Book Review: Faithful Finance by Emily Stroud

There are hundreds of personal finance works crowding the shelves of any bookstore. You’ll find books that promise to make you a millionaire in just a month, help you crawl out from under a mountain of debt or give your financial life a full makeover. Most of these books are written in a know-all, tell-all style, convincing you that you’ve just picked up the secret that holds all the money wisdom of the world. You might find complex terms you don’t understand thrown around with abandon, or read about unfamiliar approaches you’re expected to know about and understand.  

Emily Stroud’s recent release is different. Faithful Finance is written in a practical style that sounds just like your good friend is talking to you. What’s more, the book expertly twins religious belief and faith with practical money management tips, showing you what matters most in life and how to keep your perspectives in order. 

Despite its casual style, Stroud’s book is no shabby attempt at offering actionable budgeting tips. Inside this comprehensive work you’ll find the following topics explored and explained in simple, clear terms: 

  • Choosing a financial advisor
  • Creating a savings plan
  • Budgeting all of your expenses
  • Investing for retirement
  • What to do after you’ve graduated college
  • How to start a family on sound financial footing
  • How to give generously and prayerfully

Faithful Finance is sprinkled with real-life accounts of ordinary people just like you. You’ll read about how these people expertly manage their financial lives without getting overwhelmed, and you’ll learn how to make it happen in your own life. 

This book is all about breaking down the multifaceted world of personal finance and making it doable and simple while being faithful. 

If you’re looking for a book that will reveal the secret to true wealth, explore the worlds of the most successful people or study intricate money topics, this book is not for you. 

But if you want a practical, easy-to-understand guide for managing your money while keeping your faith, you’ll want to pick up a copy of Faithful Finance. 

Your Turn: What’s your favorite easy-to-understand personal finance book? Share it with us in the comments! 

SOURCES:

https://www.amazon.com/review/product/0310349788?tag=uuid10-20

http://emilygstroud.com/tag/faithful-finance/

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Rising Interest Rates Explained

If you follow the national business news, you are likely getting mixed messages about the state of the economy. While never very reassuring, pundits’ opinions on the stock market and the country’s economic state are changing as frequently as the weather. 

But there’s one area that’s been constant for some time now: rising interest rates. If you’re thinking of taking out a mortgage, or any other large loan, in the near future, you might be waiting until those rates start going down again. 

Here’s why that might not be the best idea. 

Interest rates will continue to rise throughout 2018.

Experts predict that interest rates on financial products will continue to increase throughout the year.  There are several factors triggering this rise, none of which are likely to be resolved anytime soon. Whether you’re interested in taking out a personal loan or a second mortgage, 2018 may not be a very good year for borrowers.

It’s not looking too great for those who are looking to take out short-term loans either. The U.S. central bank raised short-term interest rates a total of three times in 2017, and that trend is expected to continue. Experts claim 2018 will see an additional three interest rate hikes, each being 0.25%. If you need to borrow money from [credit union], it’s best to consider your plans sooner rather than later to ensure you can lock in before rates get higher.

The inflation factor

Unemployment rates may be down across the country, but wage growth continues to crawl at an almost nonexistent pace. This, in turn, leads to limited price growth, which keeps the inflation rate stagnant. However, the feds are expecting all of this to change in the coming year. They expect wage growth to finally kick off and then set in motion an uptick in inflation and price growth. 

The government wants to stay ahead of any surge in inflation. It does so by increasing interest rates even before there is clear evidence of an inflation peak. In fact, just last month, the feds raised interest rates on short-term loans yet again, citing an inflation scare at the beginning of February as the primary factor behind their decision. 

Financial institutions and credit card companies pattern their own interest rates after the government’s rate. For this reason, it’s best to work on aggressively paying down outstanding debt you have before you’re hit with increased interest rates.

Mortgages

Mortgage interest rates are now at an all-time high; they are currently close to 4.6% and are up more than 20% from a year ago. 

