What is the Average Stock Market Return?

 

“What’s the average stock market return?”  It’s a great question.

I’m going to use a variety of resources to give you the answer. But there’s usually a question behind this question. Can you think of it?

“What can I expect to make from the stock market over time?”

That’s usually the question that’s really being asked, and it’s actually quite a different question even though at first glance the two might seem so similar. And, you guessed it, both answers are quite different.

We’ll start with the first, more technical question. Then, we’ll move on to the practical question.

Buckle up. We have a lot of ground to cover.

What’s the Average Stock Market Return?

The average annual stock market return is widely reported to be 7%.

Trent Hamm at The Simple Dollar believes so. Tom DeGrace mentions the same figure. An article by J.D. Roth acknowledges a book that points to a similar figure. I’m sure I could go on and on.

Now, just because you see people writing that 7% is the number, that doesn’t mean that you have to immediately believe it. You can do your own research. For me, the fact that this number is continually coming up from what appear to be reputable sources gives me a great deal of confidence that the average annual stock market return is 7%. Plus, the data seems to prove this is the case.

There are those who believe that the number is different. Why is this?

It’s simply because they are using different measures (or standards) to answer the question. If you input a different timeframe, index, or add other factors to the equation such as inflation, the numbers may look different.

As an example, J.B. Maverick writes that the average annual return for the S&P 500 is approximately 10% (when measured from 1928 to 2014). He explains that this might lure investors into quite a disappointment when they don’t receive nearly that much in their portfolio.

But why? Why can’t people see that kind of a return?

Well, it’s possible they could, but it’s unlikely. There are a number of factors that make earning 10% or even 7% on average per year unlikely over a long period of time.

While the portfolio may yield 7% annually on average over time, there are factors that can reduce how much you actually keep. That brings me to the next question . . . .

What Can You Expect to Earn from the Stock Market?

If I had a dime for every time I’ve been asked this question! 

Sometimes it comes in the form of the former question, but this is really the question that matters.

Below, I’m going to break down some of the factors that can work for and against your average annual return in the stock market. But first, I have to give you a word of caution . . . .

Don’t become discouraged! Whatever you do, don’t pull your investments out of the market simply because you think you won’t earn enough to reach your goals!

Sorry, did I yell? I didn’t mean to. It’s just important that you keep a balanced perspective. Never forget the power of compound interest and what it can do for your portfolio. Feel me?

Factors that Influence Your Return

Okay, let’s get to it. Here are just a few factors that can influence your average annual stock market return . . . .

1. Being stupid and investing for a short period of time simply for the gains.

If you’re going to invest in the stock market, and you want to make somewhere near the average annual stock market return, you wouldn’t be doing yourself any favors by investing for a short period of time.

“But Jeff, what if I make 20% in a year?”

Yeah, that’s possible. But you know what? That’s not a sound long-term plan. If you want to do things like save for retirement, put your kids through college, or simply build a lot of wealth, you’re going to need to have a long-term strategy.

Taking your money in and out of the market is what we call “timing the market.” Timing the market may yield some temporary results, but over the long-term it’s a no-win strategy.

Think long-term! Okay, I think you get the picture.

2. Having to take your money out of the market because you need the money.

Alright, this is one that you don’t have control over. If you need the money, and you don’t have any other options to fund whatever situation has arisen, then you have to take money out of the stock market. I get that.

Now, this can have profound effects on your rate of return over time. Say everything is going well, you’ve been investing for 20 or 30 years, and retirement hits and you need the money. But then, you realize, “Oh wait, there’s a housing crisis. The stock market stinks right now!”

Unfortunately, that’s just tough luck. Even though you might have had a solid return all those years, you might have to take a 20 or 30% portfolio loss simply because of the timing – or shall I say, bad timing?

This has happened to real retirees in recent history. It can happen to you, too.

This, my friends, is where a great financial advisor can help you out. If you’re in retirement and are invested solely into the stock market, you can do better.

For example, having some bonds in the mix may help you lower your volatility. There are also a number of other safe investments for those who are nearing or are in retirement. Granted, this strategy somewhat involves exiting the stock market, but it’s smart for your overall portfolio.

3. Fees.

I can’t tell you how many target-date funds I see that have mutual funds with ridiculous fees. Ugh.

Now, fees aren’t evil. People who work hard to create a mutual fund and the people who manage it deserve to be paid. But you know what? Sometimes, there are just better options out there (and there are).

It’s important to keep fees low because they do eat into your portfolio. Many times, these fees are recurring fees that pull money from your investments. And you know what? Many people don’t even know they are paying these fees unless they look at the fine print.

“But Jeff, if I don’t notice these fees, they can’t be that bad, right?”

Wrong. While fees might pull a small amount from your funds, they add up over time. You lose a lot of potential earning power when your money is drained through fees.

Hint: Index funds with low fees were a popular choice among experts.

Is There Any Hope?

Yes, there’s a lot of hope. Let’s summarize what you should do to raise your chances of a better return:

• Invest for the long-term
• Seek the help of a competent professional – especially if you’re nearing retirement or are in retirement
• Watch out for outrageous fund fees

While it’s true that you probably shouldn’t expect to receive the average stock market return, you can educate yourself and work hard toward that goal.

Final Tips

I’m going to ask you to forget the average stock market return. Why? If you keep this figure in mind, you might find yourself checking your portfolio every year, month, or day and expecting to see results that align with that number.

The truth of the matter is that the stock market fluctuates – a lot! One year it might be up 5%, the next year down 15%, the next year down 20%, then the next year up 17%. It’s pretty dramatic. Don’t get caught in the hype you’ll hear from the news stations about this or that regarding the stock market.

Remember, the historical average stock market return is one of the best educated guesses we have of what the market is likely to do in the future, but it is certainly not a direct correlation. Historical performance is not an indicator of future performance.

Crazy stuff happens, and the stock market will continue like a rollercoaster – it’ll go up and down and make your gut do a few flips every now and then. But that doesn’t mean you should bail on the ride (I’d recommend against that for obvious reasons).

Finally, keep in mind that while the stock market may produce the highest returns over time, you might want to consider some stock market alternatives. The stock market might not be for you. Talk with a financial planner and see what makes sense for your situation.

There you have it. The average stock market return. Was it higher or lower than you expected? What do you expect to earn in the stock market? Leave a comment!

Source Good Financial Cents http://ift.tt/1VFX1YU

What’s More Important in Your 20s: Paying Off Student Loans or Moving Out?

I’m 26, and currently gross 50k a year. I recently graduated from college… and I have $21k in student loan debt. I am still living at home, and was planning on moving out in a few months. Would it be best to pay off the student loan debt in full before moving?

We came across this question from Reddit user chris0111110, and we’d love to know what you think.

This is the challenge many 20-somethings face as we leave college and try to make our next move a smart one.

For our parents, starting a job, striking out on their own and starting a family may have been clear next steps after graduating college. But many of us are strapped with student loan debt beyond their wildest nightmares.

