Accredited Asset Management Specialist (AAMS)

What is the AAMS certification?New financial advisors need something to help them stand out. Consequently, the AAMS does just that. Designed for newcomers to the financial advice business, the AAMS trains advisors to identify investment opportunities as well as help clients with other financial goals. It also gives more experienced advisors a fast and simple way to learn more about asset management and improve their credentials. Here’s how it works.

AAMS Defined

An Accredited Asset Management Specialist (AAMS) can advise clients on college savings, taxes, and retirement savings. The course and tests for this certification are designed to ensure advisors can assist clients with their complete financial needs. It emphasizes evaluating the client’s assets and making appropriate recommendations.

The AAMS certification is granted by the College for Financial Planning, a unit of the Kaplan Company. The college oversees a large number of financial certification programs, including the Certified Financial Planner designation, one of the most valued certifications in the field.

AAMS Certification Requirements

What is the AAMS certification?

To receive an AAMS, students first have to complete a 10-module education program provided by the College for Financial Planning. Then they have to pass an examination. Finally, they must agree to abide by a code of ethics and promise to continue their education.

The courses are online and can be delivered in self-study or instructor-led formats. Courses are open-enrollment, therefore students can begin at any time without waiting for the next session.  The 10 modules cover the following material:

1.:The Asset Management Process

2. Risk, Return & Investment Performance

3. Asset Allocation & Selection

4. Investment Strategies

5. Taxation of Investments

6. Investing for Retirement

7. Deferred Compensation and Other Benefit Plans

8. Insurance Products for Investment Clients

9. Estate Planning for Investment Clients

10. Fiduciary, Ethical, and Regulatory Issues for Advisors

The College of Financial Planning provides everything necessary to study for and complete the modules and take the test. Students have access to the study materials and tests through an online portal.

Streaming video lectures, audio files, and interactive quizzes also can be found through the college’s site. Meanwhile, students can access live classes online and contact professors with questions and issues.

The AAMS Test

To get the AAMS certification, students have to pass just one test. However, they have to make their first attempt at the test within six months of enrollment and pass it within a year.

The fee for the first attempt at taking the test is included in the course tuition. There are no prerequisites for signing up to take the AAMS course.

Time and Money Requirement

Tuition for the AAMS courses is $1,300. This includes the fee for the first attempt at passing the certification exam. It also includes all needed course materials. Each additional attempt costs $100.

Students employed with certain financial services firms may be able to get tuition discounts. The college may also provide scholarships.

The College for Financial Planning recommends students plan to spend 80 hours to 100 hours on the course. Since the course is self-study, this amount of time is flexible.

To maintain AAMS certification students have to commit to completing 16 continuing education credits every two years. Also, continuing education has to cover one or more of the topics covered in the AAMS coursework.

AAMS certificate holders also have to agree to follow a professional standard of conduct. As a result, they have to maintain integrity, objectivity, competency, confidentiality and professionalism in providing financial services.

AAMS Certificate Holder Jobs

AAMS certificates are generally earned by entry-level workers in the financial advice business. Consequently, AAMS holders are typically trainees. In some cases, they may provide support services to more experienced and highly credentialed advisors.

The AAMS designation does not confer any special powers or privileges. Instead, it’s an optional credential that students may obtain to advance their careers and enhance their knowledge of financial advice.

Comparable Certifications

What is the AAMS certification?

In addition to the AAMS, the College for Financial Planning offers an Accredited Wealth Manager Advisor (AWMA) certificate. This is a somewhat more advanced designation. As a result, it requires a course equivalent to three graduate level college credits and requires 90 hours to 135 hours to complete.

Chartered Mutual Fund Counselor (CMFC) is sponsored by the Investment Company Institute along with the College of Financial Planning. It is similar to the AAMS certificate except it focuses on mutual fund assets.

Accredited Financial Counselor (AFC) is a general personal finance advice certificate from the Association for Financial Counseling and Planning Education. First, it requires 1,000 hours of financial counseling experience. Secondly, it demands three letters of reference. Finally, applicants must both complete coursework and pass an exam.

Bottom Line

The AAMS designation is usually for newly minted financial advisors, but even experienced pros can use it to bulk up their credentials. The courses and tests associated with the AAMS teach advisors how to evaluate assets and make recommendations.

While this certification doesn’t give an advisor any real powers, it’s a sign that they can identify investment opportunities specific to their clients. Above all else, it can be a great relief to a client who has a child going to college or a retirement house on their wish list. As a result of obtaining an AAMS, and advisor can point them toward the right investments for their goals.

