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Hedgeable Review: Robo-Advisor for Investors Who Don’t Mind Risk

hedgeableYou may get overwhelmed when you think about wealth management. It can feel complex, and you may not consider yourself wealthy enough to justify the expense of having someone manage your investments.

In the past few years, though, wealth management services have been largely democratized by robo-advisers. Rather than paying an individual to handle your investments, robo-advisers manage your money through technology, letting algorithms do the heavy lifting.

In this post we’ll look at Hedgeable, a highly personalized digital investing platform.

What Is Hedgeable?

Hedgeable is a private wealth management platform that is accessible on your computer, tablet, and smartphone. Hedgeable actively invests across a wide range of asset classes, including exchange-traded funds (ETFs) and individual stocks. Because past performance cannot predict future returns, we have no way of knowing if this method will be successful in the future. But we do know that studies have repeatedly shown that the best-performing portfolios over time have often been forgotten.

While forgetting about your retirement account is certainly one way to passively invest, a more conscious option is investing in low-cost index funds. If, however, you are willing to take on the risk of lower returns associated with an actively managed account, Hedgeable’s personalization makes it worth examining.

Unlike other robo-advisers, Hedgeable takes and more active approach to managing client portfolios. When you sign up for an account, you take a portfolio customization quiz that asks you about your assets, goals, and risk tolerance. The quiz takes all of five minutes and then assigns you a very specific portfolio to match your needs.

You can either open a new investment account directly through Hedgeable, transfer an existing account, or roll over a 401(k), 403(b), or 457 to an IRA.

How Hedgeable Chooses Your Investments

While many robo-advising apps use modern portfolio theory to allocate money in a portfolio, Hedgeable uses an objective-based model, which relies less on what the market will do and more on what the investor wants their money to do.

The approach is three-pronged. First, it widens the amount of available asset classes. Your money may be invested in any of the following, depending on your personal risk tolerance:

U.S. Equities

International Equities

Emerging Market Equities

U.S. Fixed Income

International Fixed Income

Emerging Market Fixed Income

Commodities

Real Estate

Master Limited Partnerships

Alternatives

Absolute Return

Currencies

Short U.S. Equities

Short Emerging Market Equities

Short Fixed Income

Cash

To better understand the list above, there are a few key terms you should be familiar with. “Equities” generally means stocks or exchange-traded funds (ETFs). “Fixed Income” is typically indicative of bonds. When you “short” something, you’re betting against it.

Using all of these asset classes, Hedgeable then looks at the goal end date of your portfolio, whether or not you want to invest exclusively in a social cause such as female leadership, LGBTQ equality, or alternative energy, and your risk tolerance to decide where it should invest your money. Riskier portfolios generally have a better potential for return, while lower risk portfolios will likely bring in less, but run a lower potential for losing value.

After your money is invested in specific assets, Hedgeable doesn’t wait a year to rebalance your portfolio. Instead, it implements something called dynamic hedging. As assets become more volatile, the algorithm will cut exposure to them, moving your money into safer assets immediately. Portfolios on this platform are very much actively managed.

Users are also encouraged to take advantage of Hedgeable’s account aggregation, which allows you to link all of your financial accounts to the app. This gives Hedgeable an overall view of your cash and debts. When the app has more information, it can better allocate your money to fit your specific financial situation.

Fees and Costs

Hedgeable’s pricing depends on the size of your portfolio. While there is no account minimum, those with the least amount of money in their accounts pay the highest fees.

$0-$49,999 – .75%

$50,000-$99,999 – .70%

$100,000-$149,999 – .65%

$150,000-$199,999 – .60%

$200,000-$249,999 – .55%

$250,000-$499,999 – .50%

$500,000-$749,999 – .45%

$750,000-$999,999 – .40%

$1,000,000-$9,999,999 – .30%

If you have over $10 million invested, you get an institutional rate. These fees are assessed once per year and cover management fees, trading costs, product fees, administration, technology, analytics, and customer support.

Customer Service and Rewards

Hedgeable has a variety of ways to get your problems resolved and questions answered. You can open up a ticket and monitor the progress the support team has made in addressing your concerns. Alternatively, you can text or do live chat with the organization’s customer support team seven days a week. On top of all this, the CIO himself holds office hours twice a week via video conferencing.

In order to increase customer retention and give users the best experience possible, Hedgeable runs a rewards program known as ?lph? clu?. You can earn points by becoming a member, funding your first account, referring new users, sharing on social media, investing specifically for retirement, adding a recurring deposit, and sticking with the company. When you are rewarded for financial activity, your points correspond with how much money you add to your account.

You can claim points for prizes such as Airbnb gift cards, VR headsets, and donations to charitable causes. The more expensive an item is, the more points it will cost to acquire it.

Pros and Cons

Pro: The quick onboarding quiz makes it very easy for users to find an appropriate portfolio and invest without doing mental gymnastics.