There are multiple factors driving this increase, including the administration’s proposed tariffs on steel and aluminum and the associated concerns over the U.S. trade market.

For the most part, though, mortgage interest rates are based on the 10-year Treasury yield. When bond yields rise, so do mortgage rates. The recent tax overhaul caused investors to favor stocks over bonds, and consequently mortgage rates have been climbing since the tax plan was first introduced in September.

Some experts are actually predicting a turnaround for mortgages in 2018. They are hopeful that the expected volatility in the yield curve will trigger a similar curve for mortgages, possibly even causing them to dip below 4% sometime this year. However, all agree that by year’s end, the mortgage rate will settle at a stable 4.5%.

No one can be certain of anything, though. And waiting until the rates drop might prove to be pointless. In fact, you might even end up paying a higher rate because of that delay.

The good news

Take heart; it’s not all doomsday forecasts on the economic front!

Greg McBride, Bankrate’s chief financial analyst, predicts a great year for returns on savings. He claims that 2018 will be beneficial for all savings accounts, and especially for CD holders, with an average one-year CD yielding a 0.7% return by the end of 2018.

If you’ve been thinking about opening a share certificate or other ways to grow your savings, talk with UCCU, and start putting your plan into action!

What it means for you

Let’s review the practical steps you can take in this economic environment:

1.)   If you’re thinking of taking out a mortgage or another long-term loan, don’t wait for rates to decrease; it isn’t likely to happen anytime soon.

2.)   Try to pay off your debt at a quicker pace than you’ve been doing until now to avoid getting hit with rising interest rates.

3.)   2018 is a great time to increase your savings and to open a share certificate.

Volatile economy got you stressed? No worries! At UCCU, we’re always here to help you through any financial turn. Call, click, or stop by today! 

Your Turn: What steps are you taking in the current financial climate? Paying down debt? Increasing your savings? Tell us all about it in the comments! 

SOURCES:

https://www.kiplinger.com/article/business/T019-C000-S010-interest-rate-forecast.html

https://www.google.com/amp/s/www.bankrate.com/finance/mortgages/interest-rates-forecast.aspx/amp/

https://www.google.com/amp/s/www.bankrate.com/mortgages/analysis/amp/

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10 Things You Can Do to Improve Your Credit Score

We all have things in our lives we are trying to improve– whether that be our health, a hobby or skill, or home improvement.

But are you focusing on improving your credit score?

Did you know that only 10% of Americans know their credit score?

Those are the findings of a survey commissioned by TrueCredit.com, a web subsidiary of the credit bureau, TransUnion. “It is shocking how little Americans know about their credit,” said John Danaher, president of TrueCredit.com. “Good credit is a cornerstone of your financial profile, enabling you to finance major purchases, such as a home, education, or car.” Then he added, “Not knowing about your credit can expose you to higher interest rates which translates into less money in your pocket at the end of the day.” When you apply for credit, your credit scores help lenders determine whether or not you are able to repay the loan based on your past financial performance. With a higher score, you qualify for better interest rates, higher credit limits, and more types of credit than you would with a lower score. Your score reflects the way you use credit, and there are no tricks or quick fixes to getting a good score. However, you can raise your score over time by demonstrating that you consistently manage your credit responsibly.

Here are 10 things you can do to improve your credit score.

1. Pay your bills on time. If you have a history of paying your bills on time, you’ll have an easier time getting a mortgage loan, car loan or credit cards. Even if you’ve had serious delinquencies in the past, a recent history (24 months) of on-time payments carries weight in credit decisions.

2. Keep credit card balances low. High outstanding debt can pull your score down.

3. Check your credit report for accuracy. Inaccurate information on your credit report can be cleared up easily. Always contact the original creditor and the credit bureaus whenever you clear up an error so that the inaccurate information won’t reappear later.