Investing Tips

  • If you’re looking to identify investment opportunities, consider using an AAMS as your advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • An AAMS can help you with college savings, taxes, and retirement savings if you know what your goals are. However, if you are unsure how much you want to invest, what your risk tolerance is, or how inflation and capital gains tax will affect your investment, SmartAsset’s investing guide can help you take the first steps.

Photo credit: ©iStock.com/SARINYAPINNGAM, ©iStock.com/fizkes, ©iStock.com/Suwanmanee99

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Source: smartasset.com

Retained Earnings vs. Net Income

finance bar chart mobile

Companies have several different types of earnings, each of which provide different information about their revenues and insight into their financial health. On a company’s balance sheet—which is a key piece of information in evaluating a company’s stock value—it will report details about its expenses and earnings, including retained earnings and net income.

Net income (NI), or net earnings, is the amount of money a company has left after subtracting operating expenses from revenue. Retained earnings goes a step further, subtracting dividend payouts to shareholders.

This article will cover how to calculate and interpret retained earnings and net income, the differences between them, and why they’re important for investors who are trading stocks online.

What is Net Income?

Net income (NI) is an indication of how profitable a company is. It is a basic calculation showing the difference between its earnings and expenses, which can include labor, marketing, depreciation, interest, taxes, operational expenses, and the cost of making products.

How to Calculate Net Income

Use the following formula to calculate the net income of a company:

Net Income = Revenue – Expenses

For example, if a company makes $50,000 in revenue during an accounting period and has $30,000 in expenses, their net income is $20,000.

Understanding Net Income

Net income is often referred to as the bottom line, since it appears on the bottom line of a company’s balance sheet and is the basic calculation of a company’s profit.

NI is used to calculate earnings per share, and is one of the key figures investors use when evaluating companies. When people talk about a company being in the red or in the black, they are referring to whether the company has a positive or negative net income.

It’s important to note that net income can be manipulated through the hiding of expenses and other means. It can be hard to figure out if this is happening, but investors might want to be wary of this and look into what numbers are being used in the net income calculation.

What Are Retained Earnings?

Retained earnings (RE) may also be referred to as unappropriated profit, uncovered loss, member capital, earnings surplus, or accumulated earnings.

paying out dividends to please shareholders. After a company completes dividend payouts, they retain the amount of earnings that are left, and may decide to reinvest them into the business to continue to grow, pay off loans, or pay additional dividends.

It’s useful to understand RE when looking into companies to invest in, because they show whether a company is profitable or if all of their earnings are going towards dividends. If a company’s retained earnings are positive, this means they have money available to invest and put towards growth.

On the other hand, if a company has negative retained earnings, it means they are in debt, which is generally not a good sign.

How to Calculate Retained Earnings

Use the following formula to calculate the retained earnings of a company:

Retained earnings = Beginning retained earnings + Net income or loss – Dividends paid (cash and stock)

All of this information is available on a company’s balance sheet. In order to find beginning retained earnings one will need to look at the previous period’s balance sheet.

For example, if a company starts with $8,000 in retained earnings from the previous accounting period, these are the beginning retained earnings for the calculation. If the company makes $5,000 in net income and pays out $2,000 in dividends to shareholders, the calculation would be:

$8,000 + $5,000 – $2,000 = $11,000 in retained earnings for this accounting period
Since retained earnings carry over into each new accounting period, profitable companies generally have increasing retained earnings over time, unless they decide to spend them.

Understanding Retained Earnings

The calculated retained earnings show a company’s profit after they have paid out dividends to shareholders. If the calculation shows positive retained earnings, this means the company was profitable during the specified period of time. If the retained earnings are negative, this means the company has more debt than earnings.

Companies can use this figure to help decide how much to pay out in dividends and how much they have available to reinvest.

Although negative RI isn’t ideal, investors should consider the company’s individual circumstances when evaluating the results of the calculation. There are some instances in which negative retained earnings are fairly normal and not necessarily a reason to avoid investing.

