green dashes are the five-year average PE ratio and the blue dashes are the 10-year average.
Look at that line though, at a price over 22-times expected earnings, the market is now 39% more expensive than that 10-year average. In fact, you have to go back to the tech bubble in 2001 to find a market more expensive than this.
And to see how we got here, you only have to look at the returns by sector for the year. As earnings have gone down, so as that bottom number in the PE ratio went down, we’ve seen prices for some sectors just explode higher! Consumer discretionary up 21%, tech stocks up almost 30% this year!
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Best Stocks of 2020 and 2021
But not everything is as expensive and that’s going to guide a lot of our strategy for 2021. Stocks in the energy space have plunged 51% with financials and real estate both in the red as well.
This is another great chart here, showing the PE ratios for each of the stock sectors plus the market index, the S&P 500. The dark blue is the current price of stocks in each sector against the earnings analysts expect over the next year. For comparison, the green bar is the 10-year average PE ratio for that sector and I’ve added the percentages here showing just how expensive some of these sectors are on that PE basis.
Best and Worst Stocks to Buy 2021
So on the one side, you’ve got stocks of consumer discretionary companies, tech stocks and industrials that are hugely expensive and really driving this market. On the other side though, you can still find some value in a few sectors like financials, energy and health care that aren’t trading quite as high off that 10-year average.
Stock Market Trends 2021
Now let’s take a look at what’s driving the stock market and we’ll put it all together for what I think could be the three best investments for 2021 and how I’m investing my money.
And it shouldn’t come to much of a surprise that the two biggest drivers of stock prices right now, and really into at least the first couple months of 2021 are a potential vaccine and new stimulus out of Washington.
We’ve got at least three companies well into their stage three testing for a vaccine; Moderna, Inovio and Pfizer with the latter already saying it would apply for emergency approval around the end of November.
Whether a vaccine gets us back to normal or how long it takes to distribute isn’t even relevant at this point. Just the approval of a vaccine is going to be a sentiment boost for investors and the economy and the market is baking that into prices already.
The other market driver is not just the $7 trillion-plus pumped into the economy from the Federal Reserve and government stimulus but the assumption we’ll get at least one more multi-trillion dollar stimulus if not two.
And the idea here is that if we do get more confidence from consumers that they can go out without getting sick and if we do get another trillion dollars or so pumped into the economy, that’s going to mean an explosion in growth and maybe these stock prices won’t look quite as expensive.
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Will the Stock Market Crash in 2021?
But what the market is missing is I think the longer-term reality of the virus and its affect on the economy. By most accounts, it’s going to take at least a year to get enough people vaccinated to where we see that herd immunity and people can feel some kind of normal.
Then you’ve just got the depth and enduring weakness of the economy. The rebound in restaurant reservations in purple and then retail store traffic in orange, and while both have rebounded since May, they’re still down significantly from last year. Restaurant reservations are still down 40% from last year and retail store traffic is down ten- to 20% heading into that critical holiday shopping season.
And while unemployment has come down, we’re still at record highs every week for the number of people filing. The Fed shows new unemployment claims each week, and even though the most recent week was lower than expected at 787,00 new claims…that’s still higher than at any other point in history. The peak for unemployment claims in 2009 was 660,000 in a week.
So while we do have those two forces, a potential vaccine and stimulus, helping stocks move higher now, I think it’s a short ride and it’s a lot of what will drive the market in 2021.
Best Investments to Buy for 2021
Now let’s put this together for what I think could be the three best investments of next year and then that strategy of how I’m positioning in this market.
For those of you following our 2021 Bow Tie Nation portfolio, you’ve already seen we’re positioning heavily in value stocks, especially those in the energy, financials and healthcare sector.
And I’m doing that for a couple of reasons. First is that if we do get back to even anything close to normal, it’s these sectors that will bounce back faster. Interest rates will rise taking bank profits higher, oil prices should gradually move higher and healthcare providers can get back to making money in something other than Covid19.
Also though, and this is key, if the economy doesn’t rebound as quickly as the market is expecting, then these value stocks don’t have as far to fall. With tech stocks trading at 26-times on that PE basis, prices would have to fall by 66% just to get back to the long-term average. By contrast, these stocks in energy, healthcare and financials, they fall any and they’re at fair value but even something as little as a 10% selloff puts them in deep value territory.