That changes the trajectory a bit.

Responses to chris0111110’s question are mixed, and there’s certainly no perfect answer.

• Are you willing to stay in your parents’ house well into adulthood to pay down your debt?

• Or do you prefer to shoulder the burden of debt to claim independence and stop relying on the people who raised you?

Your Turn: Let us know your thoughts (and experiences) in the comments!

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more.

The post What’s More Important in Your 20s: Paying Off Student Loans or Moving Out? appeared first on The Penny Hoarder.

source The Penny Hoarder http://ift.tt/1OvkyFW

Who Knew You Could Make Money Selling Lost Mail on eBay?!

What does it mean for mail to be “lost”?

It feels like it just disappears… ceases to exist.

But what actually happens to lost mail that can’t be delivered or returned to its sender?

It goes to the dead letter office: the USPS Mail Recovery Center.

Your missing mail is in Atlanta, GA. Or, at least, it was at one time, according to an episode of the 99% Invisible podcast.

That’s the first stop. When a letter or package can’t be delivered or returned, it goes to the MRC. There it’s processed and returned, if possible.

In 2014, the Mail Recovery Center received 88 million items, USPS reports. Of those, it processed 12 million for possible return and was able to give back just 2.5 million.

What Happens to Lost Mail?

Items that can’t be returned are donated, destroyed — or sold at auction.

Like any source for pickers, the Mail Recovery Center auction is full of the kind of stuff that inspired the phrase, “One man’s trash is another man’s treasure.”

Boxes of old books might hold a sought-after vintage cookbook.

Stacks of perplexing VHS tapes might be of value to some nostalgic collector.

Many people purchase rare items at these auctions and put them up for sale on eBay.

It can be a gamble, but if you’re diligent and have an eye for a deal, you might be able to turn lost mail into cash as a reseller.

Even if you can’t get to Atlanta, you might be in luck. The U.S. Postal Services appears to be cutting out the middlemen in some cases and auctioning items directly from eBay.

Of course, that could also mean stiffer competition, so you have to be creative and know how to find the best deals and resell for the best price.

Note: The only shipping option MRC offers from eBay is USPS, so you’ll probably want to follow their tips to ensure your mail is deliverable.

How Much Money Can You Make?

eBay is the place buyers come to look for rare, unique or unexpected items they can’t find anywhere else.

So you can probably find a buyer for whatever odd items you haul home from the Mail Recovery Center. Some might just take longer than others to surface.

We’ve seen human hair sold on eBay for more than $80.

We’ve seen vintage toys sell for around $50.

We’ve even seen empty boxes sell for up to $30.

Your options are pretty wide open.

Lots of what comes through the MRC appears to be media mail, the 99% Invisible host found when she visited the auction.

That means you’ll probably find movies, books and records, as well as video games (which aren’t technically media mail, but are easily mixed in).

Surprises at the MRC Auction

You do want to be on the lookout for surprises, though.

The podcast host spoke to one man who purchased a shoddy painting only to find $5,000 worth of marijuana stuffed into the back!

And one woman had to clear thick dust off each item as she dug through her box… until she reached the bottom and discovered a shattered cremation urn.

People send strange things through the mail.

Lucky for you, apparently, sometimes they become lost. And you might get to be the next stop on their storied journey — and profit from it if you’re smart.

Your Turn: Are you an eBay reseller? Have you ever considered buying lost mail to resell?

Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more.

The post Who Knew You Could Make Money Selling Lost Mail on eBay?! appeared first on The Penny Hoarder.

source The Penny Hoarder http://ift.tt/21rgobx

Lending Club Reviews for Investors and Borrowers

Lending Club has been sweeping the investment world and the borrowing universe at the same time. And why not? It’s an amazing service!

Who wouldn’t be interested in a financial institution that enables investors to earn more than the going rate on their money while borrowers pay less? To help you get a better picture I put together this Lending Club review for investors and borrowers.

I’ll start off this Lending Club review by explaining what it is and how it works for investors and borrowers. Later, I’ll walk you though an example of how you can invest in Lending Club by investing some of my own hard-earned dollars.

Additionally, I’ll cover what you might expect to earn from Lending Club as well as Lending Club fees. It’s important to understand how Lending Club defaults work, so I’ll cover that as well. Let’s begin!

What is It? and Is Lending Club Legit?

Lending Club is an online peer-to-peer (P2P) lending platform that takes the banker out of banking. Investors lend money directly to borrowers through the website, enabling both to benefit from the rate of interest established for each loan.

And just as important, the entire transaction happens online, eliminating the need for sometimes embarrassing face-to-face meetings common with bank loans. It’s a win-win as both the investor and the borrower benefit from the Lending Club process.

As of December 31st, 2015, Lending Club has facilitated loans totaling well in excess of $15 billion. This includes more than $2.5 billion issued in just the last quarter.

Lending club is legit for both investors and borrowers. This Lending Club review, unlike some others, will review the service from both sides of the deal. Make sure to read about my experience below before you invest or borrow with Lending Club.

Investing Through Lending Club Review

With interest rates on safe, fixed income investments sitting generally at below 1%, Lending Club offers a real opportunity to get dramatically higher returns. In fact, you can get average returns of between 5.06% and 8.74% (do I have your attention now?).

Those are attractive rates, but just so we’re clear, there are more risks with Lending Club investments than there are with bank certificates of deposit. Plus, there are certain requirements you have to meet as an investor. Remember, the higher the potential reward, the higher the risk.

Investor Requirements

Notes are not available in all states. As of this initial writing, they are not available to residents of Kansas, Maryland, Ohio, Oregon and the District of Columbia.

Depending on which state you live in, there are income requirements to invest in Lending Club. In most states it’s a minimum of $70,000 per year, though it may be higher in some states. Generally, the income requirement does not apply if you have a minimum net worth of $250,000. The platform also requires you invest no more than 10% of your net worth in Lending Club notes.

The minimum opening account with Lending Club is $25, which is also the minimum requirement to invest in any single note.

Lending Club IRA

You can also hold Lending Club investments as part of an individual retirement account (IRA). You can do this through a Lending Club self-directed IRA. Lending Club will pay the annual IRA fee if you open the account with a minimum of $5,000 and keep that balance level for a minimum of 12 months.

After the first year, they will continue to pay the fee as long as you maintain a minimum invested balance of $10,000 in Lending Club notes.

Lending Club IRAs come in two flavors, Traditional IRA or Roth IRA. As you know, I’m a big fan of the Roth IRA. This is just one more way you can invest in your future. But, I wouldn’t keep all of your retirement money there. Roth IRAs aren’t for everyone, so be sure to speak with a financial advisor before you sign up for this specific type of investment.

Choosing Notes to Invest In

There are two ways to invest with Lending Club. Manual investing is where you browse available loans and choose which ones you’ll invest in one at a time. But you can also use automated investing in which you set investment criteria, and notes are selected automatically based on that criteria.

