Money management is an important part of setting oneself up for success, but in an era where both student loan debt and credit card debt are at an all-time high, it can feel like an uphill battle for a lot of consumers. As with many complex problems, the key to solving your personal finance situation is almost always knowledge. This has become more apparent than ever since the COVID-19 pandemic. Are you financially stable enough to endure the economic crisis? How will you handle coming out of the crisis? These difficult questions can create significant financial stress. Because of this, it’s important to know what the trends show and what strategies to employ.
Increased Index Fund Popularity
One of the big trends last year was involvement in index funds. In fact, in 2019 the majority of mutual fund investments were placed with index funds. These funds tend to be viewed as relatively safe, and in the kind of market the country has enjoyed over the last 10 years, they represent a solid return on an easy to manage financial commitment. If you have mutual fund investments outside of dedicated retirement funds, it might be time to move them to index funds if they aren’t there already. For those who self-manage their retirement accounts, it’s also worth looking at your involvement in these funds and assessing the balance of your investments, because they can act as a hedge against individual stock purchases and investment in more volatile funds both.
Commission-Free Stock Trading Online
Another way to get more out of your investments is by cutting the cost of making them, and that’s where the market really favors you right now. Last year, Charles Schwab moved to eliminate commissions on all stock trades on the platform, relying solely on its fee structure. That means you keep more of your capital gains. On top of that, after investment platform shares fell, it acquired TD Ameritrade, one of its larger competitors. As a result, it moved the benchmark in the industry, leading to a fall in commission prices generally. If you have been thinking about getting involved in a self-managed stock portfolio, this change makes it easier than ever to afford your buy-in. The elimination of commissions also lowers the increase you need to see in share prices before a trade becomes profitable, so you can re-evaluate your existing processes for deciding when to hold a stock and when to sell.
High-Yield Cash Accounts
Not everyone is poised to move into high yield investment opportunities right away, and no guide that focuses solely on investments is going to be useful for everyone. If you’re looking to get more out of your cash savings, you need to check out what online banks are offering. .With lower infrastructure costs and opportunities afforded by the rise of cashless transactions and electronic banking, online-only financial institutions have begun offering individuals the opportunity to realize more substantial interest gains from cash accounts than brick and mortar banks. That means for the first time in almost a generation, you can put emergency savings into an account that provides a return worth talking about. For many who have opted to use credit resources in lieu of emergency savings because of the disadvantages that come with parking money in an account without a real return, this could be a turning point.
Banks With Financial Wellness Services
Last but not least, more and more banks are investing in the services that help people get a firmer hold on their personal financial management. That means different things at different banks, though. Some have partnered with institutions and individuals like Donald Gayhardt who have a longstanding commitment to providing financial services to underserved communities, opening up new ways for those consumers to access affordable short-term credit resources when necessary. Other strategies include improved financial counseling and planning services, as well as built-in budgeting software integrated into electronic banking and bill payment platforms, making it easier to track where your money is going.
Realign Your Finances in 2020
Regardless of which resources you opt for, this year marks a turning point in the options available to individuals who want to turn around their personal financial situation. If you’re looking to overhaul your approach to savings and investment, the first thing to do is to figure out a plan that puts your emergency savings in a useful spot so you don’t need to lean as hard on credit resources when things get tight. The current economic downturn is a great example of why you need to have a strategy to deal with bear markets. This ultimately will give you the peace of mind to get through those difficult times.