Con: While the user might not feel actively engaged in the process, these portfolios are very much actively managed by Hedgeable’s algorithm. Many finance experts stay away from this type of management as it is extremely difficult to do successfully.

Pro: You can start investing with any amount of money, and can do so in accordance with your values through socially responsible investments.

Con: Those with the least amount of money will pay the highest annual fees.

Pro: There is one, flat-rate, easy-to-understand fee that is only assessed once per year.

Other Investing Apps to Consider

Betterment is another investing app with a relatively low barrier to entry. There are no minimum required investments, though it does not invest in as wide of an array of asset classes as Hedgeable. Its fees are lower though, ranging from .35% to .15% annually, depending on the size of your account. Betterment does require a $100 monthly contribution or you will incur a $3 fee.

Wealthfront uses modern portfolio theory like Hedgeable and Betterment, but offers a wider variety of potential investable assets. Wealthfront is also free until you have $10,000 or more invested; at that point your fees jump to .25% annually, making it the cheapest option of the three. To get started, though, you must open an account with at least $500.

 

The post Hedgeable Review: Robo-Advisor for Investors Who Don’t Mind Risk appeared first on MagnifyMoney.

Didn’t Get the Job? 3 Things You Can Do to Change the Interviewer’s Mind

There are some steps you can take that could either change the interviewer’s mind or lead to another opportunity. Here are three things you can do.

After months of searching for jobs, your dream company called you in for an interview. Your resume was flawless, you wore your best interview attire, and you confidently headed to Dreamy Company to meet the hiring team. Things went well. The interviewers laughed. You successfully answered every tough question, and you even got to meet your future co-workers. Things couldn’t have gone better.

After one week, you finally hear back from the hiring manager. This is it; it’s the email you’ve been waiting for. As you click open the message, your heart sinks. Much to your dismay, the first sentence starts with, “We regret to inform you …” and that’s when you know you didn’t get the job.

But all is not lost. There are some steps you can take that could either change the interviewer’s mind or lead to another opportunity. Here are three things you can do.

1. Ask for Feedback

How you respond to rejection is everything. You may be tempted to ignore the rejection email and move on with your job search. Or you may surrender to the temptation to give the hiring manager a piece of your mind. However, if you still want to work for the employer, respond kindly with a request for feedback. Rather than expressing your disappointment or getting angry, put your pride aside, try to sincerely gain an understanding of what went wrong and learn how you may be able to improve. Start by thanking the interviewer for their time and reaffirming your desire to work for the company. Then ask if there is any way you can improve your candidacy for similar positions in the future.

Career expert and former recruiter Jaime Petkanics said responding to a rejection email and asking for feedback can be a smart way to leave the door open. You never know when a position you’d be a great fit for will become available. Your positive attitude will leave a good impression and keep you top of mind.

“I’ve turned down plenty of people in my career as a recruiter because the job fit wasn’t quite right – even when the company fit is very much there,” according to Petkanics. “I have gone back to many of them at future dates to talk about new roles that were a better fit and in lots of cases have hired them. In case that is an option, you want to keep that relationship intact. It’s also a great idea to express that you’d still like to be considered for future roles if something comes up.”

2. Ask for a Chance to Join a Training Program or Apply for an Internship

Another way you can get your foot in the door at your dream company is to show that you’re willing to learn. A positive attitude is another trait hiring managers seek. A whopping 73% of managers in a CareerBuilder survey said this soft skill was also very important when it came to identifying a good company match. Some companies host training programs for entry-level employees and career changers looking to break into a particular field. Show how positive and motivated you are by asking if the company has a training program. If they do, ask how you can be part of it. If a training program does not exist at the company, inquire about an internship (if you can afford to take a pay cut). If you’re determined to become their employee, now is the time to be flexible and a little creative. You never know, your determination may just change the hiring manager’s mind.

3. Follow Up on a Question You Didn’t Answer Well

If you haven’t heard back from that dream company yet, you want to prepare for future options, or you know they haven’t filled the position yet (despite sending a rejection letter your way), there’s something else you can try. If you know you completely flubbed an answer to an important interview question, there are no rules against sending a follow-up email with a better answer. This is your chance to give yourself a do-over before the hiring manager makes a decision.

Following up and taking another stab at the question shows not only that you are serious about the job but also that you are the type of person who doesn’t give up easily. Motivation is a personality trait many employers are looking for when it comes time to hire new employees. Roughly 66% of employers in the CareerBuilder survey said motivation is an essential soft skill. So just by following up to revise your question, you’ve shown a positive trait that might turn things around in your favor.

[Editor’s Note: It’s important to remember that many organizations review a version of your credit report as part of the application process. To help you be informed of where your credit currently stands, you can take a look at a snapshot of your credit report for free, updated every 14 days, on Credit.com.]

This article originally appeared on The Cheat Sheet.