Second here is I’m using real estate as a hedge against any stock market weakness but with a huge warning. You cannot think of real estate as one market. This table shows the year-to-date returns by property type and the difference is amazing. While the overall real estate market, those REITs that trade like stocks, while it’s down 12% this year on average, some sectors have absolutely crashed while others are posting positive returns.
You’ve got a 30% loss on office property and retail property is down 39% from the beginning of the year. Lodging and resort property is down a stunning 49% with REITs in the space losing $22 billion in market value.
But a couple of these sectors are outperforming by a wide margin. Industrial property, so think things like warehouses and distribution centers, are up 9% this year. Self-storage is higher by almost 6% and data center REITs are up a whopping 25% on the year.
So I’m positioning in REITs like Stag Industrial which owns warehouses perfect for the ecommerce boom and pays a 4.4% dividend or data center REIT Digital Realty, ticker DLR, which has seen its stock price double in the last five years.
Last before we get to that specific investing strategy is don’t be afraid of cash! I know it sucks to have money sitting there in your investing account, not making money, but I think we get an opportunity at lower prices early in the next year and that cash is going to be your best opportunity.
That’s because traditional safety investments like bonds might not offer as much protection as you expect. With interest rates at historic lows, any bounce in rates is going to drive bond prices down so you might be forced to sell at a loss to raise cash and invest in lower stocks prices.
Cash though is going to be immediately investable and with inflation around 1.5% annually, you’re not losing out on anything by waiting it out.
How to Invest in 2021
So you’ve got that big picture of what the market looks like heading into next year and how I’m positioning, now I wanted to share a more detailed strategy I’m using for exactly how to invest. Again, I’ll be doing a series of videos on specific stock picks and investments over the next couple of months but this basic strategy is how I’m going to approach it.
On that probability of a vaccine later in November and the potential for not just one more stimulus package but maybe even another round, I’m bullish through January. An emergency authorization for a vaccine will be a big sentiment boost not only for investors but to the real economy as well. I think you get a jump in retail store traffic, travel and restaurant dining in those first couple of weeks after.
I’m more worried though as we head into the second quarter and summer of next year, so the late February to May period. Even with more stimulus, it’s likely that the longer-term economic weakness starts weighing on earnings and just the reality of how bad the unemployment picture starts showing through on the stock market.
For this, I’ll let my stocks run probably through January moving into some of those value names but also keeping my growth stocks in tech. Then as we head into February, I’ll use a combination of three positions.
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One is I’ll take some profits from this year’s stocks and keep a chunk of it in cash waiting for those lower profits. I’ll also rebalance out of some of those growth stocks for a bigger percentage in value especially in those three sectors energy, financials and healthcare. Finally, for the stocks I do keep, I’ll sell some covered calls against them to collect cash and hedge against a drop in prices.
Save on a Gym Membership with At-Home Workouts – SmartAsset
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Somewhat unsurprisingly, search traffic for “gym membership” peaks between January 3 and January 9, according to Google Trends. If you already belong to a gym you’ve probably noticed that things get pretty crowded every January. But if you want to save money this year, consider some of these free or inexpensive alternatives to a gym membership.
Find out now: How much house can I afford?
Try At-Home Yoga
There are plenty of options for anyone who wants to save money by canceling their gym membership or skipping out on the usual early-January gym membership purchase. One option is at-home yoga. You can buy an inexpensive yoga mat, or just use a towel or the floor if you don’t want to commit to buying a mat. An internet search will turn up sample yoga routines or you can head to your local library for a book on yoga. If you know how to do a basic sun salutation, you can start off with that – and repeat until you feel like you’ve gotten a good workout. The cost? $0.
Related Article: The Best 3 Gyms for Your Wallet
Use YouTube
YouTube is a great resource if you want to try working out at home but you’re not sure which type of exercise is the best fit for you. You can find short videos and long videos, videos for beginners and for advanced users. There are videos with Pilates routines, body weight exercises, Zumba classes and more.
You can try one-off routines to get a feel for a particular style of exercise, a particular YouTube channel or a particular vlogger. But you can also commit to a series or program that, through the aid of YouTube videos, will take you on a multi-week fitness journey. The cost to you? $0.
