Category: Moneywise

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With mortgage interest rates falling, homeowners are hunting for ways to cut their monthly payments. Refinancing remains hugely popular, but a lesser-used hack could also save you hundreds each month: mortgage rate modifications.

The best part? All you have to do is ask.

The average rate on a 30-year fixed mortgage is 7.13% as of Nov. 28, down down from over 8% in October of last year.

With this in mind, homeowners can ask for a mortgage rate modification. This is an agreement between a borrower and their lender to adjust the interest rate on a loan without a full refinance.

How to get a rate modification

Unlike refinancing, which involves replacing your existing mortgage with a new one (often with different terms and costs), a rate modification simply alters the interest rate of your current loan, lowering monthly payments and reducing interest over the life of the loan.

Mortgage rate modifications are typically associated with loan modifications designed to help borrowers avoid default or foreclosure. Some lenders offer rate modifications proactively to retain good customers when market rates drop. But do you really want to wait for the lender to make the first move?

Before approaching your lender, understand your existing loan terms, including the interest rate, remaining balance and any clauses related to modifications or prepayment penalties.

You can also benefit from researching rates before you decide whether a modification or refinancing is the better move for you.

For example, according to research from Freddie Mac, borrowers who approached different lenders and got two or more quotes saved between $600 and $1200 annually compared to people who refinanced their mortgages from their current lender. Over the lifetime of your mortgage, this number can add up to substantial savings.

Mortgage Research Center helps you view refinance rates offered by various lenders in your area within minutes. Simply enter some basic information about your existing mortgage and finances, and the Mortgage Research Center compiles and displays competitive rates offered by vetted lenders.

After matching with a lender, you can set up a free introductory call to learn how to transfer your current mortgage.

Knowing the current mortgage rateslike yours will strengthen your position when negotiating with any lender.

If you then decide that a rate modification is the right move, your next step is to contact your loan officer or customer service representative to explore what’s possible. Be ready to demonstrate your good credit score and consistency with on-time payments, since lenders are more inclined to accommodate reliable borrowers.

Finally, it’s time to negotiate terms. Be prepared for rejection. After all, the lender has its agreement and isn’t obligated to change the terms. But if your lender is open to it, be ready to discuss possible fees associated with the modification. While some lenders may charge a nominal fee, it’s often significantly less than the costs associated with refinancing.

Why consider a rate modification now?

Though interest rates are dropping they remain relatively high, so homeowners with mortgages locked in at higher rates stand to benefit significantly from a lower rate. The typical costs and hassles associated with refinancing — closing costs, appraisal fees, and extensive paperwork — are enough to send anyone looking for something better.

A rate modification gets around many of these hurdles. Since you’re merely adjusting the terms of the existing loan, the process is usually faster and cheaper, and involves less paperwork.

Obtaining or making changes to your mortgage can have long-term implications so it might be worth talking to a financial advisor to create a plan or find out all of your options depending on your goals.

If you need help finding one, Advisor.com connects you with vetted fiduciary financial advisors near you. All you have to do is answer a few simple questions about your finances, and Adivsor.com matches you with a certified expert that matches your needs and situation.

You can then set up a free consultation — with no obligation to hire — to see if they’re the right fit for you.

How can it save you money?

Here’s why it’s worth asking your lender.

Suppose you have a $300,000 mortgage with a 30-year fixed rate at 5%. Your monthly principal and interest payment would be approximately $1,610. If market rates drop and your lender agrees to modify your interest rate to 4%, here’s how the numbers change:

New monthly payment: Approximately $1,432

Monthly savings: $178

Annual savings: $2,136

Extra considerations

While typically lower than refinancing costs, some lenders may charge a fee for modifying the loan. Ensure that the savings outweigh any expenses.

Secondly, confirm that other loan terms remain the same. Some lenders might try to adjust other aspects of the loan during modification. Also, unlike refinancing, a rate modification generally doesn’t require a hard credit check and shouldn’t affect your credit score.

To sum up, refinancing can be more expensive than you think. On average, the total cost of refinancing can range from 2-6% of the total loan amount.

If you are thinking about buying a house now with hopes of refinancing in the future, it might not be the bargain you think it is. Rather, you might save substantially just by doing some research to try to get the best possible quote on your new mortgage.

According to a report from LendingTree, shopping around for a mortgage can help you save an average of $76,410 over the lifetime of a 30-year fixed-rate loan.

Once you have picked your desired property and downpayment, you can compare rates offered by vetted lenders through Mortgage Research Center.

By comparing rate information from Mortgage Research Center, you’ll be armed with the information you need to negotiate with a lender to get the mortgage — and home — you’ve been searching for.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

The dream of homeownership feels out of reach for many, with 70% of Americans in an IPX study saying buying a home in 2024 seems unrealistic. High mortgage rates are a major obstacle, with over half of potential buyers waiting for rates to drop.’

While the Federal Reserve has cut rates by 0.5% twice this year, the 30-year fixed mortgage rate still averages 6.79% — far higher than expected. Experts predict rates may ease slightly but remain near 6% into 2025, nearly double what they were three years ago. Unfortunately, even lower rates won’t solve the broader affordability challenges in housing. When supply is low and can’t meet demand, prices surge because people are willing to pay more to get their hands on the limited inventory.

A housing shortage has driven up prices

When supply is low and can’t meet demand, prices surge because people are willing to pay more to get their hands on the limited inventory.

Unfortunately, this is one of the most significant issues in the housing market. A Zillow analysis released in 2024 found that, as of 2022, the U.S. had a housing shortfall of 4.5 million homes, up from 4.3 million the year prior. Too few houses were built in the decade following the Great Recession, and strict land-use rules have made it hard for builders to build enough to catch up.

As mortgage rates fall, some experts believe buyers will flood the market, sending prices soaring and putting homes even more out of reach for many.

If you are determined to buy a home, there are ways you can help bring down the cost finance your milestone purchase.

According to a report from LendingTree, shopping around for a mortgage can help you save an average of $76,410 over the lifetime of a 30-year fixed-rate loan.

Once you have picked your desired property and downpayment, you can [compare rates from vetted lenders] ](https://moneywise.com/c/1/33/1938?placement=1) through Mortgage Research Center.

You can then connect with a preferred lender and discuss your mortgage needs. The initial consultation is completely free and with no obligation to hire.