Image: SIphotography

The post Didn’t Get the Job? 3 Things You Can Do to Change the Interviewer’s Mind appeared first on Credit.com.

The Trick That Can Help You Avoid Credit Card Interest for 2 Months

Your grace period can help you avoid credit card interest for longer than you may think.

Credit card issuers are very upfront with the features that attract new customers. Things like signup bonuses, category bonuses, or special financing are essentially marketing tactics to drive new business. What card issuers are not always the best at doing, is explaining everything you can find in the fine print. These are the things that can have a big impact on your finances.

Grace periods have long been used within the credit card industry, but most people don’t really understand what they are and how they can work for you or against you. Understanding how credit card companies use grace periods can mean the difference in hundreds if not thousands of dollars in interest out of your pocket each year.

What Is a Grace Period?

A grace period is the time from when your credit card billing statement closes until when your payment is due. This is usually anywhere from 21 to 27 days. To help you understand this a little more, let’s look deeper into how credit card billing cycles work.

Each month, when you receive your credit card statement, in addition to the bill’s due date, you will see a date that is generally labeled as the “statement date” or “closing date”. What the card company will do is total all the purchases made from the previous closing date to the current closing date and bill you for them. Let’s assume your statement’s closing date is November 7, any purchase that you make on November 8 or after will be part of the next billing cycle.

During this grace period, you’re not going to be paying interest. Think of it like your credit card company extending you a complimentary line of credit for a few weeks. However, if you do either of the following two things, interest will start accruing immediately:

  • You only pay a portion of the total amount due by the due date.
  • You pay the entire balance, but only after the due date has passed.

If this happens to you, it’s important to know that interest won’t just start accruing from the statement’s due date, it will actually accrue all the way back to the purchase dates of each item.

A Two-Month Grace Period? 

Now that you know exactly what the grace period is, what if someone told you that you could extend it to nearly two months? It’s possible and not all that difficult to accomplish. Plus, if you are planning to make a large purchase and want to little extra time to pay off the balance, then this could be an extremely useful tactic.

Because your credit card billing month starts over the day after your statement closes, the trick it to make your purchases as close to that date as possible. Let’s say that your statement closed on November 2 and you bought a new television on November 3. Your next statement, which includes the television purchase, would close on December 2 and you would have a due date of approximately December 23. That means you would have nearly two months from the time you bought your new television until when you would face possible interest on the purchase. (Note: If you’re looking to avoid interest for a longer period of time, you might want to consider a balance transfer credit card.)

Smart Charging

Remember, while the strategy can be helpful in avoiding interest on a big purchase, it’s not an excuse to overspend. Credit cards are best leveraged when they’re paid off in full by each due date. Otherwise, as we mentioned, you’ll start to accrue interest, which can add up quickly, damaging your overall financial health and your credit. (The amount of debt you owe plays a major role among credit scores. You can see how your debt levels are affecting your credit by viewing your free credit report snapshot, updated every 14 days, on Credit.com.)

Also, anyone looking to properly manage their debt needs to have a good understanding of grace periods. Credit card companies are not required to have a grace period and some do not. If they do, the CARD Act of 2009 requires your statement must be mailed or delivered to you at least 21 days before the due date. Make sure you read the fine print for your credit card so that you can fully understand how your card works and what actions may nullify your grace period, if you do have one. It could save you a lot of money in the long run.

Image: bowdenimages

The post The Trick That Can Help You Avoid Credit Card Interest for 2 Months appeared first on Credit.com.

Mortgage Insurance Explained: What It Is and Why You Should Have It


There’s a lot to consider when purchasing a home. Location, size, and cost spring to mind as three of the most important factors. Perhaps you’ve budgeted and figured out how much you can afford for a down payment, but have you also considered your total monthly mortgage payments?

If you’re applying for a mortgage and can’t afford to put at least 20% down, you may have to pay for mortgage insurance.

What is mortgage insurance?

Mortgage insurance helps protect the lender’s investment, not the homeowner.

A homeowner’s insurance policy may reimburse you for a variety of expenses, including vandalism, thefts, and environmental damage to your home. Mortgage insurance is a bit different. Although you are responsible for mortgage insurance premiums, the policy protects the lender.

Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” explains mortgage insurance “insures the lender against principal loss in the event you default, they foreclose, and the foreclosure sale doesn’t bring in enough money to cover what they’ve lent you.” In short, if you don’t pay your bills, the insurance company will help make the lender whole.

The 20% down payment rule

Mortgage insurance isn’t required for all homebuyers. “Typically, homebuyers looking to get a conventional mortgage must pay PMI if they are making a down payment of less than 20%,” says Josh Brown of the Ark Law Group in Bellevue, Wash., which specializes in bankruptcy and foreclosures. Brown points out PMI serves a valuable function by allowing otherwise qualified homebuyers (with an acceptable debt-to-income ratio and credit score) to be approved for a conventional loan without the need for a large down payment.