While you can invest in individual loans, it’s generally best to buy them in fractions (which are referred to as notes). You can purchase notes in increments of $25. At the very least, you can purchase a fractional interest in 200 loans with a total investment of $5,000. This will enable you to minimize the risk involved in investing in any single loan.

Collecting Investment Returns

It’s important to understand the notes you’re investing in are not like certificates of deposit. Each note represents a loan which will be repaid to you over the term of the loan. These payments will include both interest and principal.

That means at the end of the loan term, the loan will be completely extinguished (including 100% of your original principal invested). For this reason, you will need to reinvest payments received on a continuous basis as you receive payments.

Lending Club Loan Types and Loan Grading

Loan terms are either 36 months or 60 months, and are fixed-rate. More than 80% of the loans are taken to refinance existing loans and credit card balances. Borrowers are evaluated – and loans are priced – based on credit and credit scores, debt-to-income ratios (DTI), the length of your credit history, and your recent credit activity.

Each loan is assigned a loan grade, ranging from “A” (the highest) to “G” (the lowest). The higher the grade, the lower the rate. For example, when initially checked, a A-grade loans had an average rate of 7.51% while G-grade loans had an average rate of 25.13%.

Within each letter grade, Lending Club also assigns a numerical rank of between 1 and 5 (A1, A2, A3, A4, A5). These numeric sub-grades adjust for other factors, such as loan size and loan term. For example, a loan amount of $5,000 would be seen as low risk, and actually result in an improvement in the sub-grade. By contrast, the maximum loan of $35,000 is a higher risk, and could turn a B1 grade into a B4 or B5 grade, resulting in a slightly higher interest rate.

Buying and Selling Notes Before they Mature

Lending Club offers their Note Trading Platform through Folio Investing where you can sell the remaining portion of a note under certain circumstances. This is a marketplace where investors can buy and sell Lending Club notes to one another.

In order to participate in this marketplace, you must also open a Folio Investing trading account through Lending Club. There are no fees if you buy notes on the trading platform, but there is a 1% fee charged if you sell a note.

Risks

It’s important to realize investments held through Lending Club are not bank assets, and as such they are not insured by the FDIC. Individual loans can go into default, and if they do, you will lose that portion of your investment.

In addition, a missed payment by a borrower means you will not get the payment on that loan in that particular month. Lending Club does use “best practices” to collect payments from delinquent borrowers, but some will default nonetheless.

When a payment is past due, you as an investor will pay a collection fee of 18% if the loan is at least 16 days past due but no litigation is involved. If litigation is required, you will be required to pay 30% of an attorney’s hourly fees, plus attorney costs.

If collection efforts fail, and it is apparent the borrower cannot repay the loan, the loan will be charged off once it is 150 days past due. When that happens, the remaining principal balance of the note will be deducted from the investor’s account balance. Any funds subsequently recovered on the defaulted loans will be returned to the investors on a pro-rata basis.  This is a known risk if you invest in Lending Club, and you rarely see it come up in any complaints that people have about the site.

Minimizing Investment Risks

Just as is the case when you’re investing in a portfolio of stocks and bonds, there are ways you can invest in Lending Club that will reduce your overall risk. The most obvious strategy, of course, is to spread your investment over many different loans – hundreds if you’re in a position to do so.

You can minimize your risk by setting certain loan requirements. For example, you may decide to set a credit score that is some number higher than what is required by Lending Club (currently 660). You can also emphasize loans in which borrowers are refinancing existing debt, rather than taking on new debt. Employment stability is also a factor. A person who has been employed in their field for a number of years is likely to be more employable than one who is just starting out.

A low DTI is also a positive factor. For example, you can make sure the borrowers whose loans you invest in have a DTI of less than, say, 30%. This means their fixed monthly expenses, including their housing expense, the new loan payment, and any other fixed payments do not exceed 30% of their total gross monthly income.

Investor Fees

There are fees charged to investors with Lending Club. However, the fees are collected only when you receive a payment from a borrower. For example, there is a 1% service fee collected on each payment received.

Investing through Lending Club can provide you with excellent high income diversification in a fixed income portfolio. Just by investing a portion of your fixed income allocation in Lending Club notes can increase the overall yield on your fixed income investments.

Open an Investment Account with Lending Club

Borrowing Through Lending Club Review

Not only can you invest with Lending Club, you can borrow with Lending Club as well! Truly, whatever your needs are, you can get a fantastic deal through Lending Club.

You can typically get lower interest rates on loans through Lending Club than you can at a bank. You can also apply for a loan without ever leaving your home. Everything is done online through the website, virtually eliminating the need for an uncomfortable face-to-face meeting at the bank offices. And if your loan is approved, your funds will arrive within a few days.

How the Lending Club Loan Process Works

This is a simple multi-step process that looks something like this:

• Complete an application on LendingClub.com.
• Your application is evaluated and your credit score is pulled (this is a “soft inquiry” that will not have a negative impact on your credit score).
• As described in the preceding section, you are assigned a risk grade of somewhere between A1 (highest grade, lowest rate) and G5 (lowest grade, highest rate). Once again, this grade is based on a combination of your credit score and credit history, employment, income, and your debt-to-income ratio (DTI).
• Your loan is given an interest rate based on your risk grade.
• You are presented with a variety of loan offers.
• Investors will review your criteria and loan grade and decide if they want to invest in it.
• Once all parties agree to the transaction, the loan goes through and your funds are available within a few short days.

If you’re concerned about privacy during the application process, you don’t need to be. Lending Club investors will never know your identity so you’ll be able to borrow on a completely anonymous basis. The site also promises it will never sell, rent, or distribute your information to third party websites for marketing purposes.

Lending Club Loan Terms and Rates

You can borrow any amount up to $35,000, and while the loans are typically used for refinancing debt or debt consolidation, you can also borrow for other purposes, such as unsecured home improvement loans. Current terms are fixed-rate loans of either 36 months or 60 months.

Interest rates on personal loans range from a low of 5.49% for A1 risk grades to a high of 28.69% for G5 risk grades. Origination fees range between 1% and 5% of the initial loan amount. There are no application fees involved in the process.

Lending Club also offers business loans in amounts as high as $300,000, and fixed-rate loan terms ranging from one to five years. There are specific requirements based on the size and nature of your business, and I’ve seen advertising rates as low as 5.90% and origination fees of between 0.99% and 5.99% of the initial loan balance.

In order to keep interest rates as low as possible, Lending Club sets up your loan with automatic draft payments from your bank account. In the event you need to pay by check, they will charge a $15 check processing fee per check.

Best of all, there are no prepayment penalties should you decide to pay off your loan early.

Lending Club Personal Solutions – Medical Loans

This is a loan type whose time has truly come!

Given that health insurance deductibles and co-insurance provisions are increasing, Lending Club Personal Solutions gives you an option to finance uncovered medical expenses. And here’s something even more interesting: the loan can even be used for procedures such as hair restoration, weight loss surgery, fertility, and dental – procedures that are typically excluded under most health insurance plans.