Home insurance costs are also soaring

The cost of the house itself isn’t the only thing that’s rising. Homeowners insurance premiums jumped 11.3% in 2023, up from an average annual increase of 2.5–3.8% between 2018 and 2021, according to S&P Global Market Intelligence.

Insurance costs significantly impact monthly housing payments and are factored into the PITI (principal, interest, taxes, and insurance) calculation used to determine loan eligibility. With banks aiming for PITI to stay below 28% of income, rising premiums are pushing homeownership further out of reach.

So, how do existing homeowners protect their investment without breaking the bank on their insurance? Consider using a free service like BestMoney to find home insurance policies and prices near you.

BestMoney simplifies the process of finding coverage that fits your needs and budget. With their user-friendly platform, you can easily compare home insurance rates in your area just by answering a few quick questions about you and your property.

How can we fix it?

Mortgage rate cuts won’t fix soaring housing costs, as the real solution lies in increasing supply.

The National Association of Home Builders suggests reducing regulations, streamlining supply chains, and using tax credits to boost affordable housing. Lawmakers also propose opening federal lands, offering down payment grants, and easing zoning rules.

Invest in high-demand real estate without buying property

There are also plenty of real estate investment trusts (REITs) that cash out monthly dividends to their investors from their rent-paying tenants, not to mention crowdfunding platforms that offer everyday investors access to everything from vacation and rental income to investing in residential rental units in high-demand regions.

When it comes to REITs, there’s also a private-market option worth considering that focuses on property investments that aim to be part of the solution to the housing shortage.

DLP Capital specializes in private REITs designed for accredited investors, focusing on regions across the U.S. where multifamily residential properties are in high-demand.

With a track record of identifying high-potential properties and over $5.2 billion in assets under management, DLP Capital helps investors capitalize on real estate’s long-term value.

DLP Capital’s funds target potential annual returns between 9% and 13% — almost at par with the S&P 500 index’s 10.26% returns annually. But you get two distinct advantages by investing in DLP Capital’s funds — portfolio diversification and a potentially lower tax bill.

If you are interested in tapping into the income generated by vacation rentals, crowdfunding platform Arrived makes investing in these properties simple and accessible for everyday investors.

Backed by world-class investors like Jeff Bezos, Arrived offers SEC-qualified investments in rentals and vacation homes and you can invest for as little as $100. The firm handles the hard work, letting you browse their curated properties, select the number of shares you’d like to buy, and add real estate to your portfolio without the hassles that come with being a landlord.

And when it comes to income-producing real estate investments, you aren’t limited to residential opportunities.

In September, the U.S. central bank started moving aggressively in this new direction and cut interest rates by 50 basis points (bps). Rates were cut by a further 0.025% in November.

Commercial real estate typically appreciates in value when interest rates drop because buyers can afford to pay more for assets at lower borrowing costs. If you want to invest in the $22.5 trillion commercial real estate market, First National Realty Partners (FNRP) allows accredited investors access to institutional-quality commercial real estate deals, specializing in grocery-anchored retail properties with historically strong return potential.

FNRP has developed relationships with the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods, and provides insights into the best properties both on and off-market while investors can passively collect distribution income.

FNRP’s team makes investing in commercial real estate convenient and simple by offering white-glove service to investors. They act as the deal leader, providing expertise and doing the legwork, while investors can use their secure platform to explore available deals, engage with experts and easily make an allocation through their secure platform.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

Life seems to be getting even better for California Governor Gavin Newsom. For years, he and his family have lived in a $3.7 million home in Sacramento County, purchased in December 2018 by a company registered to Newsom’s cousin, Jeremy Scherer. Now, the governor is upgrading — at least part-time.

Newsom recently bought a $9.1 million mansion in Marin County, just across the Golden Gate Bridge from San Francisco. The luxurious six-bedroom property features floor-to-ceiling windows, a swimming pool and a spa. Reports reveal that Newsom acquired the home through MHBD Farms, LLC, an entity formed just two days before the transaction.

While Newsom’s office has declined to confirm the purchase, a spokesperson told the San Francisco Chronicle, “The family continues to split their time between Sacramento and Marin counties.” According to the Daily Mail, the governor plans to keep his $3.7 million Sacramento residence too.

It’s no secret that real estate in Marin County comes with a hefty price tag. Zillow estimates the average home price in the area at $1,449,891. California as a whole has one of the nation’s most expensive housing markets: the average home in the Golden State costs $771,057, more than double the U.S. average of $359,099.

The good news? You don’t need millions to get a slice of California’s lucrative real estate market.

Invest through REITs

Real Estate Investment Trusts (REITs) offer an easy and accessible way for investors to participate in the real estate market without the challenges of owning property.

These companies own, manage or finance income-generating real estate, making them a convenient alternative to traditional land investment. Think of a REIT as a landlord: it owns and operates a portfolio of properties, collecting rent from tenants and distributing most of its income to shareholders.

By law, REITs are required to pay out at least 90% of their taxable income as dividends, providing investors with a stream of passive income.

Many REITs are publicly traded, allowing you to buy and sell shares through a brokerage account, just like stocks. Additionally, some REITs specialize in specific regions or property types. For those interested in California’s thriving real estate market, here are two REITs with a strong focus on the Golden State.

Essex Property Trust (ESS)

Essex Property Trust is a REIT that focuses on acquiring, developing, and managing apartment communities in supply-constrained markets. Unsurprisingly, California plays a central role in the company’s operations. Its portfolio primarily targets Southern California, the San Francisco Bay Area, and the Seattle metropolitan area.

According to its latest investor presentation, Essex owns 254 apartment communities totaling around 62,000 units. Over 80% of the REIT’s net operating income comes from properties located in California, making it a name worth considering for those looking to tap into the state’s robust housing market.

The company currently pays quarterly dividends of $2.45 per share, translating to an annual yield of 3.2%.

Rexford Industrial Realty (REXR)

Rexford Industrial Realty specializes in industrial properties, with a particular focus on infill Southern California. This focus stems from the region being considered “the largest industrial market and consistently the highest-demand with the lowest-supply major market in the nation.”

Rexford’s current portfolio includes 424 properties, encompassing approximately 50.3 million rentable square feet. These properties are leased to a diverse array of tenants, with no single sector accounting for more than 25% of the REIT’s annualized base rent.

Paying quarterly dividends of $0.4175 per share, Rexford offers an annual dividend yield of 3.88%.