4. Pay down debt. Consolidating your credit card debt or spreading it over multiple cards will not improve your score in the long run. The most effective way to improve your credit is by slowly paying down the amount you owe.

5. Use credit cards – but manage them responsibly. In general, having credit cards and installment loans that you pay on time will raise your score. Someone who has no credit card tends to have a lower score than someone who has already proven that he can manage credit cards responsibly.

6. Don’t open multiple accounts too quickly, especially if you have a short credit history. This can look risky because you are taking on a lot of possible debt. New accounts will also lower the average age of your existing accounts which is something your credit score also considers.

7. Don’t close an account to remove it from your record. A closed account will still show up on your credit report. In fact, closing accounts can sometimes hurt your score unless you also pay down your debt at the same time.

8. Shop for a loan within a focused period of time. Credit scores distinguish between a search for a single loan and a search for many new credit lines, based in part on the length of time over which recent requests for credit occurred.

9. Don’t open new credit card accounts you don’t need. This approach could backfire and actually lower your score.

10. Contact your creditors or see a legitimate credit counselor if you’re having financial difficulties. This won’t raise your score immediately, but the sooner you begin managing your credit well and making timely payments, the sooner your score will improve.

These ideas won’t create a dramatic improvement in your credit score overnight, but over time, they will. Remember, it takes time to develop a strong profile. Once you’ve done it, you’ll find it easier to apply for credit and favorable interest rates.

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Investing – Step 7: Find Your Investing Style

Now that you have successfully determined how much of a risk-taker you are, it’s time to choose an investing style that best suits your personality, your needs, and your financial standing.

First, you’ll need a basic understanding of the major investment styles available in today’s market. These styles can be broken down into three dimensions: active vs. passive management, growth vs. value investing, and small cap vs. large cap companies. Study each category to determine which style best suits your needs.

1.) Active or Passive Management

When choosing your investment style, your first question is going to be how much trust you’re comfortable placing in financial advisors.

If you’d like to have professional money managers carefully select your holdings, along with a full-time staff of financial researchers and managers constantly seeking to gain larger returns for you, active management is the style for you. Of course, you’ll have to pay for those financial experts to work on your investments, but hopefully, the greater returns you’ll get will make the expense well worth it.

If you don’t think a team of professionals will do enough for your investments to justify the high cost, you might choose to be a passive investor instead. In fact, empirical research supports this style – it shows that many passively-managed funds actually earn better returns over the long run. You’ll need to do more of the legwork yourself this way, but your expenses will also be much, much lower.

2.) Growth or Value Investing

The next question you’ll need to consider is whether you prefer to invest in fast-growing firms or in underpriced industry leaders.

Those using the growth style of investing, will choose firms with high earnings, high return on equity, high profit margins, and low dividend yields. The reasoning behind this choice is that a firm earning in this pattern is likely to be an innovator in its field and will continue earning high profits.

Since it is currently growing at a fast pace, such a firm will reinvest most – or even all – of its earnings for fueling further growth. As an investor, you want a chance to be part of that growth, even if it means paying a higher price-to-earnings ratio.

In contrast, the value style of investing is focused on buying a strong firm at a good price.To be considered a value investment, a firm must have a low price-to-earnings ratio, low price-to-sales ratio, and a higher dividend yield.

3.) Small Cap or Large Cap Companies

The last question you need to ask yourself, is whether you want to invest in small or large companies. In investing lingo, the measurement of a company’s size is referred to as its “market capitalization” or “cap” for short. Market capitalization is the number of shares of stock a company has outstanding, multiplied by the share price.

Some investors prefer small-cap companies because they believe these companies can deliver better returns as they are more flexible, and have more opportunities for growth. As is usually the rule in the market though, the potential for greater returns comes with heightened volatility and greater risk. In comparison to large firms, small firms have fewer resources and a less diversified business line. Share prices of the company can therefore fluctuate dramatically, generating larger gains but also generating larger losses. If you’re comfortable with risk and like the potential for greater growth, this is the style for you.