Lending Club offers two types of loans for this purpose:

• Extended Plans – You can get a loan for between $2,000 and $50,000, at rates that range between 3.99% and 19.99% per year, depending on the size of the loan and your credit history. The terms can be 24-, 36-, 48-, 60-, 72-, or 84-months. This loan can be used to pay for fertility, dental, hair restoration, and weight loss surgical procedures.
• True No-Interest Plans – This loan program offers 0% APR for terms of 6-, 12-, 18-, or 24-months, and for loan amounts ranging from as little as $499 up to $32,000. After the no-interest term expires, a variable rate of 22.98% APR applies on the remaining balance (this arrangement is similar to the one offered by CareCredit, but at a lower rate of interest after the initial 0% interest period). And if you can pay off the loan within the 0% interest term, you can get funds for medical procedures without having to add interest to the cost of an already expensive operation.

These loans from Lending Club can really come in handy when you’re out of options.

Open an Borrower Account or Business Borrower Account with Lending Club

How I’m Investing Using Lending Club

What I really want to do today is walk you through how I am investing with Lending Club. While we’ve already covered details on how to invest and borrow with Lending Club, I thought I’d show you a little bit of my personal experience with investing using the peer-to-peer lender.

I have been investing with Lending Club for a few years now. I don’t have a whole lot invested, and you’ll actually see that here in a minute because I really didn’t understand it and I wanted test it out first. I wanted to test-drive it before 1) I put more money into it and 2) before I recommended people take a look at it.

Below, you’ll see a screenshot of the website. I went ahead and logged in so you can see where I’m at right now. Right now, I have invested a total of $2,200, so not a big investment by any means.

My net annualized return is 10.83%, so right off the cuff you can see I’m already making more than the average investor at Lending Club is making – almost a full percentage point more. That’s not because I am a uniquely great investor. I’m actually very passive in the way I choose my notes, which I’ll show you here in a minute.

I currently have $525 sitting in cash in my Lending Club account that I need to invest, and that’s exactly what I’m going to use today to show you how to invest.

I love Lending Club because they keep things simple. For the people who don’t like to spend a lot of time doing research, they make it very, very simple in that you can choose option one, option two, or option three. Let’s just assume you have a high tolerance for risk and you are looking at the 17% figure. You look at that number. You’re drooling over it. You want it. That’s how much you want to make.

By quickly clicking that option, they will show you where you are investing your notes (the agreements you have with people you’re lending your money to). They’re ranked similarly to that of a report card or a bond.

Initially, you’ll notice by going the more aggressive direction you do not have any of the A- or B-type investors. These are your higher credit score people. They are less likely to default on their loan, so this is definitely more of a high-yield approach when it comes to peer-to-peer lending.

Of that $525 I have to invest, $100 is going into C notes, $200 is going to D notes, $150 going to E, and $75 going to F. Immediately, Lending Club breaks it down for you automatically. And I can’t tell you how much I love that! That’s actually my strategy. I don’t select the third option. I typically select option one, but immediately they break down the notes for you.

They also show you your average interest rate on that is 17.9% (in this example), but because some of those folks are going to default on their loans, they are estimating you’ll lose 4.42% based on default.

Then there is Lending Club’s charge of 0.52%, so your projected return after it’s all said and done is going to be approximately 12.25%. And that’s approximately. Maybe all of those people do pay you back where you’re all good and you actually make more, but that should just give you an idea.

Lending Club Notes

Let’s just go to the next step real quick. Here is another area where you can start seeing what some of these loans are used for. For example, you might see listed: credit cards, debt consolidation loans, small business loans, and more. You can actually see what these notes are.

Note: You should know I’m going through this process in real time, so I can make sure to show you my thought process along the way using Lending Club as I move from screen to screen.

The amount left is how much more that person needs to borrow to take care of the debt. If you want to take it one step further you now can see more about the individual, their gross income per month, if they’re a homeowner or not, their length of employment, their current employer, where they are located, their debt-to-income, and their credit score range. It just gives you a lot more details about the borrower.

Even more, if you want you can ask them questions if you’re not confident or just need some reassurance. Here’s an example of an asked question:

“What type of business are you starting?”

They said:

“We are purchasing an existing flight school and looking for help with a short-term loan to assist with the down payment.”

Lending Club actually gives you some direct questions to ask. They did change that a little bit over the past few years (I think because of a privacy act), but they give you a lot of the good basic questions to ask.

One thing I didn’t mention is that of the $525 I have to invest, typically only $25 of that is going toward each individual note, so that’s where the diversification comes into play where you’re not putting all your eggs in one basket.

I am going to try option one. I’m much more comfortable with that option. My projected rate of return is going to be lower, but as you can see I’m actually doing better than what was predicted. I think I might have done some high-risk investing in the beginning, but typically I have stuck with option one. You can see I have a lot more of the B borrowers and none on the F and G side. I’m not much on the high yield. I like to be a little bit more conservative with this aspect. Immediately they break it down and it looks like I’m doing some overlap of my last entry so let’s see if we can get that straightened out.

Note: Lending Club’s minimum investment is only $25. That’s it.

The other thing too is you could actually choose the term of the note. Lending Club initially just started out with a 36-month, three-year note. They now offer a 60-month note so that’s actually a little bit more of a return on that one, but you are locked into your own money. You can also sell these notes too, so if you are not wanting to hold it for the maturity you can find a buyer – just like selling stock on the open market.

Choosing Note Options

All right, let’s see if I can finally get this figured out. I just want to invest. I should’ve started with the option one to begin with. Let’s start over. Sorry about that.

Let’s go with option one. I can actually go in there and select notes by themselves. I can add more money to one note, take some money away from another note, etc. You have that ability! You also have the ability to build your own portfolios from scratch, so if you want to go through all of the different available notes, you can do that as well. I personally don’t have interest in that so I don’t. So, with $525 I’m going to invest into 21 different notes and my average rate of return will be approximately 9.58%. A quick look at the notes and we are going to place the order.

You can then give your portfolio a name. I haven’t done a very good job of managing this so I’m just going to assign it to “portfolio 10” and we can go from there. I will soon get a confirmation.

One notable thing is that I’ve just invested $525 into 21 individual notes. Most likely, not all of those notes will get the entire funding. In some cases you won’t get the investment you initially were after. In that case, you would get a refund. From there, you can go out and find some new notes. It most likely will happen, just so you know.

That is it as far as how to invest with Lending Club. It’s so simple! As far as who I would recommend this to – this is not a savings account replacement. This is not a certificate of deposit replacement. Even though you can get a three-year or five-year note you might think of that as a three-year or five-year CD.

There is definitely more risk involved with investing this way so do not make this an apples-to-apples comparison.

How Lending Club Fits in My Overall Portfolio

How do I view Lending Club in my overall investment portfolio? Well, we already have our emergency fund and we have our savings account – this is just something to complement what I’m doing in my stocks. Like I said, I only have a small investment now but we are planning on shifting some more money there.