How to Assess Retained Earnings

When assessing the retained earnings of a company, the following factors should be taken into account:

•  The company’s age. If a company is only a few years old, it may be normal for it to have low or even negative retained earnings, since it must make capital investments in order to build the business before it has made many sales. Older companies tend to have higher retained earnings. If a company has been around for many years and has low or negative retained earnings, this may indicate that the company is in financial trouble.
•  The company’s dividend policy. Some companies don’t pay out any dividends, while others regularly pay out high dividends. This will affect their retained earnings. In general, publicly-held companies tend to pay out more dividends than privately-held companies.
•  The period of time used in the calculation. Some companies are more profitable at certain times of year, such as retail businesses. If one looks at retained earnings during the holiday season or other popular times for retail, the company may save up their profits from those times in order to get through slower times. For this reason, the same company might show different retained earnings depending on what time period is used in the calculation.
•  The company’s profitability. More profitable companies tend to have higher retained earnings.

What’s the Difference Between Retained Earnings and Net Income?

Although retained earnings and net income are related, they are not the same. While net income helps with understanding profit, retained earnings help with understanding both profit and growth over time.

At times, a company may have negative retained earnings but positive net income. This is what is known as an accumulated deficit. Or the opposite may occur. For example, if a company earned $60,000 in revenue and they have $40,000 in expenses, their net income is $20,000. If they then pay out $10,000 in dividends to shareholders, the retained earnings calculation would be:

$0 + $20,000 – $10,000 = $10,000 in retained earnings

If a company has a healthy net income and retained earnings, this may be a good time for them to reinvest some of their money into growing the business. In some cases, retained earnings and net income may be the same—as when a company doesn’t pay out dividends and has no retained earnings carried over from the previous period.

Why do Retained Earnings and Net Income Matter?

Investors are often interested in retained earnings and net income because they help show the long-term financial health of a company. Figures such as revenue and expenses vary with each accounting period, and they don’t give as accurate a picture of debt and opportunity for growth.

debt-to-equity ratio, which is a measure of how much debt it takes for a company to run its business.)

Retained earnings are also useful for companies to help determine how to spend their money. If retained earnings and/or net income are low, it might be best for the company to save their money rather than reinvesting it or paying out dividends. If the numbers are high, they can consider spending it.

The Takeaway

Net income and retained earnings are two useful calculations that can help investors assess a company’s health, and that can help a company decide what to do with their earnings. They’re a key part of a company’s overall financial picture.

The big difference between the two figures is that while net income looks at revenue minus operating expenses, retained earnings further deducts dividend payouts from NI. Both can help form an overall view of the profitability and risk of a company.

Investors ready to start buying and selling stocks might want to consider a SoFi Invest® account, which offers complimentary advice and other benefits that can help individuals set and work toward their personal financial goals.

Find out how to open a SoFi Invest account today.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOIN20226

The post Retained Earnings vs. Net Income appeared first on SoFi.

Source: sofi.com

76% of People Who Don’t Fret Over Money Report Doing This

Want to get rid of stress? You could meditate, count to 10 or simply start a zero-based budgeting system. In fact, 76% of people who use such a system report either no financial stress or a decrease in the level of their financial stress last year, according to a recent survey by YNAB (short for “You Need A Budget”), an app that helps people rein in spending and reach financial goals.

Source: moneytalksnews.com

Should You Listen To Financial Gurus?

Financial gurus are telling you how to get out of debt, and what to do with your money and investments. The question is, should you follow their advice?

The post Should You Listen To Financial Gurus? appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

Source: biblemoneymatters.com

Digital Assets and Cryptocurrency

cryptocurrencies

In the last ten years or so, a new asset class has swept the globe—digital assets and cryptocurrency. It began with Bitcoin in 2009 and has since expanded into thousands of different cryptocurrencies.

Bitcoin, the first and largest cryptocurrency by market cap, is widely considered the gold standard of the asset class. Over time, other coins have seen their values plunge to zero, and it’s likely that many others will follow.

Only cryptocurrencies with large market capitalizations and a historical track record of success can be considered potential investments. Most digital assets are purely speculative in nature. Here’s what potential investors need to know about digital assets and cryptocurrency.

What is a Digital Asset?

Broadly speaking, most digital assets fall into two general categories:

1. cryptocurrencies (money)
2. cryptographic tokens

The two are often called “coins” and “tokens,” respectively, for short.

What are Cryptocurrencies?

There are many different types of cryptocurrency beyond Bitcoin. These include:

•  Bitcoin Cash
•  Litecoin
•  Ethereum
•  Ripple
•  Stellar
•  NEO
•  Cardano
•  IOTA

In 2011, Charlie Lee created a “hard fork” of the Bitcoin (BTC) network, meaning a new and different blockchain was created based on the old one. Lee called this new coin Litecoin (LTC). LTC uses a different consensus algorithm than BTC, generally allowing for faster transactions with lower fees. But because the Litecoin network is much smaller, it’s also less secure.