Related Article: How to Cancel Your Gym Membership
Go Old-School
If taking up yoga or learning something like Pilates or Zumba through YouTube doesn’t sound like your speed, you can always go old-school with classic body weight exercises performed free of charge, in the comfort of your own home. That means push-ups, squats, lunges and other exercises that require no equipment.
There’s a lively online community devoted to helping people achieve their strength and fitness goals through body weight alone, without using free weights or any gym accoutrements. If you think you need to pay for a pricey gym membership to get the results you want, take a look at the information that’s out there on body weight training – you might be surprised by what’s possible.
Head Outside
OK, so this one isn’t technically “at home” but you can always hit the streets, head to a local park or set up in your backyard to get your exercise. Running and walking are popular forms of exercise, but you can also do the body weight training mentioned above. At first, you might feel a little self-conscious doing walking lunges in your yard or in the park, but the (free) fitness gains should help you overcome any initial embarrassment.
Bottom Line
Every January, gym owners count on consumers to buy pricey gym memberships and then never use them. They oversell gyms the way airline owners oversell flights, counting on a high number of no-shows. This year, why not prove them wrong and opt for an at-home workout regimen?
Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
We’re not going to lie—2020 was a tough year for everyone. Between COVID-19 and pandemic-driven layoffs, we’re all ready to move on from last year. So, what are your new year’s credit resolutions for 2021? Do you want to improve your credit score, pay your bills on time or create a savings plan?
If you haven’t thought of any financial resolutions yet, don’t worry. We’ve got a few suggestions. Here are some tips on how to stay on top of your credit and make your money work for you in 2021:
I just watched a documentary on the dark web, and I will never feel safe using my credit card again!
Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.
I need that peace of mind in my life. What else do you get with ExtraCredit?
It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.
It’s settled; I’m getting ExtraCredit tonight. Totally unrelated, but any suggestions for my new fear of sharks? I watched that documentary too.
…we live in Oklahoma.
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Get on Board with ExtraCredit
Build Your Savings Account
Pay Bills on Time
Get Your Taxes Done Early
Open a Few Extra Credit Accounts
Maintain a 30% Credit Utilization Rate
Check Your Credit Score Regularly
1. Get on Board with ExtraCredit
The more you know about your financial profile, the better off you’ll be. You can monitor, build, earn, protect and restore your credit profile with ExtraCredit from Credit.com. Fully loaded and intuitive, ExtraCredit includes five powerful tools to help you stay on top of your money:
Build It: Build It adds information about your rent and bill-paying habits to your credit profile. Whenever you pay on time, you get kudos—and your on-time payments are reported to all three bureaus.
Guard It: A staggering 14.4 million people became victims of identity theft in 2019. Guard It comes with Dark Web Monitoring, which scans hidden sites and nefarious file sharing sites for consumer data breach information. Guard it also includes a Compromised Account Monitoring feature and valuable Identity Theft Insurance.
Track It: Believe it or not, you have at least 28 different FICO scores. That’s a lot to keep on top of. Thankfully, you can keep track of all of them through Track It.
Reward It: When you sign up with ExtraCredit, you get a rewards card in the mail. It’s preloaded with a $5 signup bonus, and you earn more money every time you’re approved for a Reward It financial offer.
Restore It: Credit score looking a little low? Restore It connects you with a leading credit repair company in your state so that you can begin to solve problems on your profile. Better still, you get a signup discount at CreditRepair.com or at an equivalent leader in your area.
2. Build Your Savings Account
Almost everyone could have done with a little extra money in 2020. So, what’s the best savings option on the market? Both savings accounts and money market accounts are Chime a go? Chime has a lot of neat features, including a clever automatic savings tool and a competitive 0.50% Annual Percentage Yield interest rate—10x the national average!
3. Pay Bills on Time
You might be surprised to learn that your payment history makes up 35% of your credit score. If you don’t pay your bills on time, your financial outlook can suffer in the long term—so do whatever you can to avoid late payments. If you’re busy or somewhat forgetful, stay on schedule by:
Automating payments
Setting reminders on your phone or computer
Writing payment dates on a calendar
Creating a bills spreadsheet
Does Your Credit Improve After 7 Years?
In a nutshell, if you have a delinquent debt on your credit report and you don’t do anything about it, it’ll generally drop off after seven years. Late payments are generally removed around the seven year mark, while bankruptcies usually stay on record for seven to 10 years. Unpaid collection accounts stay on record for about seven years—and that timeframe renews if you begin to pay and then stop again. Over time, delinquencies affect your credit score less and less.