We were building a house, had some other improvements we were doing, were having a third child, so we wanted to have more in cash then we probably should, but we just felt more comfortable doing that. Now that we have some of those things out of the way I am definitely a lot more comfortable moving some more cash into Lending Club and start making some more interest.

I should also say I have never had any notes default on Lending Club up to this point. I’ve been doing it for just over two years, and I believe and have not had a default yet. I’m not saying I won’t, but I haven’t had one yet. If I do I will definitely report it.

If you have any more questions let me know. You’ll find an affiliate link, so if you do click and open an account I do earn a bit of money for you doing that. You can also go to LendingClub.com directly. I won’t get the commission and that’s fine by me as well.

If you have more questions on my Lending Club review or if you have any experiences, please share. I’d love to hear more about it as this becomes more of a mainstream investing approach for a lot of people.

Lending Club Alternatives

There are other P2P lending platforms popping up all over the web. But Lending Club has become the gold standard for the entire industry. Whether you are an investor looking for an above average rate of return, or a borrower looking for more affordable loan programs, you’ll find what you’re looking for at Lending Club.

This company has continued to grow and prosper over the years. We can expect even better things from Lending Club going forward. And it’s probably not an exaggeration to say that Lending Club just might be the banking platform of the future.

While you can always invest using a more traditional investment platform or borrow money through a bank or credit card, there are only a few other options in the peer-to-peer lending world. The most prominent competitor to Lending Club is Prosper.

These two are the heavyweights in the peer-to-peer lending marketplace – so much so that we put together an in-depth Prosper vs. Lending Club comparison. You can learn more about all the features on Prosper with our Prosper review.

Check out everything Lending Club has to offer, and see if you can’t get a better investment – or a better loan – than what your bank is offering you.

Hey, by the way, if you’re looking for a way to invest your money for the short-term and you’re not really sure if Lending Club is right for you, be sure to read my article: The 11 Best Short-Term Investments for Your Money. It’s packed full of information on how you can invest your money with little risk to swallow.

Remember, only you can make the determination of what’s right for you when it comes to peer-to-peer lending. I wouldn’t recommend putting all your eggs in the Lending Club basket, but it’s certainly an appropriate choice for well-established investors or borrowers needing some money.

Take a look at Lending Club today and see if it’s right for you!

Please note: This article contains affiliate links that may result in providing me with a commission for you signing up for the services listed. Still, my opinions are my own and I wouldn’t steer you wrong.

Source Good Financial Cents http://ift.tt/1F8XY1E

4 Conversion Rate Optimization Tactics That Hurt You in the Long Run

There are two sides to conversion optimization.

The first one is the one that’s in the open. You perform tests, measure activity, and choose the winner that will yield a better conversion rate for your business.

The conversion rate might be for opting in to an email list, buying products, or signing up for a demo.

But behind that conversion rate number, there’s a more complex factor lurking…

Marketers love conversion rates because they give us something to measure and base our decisions on. But they can be taken too far.

If the rate at which your visitors convert to purchasers increased from 2% to 4%, did you just double your sales for good?

Maybe…maybe not.

That’s because numbers reflect quantity without taking quality into account.

Simply put: If you double your current conversion rate but do so in a way that lowers your conversion rate in the future (i.e., rate of getting return customers), that initial optimization could actually decrease the profit you make.

If this isn’t obvious to you right now, don’t worry.

I’m about to show you four specific conversion rate optimization tactics that can appear to give you positive results in the short term but can do serious damage to your business in the long term.

On top of that, I’ll show you what to do instead. 

1. Discounting your products can destroy your business

Need a spike in sales?

Easy…just send out coupons or put your products on sale.

In almost all situations, you will see a spike. And the bigger the discount, the bigger the spike.

Also, if you do some testing, you can price the discount so that you maximize your overall profit.

So, what’s not to love?

At first glance, discounting looks like a great way to boost sales, which seemingly might lead to more return customers down the line too.

Most short term case studies support this. They show, for example, conversion rates improving by 13% with a simple 10% coupon.

But the complete picture is much bleaker.

There’s a company you’ve probably heard of called Groupon.

It’s a pretty simple company/app. Groupon contacts businesses offering to send them a ton of new customers if they provide them with a big discount, often at 40-50% off.

Many companies thought Groupon was an amazing opportunity to grow their businesses for the reasons I mentioned above.

However, they quickly discovered that the big discounts not only didn’t grow their business but indeed hurt it. If you Google “Groupon caused business failure,” you’ll get a slew of results that explain how running a Groupon deal actually killed someone’s business.

And these results are not rare; there are many of such sad cases.

The proof is in Groupon’s share price. After its IPO (in 2011), it was valued at about $13 billion (or $20 per share).

Currently, Groupon’s share price is under $3, which is less than a sixth of its original valuation.

It has steadily declined over the past few years as businesses have learned that massive discounting isn’t effective in the long term.

There are multiple ways that discounting can hurt you.

Problem #1 – You attract the wrong customers: There are many sites, like Slickdeals, that exist solely to promote sales to their user bases.

If your products have a fairly wide appeal, any discounts will end up on these kinds of sites.

The people who use these sites are looking for great deals (called discount hunters) and nothing more.

They don’t become long term customers.

In addition, if you promote your sale (and why wouldn’t you?), it could actually cause you to lose potential long term customers.

That’s because you’ve shifted the focus to your product’s or service’s price.

So, when a potential customer (who cares about quality over price) is comparing their options, they’ll go with the company that’s emphasizing the quality of their product rather than the price.

Problem #2 – You set a bad precedent: This adds on to the problem of having discount-seeking customers.

Once you discount a product for a customer, that becomes their new perceived value of your product.

They are not likely to buy from you again unless they get a similar deal in the future.

This is okay for some businesses that rely on selling huge volumes, but most businesses can’t permanently slash their profit margins.

Additionally, if someone pays a full price for your product and then sees that it goes on sale, they’ll usually feel shafted. There’s a good chance that they won’t want to buy from you again because of that.

Problem #3 – You erode your brand’s and product’s value: Finally, since a discount can lower the perceived value of your product, it can make potential customers question its quality.

Why is this so cheap? Is there something wrong with it?

In some cases, discounts actually lower short term conversion rates since customers care about quality over cost.

How do you get the potential benefits of discounting without giving a discount? Discounts are not evil despite all these common problems.

They can be used effectively in some specific situations.

More importantly, you can learn a few general elements of effective discounting and use this knowledge to increase your conversion rate without hurting your business in the long run.

One of the main reasons why people buy discounted products and services is because they feel they are getting good value for their money.

Think of it like this:

Likelihood of buying = Value of product (or offer) / Cost

When the cost goes down, your conversion rate goes up.

However, you could also just increase the perceived value of your product.

Bryan Harris uses this tactic well. He sells courses related to building an email list.