Satoshi Nakamoto white paper, was published on October 31st, 2008. Just over two months later, on January 3rd, 2009, the Bitcoin network went live, and a new asset class (cryptocurrency) was born alongside a new technology (blockchain).

Bitcoin is a scarce form of digital money that can be transferred peer-to-peer, without any financial intermediary. It uses the proof-of-work (PoW) consensus algorithm and has a fixed supply limit, so it can’t be created out of thin air.

Benefits of Investing in Digital Assets

The benefits of investing in digital assets go beyond the potential for outsized capital gains.
The biggest benefits of investing in digital assets are:

•  Individual sovereignty and less counterparty risk
•  Portfolio diversification
•  Hedge against inflation

There are some people within the community who want to buy cryptocurrency because of the ways it aids individual freedom and sovereignty more than for its potential for prosperity. There are others who value this investment as a unique form of diversification and a hedge against inflation.

Individual Sovereignty

Bitcoin allows people to become their own bank. When storing assets at a traditional bank or other financial institution, an individual becomes vulnerable to the risk of that institution going bankrupt or mismanaging their funds. This risk is known as counterparty risk.

Because they are peer-to-peer, digital assets and cryptocurrency eliminate all counterparty risk.

By holding their own private keys, investors can have total ownership of their digital assets and cryptocurrency. Other than gold or silver, no other asset has this quality.

Diversification

Bitcoin has been the best performing asset class of the last decade by far. During eight of those years, the returns from holding Bitcoin exceeded that of any other asset in the world. At the time of this writing, the same holds true for 2020. (That said, as with any investment past performance is not an indication of future performance.)

Cryptocurrency can diversify an investment portfolio in a way no other asset class can. Crypto is known as a “non-correlated asset,” meaning it tends to have little or no correlation to the rest of the investment world (although this has changed at times during 2020).

Inflation Hedge

While all investing carries risk, investors often fail to factor in the one risk inherent in every investment denominated in fiat currency (stocks, bonds, mutual funds, ETFs, etc.): Inflation risk.

The law of supply and demand dictates that when the supply of something increases, its price will decrease absent an equal or greater increase in demand. With central banks creating tens of trillions of new currency units in 2020 alone, more and more investors have begun looking toward digital assets and cryptocurrencies that have fixed supply limits, like Bitcoin.

It should be noted that the only cryptocurrencies that can serve as viable inflation hedges are those that have a fixed supply limit. Like gold, scarce commodities tend to increase in value during times of inflation.

In addition, global uncertainty and turmoil tend to increase demand for safe haven assets.

And amidst the chaos of 2020, Bitcoin is the best performing asset in the world, being up 80% year-to-date at the time of writing. (Despite this success, past performance is not an indication of future performance.)

Digital Assets and Risk

The vast majority of altcoins are highly speculative in nature. Most have very small market capitalizations of less than $1 billion or even less than $100 million, so their prices can swing dramatically in short periods of time due to a lack of liquidity. And in the long run, it’s not unheard of for altcoins to drop to zero, meaning investors lose everything.

Bitcoin might be a little different because it has the most secure network (due to having the highest hashrate), the longest track record, and the largest market cap by far.

Best Practices for Investing in Digital Assets and Cryptocurrency

Anyone considering investing in digital assets and cryptocurrency would do well to educate themselves on related subjects.

bitcoin halving, bitcoin forks, cryptocurrency wallet, and crypto exchange, the less confusing this type of investment will seem.

Due to the volatile nature of digital assets and cryptocurrency, a common strategy is what’s known as dollar-cost averaging. Rather than trying to time the markets, investors sometimes buy fixed dollar amounts at fixed time intervals.

An example would be an investor setting a recurring buy for an automatic purchase of $50 worth of Bitcoin every two weeks.

The Takeaway

There’s a lot to learn when it comes to digital assets and cryptocurrency. This relatively new asset class has a lot going for it—from individual sovereignty to a hedge against inflation—but it can feel very much like the wild west to new investors.

When considering investing in digital assets and cryptocurrency, the bottom line is the same as for any investment: Potential investors always benefit from educating themselves before making financial decisions. SoFi Invest® gives members the straightforward, simple information they need to invest in cryptocurrencies.

Find out how SoFi Invest can help you invest in cryptocurrency.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOIN20198

The post Digital Assets and Cryptocurrency appeared first on SoFi.