How to find mortgage insurance

Mortgage lenders will often find a PMI policy for you and package it with your mortgage. You will have a chance to review your PMI premiums on your Loan Estimate and Closing Disclosure forms before signing paperwork and agreeing to the mortgage.

Types of mortgage insurance

There are two main types of mortgage insurance: Private mortgage insurance (PMI) and mortgage insurance premium (MIP).

PMI helps protect lenders that issue conventional, Fannie Mae and Freddie Mac-backed, mortgages. You’ll often be required to make monthly PMI payments, a large upfront payment at closing, or a combination of the two. These payments are made to a private insurance company and are required unless you have at least 20% equity in your home. You may request to cancel your PMI once you have paid down the principal balance of your home to below 80% of the original value.

Mortgages issued through the Federal Housing Administration (FHA) loan program also require mortgage insurance in the form of a mortgage insurance premium (MIP). You will be required to pay an upfront fee at closing and an MIP every month as part of your monthly mortgage payment. Your MIPs depend on when your mortgage was finalized and your total down payment.

How much mortgage insurance will cost you

Protect Your House

PMI premiums can vary depending on the insurer, your loan terms, your credit score, and your down payment. The premiums often range from $30 to $70 per month for every $100,000 you have borrowed, according to Zillow.

Many homeowners’ monthly mortgage payments include their PMI premium. Alternatively, you might be able to make a one-time upfront PMI payment. Or, you could make a smaller upfront payment and monthly payments.

As we mentioned earlier, for an FHA loan, you will have to pay upfront mortgage insurance premium (UFMIP) which is generally 1.75% of your loan’s value. You may have the option of rolling this premium payment into your mortgage and pay it off over time. Your MIP depends on your down payment, the base loan amount, and the term of the mortgage and can range from .45% to 1.05% of the loan’s value. The MIPs must be paid monthly.

Mortgage insurance doesn’t have to be forever

There are a few situations when you may be able to stop making mortgage insurance premium payments.

There are two eligibility requirements for conventional mortgages closed after July 29, 1999. As long as you’re current on your payments, PMI will be terminated:

  • On the date when your loan-to-value is scheduled to fall below 78% of the home’s original value.
  • When you’re halfway through your loan’s amortization schedule; 15 years into a 30-year mortgage, for example.

Your home’s original value is often the lower of the purchase price or appraised value. The current value of your home and your current loan-to-value aren’t figured into the above criteria.

You can also submit a written request asking your lender to cancel your PMI:

  • On the date your loan-to-value is scheduled to fall below 80% of the home’s original value.
  • If your current loan-to-value ratio is lower than 80%, perhaps due to rising home prices in your area or renovations you’ve done.
  • After refinancing your mortgage once you have at least 20% equity in the home.

Unlike PMI, if you have an FHA loan, your MIP may not ever be removed. The date your mortgage was finalized and the amount you put down determines your eligibility:

  • The MIP stays for the life of the loan for mortgages closed between July 1991 and December 2000.
  • The MIP will be canceled once your loan-to-value is 78%, if you applied for the mortgage between January 2001 and June 2013, and you’ve owned the home for five or more years.
  • If you applied after June 2013 and put at least 10% down, the MIP will be canceled after 11 years. If you put less than 10% down, the MIP stays for the life of the loan.

Refinancing an FHA loan to a conventional mortgage may provide you with additional options.

The pros and cons

There are a variety of pros and cons to consider when weighing the options of waiting to save a 20% down payment versus paying mortgage insurance.

Melanie Russell, a mortgage loan officer in Henderson, Nev., points out buying now can make sense if you expect home prices to increase or interest rates to climb.

What about waiting? In addition to avoiding mortgage insurance, putting more money down could lead to lower closing costs and a lower interest rate on your mortgage. Also, if you expect prices to drop, you’re saving on all the costs that could come with ownership, including taxes, mortgage, insurance, maintenance, and potential homeowners’ association fees.

In the end, it’s often a situational and personal choice. While Russell shared a few positives to buying early and paying for PMI, she also notes, “Only you can answer this question for yourself.”

When you don’t need mortgage insurance

There are also a few options that don’t require mortgage insurance, even if you can’t afford a 20% down payment.

For example, Veterans Affairs (VA) loans, offered to qualified veterans, don’t require mortgage insurance. You might not have to put any money down either, but these loans usually require an upfront payment at closing.

The Affordable Loan Solution program offered through a partnership between Bank of America, Freddie Mac, and the Self-Help Ventures Fund allows borrowers to put as little as 3% down without taking on PMI. Maximum income and loan amount limit requirements may apply.

You may also find some lenders willing to offer lender-paid mortgage insurance. You’ll pay a higher interest rate on the loan, but in exchange, the lender will make the insurance payments for you. “The math works differently every time,” says Fleming. “If a borrower thinks they won’t be in the property very long, [lender-paid mortgage insurance] might be a good choice, as sometimes the additional amount you pay is lower this way.”