When he goes through a sales campaign, he doesn’t discount his courses often. Instead, he adds bonuses.

If someone buys the course, they get a free valuable add-on related to the course:

This way, you still increase your conversion rate, but you don’t damage your product or brand in any way, and you still attract the right customers (who care about value more than a discount).

Businesses that sell physical goods use this tactic as well by sending free samples of products with orders. For example, Bodybuilding.com sends free samples of supplements:

The second useful aspect of discounts is that they make your product feel less risky.

No one wants to buy something only to find out that it doesn’t do what they thought it would.

The solution is to make buying your product feel less risky by addressing potential concerns. This will be different based on the type of your product.

One option is to create detailed case studies that show how your product works and what results it produces:

If you sell physical products, create a high quality video that shows your product in action. Remove all doubt.

If you sell software, offer a demo, or create clear video walkthroughs.

2. Buying fake followers on social media for social proof

We all look to friends and experts to guide our purchases.

This is known as “social proof.”

If other people recommend something or simply already use it, it’s a sign that the product is good.

Case studies, testimonials, number of members, etc. can be considered as social proof.

And social proof can have a big impact on conversion rates. One study found that testimonials increased sales page conversions by up to 34%.

While social proof is most studied in the context of sales, it plays a role in all types of decisions (conversions).

Should you join that email list? Well, do any of your friends or mentors recommend it? If so, you’re much more likely to.

Additionally, social proof matters on social media, just not in all the ways that many marketers think it does.

The logic is that if you have a ton of followers on a social media account, other users will think you’re popular and be more likely to follow you as well.

It’s hard to build up a social media account from scratch, so marketers look for a shortcut: buying followers.

It’s easy to go to Fiverr and get a few thousand subscribers on any main social network for $5.

These followers or likes all come from bot accounts that won’t do anything afterwards.

Having more isn’t always better: There are a few major downsides to faking social proof on social media.

One that most marketers never even consider is that having more social proof doesn’t always improve conversion rates.

Derek Halpern conducted a test and found that social proof in the following form actually decreased his email opt-in rate:

Join 15,000 people already subscribed.

The reason why this “social proof” might backfire is because some people don’t want to be part of a huge crowd.

They want to feel like they could potentially make a personal connection.

It, of course, depends on the demographics of your audience, but you can’t automatically assume that having thousands of followers will improve your follow rate.

Fake followers can kill your reach: The more important issue is that many social networks are determining the organic reach of users based on their engagement rates.

Take Facebook for example.

If a page has 10,000 likes but gets only one or two likes or comments on each individual post, Facebook assumes the posts aren’t very good.

Then, Facebook will start showing that page’s future posts to fewer people unless the business pays for advertising. If you want to improve your Facebook page’s organic reach, read this guide.

When you have fake followers, you have low engagement rates because bots don’t engage with anything. Your profile will look something like this:

This means that fewer of your real followers will see your content, or you’ll have to spend a lot more than the initial social proof boost gave you.

3. “Clickbait” headlines can raise your email open rates…at first

Clicks equal views, and views equal revenue.

At least that’s a reasonable formula to use when your revenue comes from advertising.

Buzzfeed is infamous for coming up with the concept of “clickbait” headlines.

These headlines pique curiosity of readers and make them more likely to click through to the content.

In the past years, marketers have used clickbait headlines for content headlines, email subject lines, and social media posts.

I’m not a fan of using them anywhere—but particularly in email subject lines.

When someone is on your email list, they’re giving you access to a valued personal channel of communication. Trust is key.

When you use clickbait headlines, it’s almost impossible to offer your readers content that will match their expectations and make them feel satisfied.

For example, imagine I sent you an email with the subject line:

10 Mind-blowing SEO tactics that will change your life

I don’t think I could come up with a single “mind-blowing” SEO tactic, let alone 10.

Even if the 10 tactics were valuable, you’d still feel unsatisfied after reading that subject line.

If you use these types of email subject lines, please stop.

It might help at first, but your readers will quickly catch on.

A study of 9 million subject lines identified clickbait phrases and looked at their effect on the open rates.

It turns out that clickbait phrases have either minimal positive or significant negative effect on open rates.

The reason is simple. Why would anyone continue to open your emails once you showed them they will be disappointed?

The solution – Deliver on your promises: You should always make your subject lines as enticing as possible, but you need to ensure that they match the content closely.

If you say you have five tactics that will double your subscriber’s revenue, those five tactics had better do just that.

Your subject line is a promise that you need to keep if you want to earn long term trust.

4. Using fake scarcity to boost sales is a double-edged sword

One way to improve conversion rates in almost every situation is to make use of scarcity.

It’s one of Cialdini’s 6 principles of influence.

When there’s a limited amount of a product we might want or a limited time to buy it, we are much more likely to make the purchase.

Landing pages that have countdowns, indicating when an offer will expire, are a great example of this. These pages can improve conversion rates by up to 147%.

Another example of scarcity is a simple email saying that there’s a limited amount of a product left:

Both are incredibly effective.

Scarcity works, but keep it real: As always, some marketers get too greedy.

Using scarcity in the form of a timer, for example, is a one-time thing. You can use it once per sales period.

What some marketers do is set up a timer that runs out and then starts again.

If you’re continually sending new traffic to the page, the idea is that you can use scarcity all the time.

But people aren’t stupid. If they come back to the page after the timer should have ran out, they will know that you were trying to trick them.

Of course, once someone feels tricked like that, they’ll never trust you or buy from you again.

So, while you might improve your conversion rate in the short term, you’re also going to scare away some good customers for life.

By all means, use scarcity, but don’t fake it.

If you say you have only five spots left in a course, then sell only five more. If you say you’re selling something for only 10 more hours, stop taking orders in 10 hours.

Conclusion

All marketers and business owners need to use conversion rate optimization to improve their revenue.

However, you need to consider the long term effect of any changes you make based on short term optimization.

I’ve shown you four common tactics that can work in the short term but could hurt your business significantly in the long term.

If you’re making one of these mistakes, fix it. If not, be aware of them and avoid them in the future.

To close off, I’d like to ask you to leave me a comment below telling me one way that you’ve prioritized long term success over quick wins as well as any questions you have.

Source Quick Sprout http://ift.tt/1QeWNYs

How I Went Gluten-Free Without Destroying my Grocery Budget

I miss croissants.

Between ages 10 and 13, I would regularly visit Vie de France, the local chain bakery, for a treat with my mom. Over a decadent chocolate croissant, she’d ask about boys and why I decided to wear my hair like that.

Those flaky, buttery angels are at their best when made with wheat flour. I’ve not yet found a gluten-free version good enough to tango with the croissants of my adolescence. If it exists, it probably costs $50.

Or, if you believe the president of the National Foundation for Celiac Awareness, it’s at least double the cost of a run-of-the-mill croissant made with wheat flour (a 2011 study showed gluten-free alternatives to cost between 76 and 518% more).