4. Get Your Taxes Done Early
Enjoy doing your taxes? No, neither do we. There are benefits to filing early, though. If you file your taxes before the late-tax-season rush, you could get a faster refund. You’ll also reduce the chance of identity theft, avoid penalties and—if applicable—give yourself extra time to save for your tax bill.
5. Open a Few Extra Credit Accounts
The more account types you have in good standing on your credit report, the more likely you are to get approved when you go for a low-interest car loan, personal loan or mortgage. Lenders scrutinize your credit report—and they look for a good mix of account types.
Revolving accounts include credit cards, store cards and home equity lines of credit (HELOCs). Installment accounts are products like personal loans and car loans, which have fixed monthly payments. Open accounts, like charge cards and utility accounts, require payment in full each month. Your unique credit mix accounts for 10% of your credit score.
6. Maintain a 30% Credit Utilization Rate
Credit utilization ratio is the amount of credit you have available versus how much you’re using. If you regularly max out your credit card, your score will almost certainly go down. Instead, try to avoid using more than 30% of your available credit at any one time. If you have a card with a $1,000 credit limit, for example, stop spending when you reach the $300 mark.
Your credit utilization rate accounts for a whopping 30% of your credit score. If you need to borrow a little more money, try asking for a limit increase to avoid messing up your ratio.
7. Check Your Credit Score Regularly
It’s important to check your credit score regularly. Checking your own credit score is a type of soft inquiry, which won’t harm your credit. If you know your credit score:
Whenever you apply for credit, lenders look at your credit score—and often, your entire credit report. This is known as a hard inquiry. Too many hard inquiries and your score could drop temporarily, so try to keep applications to a minimum. If you already know your credit score, you can gauge your likelihood of success in advance.
If you don’t already know your credit score, check out your Credit.com Credit Report Card or sign up with ExtraCredit as soon as possible.
Let’s face it—2020 was a doozy. If you follow a few of our new year’s credit resolutions, 2021 might be a bit better. Maybe you want to increase your credit score, or perhaps you’d like to build your savings account for the future. Either way, slay those at least one financial resolution and shine on in 2021.
Looking for more financial tips for 2021? Check out these helpful articles!
Recover From a Holiday Binge With a Spending Freeze – SmartAsset
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The holiday parties may be over but the financial hangover is just setting in. Holiday sales for 2016 were estimated to top $655 billion, according to the National Retail Federation. If you blew your holiday budget, don’t panic. A January spending freeze may be just what you need to get back on track. If you’ve never done a spending freeze before, here’s what to expect.
See the average budget for someone in your neighborhood.
How Does a Spending Freeze Work?
During a spending freeze, you avoid making nonessential purchases. For example, if you buy fast food two to three times per week or movie tickets once a month, you’d cut those expenses out temporarily. A spending freeze gives you the chance to rein in your spending and evaluate your budget. The money you would’ve spent on fun and entertainment can then go toward paying off the debt you racked up during the holidays.
Getting Started
Before starting your spending freeze, you may need to mentally prepare yourself for what’s to come. Getting rid of bad spending habits can be tricky. But with the right mindset, you may be able to cut costs and achieve some of your financial goals.
The key to making your spending freeze work is being able to separate your needs from your wants. You’ll need to be able to pay for essential costs like rent, mortgage payments and debt payments. But you’ll need to recognize that other expenses – like the cost of a daily latte or a pair of new shoes – can be removed from your budget if necessary.
If you’re having trouble curbing your spending, agreeing to splurge on just one item during the month of January may make sticking with your freeze a bit easier.
Related Article: How to Recover From a Holiday Shopping Spree
Put the Money You’re Saving to Work
Once you begin your spending freeze, you’ll need to figure out what to do with the extra money in your bank account. Paying off your credit card bills should be a top priority since credit card debt tends to have a bigger impact on your credit score than installment debt. Specifically, you may want to focus on paying off your store credit cards since they often carry high interest rates.
Which credit card should you pay off first? You may want to begin by paying off the card with the highest APR since that’ll reduce what you’re paying in interest. Or you could pay off the card with the lowest balance. That may give you the momentum you need to knock out the rest of your credit card debt.