Invest outside the stock market

These days, REITs aren’t the only way to diversify into real estate. Crowdfunding platforms like Arrived have opened the door for everyday Americans to invest in rental properties across the U.S. — without the hefty down payment or the burden of property management.

With Arrived, you can invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving rental income deposits from your investment.

Another option is First National Realty Partners (FNRP), which targets necessity-based commercial real estate. The platform lets accredited investors [own a share of institutional-quality properties] leased by national brands like Whole Foods, CVS, Kroger and Walmart. Investors can enjoy the potential to collect stable, grocery store-anchored income every quarter.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

For many people, the only way to afford a home is to finance it with a mortgage and pay off that loan over time.

During the third quarter of 2024, the median U.S. home sale price was $420,000, according to Federal Reserve data. Given that median annual wages were just over $60,000 during this year’s third quarter, it’s easy to see why the typical working American can barely afford a down payment on a home today, let alone the entire cost in one fell swoop.

But uber-wealthy folks are in a different position. Those with billions of dollars to their name can buy a home outright rather than take out a loan.

Yet celebrities like Mark Zuckerberg, Elon Musk and Jay-Z have all made headlines for taking out multimillion-dollar mortgages — not out of necessity but to reap a couple of key benefits.

It allows for better cash flow

Someone who’s a billionaire a couple or several times over may not have to worry so much about cash flow. But borrowing for a home allows them to hang onto their cash for other purposes, rather than tying their money up in an illiquid investment.

Take Hollywood’s it couple, Jay-Z and Beyonce, with a combined net worth of roughly $3 billion (as of 2023), for instance. But back in 2017, when their net worth was $1.6 billion, the power couple took out a $52 million loan to buy a hillside estate in Los Angeles., worth $88 million, according to a report published by the L.A. Times.

"Depending on how their portfolio looks — what they’ve invested in — I think there could be a huge benefit [to Beyoncé and Jay-Z]. It gives them flexibility, and they could pay the mortgage off anytime," Robert Cohan, managing director at Carlyle Financial, said in an interview with Business Insider.

You can still land an affordable mortgage rate even if you don’t fall in the category of America’s elite 1%](https://moneywise.com/managing-money/american-annual-income-class). The key is to not accept the first offer on the table — and to shop around and get quotes from at least two-three lenders.

According to a study conducted by LendingTree, 45% of homebuyers who received more than one quote got a lower rate than their initial one .

Mortgage Research Center can help you shop around for rates from vetted lenders near you.

All you need to do is enter some basic information about yourself, such as property type and zip code in which it is located, total cost, desired down payment, and your annual income and credit score.

Mortgage Research Center then matches you with lenders best suited to your needs. You can then set up a free, no-obligation consultation to further assess whether they’re the right fit for you.

Free up more money to invest

If you purchased a house in the last couple of years at a fixed rate, chances are you might be able to refinance it at a lower rate right now.

Mark Zuckerberg, the world’s third richest man (according to the Forbes Real Time Billionaires list) did the same.

Back in 2012, when Zuckerberg was #40 on the list with an estimated $15.6 billion net worth, he refinanced his home in Palo Alto, California, with a 30-year adjustable rate mortgage at 1.05%.

While rates probably won’t go down to that level any time soon, the Federal Reserve’s rate cuts over the past few months have already had a noticeable impact. Median mortgage rates are currently hovering around 6.84% — down from 8% in October last year.

With the Fed slated to lower the benchmark rates further in the upcoming months, it might be a good idea to start looking at your options.

Ideally, you can land a lower rate by shopping around. According to a study from LendingTree, 56% of homebuyers shopped around when they refinanced their mortgage. What’s more, 81% of those who chose to refinance, came away with a lower rate than what they started with.

Mortgage Research Center is also a beneficial tool if you are looking to refinance your current mortgage.

The process is the same — you need to enter some information about yourself and your current mortgage, and Mortgage Research Center will match you with vetted lenders offering competitive rates.

More ways to invest in real estate

Buying additional properties to yield rental or investment income can be inconvenient, even for accredited investors. Not only do you have to worry about timely maintenance and property taxes, but you also have to deal with the hassles of being a landlord if you are thinking about renting it out.

Crowdfunding investment opportunities can provide a way to build a passive real estate portfolio without doing any of the heavy lifting.

For example, accredited investors can invest in private REITs through DLP Capital’s investment funds. These investments are tax-advantaged and disburse positive cash flows (if any) through monthly, quarterly, or annual distributions. This means you can potentially generate passive income from real estate.

DLP Capital’s funds aim to generate annual returns in the range of 9% to 13%. This is at par with the S&P 500 index’s average return of 10.26%. But with DLP Capital, you get the added benefit of diversification by incorporating [income-producing real estate funds]](https://ribn.com/c/1/325/1563?placement=6) in your portfolio.

If you want a more affordable option or you want to wade into real estate for the first time, try investing through Arrived.

Backed by prominent investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes and vacation properties without having to worry about managing the property.

You are also eligible to receive distributions from your investment property’s rental income, potentially helping you set up a passive income stream. You can get started with as little as $500.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

If you will, allow us to present the hypothetical case of Pete Moneywise, a married, 78-year-old father of three who wants to get his financial affairs in order before his passing.

Though he exists only in the confines of this article, his situation reflects what countless retirement-age people face as they draw up their wills and create their trusts.

“I hate probate,” Pete tells us in an exclusive interview (what else did you expect? We created him). “I went through it when my father died, and my family spent the next year talking to lawyers, trying to get things squared away.”

He shares how the probate process caused tension between his siblings. He also harbored frustration over one unanswerable question: “Why didn’t Dad create a living trust? It would’ve made things so much simpler.”

Credit Pete for following his own advice. He has set up a living trust. Now, he must decide what, if anything, to leave out of it. He has done the homework for you: Here are five things to consider as you structure your living trust.

Probate explained: Best not go there

Many folks don’t even know what the word “probate” means until they’re in the thick of it.

Sometimes, not always, when a person dies — even if they left a will — a legal process is required to validate the will, name an executor to administer the estate if there isn’t one already, pay off liabilities, and then distribute the remaining assets.

The process can sometimes take years, not to mention the piles of paperwork and legal fees. For example, when the beloved entertainer Prince passed away in 2016, the legal dogfight over his estate continued in probate until August 2022.