However, if you’re in the home and paying off the mortgage for a long time, it could be more expensive than taking out a conventional loan with PMI. Because the premiums are built into your mortgage, you won’t be able to get rid of the extra payments after building equity in the home.

Another option could be to take out a second loan, called a piggyback mortgage. Although there are potential downsides to this route, you can use the money from the second loan to afford a 20% down payment and avoid PMI. Some people also borrow money from friends or family to afford a 20% down payment, but that could put your relationship in jeopardy if you run into financial trouble.

Finally, you might also discover lenders offering no-mortgage-insurance loans with a 10% to 15% down payment. As with the lender-paid mortgages, it’s important to review the fine print and the potential pros and cons of the arrangement.

The post Mortgage Insurance Explained: What It Is and Why You Should Have It appeared first on MagnifyMoney.

What Is Mortgage Amortization?

Mortgage concept by money house from the coins

Owning a home can feel good. But is it a good financial decision?

There’s a lot that goes into answering that question, and one of the biggest factors is something that sounds both incredibly boring and incredibly confusing: mortgage amortization.

It’s not the sexiest financial topic in the world, but it has a big impact on your personal finances. In this post we’ll break it down so that you understand what it is and how it should factor into your decision about whether to buy a house.

What Is Mortgage Amortization?

Each time you make your monthly mortgage payment, that payment is split between paying interest and paying down principal (reducing your loan balance). Amortization is simply the process by which that split is calculated.

See, your payment isn’t split the same way throughout the life of your mortgage. It’s actually different with each payment, with your earliest payments going primarily toward interest.

For example, let’s say you buy a $250,000 house, put 20% down, and take out a 30-year, $200,000 mortgage with a 4% interest rate. That means your monthly payment would be $955.

To calculate how much of that first payment goes toward interest, you simply divide the interest rate by 12 to get a monthly interest rate and multiply that by your outstanding loan. Here’s how it looks in this example:

  • (4% / 12) * $200,000 = $667

That means $667 of your initial mortgage payment is used to pay off interest, while the remaining $288 reduces your mortgage balance to $199,712.

Next month the same calculation is run again, but this time with your slightly lower mortgage balance. That leads to a $666 interest payment and $289 going toward reducing your loan.

And that’s how it works. Your early payments are primarily used to pay interest, but over time it slowly shifts so that more and more of your monthly payment is used to reduce your mortgage balance.

You should receive an amortization schedule when you apply for a mortgage, and you can also run the numbers yourself here: Zillow Amortization Calculator. This will show you exactly how much of each payment goes toward interest, how much goes toward principal, and how much interest you’ll pay over the life of the loan.

What Does That Mean for You?

Okay, great, so you have the technical explanation for how mortgage amortization works. But how is that actually relevant to you? Why should you care?

There are two big implications to keep in mind as you consider whether or not to buy a house.

The first is this is one of the reasons it often requires you to stay in your house for several years before your home purchase pays off versus renting. People often talk about renting as if you’re “throwing money away,” but they forget that you’re doing something very similar in those early years of your mortgage as well.

Remember, those interest payments you’re making, which are the majority of your early mortgage payments, aren’t building equity in your home. That money is going straight to your lender and will never be yours again. It usually takes a while before your home equity really starts to grow.

The second is buying a house costs much more than most people realize. Take the example above. You might think of it as just a $250,000 purchase, but when you include all the interest you pay over the life of that 30-year mortgage, the total cost rises to $393,739.

And that doesn’t even include the cost of homeowners insurance, property taxes, repairs, upgrades, and everything else that comes with owning a home.

The bottom line is buying a house is expensive, and in many cases renting is actually a better financial move, especially if you aren’t committed to staying in the house for an extended period of time. You can run the numbers for yourself here: New York Times buy vs. rent calculator.

How to Combat Amortization

To be clear, mortgage amortization isn’t a bad thing. It’s just how mortgages work, and it’s important to understand so you can evaluate the true cost of buying a house.

But if you’d like more of your money to go toward principal sooner, and therefore decrease the amount of interest you pay, there are a few ways to do it.

The first is to put more money down when you buy the house. That down payment is immediate equity in your home that will not be charged interest.

The second is to make extra payments and make sure they go toward paying down principal. You will have to double-check your mortgage’s specific terms, though, to make sure there aren’t any prepayment penalties or other clauses that would make this a bad idea.

And the third is to take out a 15-year loan (or other shorter term). Using the same example above and changing only the length of the loan from 30 years to 15 years, the monthly payment increases to $1,479, but the total cost of the house over the life of the loan decreases to $316,287. That’s a savings of $77,452 and doesn’t factor in the likelihood of getting a better interest rate in return for the shorter loan period.

Keep in mind all of these strategies can be beneficial in some situations and not in others. In some cases it can make more sense to invest your money elsewhere, so you’ll have to run your own numbers and make the best decision based on your personal situation.