Related Article: How to Stop Spending Money Carelessly
Get a Partner Onboard
Implementing a spending freeze can be difficult if you’ve never done one before. Having someone else along for the ride may help you fight your urge to splurge.
If you’re married, for example, you could ask your spouse to jump on the spending freeze bandwagon with you. Singles can find a friend or family member who’s willing to join in. Just remember that when you’re choosing a partner, it’s best to pick someone who’s going to encourage you to stick with your freeze and make good financial decisions.
Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
A lot has changed during the coronavirus pandemic. Large in-person gatherings are a thing of the past, the economy has been affected, and some businesses have even shut down. There are many small businesses that are still open, but they’re struggling. It’s up to everyday people to continue to support them.
But consumers have also been affected—many people have lost their jobs, making it more difficult to support small businesses. Small Business Saturday offers a way for consumers to support local businesses, while also offering you some much-needed deals for your holiday shopping.
I just watched a documentary on the dark web, and I will never feel safe using my credit card again!
Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.
I need that peace of mind in my life. What else do you get with ExtraCredit?
It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.
It’s settled; I’m getting ExtraCredit tonight. Totally unrelated, but any suggestions for my new fear of sharks? I watched that documentary too.
…we live in Oklahoma.
Get everything you need to master your credit today.
Get started
What and When Is Small Business Saturday?
Small Business Saturday is the Saturday after Thanksgiving. This year, that’s November 28. The day was developed in 2010 by American Express to encourage more people to do their holiday shopping at small businesses. The Senate even passed a resolution to officially recognize the day in 2011.
Tucked between Black Friday and Cyber Monday, Small Business Saturday is a big shopping day, and it continues to grow in popularity each year. In 2019, US consumers spent $19.6 billion on purchases that day.
Small Business Saturday may look different this year, but it isn’t canceled. You don’t have to avoid shopping altogether out of coronavirus fears. Instead, you can take steps to shop smart and support your favorite small businesses.
As long as you take the right steps, you can support small businesses while reducing worries about your finances, as well as health and safety. Here are some tips you can follow.
Check to See Which Stores Are Celebrating the Shopping Day
Take time to research your favorite shops to see if they’re participating in Small Business Saturday. Many post special promotions on their social media pages. This can help you decide where to shop in order to save money.
Plan in Advance to Avoid Overspending
No matter what shopping day you choose to participate in this year, it’s important to spend only what you can afford. Overspending can lead to debt and other financial problems.
Sticking to a budget is especially important if you’re struggling financially because of COVID-19. Don’t feel like you have to take part in this shopping day—but if you do, stay within your budget.
If you’re not good at creating or sticking to a budget, now might be a great time to start practicing. Learn how to budget better to make smart financial choices when shopping.
Use Credit Cards to Your Advantage
If you plan to use credit cards instead of cash or debit when doing your Small Business Saturday shopping, use them to your advantage. Check to see which rewards credit cards you already have in your wallet, and verify the perks they offer.
[There’s still time to apply for a new credit card to take advantage of Small Business Saturday spending perks. Check out RewardIt from ExtraCredit to get personalized offers.]
Maximize your earning potential by using the right credit cards for the right purchases. Many cards will allow you to earn more points, miles, or cash back if you spend in a specific category, for example.
American Express often offers cashback rewards when you spend a certain amount at qualified small businesses. You will need to sign up for the program, so check your cards’ eligibility and sign up before Small Business Saturday arrives.
Debit transactions often cost merchants aflat fee plus a percentage of the transaction, while credit cards charge only a percentage and can cost merchants less for smaller transactions. If you can, consider using credit cards to help keep costs down for your local small business.
Consider Getting a New Card
If you’ve been eyeing a new rewards or cash-back credit card, now might be a good time to apply. You can use your holiday shopping to meet spending requirements for a bonus while you earn rewards points or miles.
For example, the TD Cash Credit Card might be a good option for individuals looking for a credit card with some perks but no annual fee. Earn $150 cash back when you spend $500 within the first 90 days after account opening. Though its cash-back earning potential isn’t as high as some other cards, it could be a good beginner rewards card.