Source: sofi.com

The Top Financial Resolutions for 2021

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Have you made your resolutions yet? It can feel a little daunting trying to figure out what you need to focus on, so we made it easy: These are the resolutions everyone else is taking on in 2021, according to a survey by Wallethub, and you should, too. Plus — how to accomplish them.

1. Make A Realistic Budget And Stick To It

This one sounds familiar, right? Oft-regarded as Old Faithful when it comes to New Years’ resolutions, it holds that title for good reason. Having a budget you can actually stick to will set you up for financial success, no matter what your goals are.

It’s easy to slip away from our good financial habits as the year goes on, so it’s particularly important to find a budgeting system that works for your lifestyle and won’t be hard to maintain.

We recommend the 50/30/20 method. It’s simple, yet effective, and has a bit of a cult following, too! Here’s how it shakes out:

50% of your take-home income every month covers your fixed expenses — rent, utilities, groceries, minimum debt payments, etc. 30% goes towards the things you can live without, but don’t want to (like food delivery, a Netflix subscription and travel). Finally, the last 20% of your monthly income is dedicated to your financial goals.

2. Look For A Better Job: Make up to $69/Hour

The most surefire way to achieve your financial resolutions and stay within that budget you made is to earn more money.

2020 made that really hard for most people. Which is why finding a better job, that you actually enjoy — and will pay you more — is a top resolution for 2021.

But what if you could create that higher-paying and more rewarding job? There’s an idea…

Can you open an excel spreadsheet? Does earning $69 an hour sound appealing? How about the freedom to work remotely while helping others succeed?

Those are the perks of working as a bookkeeper, says Ben Robinson, a CPA and business owner who teaches others to become virtual bookkeepers through online courses called Bookkeepers.com.

You don’t have to be an accountant or even really good at math to be successful in this business. In fact, all you need are decent computer skills and a passion for helping business owners tackle real-world problems. The ability to stay moderately organized is helpful, too.

You can make up to $69 an hour, according to data from Intuit, the creator of QuickBooks, and you have no commute. It’s a great opportunity for parents who want a part-time job, recent college grads or anyone who wants to bring in real money working from home.

Robinson shares what it takes to be a virtual bookkeeper, plus tips for making this career work for you in his free class at Bookkeepers.com. If you stick with the classes, you could be running your own business in just a few months.

3. Pay Off Credit Card Debt: Wipe Out All Your Debt by Tomorrow

2020 was actually a good year for paying down credit card debt — Americans did more of it this year than they ever have.

But there’s still work to be done, which is why paying off credit card debt is one of the top financial resolutions this year.  Because if you still have credit card debt, you know. The anxiety, the interest rates, the fear you’re never going to escape…

And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.

4. Monitor Your Credit Report

Did your credit score take a dive this year? Or is still stuck at a “fair” grade? Then monitoring any changes on your credit reporting and working to improve your score should be one of your financial resolutions for this year, too.

When it comes to your credit score, it’s important to stay organized and keep tabs on it. After all, it’ll play an essential role in any big purchase you want to make — whether that’s a home or a car.

So if you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — try using a free website called Credit Sesame.

Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.*** “They showed me the ins and outs — how to dot the I’s and cross the T’s,” he said.

Want to check for yourself? It’s free and only takes about 90 seconds to sign up.

5. Get Insured In Case Of A Catastrophe. You Could Give Your Family up to $1 Million

Talk about a scary year. If a global pandemic didn’t have you thinking about your own mortality, what else could? With that thought in mind, people are adding “buy life insurance” to their list of 2021 to-dos.

Have you thought about how your family would manage without your income if something happened to you? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.

You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.

Rates start at just $16 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

6. Add A Month To Your Emergency Fund

Having an emergency fund is important; you know that. But it’s easy to deprioritize it when things are going fine. And as 2020 showed us, you can lose your job at the drop of a hat, meaning a full emergency fund can be what keeps your lights on.

So prioritize your emergency fund this year. If you don’t have one yet, start by opening an account that will help you grow your money.

One way to do that is with a company called Aspiration. It lets you earn up to 16 times the average interest on the money in your account.

Not too shabby!

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.”

7. Pay Bills Right After Payday

It’s easy to get swept up in the joy that is payday and immediately start buying things you don’t need. But as the final financial resolution on this list, paying your bills right away can help keep the rest of your goals on track.