If you are “of sound mind and body,” then you can make a will — and it’s a good idea to do that, so you don’t leave your friends and family scrambling and trying to guess at your wishes. With Trust & Will, an online service that makes it easy to create, store, edit and share your will, you can make the process as painless as possible.

Trust & Will is an organization seeking to flip that narrative, by providing helpful, concise, and human support for creating wills and estate plans. They want to make estate planning simple, accessible, and affordable for all Americans, meaning you can make sure your loved ones know, understand and have input on exactly what your plan is, before you pass.

If you want an extra layer of security and peace of mind, you can create a revocable living trust. A trust would have helped Pete’s family avoid probate, protect their privacy, and minimize estate taxes when his father died. A trust is a document that allows you to keep control of your money and property and designate who receives it once you die.

“Revocable” means you can change the terms at any time while you are alive. As the assets aren’t considered a part of your estate, they sidestep the probate process.

It also lets you continue to use assets transferred into the trust, such as property or investments you own.

If you have a large estate with plenty of investments, you may want to consider both consolidating your asset management on a single platform, and using that platform to manage the distribution of your wealth after your passing.

Arta Finance is a digital wealth management service where users can access exclusive financial strategies for the public market and alternative investments to diversify their portfolios.

In partnership with Camelot Trust, Arta Finance also offers guidance on estate planning to help safeguard estates and ensure assets are managed appropriately.

However, the advantages of trusts have their limits and certain items will only create headaches if held there.

Five items to leave out of a revocable living trust

Vehicles. Whether it’s a 1963 Corvette, a Harley chopper or a prop plane, all that’s required to pass it on is a simple written instruction to transfer the title to a beneficiary. If it’s held in a trust, you could be vulnerable to lawsuits over accidents involving the vehicle.

Annuities and retirement accounts. A trust can turn non-taxed accounts into taxable ones. However, you can ​make the trust itself the beneficiary, so that these accounts pass directly to your trustees without an IRS agent crashing the wake.

One way to ensure the money in your retirement accounts grows at a stable rate and gives your beneficiaries as much as they deserve is to invest in a gold IRA with the help of American Hartford Gold – a precious metals dealer offering support for opening IRAs and direct purchases of precious metals and coins.

Gold has historically acted as a hedge against inflation, and many find it to be a more secure place to invest your retirement fund.

Life insurance. No need to put this in a revocable trust. Simply name your beneficiaries within the policy. Or, create an irrevocable life insurance trust (ILIT) to avoid estate taxes.

If you’re worried about your loved ones having access to funds to cover your funeral expenses, or other costs and debts immediately after your passing, life insurance can offer a versatile solution to help support your family, providing coverage to potentially replace lost income or settle outstanding debts in the event of your death.

Opting for term life insurance through a provider like Ethos, ensures that as you age, your loved ones are protected from unexpected costs. With term life insurance, you can secure affordable coverage while managing your other financial responsibilities.

Ethos offers an easy online process that allows you to get up to $2 million in coverage with terms spanning from 10 to 30 years. To get a free quote, simply answer a few questions about yourself. Then, you can compare various policies and choose one that best suits your needs.

Assets held in other countries. This gets complicated, as you may not be permitted to place international assets in a trust. To find out if it’s possible, you’ll need to consult an estate attorney licensed in the country where your international assets are located.

Checking and savings accounts. If you use these to pay monthly bills, you may run into financial complications unless you’re the trustee and granted full control of trust assets. There’s a much easier route to take: Keep these accounts out of the trust.

And if Pete were real, he’d surely remind you that the information in this article does not constitute legal advice. Talk to a trust lawyer in your state, financial adviser, or other professional before making any decisions. Pete’s imaginary kids — and your real ones — will be grateful you did.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

Headline inflation has eased in the U.S., but according to economist and former Treasury Secretary Larry Summers, soaring prices may not be over — especially in light of Donald Trump’s recent presidential election victory.

Speaking at a New York Economic Club, Summers cautioned that Trump’s proposed policies could drive inflation even higher than the levels triggered by his predecessor’s actions.

“There is a very substantial risk that the president will attempt to implement what he talked about. If he does, the consequences are likely to be substantially greater inflation than what was set off by the excessive Biden stimulus,” Summers suggested, according to a recent CNN report.

He also looked to the U.S. Federal Reserve, which recently announced a second consecutive cut to its benchmark interest rates.

“My own judgment is that the Fed and markets are still underestimating the overheating risk,” he wrote in a post on X.com. “I ask myself: Why is cutting rates a priority into that environment?”

In October, the U.S. Consumer Price Index recorded a 2.6% annual increase, a significant drop from its 40-year high of 9.1% in June 2022.

Still, Summers remains vigilant, warning, “I am fearful that the Fed is going to be more like once burned, twice burned, rather than once burned, twice shy, on inflationary risks.”

Inflation impacts everyone by eroding the purchasing power of money. If you share Summers’s concerns, here are three strategies to guard against its impact.

Real estate

Real estate has long been considered a reliable hedge against inflation, thanks to its intrinsic value and income-generating potential.

When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation. This combination makes real estate an attractive option for preserving and growing wealth during periods of escalating price levels.

Over the last five years, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index has surged by more than 50%.

You can invest in real estate by purchasing rental properties and becoming a landlord. Alternatively, crowdfunding platforms like Arrived have made it easier for average Americans to invest in rental properties without the need for a hefty down payment or the burden of property management.

With Arrived, you can invest in shares of rental homes without worrying about mowing lawns, fixing leaky faucets, or handling difficult tenants. The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase, and then sit back as you start receiving rental income deposits from your investment.

Gold

Gold is another popular hedge against inflation. The reason is straightforward: the yellow metal can’t be printed in unlimited quantities by central banks like fiat money. And because its value isn’t tied to any one currency or economy, gold could provide protection during periods of economic uncertainty. This unique characteristic has earned it the reputation of being a “safe haven” asset.

When inflation erodes the purchasing power of fiat currencies, gold’s appeal as a stable store of value often grows, driving up demand.

Investors have already taken note of its resilience. So far in 2024, gold prices have surged by 27%, surpassing $2,600 per ounce.

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of American Hartford Gold. Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those seeking to ensure their retirement funds are well-shielded against economic uncertainties.

When you sign up with American Hartford Gold, you’ll be eligible for an offer to receive up to $15,000 in free silver, along with the assurance of the best pricing through their price match guarantee.