The post What Is Mortgage Amortization? appeared first on MagnifyMoney.

How to Pick the Right Healthcare Plan for You

Choosing medical coverage can be daunting. Here's how to select a healthcare plan.

Selecting a health insurance plan that works for your family can be an overwhelming task. However, there are four critical steps you can take to make certain that the plan is right for you and your family.

1. Network

Ever since managed care took over the health insurance industry in the 90s, insurance plan networks have become a critical part of selecting the “right” plan for you and your family. All of the major insurance companies offer online directories for finding medical providers. Those directories, however, can be very confusing. While you may find your physicians are contracted through your insurance company, you might be terribly disappointed when you schedule an appointment only to find that they are not on the sub-network that your plan utilizes.

Insurance companies normally have several different networks and your doctors may not belong to all of them. I have found that the simplest way to find out if your providers are on the network is to call their offices directly and provide the name of the insurance company and the name of the network you will be using. The other piece of information you will be able to glean is if your doctors will be participating in that network in the upcoming year. This will not usually be indicated on the insurance company’s website. Contracts between insurance companies and medical providers change constantly, and a network that includes your physicians this year may not include them next year.

2. Benefits

Many benefits that used to be optional are required to be included by the Affordable Care Act (a.k.a. the ACA, or Obamacare). For example, mental health benefits, maternity coverage and guaranteed coverage without pre-existing condition limitations are currently all mandated by law. These standardized benefits may not last if the ACA is partially or fully repealed.

While many benefits are standardized, benefit levels are not. There are typically three types of policy benefits you will need to consider when selecting a plan. It is very important to read the Summary of Benefits and Coverage for your selected plan before you make this important decision.

  • A deductible is the amount of money you must pay before any expenses will be covered by your insurance company. The deductible typically resets on January 1st of each year. So, if you have a $1,000 deductible, you will have to pay the first $1,000 of eligible expenses, and the insurance company will start paying a portion of the next expenses incurred in that calendar year (see co-insurance, below). Generally, the higher the deductible, the lower the premium. So if you want to save money on your monthly premiums, you can select a higher deductible. There may also be a separate per-stay deductible if you need hospitalization or go to the emergency room. Sometimes, the deductible will be waived and a smaller copay will be required upon each visit to the doctor. The amount of the co-pay will vary by plan. Typical co-pays range from $25 to $100 per visit.
  • Co-insurance is the split between what the insurance company pays and the expenses for which you are responsible after the deductible has been paid. You might select a plan that pays 80% of approved medical expenses after your deductible has been satisfied. You would then be responsible for the other 20% of expenses. A plan that only pays 50% of expenses (with you paying the other 50%) would generally cost less than the aforementioned 80%/20% plan. This sharing stops and the insurance company pays 100% of the remaining charges when you have reached the out-of-pocket maximum. This limit is expressed in a dollar amount and includes all of your deductible and co-insurance payments. A typical out-of-pocket maximum might be $4,000 per person, with an $8,000 family limit. So if you have a family of four and each had expenses of $2,000, the family limit would be reached even though no one person reached their individual limit.
  • The final benefit selection you will need to make is for prescription drug coverage. Some plans cover prescription drugs just like any other medical expense, subject to the deductible and co-insurance described above. Other plans might waive the deductible and co-insurance but require a separate co-pay each time you refill a prescription. Since name-brand drugs are more expensive, the co-pay is usually higher. Generic drugs, however, cost less so they enjoy a lower co-pay. Finally, there may be a separate prescription drug deductible, which must be satisfied before any co-pay applies.

3. Insurance Company

The strength of the insurance company backing the policy you choose is just as important as the network or benefits selected. There is a misconception that Obamacare is an insurance policy backed by the government. Each policy is still underwritten by an insurance company, not the federal government. Since claims are paid by the insurance companies, you should check out the financial strength of the company. Several rating agencies evaluate the financial strength of insurers, including Moody’s, A. M. Best and Fitch Ratings. Look for companies with an “A” or better rating from all three rating agencies. (You can check your own credit rating for free by viewing your free credit report snapshot, updated every 14 days, on Credit.com.)

4. Premiums

The premium is the monthly amount paid to the insurance company in return for the policy benefits purchased. All of the factors discussed above will work together to determine the premium required for your insurance coverage. And while your health, medical history or gender can’t affect your premium, a few other factors can. Premiums increase with age and as family members are added to the plan. Premiums can also vary widely based upon where you live in the country or even within your own state. Rates are determined, in part, by the medical expenses in your particular zip code. The insurance company can also charge more if you use tobacco.

While deciding on the correct medical insurance plan can be tedious, balancing these four critical details can help you make an informed and appropriate selection.