It means you can avoid late fees on your utilities, which can really add up and destroy your budget. You can pay off your credit card debt without mounting interest charges. And you can prevent any hiccups that would dock your credit score a few points.

Whatever your financial goals are this year, we know you can achieve them! Here’s to making 2021 your best financial year yet.

Kari Faber is a staff writer at The Penny Hoarder.

***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How Tax on Mutual Funds Works

For a long time, mutual funds have been a popular investment vehicle for millions of investors, largely because they offer an easy way to purchase no-fuss, diversified assets with relative ease. This out-of-the-box diversification and risk-mitigation is something that individual stocks can’t match.

Though technology has made it easier than ever to buy securities like mutual funds online, one area of confusion persists. When it comes to tax on mutual funds, and calculating capital gains on mutual funds, many investors don’t know where to start.

Discussing tax on mutual funds and other investments can be tricky, but it doesn’t have to be. Read on to learn how tax on mutual funds works, what investors should expect or anticipate when it comes to dealing with mutual funds and the IRS, and some simple strategies for tax-efficient investing.

Quick Mutual Fund Overview

First, it makes sense to review the basics. Mutual funds are similar to exchange-traded funds (ETFs) in that they’re not singular investments. Instead, they’re a collection (or a “basket”) of many different investments like stocks, bonds, and short-term debt. When an investor buys into a mutual fund, they’re essentially purchasing a spectrum of assets all at once.

Paying Tax on Mutual Funds

Like other types of investments, investors must pay tax on any income or profits they realize from their mutual fund holdings. Not every fund is the same, so it follows that the taxable income shareholders receive (or don’t receive) from a fund isn’t the same.

Since it’s up to investors to know when to pay taxes on stocks and report the amount of taxable income they’ve received from the sales of their investments and distributions (on IRS Form 1099-DIV) the most proactive thing an investor can do to get an idea of what type of tax liability a specific mutual fund may present is to research the fund before any shares are purchased. In other words, do your homework.

There are a number of online resources—including but not limited to Morningstar and Kiplinger Mutual Fund Finder —that allow investors to conduct that research, with some also providing rating systems to help streamline the process.

Paying Tax on “Realized Gains” from a Mutual Fund

capital gains taxation rate will vary.

Because funds contain investments that may be sold during the year, thereby netting capital gains, investors may be on the hook for capital gains taxes on their mutual fund distributions. As each fund is different, so are the taxes associated with their distributions. So reading through the fund’s prospectus and any other available documentation can help investors figure out what, if anything, they owe.

How to Minimize Taxes on Mutual Funds

When it comes to mutual funds, taxes are going to be a part of the equation for investors—there’s no way around it. But that doesn’t mean that investors can’t make some smart moves to minimize what they owe. Here are a handful of ways to potentially lower taxable income associated with mutual funds:

Know the Details Before You Invest

IRAs and 401(k)s—are tax-deferred. That means that they grow tax-free until the money contained in them is withdrawn. In the short-term, using these types of accounts to invest in mutual funds can help investors avoid any immediate tax liabilities that those mutual funds impose.

Hang Onto Your Funds to Avoid Short-term Capital Gains

If the goal is to minimize an investor’s tax liability, avoiding short-term capital gains tax is important. That’s because short-term capital gains taxes are steeper than the long-term variety. An easy way to make sure that an investor is rarely or never on the hook for those short-term rates is to subscribe to a buy-and-hold investment strategy.

This can be applied as an overall investing strategy in addition to one tailor-made for avoiding additional tax liabilities on mutual fund holdings.

Talk to a Financial Professional

Of course, not every investor has the same resources, including time, available to them. That’s why some investors may choose to consult a financial advisor who specializes in these types of services. They usually charge a fee, but some may offer free consultations. For some investors, the cost savings associated with solid financial advice can outweigh the initial costs of securing that advice.

The Takeaway

Getting taxed on capital gain on a mutual fund is unavoidable, but with a little help from a tax professional, you can minimize the amount you get taxed.

Some of the above strategies can work in concert: Investors who are investing for long-term financial goals, like retirement, can use tax-deferred accounts as their primary investing vehicles. And by using those accounts to invest in mutual funds and other assets, they can help offset their short-term tax liabilities.

While it’s possible to buy some mutual funds with an online brokerage account, many have restrictions on the types of funds investors can buy, as they’re specially-tailored toward specific financial goals, like retirement. With a SoFi Invest® account, investors can get started building a portfolio, and even gain access to complimentary advice.

Find out how SoFi Invest can help you get your money in the market.


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