Contemporary art

It’s easy to see why great works of art tend to appreciate — especially during times of inflation. Supply is limited, and many famous pieces have already been snatched up by museums and collectors.

Investing in art was traditionally a privilege reserved for the ultra-wealthy.

In 2022, shortly after inflation reached a 40-year high, the art collection of late Microsoft co-founder Paul Allen sold for a total of $1.5 billion at Christie’s New York, making it the most valuable private collection of all time.

Art is also a popular way to diversify because it’s a tangible physical asset with little correlation to the stock market. According to Masterworks, postwar and contemporary art prices have outpaced the S&P by 64% (1995-2023).

Masterworks is a platform for investing in shares of blue-chip artwork by renowned artists including Pablo Picasso, Jean-Michel Basquiat, and Banksy.. It’s easy to use, and with 23 successful exits to date, every one of them profitable.

Simply browse their impressive $1 billion portfolio of paintings and choose how many shares you’d like to buy. Masterworks will handle all the details, making high-end art investments both accessible and effortless.

Masterworks has already sold roughly $45 million worth of art, distributing the net proceeds to everyday investors. New offerings have sold out in minutes, but you can skip their waitlist here.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

Without a well-defined plan for spending in retirement, Americans could be facing unexpected and unnecessary stress.

Allianz Life Insurance’s recent study reveals that only 44% of Americans have a retirement income plan.

Allianz’s Vice President of Consumer Insights, Kelly LaVigne, commented “if you don’t know how you will draw from your retirement assets for income, then you aren’t ready to retire.”

Having the right retirement strategy for how and when you’ll spend your income is key to reducing the decisions you’ll need to make once you reach retirement age.

Unfortunately, without a plan, you risk joining the 31% of Americans who are overspending in retirement, according to a report from retirement magazine 401(k)Specialist.

Why it’s so important to have a plan

Having a plan really does pay off.

Research from T. Rowe Price found that individuals with a formal financial plan had two to four times more wealth when entering retirement compared to those without one.

With the help of a qualified professional, like those found through WiserAdvisor, you can easily plan when, where, and how you want to retire.

WiserAdvisor is a free online service that helps you find a financial advisor who can co-create a plan to reach your financial goals. Just answer a few questions, and the extensive online database will match you with two to three vetted advisors based on your answers.

You can view the advisors’ profiles, read past client reviews, and schedule a free consultation with no obligation to hire.

Even if you’re confident in the amount you’ve saved for your retirement, LaVigne insists “it is critical to understand how those assets will be able to fund your life after you retire.” That’s why individuals with higher [net worths should also consider consulting a professional to make the most of their nest egg and the rest of their assets and portfolio.

Arta Finance gives you access to a digital wealth management platform with exclusive financial strategies for public market and alternative investments. These include private equity, quantitative strategies, and venture capital investment opportunities.

You can think of them as an accessible family office which will enable you to make the appropriate financial plan for your best retirement.

How to add to your retirement income

Another big concern among the Americans surveyed is how to best take distributions from their retirement savings when they do retire, with 45% revealing they’re unsure of the best method.

This question is best answered with the help of a financial advisor, and it will largely depend on the type of accounts that you have.

With most IRA accounts, you will pay taxes on the funds you take out. So, the timing of these withdrawals really matters for the potential income tax you’ll incur. However, with a Roth IRA, you are contributing to your account with after-tax income, which means your withdrawals at retirement age won’t be taxed.

This is why financial guru Suze Orman wrote that Americans should be putting “every single cent” into a Roth account in her book, "The Ultimate Retirement Guide For 50 Plus".

And if you have a gold IRA, you’ll want to plan for whether you’d like your withdrawals to be as income, or as the physical asset.

Opening a gold IRA with the help of American Hartford Gold offers both types of withdrawals. When you open a gold IRA with AHG, you own the physical metals — and your assets are stored in a secure depository.

When you sign up with American Hartford Gold, you’ll be eligible for an offer to receive up to $15,000 in free silver, along with the assurance of the best pricing through their price match guarantee.

No matter if your retirement plan involves investing in gold, or its value in cash, the investment is an opportunity to diversify your portfolio and stabilize your finances.

Make sure your family is secure

Finally, a plan is important because it provides your loved ones with security, too.

For workers, an emergency fund doesn’t just safeguard against a job loss. It can also be the ticket to covering surprise expenses without going into debt. And being retired doesn’t make you immune from surprises.

For instance, if you’re concerned that Medicare might not cover all your health care expenses or that you want a little more financial security in retirement, there are other insurance options you can consider

A life insurance plan can provide an extra layer of support, and a financial buffer, for you and your family.

If you’re looking for a policy that will last a lifetime, with a locked-in premium and a cash value that can be tapped into while the policyholder is still alive, a whole life insurance policy from Mutual of Omaha might be worth considering.

With coverage amounts ranging from $2,000 to $25,000 (in WA, $5,000 to $25,000), you can rest assured that your family will always be ready to cover unexpected expenses. It only takes five minutes to fill out a quick online application with your personal and beneficiary information.

Once you register, not only will you be guaranteed coverage, but your benefits will never be reduced due to age or health. Plus, no medical exams or health questionnaires are needed to join.

Another option that can help your family in the event of your death is term life insurance. This is a type of life insurance that offers coverage for a predetermined period, known as the "term," that typically ranges from 10 to 30 years.

Term insurance is usually a less expensive and more flexible option. If the insured individual dies during this term, the policy pays a death benefit to the designated beneficiaries.

Young families and busy professionals looking for fast and affordable insurance can easily connect with Ethos and get term life insurance in 5 minutes, with no medical exams or blood tests.

With Ethos Insurance, you get a policy with up to $2 million in coverage, starting at just $2/day. Ethos’ application process ensures you get flexible coverage options quickly and transparently, allowing you to focus on what matters most.

Enjoying life on a fixed income

Having a suitable retirement plan isn’t only important for your financial goals, it’s just as critical for your peace of mind.

Of those surveyed by Allianz Life, 48% worried about living too frugally and not enjoying retirement as much as they should. Without a clear set of steps for how you want to prepare for — and live — in retirement, you’re subjecting yourself to unnecessary uncertainty. You may be spending more frugally than necessary, or you might not be frugal enough to make those savings last.