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3 Common Mistakes Savers Make When They Invest in Target-Date Funds

archer target arrow investing retirement saving

Target-date funds (TDFs) are one of the most popular investment options offered by employers because they provide employees an all-in-one portfolio within their retirement plans. To show how popular they are, more than 70% of all 401(k)s provide TDFs, and approximately 50% of participants own them. However, most employees don’t even know what target-date funds are or how they work.

So why the fuss about target-date funds? Although popular, many participants are misusing them and hurting themselves in the long run.

What a Target-Date Fund does:

A TDF is simply an investment fund that owns a bunch of index-style mutual funds. Because TDFs include funds with broad exposure to different types of assets, they allow novice investors to access countless stocks and bonds. For example, the Vanguard 500 Index Fund tracks the S&P 500, which gives investors access to 500 different stocks. A TDF may contain several funds similar to the Vanguard one.

According to a recent study by Aon Hewitt, retirement savers who choose to invest in a single TDF and no other funds had higher investment returns by over 2%. In addition, those participating in TDFs outperformed people who manually managed their retirement investments by a whopping 3%.

Here are some reasons they have been misused, how to overcome them, and why you only need one in your portfolio.

Choosing the wrong year

The name “target-date fund” means exactly what it sounds like. You choose a fund based on the year or “target date” that you plan to retire. TDFs are offered in five-year increments — 2035, 2040, 2045, 2050, and so on. Your goal is to pick a TDF associated with a date that is closest to when you expect to retire.

For example, if you’re 25 years old today and plan to retire at age 65, you would opt for a 2055 TDF option.

Why does the year matter so much? Because the closer you get to retirement, the more conservative your investments should become. This is important, because you have less and less time to bounce back from setbacks as you get closer to retirement. The way TDFs work, they tend to be more heavily invested in risky assets like stocks in your early working years.

“As the investor ages and moves closer to their intended retirement date, a target-date fund will reduce the overall investment risk,” explains John Croke, a certified financial adviser with Vanguard. This process is known as the glide path.

Choosing more than one TDF

Since TDFs are pretty straightforward, many people mistakenly think that they need to split their retirement savings among more than one TDF in order to be truly “diversified.” But the whole point of a TDF is that you only need to invest in one — it is automatically diversified among many assets for you.

“TDFs are designed as ‘all-in-one’ solutions that provide automatic diversification across multiple asset classes,” Croke says. “Owning more than one TDF is not advised or necessary.”

You shouldn’t treat your TDF as if you were a day trader trading stocks either. It’s better to invest in your TDF and keep your funds there rather than to jump in and out trying to time the market.

Paying too much in fees

Compared to traditional mutual funds, TDFs are especially appealing because they charge such low fees. In the world of investing, fees come in many different forms, but the important fee to watch out for is called the “expense ratio.” This is the amount your fund manager charges you for the ability to own that fund. Expense ratios can be as low as a fraction of a percentage or as high as several percentage points. It may not sound like much of a difference, but even a difference of one or two points can mean losing tens of thousands if not hundreds of thousands of dollars over the decades until you retire.

Also, participating in more than one fund just subjects you to more fees that are unnecessary. Why pay more when you don’t have to?

The final word

All in all, TDFs provide an easy, diversified, and low-cost means to invest for retirement. All you need to do is choose one that matches the year you plan to retire, make tax-deferred payments from your paycheck into the fund, and allow your account to grow with history proving that time is on your side when it comes to the markets.

The post 3 Common Mistakes Savers Make When They Invest in Target-Date Funds appeared first on MagnifyMoney.

4 Invitation-Only Credit Cards

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If you have reasonably good credit and a steady income, credit cards aren’t usually that difficult to come by. In fact, you may be throwing credit card offers out with the rest of your junk mail on a regular basis. (Actually, we hope you’re shredding them so you don’t put yourself at risk for identity theft.) But it’s likely that the companies sending you mailers are just hunting for new customers, and there’s nothing too exclusive about them.

By contrast, there are some credit cards that are rarely advertised anywhere, and are available to top tier customers by invitation only. Consumers can’t apply for them, and offers are only extended to the most qualified.

These are four of the most exclusive credit cards that come by invitation only.

1. The Dubai First Royale MasterCard

The Dubai First Royale MasterCard is a black card so ritzy it has diamond and gold details embedded on the face of the card. The card is invitation only for a very limited group of the “upper echelons of the social and business community.” The card comes with no limit, a dedicated account manager, and Royale Lifestyle Management — presumably a “lifestyle manager” similar to a personal concierge — but details are slim, so you can let your imagination run wild with what this entails.

2. The American Express Centurion Card

This American Express invite-only card is referenced in rap songs and TV shows, and is known as one of the most exclusive black cards on the market. But information on the features that come with this anodized titanium card is scarce. However, it’s reported the card will get you access to Amex’s Centurion lounges at airports, as well as (rumored) free upgrades at hotel chains, airline credits and other special services. It comes with a hefty price: an “initiation fee” of $7,500 and an annual fee of $2,500.