If the thought of putting your money into a smaller company makes you uneasy, consider investing in a dependable, large-cap company. The names of large caps include some big firms you’ll be familiar with like Microsoft and Exxon Mobil. These companies are well-established and stable; you don’t have to worry that they’ll suddenly go out of business and leave you in the lurch.

On the flipside though, these companies are already so large, that they may have reached their capacity for growth and don’t have much more room for expansion. Investors putting their money into large caps can anticipate lower returns, but also less risk.

Review these three dimensions of investment styles until you can determine which choice from each category suits you best. When you have chosen one from each dimension, you’ll know your investing style. This will enable you to pick the investments that you’ll be comfortable holding onto for a long time.

Your Turn: What kind of investor are you? Share your style with us in the comments!

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7 Things to Do Before Asking for a Raise

You know you deserve a salary raise. Here’s how to get your boss to agree:

  1. Volunteer for tasks that fall beyond your actual job responsibilities.
  2. Make yourself indispensable to the team by becoming an expert in a specific area.
  3. Take the initiative to acquire new skills in your field.
  4. Set up a meeting beforehand, specifying what you’d like to discuss.
  5. Make your request during your company’s best season.
  6. Bring proof of how much value you bring to the team and how you help increase the company’s bottom line, citing recent projects you’ve excelled at and increased levels of responsibilities.
  7. Be courteous and respectful without resorting to threats and ultimatums.

Your Turn: Have you recently received a raise? Share any proactive steps you took to make it happen!

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Investing – Step #6: Determine Your Risk Tolerance

You know that deciding to invest some of your money in the market automatically means you’re setting yourself up for possible loss.

But how much losing can you take? Does the thought of your stocks plunging make you sick to your stomach? Or are you a genuine thrill-seeker who loves the rush of adrenaline you get when you think about putting your money somewhere shaky?

Determining your risk tolerance is an important step to take for ensuring you’re completely comfortable with your investments. You might also come across trade recommendations that are discussing options based on different risk tolerances.

While your risk tolerance will change according to your age, income requirements and financial goals, there is no fixed label for those who fit certain criteria. There are simply too many variables. For example, most people think that the younger you are, the more of a risk-taker you’ll be. They reason that the years ahead afford you the freedom to take more chances with your money. While this may be true in general, it is not a fixed rule, and determining your risk tolerance depends on several variables besides age.

So, how do you determine your risk tolerance? Consider the following before answering the question:

1.) Time frame

The first factor to determine is the actual length of the investment horizon. When will the funds be needed? Even a younger investor can have a short-term horizon if they’re trying to earn enough capital for a goal they hope to fulfill in the near future, such as buying a house. If the investment horizon is indeed short, the risk tolerance should shift toward being more conservative, regardless of the investor’s age. For long-term investments, there’s room for more aggressive investing.

If you’re an older investor, don’t fall into the trap of thinking that, just because you’re pushing 70, you need to move everything into conservative investments. This may be suitable advice for some, but it’s not recommended as a one-size-fits-all approach. For example, a retiree who has sufficient funds to live off the interest without touching the principal can safely invest in volatile stocks. Also, with today’s growing life expectancy, a 70-year-old investor may still have a 20-year investment horizon – or more! When determining your risk tolerance, be sure to consider your actual time horizon, irrespective of age.

2.) Risk capital

An obvious factor of your risk tolerance is going to be how much money you have available to put into the market. What is your net worth? To find this number, simply add all your assets and subtract your liabilities. Risk capital is defined as the amount of money you have available to invest or trade that will not affect your lifestyle if it is fully lost. It is also referred to as liquid capital, meaning assets that can easily be converted to cash.

Naturally, an investor with a higher net worth will be able to take more risk. The smaller the percentage of your overall net worth the investment represents, the more aggressive the risk tolerance can be.