Once you have your plan, investing while you spend is another way to double down on savings for the future.

Acorns automates investing and saving to simplify the process of setting aside extra funds.

When you make a purchase on your credit or debit card, they will automatically round up the price to the nearest dollar and place the excess cash into a smart investment portfolio. This way, even the most essential spending translates to money saved for the future.

When you sign up now, you’ll get a $20 bonus investment, too.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

Inflation is still hitting hard across America, and even Eric Trump, son of President-elect Donald Trump, claims to feel the pinch in his wallet.

During a September Fox News interview, Eric Trump lamented, “It cost me $130 to fill up my SUV. People can’t afford life anymore.”

Gas prices peaked at $5.016 per gallon in June 2022, according to the American Automobile Association (AAA), before falling to $3.009 by November 2024.

Still, many households remain burdened by high costs, so it might be time to start strategizing how you can better protect the value of your dollar and build your net worth.

Protecting your purchasing power

President-elect Trump’s promises on gas aside, inflation continues to erode purchasing power across the board.

Eric Trump’s claim about his $130 fill-up sparked a wave of skepticism online.

“What kind of SUV is he driving? Mine costs me about $55 at Costco gas,” commented lawyer Bradley P. Moss on X.com.

Whether you buy into Trump’s $130 fill-up story or not,, prices for essentials like food and shelter remain high, with the food CPI up 26% and the shelter index up 24% since 2020.

The good news? Americans now have more tools than ever to protect against inflation’s impact.

For example, One way to turn inflation into an opportunity is by finding ways to invest while you spend. Acorns makes this effortless.

By simply linking your bank account to the app, every purchase you make with your debit or credit cards helps grow your investments automatically by rounding up the price to the nearest dollar and placing the excess in a smart investment portfolio.This way, even the most essential spending translates to money saved and invested for the future.

Sign up now and you can get a $20 bonus investment.

Investing to hedge against persistent inflation

Nowadays, there are plenty of accessible strategies for investors to shield themselves — and their portfolios — from inflation’s bite.

Real estate

Real estate has long been a reliable way to hedge against inflation. As material and labor costs rise, building new properties becomes more expensive, driving up the value of existing real estate.

In addition to price appreciation, well-chosen properties generate rental income, which typically increases with inflation, helping to preserve and grow real income over time.

But you don’t need to buy a house to start investing, real estate crowdfunding platforms make it accessible to more investors.

For instance, if you are interested in tapping into the income-generating properties, Arrived makes investing in those assets simple and accessible no matter your income or portfolio size. Backed by world-class investors like Jeff Bezos, Arrived offers SEC-qualified investments in rental homes and vacation properties — and you can invest with as just $100.

The Arrived team handles the hard work of finding and managing the properties. As an investor, you can simply browse curated properties, select the amount of shares, and enjoy the benefits of investing in real estate without becoming a landlord.

And you aren’t limited to residential real estate.

Commercial real estate has also long been touted as a wise investment for adding stability to your portfolio, outperforming the S&P 500 over a 25-year period.

While commercial properties leased as office spaces have taken a serious hit over the past few years, two sectors have remained surprisingly resilient: grocery-anchored properties and health-care facililities. These sectors are necessity-based, meaning their demand tends to remain strong no matter how the economy shifts.

For accredited investors looking to dive into commercial real estate, First National Realty Partners (FNRP) allows you to invest in institutional-quality commercial real estate.

FNRP’s team makes investing in commercial real estate convenient and simple by offering white-glove service to investors. They act as the deal leader, providing expertise and doing the legwork, while investors can use their secure platform to explore available deals, engage with experts and easily make an allocation.

FNRP has developed relationships with the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods, and provides insights into the best properties both on and off-market while investors have an opportunity to passively collect distribution income.

Gold

Gold has been a trusted store of wealth for centuries, and is prized for its stability during economic downturns and inflation by professional investors like Peter Schiff and Ben Mallah.

Over 2024, gold is up 34%, surpassing $2,700 per ounce.

For investors seeking tax advantages and long-term stability, a gold IRA is an excellent option if you’re looking to hedge your retirement fund against inflation. By including physical gold in your retirement portfolio, you diversify beyond stocks and bonds while cushioning your savings against inflation and market volatility.

One way to invest in precious metals that also provides significant tax advantages is with a gold IRA — and you can open one with the help of American Hartford Gold.

One of the country’s most trusted precious metals companies – with an A+ rating from the Better Business Bureau – American Hartford Gold has helped thousands of clients protect their retirement.

Economist Peter Schiff has previously told investors that the metal was underpriced due to persistent inflationary pressures.

“I think it has to be repriced higher to reflect the reality of much higher inflation. We’re not going to go back to 2%, probably in my lifetime,” he said. “It’s going to be much higher than that, and when investors come to terms with that, they’re going to bid up the price of gold much higher.”

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.

A former owner of a pet shop and mahjong parlors in Japan has invested his way to eight figures — and earned the nickname Japan’s Warren Buffett.

At 88, Shigeru Fujimoto of Kobe, often seen in simple pullovers before three monitors, has quietly amassed a $14 million fortune. Investing since 19, according to The Asahi Shimbun, he became a full-time investor in 1986 and took up day trading in 2015.

In a country where over half of household assets are in cash, Fujimoto urges boldness. “Age doesn’t matter when you are making a new effort,” he once said.

He refuses to retire

In declining health, Shigeru Fujimoto’s wisdom is in demand, with his teachings hitting bestseller status on Amazon Japan. Still eager to trade, he told The Asahi Shimbun: “I will be retiring when I die.”

With enough wealth to spend $3,800 daily for a decade, Fujimoto rates his life a “75 out of 100,” focused on perfecting spirit, technique, and fitness—a stark contrast to the anxiety of U.S. retirees, whose median savings at ages 55–64 is just $204,000. With the guidance of a professional like those available through WiserAdvisor, planning your ideal retirement — when, where, and how —becomes much easier.

WiserAdvisor is a free matching service that helps you find a financial advisor who can help you reach your financial goals by matching you with a pre-screened financial advisor from their database of thousands.

All it takes is a few minutes to answer some questions about yourself, and WiserAdvisor will provide you with a personalized match of two to three advisors. From there, you can book a free, no-obligation consultation to confirm if your match is right for you.