My gluten-free existence began three years ago. Since then, I’ve done a lot of research on how to improve your gut, taken classes in health and nutrition, and am planning the launch of a health and nutrition website. I don‘t have celiac disease, but I am gluten-intolerant. I’m also cheap in all the right places.

So let’s sally forth, fellow gluten-free shoppers. Here are a few ways you can take the sting out of the increased premiums — your gut is worth it.

1. Evaluate What You Already Eat

Gluten hides in all kinds of things (soy sauce? Come on!). But a lot of what you already eat is probably gluten-free. As you likely know, meat, nuts, seeds, beans, cheese and eggs are already gluten-free, as are fish, vegetables and fruit.

Think about what you actually enjoy eating before you go grocery shopping so you don’t get sucked in by all the gluten-free options.

If you never use barbeque sauce, you don’t need that gluten-free sauce, even if it happens to shine in the aisle with its specially colored gluten-free tag.

At first, when there weren’t a ton of gluten-free foods, I would get excited to see those “I’m Gluten-Free” tags. Now I just smile and move along.

2. Sell Your Food

You can probably only do this once, so make it good.

When I first went gluten-free, I had a lot of food to get out of my pantry, including a couple of unopened boxes of pancake mixes, some muffin mixes, a couple of bags of flour, cookies, etc. (Can you tell I like baked goods?)

So I sold them on my community’s Facebook garage sale page. I probably made $20 overall, but I was able to put that toward my upcoming gluten-free shopping trip. And I loved cleaning out my shelves.

3. Don’t Buy Gluten-Free Alternatives

This advice seems counterintuitive, I admit. What else would you buy?

When I first started my new gluten-free diet, I didn’t really know what to eat. I bought gluten-free versions of everything I usually ate: muffins, bread, granola bars, frozen pizzas. My weekly grocery bill for me and my husband — who is not gluten-free — doubled, settling north of $200.

So I cut out those gluten-free versions of my go-to foods. I changed my diet, and I stopped paying $4 for five gluten-free granola bars, when I remembered I used to be able to get an eight-pack for half that.

Plus, avoiding gluten-free alternatives eliminated a lot of processed foods. It takes a lot of preservatives, salts and sugars to get those things to taste like their non-gluten-free counterparts. It’s all about the “mouthfeel,” folks.

Certified sports nutritionist Melissa Hartwig says that eating things like gluten-free muffins, bread, pastries, etc., is like “having sex with your pants on” — they’re OK, but they’re not that good, so why bother?

By changing my purchase strategy (and diet), my average weekly grocery bill for two people is now $120, just $20 more than what I spent before instituting my gluten-free ways. Oh, and I also lost 37 pounds.

4. Cook and Make Dressings From Scratch

Easier said than done, right? But this strategy will save you the most amount of money, and cooking at home isn’t as difficult as you think.

Plenty of gluten-free recipes require just a few ingredients, and therefore a smaller investment in money and often time than you’d expect.

Try this one for flourless peanut butter chocolate chip mini blender muffins or this one for two-ingredient pancakes. And no recipe is simpler than seasoned meat, pan fried in butter.

Many sauces or dressings contain gluten, so a simple mix of what’s already in your cabinets — olive oil, vinegar, mustard, honey, salt and pepper — can make a pretty good honey mustard dressing or even dipping sauce.

But the minute you turn to your local “natural” store, you’re paying a huge premium. For example, my favorite packaged honey mustard dressing is $5.99, before shipping. I can make 24 oz. of honey mustard dressing for less than half of that.

5. Shop Discount Grocers, Wholesale Clubs and Online

This may seem like a no-brainer, but Costco and its wholesale brethren didn’t used to carry many gluten-free items. These days, I’d suggest a gluten-free recon at your local club to see what it has to offer, since many don’t have the same products from city to city or month to month.

For example, Costco now carries Udi’s gluten-free bread, according to ClarkHoward.com. Wholesale clubs are great to get things you eat regularly, like crackers and cereal — and you can find deals on fruit and meat, my favorite gluten-free things.

When I can’t find what I’m looking for at Sam’s Club or Aldi, another popular discount grocery store, I’ll turn to Amazon or Vitacost.com.

I once purchased a box of 50 snack-sized bags of white cheddar popcorn from Amazon for a price even cheaper than my local Sam’s Club. And popcorn is almost always gluten-free.

6. Always Make a List

Wherever you shop, make sure you’ve got a grocery list. I can’t tell you how many times I’ve wandered the aisles, picking up anything that looked good while decimating my grocery budget.

Making a list — and sticking to it! — is key to getting the food you need without going way over-budget.

In a way, a gluten-free lifestyle can make grocery shopping simpler, because where you would once hem and haw over what bread to get or which granola to purchase, now you have slightly fewer options.

Add to that the goal of saving money, and your decision becomes more black and white — it comes down to the best for your gut for your buck. And that is worth searching for.

As for me, I’ll keep carrying my torch for a gluten-free version of the holy grail of baked goods. I know there’s a croissant out there with my name on it. It doesn’t have to be chocolate. But it can’t hurt.

Your Turn: If you eat gluten-free, or shop for someone who does, what are your best strategies for saving money?

Disclosure: We have a serious Taco Bell addiction around here. The affiliate links in this post help us order off the dollar menu. Thanks for your support!

This post originally appeared in June 2015, but saving money on groceries is always in season!

Raina Keefer is a freelance writer and editor at Quickwitwriter.com.

The post How I Went Gluten-Free Without Destroying my Grocery Budget appeared first on The Penny Hoarder.

source The Penny Hoarder http://ift.tt/1RFOLXw

The Power of Social Indifference

Yesterday, as I was doing a bit of research into my article about the traits of a typical millionaire, I came across a fascinating article from MarketWatch entitled Social media can keep you from being ‘The Millionaire Next Door’. The article features an interview with the daughter of one of the authors of that book, Sarah Stanley Fallaw, who has continued his work as the founder of DataPoints, which is essentially a company built around finding and extracting data on the affluent.

Here’s an excerpt from that interview:

MarketWatch: Were there any surprises resulting from the new research?

Sarah Stanley Fallaw: The new things that were interesting were how being responsible for one’s finances impacted net worth. If you look at some of the research that relates to self-efficacy (which means you believe you can do things) and internal locus of control (believe that things around me are driven by my actions and behavior), you see the importance of social indifference.

Do I care what other people are driving, or about trends? That sort of thing. When you look at the correlation between those scores and net worth, it holds true.

The research is based on the idea that personal financial management is a job. My background is in industrial psychology, developing assessments that would predict someone’s performance on the job. We designed assessments for use in the selection in leaders and sales people. That’s essentially what my dad did. He defined how people who were self-made were able to build wealth on their own.

MarketWatch: So social indifference is our ability to resist the temptations of fashion, trends, fads or the luxury car parked next door. This isn’t really a new problem, as your father pointed out in his book.