3. The Visa Infinite Eurasian Diamond Card

According to Kazakhstan-based Eurasian Bank, the Visa Infinite Eurasian Diamond Card is the world’s first card to feature diamond-and-gold ornamentation. To become a cardholder, you must be recommended by two bank members of the Eurasian Bank’s Management Board.

Unlike other cards on this list, the card provider is very transparent about the benefits. Features include concierge services that arrange transportation (including private planes), translator and courier services and even butler services. There is no credit card limit, but there are fees associated with the card, depending on the year of service and the customer’s status.

4. MasterCard’s Luxury Card Priceless Program

This is a departure from the other invitation-only cards on the list, as the MasterCard Priceless service is actually a program available to MasterCard’s luxury line of credit cards, including their Gold Card, Black Card and Titanium Card. Technically, you can directly apply for all three of these cards through MasterCard’s website.

But we’re including them as a bundle on this list because of MasterCard’s Priceless program, which is unavailable to most MasterCard holders. This service gets cardholders access to invitation-only, exclusive experiences. These could include backstage tickets and courtside seats, access to VIPs and industry experts, exclusive golf experiences and other curated excursions.

OK, so most of us probably won’t be using these cards. But if you’re considering a rewards credit card that is more within your reach (and there are plenty of great ones out there), it’s important to know where your credit stands. After all, you have to have good or excellent credit to get the coveted perks and you don’t want to apply (and take the hit of a hard inquiry) just to get denied. You can see two of your credit scores for free, updated every 14 days, on Credit.com.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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8 Things to Buy After Thanksgiving

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When it comes to shopping, the days and weeks after Thanksgiving are unparalleled.

You have the twin massive discount days of Black Friday and Cyber Monday. You have the seasonal Fall items going on massive sale to make way for the holidays. And you have discounts on things people might buy that aren’t necessarily linked to the holidays, like appliances and other capital equipment, because stores need to make room for next year’s models. Finally, the winter is the “off season” for so many things and buying in the off season can help you save a lot of money.

Here’s a list of things you should buy after Thanksgiving.

1. Electronics

The key to winning Black Friday (and Cyber Monday) is watching the circulars as they are leaked and doing some serious comparison-shopping. High-ticket electronics from brands you recognize like tablets, computers, and video game consoles from Sony, Microsoft, Apple, and more, will all tout mega-deals, the weekend after Thanksgiving. But remember, it’s best not to get carried away gorging on the great deals that pan out because it might leave you needing money closer to the holidays!

2. Leftover Thanksgiving Decorations

Thanksgiving will happen in just 52 short weeks but all those Thanksgiving-themed decorations, and many of the Autumn-themed decorations, will be deeply discounted as stores look to get rid of stock. If you’ve wanted an orange and red wreath or an Autumn-inspired centerpiece, now is the time to start snagging them because in a few short days they’ll be gone.

3. Live Christmas Trees

One sneaky good thing to buy right after Thanksgiving is live Christmas trees. Many live tree sellers will discount them initially to start moving some of their stock and then start selling them at regular price as Christmas draws near. They won’t start discounting them again until it’s time for the procrastinators to buy.

4. Big Ticket Appliances

Stores will discount large appliances as we near the end of the year to clear inventory for newer models. You can expect to see sales on refrigerators, washers, dryers and other large appliances around this time. If you are getting rid of an old appliance, you may find your local utility will haul it away for you or even pay you for them.

5. Cars

Late November is a fortuitous time for a car buyer. As the end of the year draws closer, sales people are thinking about hitting their annual quotas and willing to make deals to move cars. The next model year will have been released near the end of the summer, so previous model years that are still around in November have been sitting for a long time. The confluence of those factors makes late November and December a prime time to strike a deal.

(If you are thinking about buying a car, it’s important to check your credit since a good score will help you qualify for a better interest rate. You can view two of your credit scores, updated every 14 days, for free on Credit.com.)

6. Recreational Vehicles

The same logic for cars also works with recreational vehicles (RVs) but even more so. The winter months are also the slowest in the RV business. People hunker down for the winter and aren’t thinking about making cross-country trips — dealers will still want to sell vehicles.

7. Cookware

Cookware will be discounted because a lot of people will be cooking and entertaining, which means a lot of people will discover their cookware needs an upgrade. Retailers know this so, to win over their share of the market, they will entice shoppers with great deals around this time.

8. Tools

Tools make great gifts and retailers will often offer some fantastic deals on cheap tools. It’s a great time to pick up a tool you’ve always needed for that last project on the list but never had the heart to pay full price for.

You can save a bundle after Thanksgiving if you’re judicious in what you buy. Always comparison-shop and make sure that deal you see before you actually is a deal.

Finally, remember that there are some things that will be deeply discounted after the holidays – things that are classic gifts but rarely get used. Gift cards, exercise equipment, and many other items will be on clearance after the New Year!

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