Fujimoto built his wealth as a day trader, which means he invests in the market with an iron stomach. You don’t necessarily need his resolve to make safe returns for your retirement, however. You might consider backing your retirement with a traditionally stable asset like gold.

With a self-directed gold IRA, you can invest directly in physical precious metals, offering both portfolio diversification and a hedge against market instability.

Thor Metals is an industry leader in precious metals and authorized dealer for the U.S. Mint and they can help you seamlessly manage the complexities of setting up and managing your gold IRA. They also partner with the top IRS-approved depositors to make sure your metals are stored safely.

You can fill out your name and email to get a free 2024 Wealth Protection Guide to help you determine if this investment is right for you and your retirement.

Two investing pathways to abundance

You can avoid brooding and embrace prosperity if you follow Fujimoto’s precepts — which bear a strong Buffett influence. Put these three lessons into action now.

1. Purchase quality stocks at cheap prices:

Buffett famously said investors should be “fearful when others are greedy, and greedy when others are fearful.” After Japan’s Nikkei market tanked 12.4% on Aug. 5, Fujimoto remained calm, telling Bloomberg: “When the stock price gets low, then it’s time for me to buy stocks.”

But waiting for companies to have a bad day before buying isn’t the right strategy for everyone. To take the guesswork out of which of those stocks to pick, you could consider trying out Moby.

The team of former hedge fund analysts and experts at Moby spend hundreds of hours each week sifting through financial news and data to provide superior stock and ETF research to keep you up-to-date on what’s moving the markets.

In four years, across almost 400 stock picks, Moby’s recommendations have beaten the S&P 500 by almost 12%, on average. With their easy-to-understand formats, you can become a wiser investor in just five minutes, backed by a 30-day money back guarantee.

Once you’ve got the names picked, you’ll need the right account where you can park and grow your cash. Social investing platform Public is a commission-free, self-directed investing platform that empowers users to manage diverse assets —including stocks, ETFs, crypto, treasuries, and alternatives—while learning from a community of fellow investors.

With real-time insights, social features, and no "payment for order flow" model, Public prioritizes transparency and user trust. It’s ideal for both beginner and experienced investors seeking to build wealth, invest fractionally, and stay informed on market trends without hidden fees.

2. Buy and hold:

In a 1988 letter to Berkshire shareholders, Buffett declared, “Our favorite holding period is forever.” Fujimoto may practice day trading, but his advice is to secure good stocks for the long term. “It’s important to hold good stocks for the long term,” he said. “Don’t buy or sell immediately like a day trader. If you hold such stocks for a while, they will surely bear fruit.”

You can’t go wrong with holding long, but you can also open accounts with Acorns that allow you to save and invest while you’re spending.

With Acorns, every purchase on your credit or debit card is rounded up to the nearest dollar, with the spare change invested into a diversified portfolio for long-term savings. Plus, Acorns lets you customize how you save. With an Acorns Silver plan, you get access to Acorns Later, a retirement investment account with a 1% IRA match on new contributions. With Acorns Gold, you get a 3% IRA match on new contributions, an investment account for your kids, and the ability to customize your portfolio by selecting your own stocks.

If you sign up now, you can get a $20 bonus investment.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Hot off interest rate hikes, Canada’s economic environment remains a potentially volatile and uncertain environment for investors. With risks ranging from fluctuating markets to geopolitical events, experienced investors are increasingly turning to strategic cash holdings — an old-school tactic that helps safeguard your financial portfolios from volatile economic shifts.

A cash position offers liquidity, minimizes risk and preserves capital during market downturns. It’s particularly helpful during global macroeconomic events when fallout can be unpredictable — such as the potential impact of Donald Trump’s re-election as US president. While some business leaders are breathing a sigh of relief, others are bracing for strong headwinds. Trump’s impending return to the White House could disrupt economic stability, particularly in countries heavily reliant on US trade relations.

For Canadian investors, understanding the role of cash in a diversified investment strategy is indispensable.

Impact of Donald Trump’s presidency on Canada’s economy

Donald Trump’s return to the presidency could profoundly affect Canada’s economic landscape, given that more than 75% of Canada’s exports are US-bound. This suggests even a relatively small tariff could reduce Canada’s GDP.

For instance, if Trump were to impose a 10% tariff on Canadian goods exported to the US, this could result in a GDP drop of 0.9%, annually — about CDN$19.3 billion, based on Canada’s GDP of $2.14 trillion in 2023.

Expect Canadian concessions

Trump’s previous approach to trade was marked by higher tariffs and additional demands. As a result, Canadians can expect that Trump will focus on the Canada-United States-Mexico Agreement (CUSMA) — and should anticipate drastic changes, even before the agreement reaches the mandatory 2026 review deadline.

Economists with Desjardins estimate that new Trum tariffs could increase inflation in Canada by as much as 1.7%, pressuring the Bank of Canada to raise rates. These tariffs would raise costs, adding inflationary pressure to goods and services, which could prompt an increase in the Bank of Canada’s overnight rate.

Trump’s fiscal policies could further strain Canadian budgets

Moreover, Trump’s expansive fiscal policies — characterized by tax cuts and increased government spending — could drive US inflation with spillover effects in Canada. Rising US inflation would particularly affect Canadian imports, pushing up consumer prices and eroding purchasing power.

Additionally, higher U.S. Treasury yields, influenced by these policies, could lead to increased fixed-rate mortgage costs for Canadians. Since fixed interest rates are heavily influenced by the five and 10-year Treasury yields, this could add further strain to household budgets in both countries.

For Canada’s energy sector, the outlook is similarly concerning. While direct tariffs may not be imposed on energy exports, Trump’s push for US energy independence could depress global oil prices, significantly reducing revenues for Canadian producers. Considering that energy exports make up 30% of Canada’s goods sent to the US, lower oil prices could trigger job losses in oil-dependent regions and shrink family incomes.

Lastly, potential shifts in immigration policy, particularly large-scale deportations, could lead to a surge of migrants northward. Such an influx could strain housing and social services in Canada, compounding economic challenges.

Predicting a stock market downturn

Tighter fiscal policies don’t always result in market downturns, but uncertain economic conditions signal that investors should protect their portfolios. To do this, investors need to be mindful of when market downturns occur and how long they last. According to analysts, the stock market has crashed 13 times since 1950, with the average length of time before the rebound lasting almost one year? To be considered a crash, stock prices must decline suddenly and dramatically — usually by 20% or more — and hit a few sectors, simultaneously.