Unfortunately, those with little or even no net worth are often attracted to riskier investments because of the lure of quick and large profits. Bear in mind, though, that when too much risk is taken with too little capital, a trader can be forced out of a position too early to make the investment worth it.

On the other hand, if an undercapitalized trader using limited risk instruments “goes bust,” it shouldn’t take that trader long to recoup the losses. Contrast this with a high-net-worth trader who throws caution to the wind and puts everything into one risky stock and loses – it will take this trader a lot longer to recover.

3.) Investment objectives

Your investment objectives are another important factor in determining your risk tolerance.

Are you saving toward a specific goal? Are you investing your child’s college fund with the hopes that it will grow? Are you trying to earn enough to support your retirement? If your goal is to raise enough capital for a pressing need, you will likely be more risk-averse. Or, you may be so desperate to raise those funds that you’ll make some hasty decisions.

On the other hand, if you’re simply trying to increase your net worth with extra capital, you’ll probably be more open to investing in riskier stocks.

Knowing your risk tolerance goes beyond being able to sleep at night without stressing over your investments. Ultimately, knowing your risk tolerance – and sticking to investments that fit within it – should keep you from complete financial ruin and allow you to invest with a clear head.

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11 Ways to Scale Back on Food Costs

Here are 11 easy tips to help you save on food costs:

  1. Never shop before making a detailed menu for the week.
  2. Use coupons whenever possible.
  3. Cook with seasonal produce.
  4. Use the generic brands for cleansers, shampoos and detergents instead of brand-name products.
  5. Never buy something just because it’s on sale unless you use that item regularly. You aren’t saving if you got a great deal on something that will just sit in your pantry.
  6. Whenever possible, make your own instead of buying convenience foods.
  7. Never shop for groceries without a list.
  8. Buy in bulk instead of making smaller, more frequent trips to the store.
  9. Consider having your groceries delivered instead of going to the store to avoid impulse purchases.
  10. Never shop before taking full inventory of your fridge, freezer and pantry.
  11. When possible, buy larger containers of food instead of individualized portions. This includes snack bags, yogurts, ice cream, cheeses and drinks.

How do you save on food? Share your best tips with us in the comments!

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Energy Saving Tips – What to Look For When Buying New Appliances

There’s no getting away from the fact that our dependence on energy increases daily. With energy-dependent technology driving our lives, ecologists continue to search for ways to save our environment. Focusing on energy-efficient appliances is one way to do that.

Your monthly electric bill may not itemize the specific usage of each appliance in your home. If you are interested in a breakdown, though, you can ask your local electric company for a listing. But about 30% of the charges on your statement stem from your electrical appliances. That’s why the government, as well as the majority of appliance manufacturers, encourage consumers to replace standard devices with new energy-saving ones.

So, if your dishes aren’t coming out clean after a run in the dishwasher, or if the ring around your shirt collar has not disappeared after a hot laundry wash, you may be in the market for a new appliance.

There could be some good years left in that 10-year-old refrigerator or oven. But, generally speaking, prices for electrical appliances have come down across the board over the years. And once you consider the cost of a new part for your old apparatus, plus the charge for the visit, it just might be worthwhile to chuck the old and buy new.

It’s also worth keeping in mind that the new energy-efficient appliances save you money on a monthly basis because they use far less electricity. They also help the environment by cutting down on greenhouse gases emitted into the air.

What is Energy-Efficient?

So what does it really mean if an appliance is energy-efficient? In simple terms, it means the process used to make the appliance function – spin, clean, cool, heat, etc. is using less energy. This can be achieved in a number of ways, and manufacturers are always adapting new techniques, such as using renewable sources of energy like water or sunlight.  

Now that you have decided that a modern and energy-efficient refrigerator is what you need, how can you be sure you’re choosing the best product at the most reasonable price?