TD Cash Credit Card
Card Details
Intro Apr:
0% Introductory APR for 6 months on purchases
Ongoing Apr:
12.99%, 17.99% or 22.99% (Variable)
Balance Transfer:
0% Introductory APR for 15 months on balance transfers
Annual Fee:
Credit Needed:
Excellent-Good
Snapshot of Card Features
Earn $150 Cash Back when you spend $500 within 90 days after account opening
Earn 3% Cash Back on dining
Earn 2% Cash Back at grocery stores
Earn 1% Cash Back on all other eligible purchases
$0 Annual Fee
Visa Zero Liability
Instant credit card replacement
Digital Wallet
Contactless Payments
Card Details +
Do Your Shopping Online
If you want to support small businesses but don’t want to risk in-person shopping, consider placing orders online for delivery. Many small businesses will waive shipping fees if you spend a certain amount of money, and your purchases will arrive right at your doorstep.
Order Ahead and Pick Up Your Order
If you don’t want to deal with crowded stores on Small Business Saturday but don’t want to deal with shipping, simply place an order online and then pick it up yourself. Many small businesses have begun offering this service since the onset of coronavirus. You may also be able to arrange to pick up items after the weekend, when the store might be less crowded.
Wear a Mask and Time Your Visit
If you prefer to visit your favorite small businesses in person, take precautions. Be sure to wear a mask and keep your distance when you see other shoppers in the store. If possible, plan when to shop to avoid the busiest times of the day. For example, shopping soon after a store opens might be your best bet.
Yes, it’s possible to shop safely at your favorite locally owned stores this Small Business Saturday. Be sure to act smart, keep the pandemic in mind, and plan your shopping to avoid debt and earn more credit card rewards.
If you’re in need of a rewards credit card, take some time now to compare card options. If you’ve struggled with credit and debt and want to keep better track of your financial health, ExtraCredit offers access to 28 of your FICO® scores and other opportunities for staying on top of and protecting your credit.
Essential Financial Resolutions to Make for 2018 – SmartAsset
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The start of a new year is a great time to update your financial goals and give your budget a second look. If you didn’t save as much as you had hoped to in 2017 – or you’ve racked up holiday debt – making some financial resolutions can help you get back on track. As you’re reviewing your spending habits and expenses, here are three money moves you might want to make.
1. Prioritize Your Emergency Fund
An emergency fund can be your best friend when disasters strike. If your heating system bites the dust in the middle of the winter or April showers cause your roof to leak, having some cash in the bank can keep you from having to cover the damages using loans or credit cards.
If your emergency fund is on the small side (or worse, nonexistent), whipping it into shape belongs at the top of your to-do list. You can begin by setting a savings goal. For example, you could initially aim to save $1,000. Then you could work on bumping that up to an amount equal to three to six months’ worth of expenses.
Depending on how you manage your finances, you may need to break down your bigger savings goals into smaller ones that you can hit on a monthly basis. You may only be able to save $25 or $50 every month, but the key is to be consistent. If you’re struggling to get into the habit of saving money regularly, you can have part of your paycheck automatically deposited into your savings account.
2. Track Your Spending
One of the biggest budgeting blunders you can make is not knowing where your money’s going. Aside from knowing how much you’re spending on essentials like housing, utilities and transportation, it’s important to keep an eye on how much money is going toward non-essential expenses, like movie tickets, clothing and fast food.
You can track your expenses by listing them in a notebook. Or you can find an app to do that for you. Apps like Level Money and Mint, for example, make it easy to see what you’re spending money on.
3. Switch up Your Payment Methods
Using a credit card can be a convenient way to pay for purchases. But credit cards can be dangerous, especially if you fall into the habit of thinking it’s okay to spend more than you need to. Paying with a debit card could also get you in trouble if you often overspend.
Paying for everything with cash for the first few months of the new year might help you reign in your spending. Having to physically hand over money tends to be more painful than swiping or dipping a piece of plastic. Setting aside a certain amount of cash for non-essential items may force you to think twice about what you’re doing with your dollars and cents.
Final Word
Each of these resolutions is based on the assumption that you have a budget. If you don’t have one, it’s best to create a spending plan before setting other financial goals.
To get started, you can review your pay stubs and your bank statements to get an idea of how much money you have coming in and going out. Then you can fine-tune your budget by adding up all of your debts and estimating how much you can spend on discretionary items. Finally, you can decide how much you can afford to save, based on whether you’re trying to prepare for retirement or make a major purchase.
Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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