Many experienced investors prepare for downturns by realigning their portfolios, selling off non-strategic holdings, and increasing cash reserves.

In general, cash holdings provide a secure and flexible foundation to protect your portfolio but also offer some upside benefits. For instance, experienced investors will use their cash reserves to jump on future investment opportunities while keeping a portion of their portfolio liquid and protecting it from market fluctuations and downturns.

Three ways to keep cash

While there are various ways to keep cash, two of the most common and easiest-to-implement options are to stash your cash in a money market fund or to open a high-interest savings account.

Keeping cash in a money market fund

A money market fund is a type of mutual fund that invests in short-term, highly liquid and low-risk debt instruments. These funds aim to provide investors with a safe place to park cash while earning a modest return, typically higher than a standard savings account.

Most of the big banks offer a money market fund, meaning you can buy and sell shares in these funds through any trading platform.

If you plan to park your money for an undetermined amount of time, you may want to consider funds with better historical performance. Good options include:

• Purpose High-Interest Savings ETF (TSX:PSA): With a yield of 5.05%, it’s one of the highest-yielding funds currently available. It invests in high-interest savings accounts at major Canadian banks, offering a low-risk option with monthly distributions.
• Horizons Cash Maximizer ETF (TSX:HSAV): This ETF boasts a yield of 5.30%, which is among the best returns for a money market ETF. It reinvests all income, increasing the fund’s net asset value (NAV) daily, and offers a very low MER of 0.12%, making it an attractive option for tax-sheltered accounts.
• CI High Interest Savings ETF (TSX:CSAV): Offering a yield of 4.90%, this ETF is also a popular choice for those seeking a low-risk investment in Canadian dollar-denominated high-interest savings accounts
• BMO Money Market Fund ETF Series (TSX:ZMMK): This fund offers a yield of 4.98% and primarily invests in short-term government and corporate debt, providing stable returns with low-risk.

To get started, you’ll need to open a discount brokerage account. You can find the best stock trading platform to meet your needs, or open an account with a brokerage account using a new client promotion. Good options include:

• CIBC Investor’s Edge: Get 100 free trades when you open a CIBC Investor’s Edge account using promo code EDGE2425. Plus, get $200 or more cash back. Offer valid until March 31, 2025
• Moomoo: Get up to $2,200 in rebates
• Wealthsimple: Get 1% cash back with a minimum deposit of $15,000 or open and fund an account with $100,000 or more and get an iPhone or Macbook.

Keeping cash in a high-interest savings account (HISA)

During a stock market correction, many investments lose value rapidly, and liquidity becomes crucial. By keeping your cash in a secure bank account that earns a higher interest rate, you not only protect your money, but you remove the volatility to your portfolio. Unlike stocks or mutual funds, cash in a HISA is not subject to market fluctuations, ensuring that your savings are safe from financial losses. Plus, cash in a HISA ensures you have readily accessible funds to cover expenses or invest when better opportunities arise. That’s because cash in a HISA is readily accessible, making it easy to withdraw funds for emergencies, expenses, or investment opportunities.

Read More: Pick the best high-interest savings account

Lock-in today’s higher interest rates with a GIC

One other option is to park your cash in a guaranteed investment certificate (GIC). Investing in GICs is an effective strategy for saving as it offers several benefits that align with financial security and growth:

• Fixed Interest Rates: GICs provide a guaranteed return on your investment at a predetermined rate, shielding you from market volatility.
• Predictable Growth: You know exactly how much your savings will grow by the end of the term, making them an excellent choice for conservative savers.
• Zero Risk of Loss: GICs are one of the safest investment options, as your principal is fully protected. They are particularly attractive to risk-averse investors.
• Deposit Insurance: Most GICs in Canada are insured up to a certain limit by the CDIC or provincial counterparts, further safeguarding your investment.
• Higher Yields: GICs often offer higher interest rates compared to regular or even high-interest savings accounts, rewarding you for committing your money for a fixed term.

Read More: Find the best GIC rates

5 reasons to park your cash

To appreciate whether or not you should consider increasing a portion of your portfolio and keep more cash — as a smart hedge during a stock market correction — consider these five reasons for keeping cash.

#1. Cash offers liquidity and safety during equity market downturns

During a stock market correction, many investments lose value rapidly, and liquidity becomes crucial. Cash in a high-interest savings account remains safe from market volatility. Unlike stocks, which can see sudden drops in price, your cash balance is secure and unaffected by market swings. This ensures you have readily accessible funds to cover expenses or invest when better opportunities arise.

#2. Cash in high-interest accounts earns interest while staying liquid

In a typical savings account, the interest rates are low, and inflation may erode the purchasing power of your cash. However, a high-interest savings account offers a better yield, allowing you to earn more on your cash reserves. While the interest may not outpace inflation entirely, it provides some return on your money, helping it grow modestly while staying liquid and accessible.

#3. Having cash offers opportunistic buying opportunities (buy low and sell high!)

Holding cash during a market correction puts you in a strong position to take advantage of investment opportunities. When stock prices fall during a correction, many high-quality assets may become undervalued. Having cash on hand allows you to buy stocks, bonds or ETFs at lower prices, capitalizing on the potential for future growth once the market recovers.

#4. Minimized risk

When stock markets correct, there is often widespread uncertainty. Holding cash in a high-interest savings account minimizes your risk exposure. Unlike investing in the market, where losses can be substantial, cash in a savings account is typically insured (in Canada, this would be through the CDIC, up to a certain limit), reducing the risk of losing your principal.

#5. Preserving capital

One of the main objectives during a market correction is to preserve your capital. By keeping a portion of your portfolio in cash, you are preserving that capital and ensuring it doesn’t suffer from the same market losses as your equity investments might. High-interest savings accounts, while not offering high returns, can serve as a stable part of a diversified portfolio, providing balance in turbulent times.

Bottom line

Whether you open a high-interest savings account or invest in a money market fund, both options offer strong returns compared to traditional savings accounts plus, investors get the benefit of accounts that keep cash highly liquid, which is excellent for conservative investors looking to park cash during volatile market conditions.

Sources

1. Covenant Wealth Advisors: Understanding Stock Market Corrections and Crashes (2024) (Sept 26, 2024)

This article Worried about a stock market crash? Here’s where to park your cash originally appeared on Money.ca

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.