Here are some tips to guide you in your search:

  1. Determine the total cost. Since the purpose of your new purchase is to save on monthly energy costs, the first thing to consider is the operating costs.  That, along with the actual purchase price, should give you the real cost of the appliance.
  1. Look for the energy rating. There are several reliable rating services that provide information about appliance energy consumption. The federal government uses the yellow and black Energy Star Standard sticker to inform consumers about operating costs and annual energy consumption. This helps buyers compare one clothes dryer to another. Energy Star tests each item independently.
  1. Select the right size appliance. Running a large machine – even the most energy-efficient one – uses more electricity than a compact one, so don’t buy something bigger than what you need.
  1. Look for economy choices. Many dishwashers and washing machines offer a variety of different cycles. If you find one with an economy cycle, that will save you money when you need to wash only a small load of clothes or dishes.
  1. Stay Simple. When it comes to choosing a refrigerator, go easy on the add-ons. According to one independent rating service, a water dispenser or ice maker uses a lot of extra electricity. Also, top-to-bottom fridge/freezer models are more energy-efficient than side by sides. The auto-defrost feature uses heat to speed up defrosting and makes running the refrigerator less efficient.

This holds true for self-cleaning ovens as well, so consider the value in this upgrade.

  1. Contact your utility supplier for the latest ways to save on utility charges. With today’s smart devices, appliances can be programed to use less energy at certain times of the day.
  1. Check out your home. If you have the time and the extra cash, it may be worthwhile to call in a home assessor to help identify ways you can save on your overall energy and water costs.  He or she may be able to tell you how to use your appliances at the most energy-efficient times of day.
  1. Comparison shop. Never buy the first model you see. Household appliances are not cheap, and to find the most energy efficient one at the best price, shop around. Well-known name brands are always more expensive than lesser-known companies. However, they don’t always offer a better product. If you check carefully, you may find that heating element in the name-brand laundry dryer is exactly the same as the one in a model selling for hundreds of dollars less. Compare the details. You might be surprised.

SOURCES:

http://matteroftrust.org/13895/energy-efficient-appliances-and-their-benefits

https://energy.gov/energysaver/shopping-appliances

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Sleep Deprivation – And Its Effects

Obviously, the potential downside for severe sleep deprivation is disastrous. But sleep deprivation hurts us in a myriad of other ways too – some more subtle than others. Lack of sleep can lead to the following problems:

  •  Decreased productivity at work.
  •  Increase in workplace errors.
  •  Workplace accidents and injuries.
  •  Increased irritability.
  •  Decreased energy.
  •  Depression.
  •  Decreased sex drive.
  •  Memory problems.
  •  Concentration problems.
  •  Difficulty managing financial affairs.

The problem is widespread. Most of us need about eight hours of sleep per 24-hour period. But more than 35% reported getting less than seven hours per night. Nearly half of Americans reported snoring – a major indicator of sleep apnea, which can cause sleep deprivation.

Nearly 40% of Americans reported falling asleep unintentionally during the day, at least once during the previous month. About one in 20, or 4.7% report falling asleep while driving – a problem that the U.S. Department of Transportation estimates to have caused 40,000 injuries and 1,550 deaths in traffic accidents each year.

Tips for Managing Sleep Issues

There are some easy things you can do to help improve your sleep patterns. According to the National Sleep Foundation:

1. Go to bed at the same time each day.

2. Wake up at the same time each day.

3. Keep up the habit, even on weekends.

4. Establish a relaxing bed-time routine.

5. Invest in a good mattress and good pillows.

6. Get computers, TV sets, work materials and other distractions out of the bedroom, which should be used only for sleep and intimacy.

7. Don’t eat a big meal or heavy snack right before bedtime. (Your heart will thank you for this too!)

8. Exercise.

9. Avoid caffeine near bedtime.

Severe, chronic sleep difficulty is a medical issue. If you are routinely getting too little sleep, and it affects your personal and professional life, talk to your doctor about your options. He or she may refer you to a sleep specialist.

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Investing – Step #5: Learn The Costs Of Investing

The ultimate goal of investing is to let your money work for you and provide you with stable, passive income.

But it costs money to invest money.

This month, take the time to learn the dollars and cents of investing. Of course, you knew that investing was going to mean coming up with the actual money you’re putting into the market, which always holds the possibility of being lost forever. But did you know there are going to be various fees, commissions, and taxes you’ll have to pay, too?

Let’s take a peek at an actual investment to illustrate this. The company and amounts have been changed, but they’ve been accurately scaled down to size.

Suppose that, on Aug. 13, 2015, a share of stock in Apple closed at $43.26. During the next few months,
Apple issues four dividends of $0.55 per share. On Aug. 25. 2016, a share of stock in Apple closed at $51.23.

Let’s say you chose to invest $1,000 in Apple on Aug. 13, 2015 and you withdrew it on Aug. 25, 2016.

At the time of your investment, $1,000 would buy you 23.25 shares of Apple. Over the year, you would have received $51.16 in dividend payouts. When you withdrew from the company a bit over a year after your initial investment, you’d sell that stock for $1,191.09.

It seems like your gain from this stock is $242.25, broken down into $51.16 in dividends and another $191.09 from selling the stock. Simple, right?

The problem is, though, you haven’t exactly earned that much. Here’s where the costs of investments come into play.

First, the dividends would be subject to income tax. In this case, the dividends are considered qualified dividends, and would therefore be taxed at a rate of 15% by the federal government and possibly more by state and local sources. As a result, $7.67 of that dividend gain is eaten up by these taxes.

Second, you’re going to have to pay your broker for the cost of buying and selling the stock. Let’s say, hypothetically, you’ve used an online discount stock brokerage firm. The buy and the sell would each cost $9.99. That’s another $19.98 dropped from your gain – although this fee is tax deductible.

Third, the gain on the sale would be a long-term capital gain, so 15% of that gain goes to the federal government. Since your gain was $191.09, you’d be paying an additional $28.66 in taxes on the sale.

In total, your expenses for your gain add up to $56.31. Just like that, nearly 30% of your gain is gone!

Even if your investment is a loser, you’re still paying the brokerage fees and will earn less in dividends.

The moral of the story? Investing costs. You’re taxed if you gain, and you’ll get hit with brokerage fees whether you win or lose.

Some forms of investing have lower costs than others. If you invest directly with an investing house, you can bypass the investing fees and only pay the taxes on your gains. However, you’re limited to the offerings that the investing house has available, and you’ll be subject to their often inflexible minimums for investing.

You could also simply invest in a money market account or other savings option at UCCU. Your returns will come with fewer or no costs. Plus, your balance isn’t at risk. Yes, you might “lose” some gains by only having the cash in a savings account, but your money is earning a steady return. If you invest elsewhere, it’s possible that the costs, the fees and the taxes can easily eat up a substantial amount of whatever you gain or make an already painful loss even harder.

It’s important to note that the bigger your investment, the smaller the impact such costs have. At the $1,000 level, the investment fees in the above scenario typically eat up about 2% of your balance. If you’re investing $10,000, the fees will only eat up 0.2% of your balance, and if you invest $100,000, the fees eat up only 0.02% of your balance.

Thus, as a beginning investor, it’s crucial to know the total cost of ownership of an investment as you consider it. Even a small fee can significantly lower your total return when you’re starting out with small investments.

That’s why it’s best to take it slowly at first and continue learning about the market and stocks you’re interested in. Know exactly what you’re going to invest in – and what all of the costs of that investment are – before you put down any of your money. After working out the math, you may find you’d rather wait until you have a substantial amount saved up for investing, as these fees don’t make such a big dent when the gains are larger.

So, before you make that first investment, learn the costs and be sure it’s worth the price!

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