Sarah Stanley Fallaw: I think the difference today is the unending nature of knowing what “the Joneses” do, given technology. Purchases, vacations, educations are all broadcast via social media and other means, and he couldn’t have anticipated this in 1996. Still, the research we’re doing demonstrates that those who ignore trends have higher net worth, regardless of their age, income and percentage of wealth that they inherited. Building wealth means ignoring what others are doing, which may be more challenging today than in the 1990s.

MarketWatch: Do you have advice for people in the “mass market” or “mass affluent” categories on which wealth destroyers they need to avoid?

Sarah Stanley Fallaw: In this day and age, making an assessment of how much you are distracted from the goals you want to reach. My dad, in his final years, was focused on how challenging it was to be disciplined to manage time, and to assess how much you are being distracted from those goals, and make changes. What we are doing here is measuring behavior you can change. It’s not something you are born with. You can change. And that was his advice too.

In other words, we are heavily influenced in our spending choices by the people in our social circle, and thanks to social media, we are more heavily exposed to our extended social circle than ever before. For example, Facebook is a constant flood of pictures of things like the cars that people own, the houses that people live in, and so forth. Twitter is often the same.

The reality is that social media creates a very false view of what the lives of other people are really like. When you interact with someone every day, you tend to see the “average” of their life pretty clearly. You see their day-to-day activities, their small highs and their small lows, along with their occasional peaks and valleys. On social media, those things are edited. You only see the highest peaks and, sometimes, the lowest valleys. People want to make their lives seem as impressive as possible, so they cut out the everyday elements of their lives and show only the things that will impress others.

“Look at our gorgeous new kitchen!” “I love our new car!” “Here’s our whole family at Disney World!” “We are soooo in love!”

You get the idea.

Yet, we can often fall into the trap of taking our cues on living from those snapshots on social media. If one of our friends has a big house, we begin to believe we need a big house. If one of our friends has a shiny new luxury car, we begin to believe we need a shiny new luxury car. If one of our friends is showing off pictures of their wonderful trip, we begin to believe that we need that wonderful trip, too.

What those snapshots don’t show you are the average moments in life, the ones that you see when someone is really close to you. Facebook doesn’t show you that person in their pajamas watching Netflix all day. Facebook doesn’t show you that couple arguing about how they’re going to pay the bills at 11 o’clock at night.

All we see are the glossy pictures of their life, the ones where everyone is happy and smiling and seems to have tons of money. We see what people perceive to be the peaks of their life.

And, since we’re human, we want those peaks as well, and it’s not a stretch to see how our minds instantly make that connection between the purchases and the joy that we think we’ll get.

Yet, when you look back through your life, very few purchases really bring you a lot of lasting joy. I know this is certainly true for me. Many things I’ve bought have given me an initial burst of joy, but that burst has quickly faded over time. Sometimes, I’ve even fallen into a trap of routine purchasing, where I buy something out of routine because it once brought me joy but now seems utterly normal.

So, what’s the fix? How do we deal with the constant encouragement of social media to live a perpetually more and more and more affluent lifestyle, which chains us to our jobs and forces us onto a financial tightrope?

The solution is social indifference.

Here’s the crux of the whole issue. If you didn’t see a friend of yours with a shiny new car, would you even want a shiny new car? If you didn’t see a friend of yours going on a luxurious vacation, would you even want that vacation? If you didn’t see a friend of yours owning a bunch of expensive home furnishings, would you even want those furnishings?

The truth is that you almost always wouldn’t want those things. They wouldn’t be present in your mind at all. They wouldn’t be associated with a person that you care about. You wouldn’t feel vague pangs of jealousy about that person’s life.

Nothing whatsoever is different about your life. You still don’t need that thing that you desire in your life. The only thing that changed is that you saw a picture of a friend enjoying something and you craved that happiness and enjoyment, too. If your friend is happy about something, you want to be happy, too, and you make the logical leap that the thing your friend is happy about will be the thing that brings you the joy that you want.

The way to fight this off is through a conscious effort toward social indifference. This doesn’t mean that you cease caring about your friends, but simply a realization that an expense that brings your friend joy will not necessarily bring you joy – and, in fact, usually won’t bring you joy.

It’s a hard switch to flip, to be honest.

For me, the most effective technique for encouraging a sense of social indifference is to ask myself why exactly I haven’t considered buying this item before. Why haven’t I been interested in this before? Why haven’t I wanted a new shiny car very much before seeing my friend with one?

When you ask that question of yourself honestly, you start looking at your own personal needs and wants, separate of the influence of others. You look at what’s actually important to you, not what others might value. And, unsurprisingly, you’re probably going to come to different conclusions.

If you do this often enough, you train within yourself a certain level of social indifference. You don’t want it to be high enough that you genuinely don’t care about your friends, but you do want it to be high enough so that you don’t feel the need to replicate their experiences or their purchases.

The happy medium is a point where you can feel quite happy for your friends because of the joy they’ve found, but at the same time you don’t feel a need to replicate that joy because you have your own sources of joy independent of that.

That’s a mindset that will keep you from feeling jealously and making purchases because of what you see from your friends on social media, and reaching that point is going to save you a great deal of money, both directly and indirectly.

The post The Power of Social Indifference appeared first on The Simple Dollar.

Source The Simple Dollar The Simple Dollar http://ift.tt/1KKddYC

6 Simple Ways to Save Money on Nursing Clothes

One of the biggest ways to save money when you have a new baby is to nurse.

But if you’re lucky enough to skip the formula and breastfeed, you may be surprised how much you can spend on nursing clothes.

When my first baby was born, I quickly realized a simple nursing shirt can cost over $50, so I knew a brand-new nursing wardrobe wasn’t in the cards.

Instead, I got creative.

Here are six ways to save on nursing clothes — and still reap nursing’s financial benefits.

1. Know What You Need

If you’re planning to be a stay-at-home or work-at-home mom, your clothing needs will be different from someone who’ll be returning to work, where nursing clothes will make it easier to pump.

As a work-at-home mom, I managed with two or three nursing bras.

I also had five or six nursing tanks in neutral colors I could mix and match with shirts and sweaters I already had (see #2).

Your needs might be similar if you’re planning to stay at home — or if you work for a company with a casual dress code.

If you’ll be working outside the home for a company with a strict dress code, you may need to buy some additional work-worthy nursing tops to supplement your wardrobe.

Once you have a good idea of what you’ll need, use the rest of these tips to come up with a wardrobe that works — without breaking the bank.

2. Use What You Have

Before you go shopping, shop your own closet and get creative.

You may be able to use what you already have to create a nursing wardrobe just as good as anything you might buy.

Turn a few regular tanks or camisoles into nursing tanks with this easy DIY tutorial. These are especially nice for larger-chested gals like myself because they attach to nursing bras.

Once you have DIY tanks or have purchased nursing tanks, you can layer up with deep V-neck T-shirts, button-downs, roomy tunics or cardigans you already own.

3. Buy Secondhand

Once you know what you need, it’s time to go shopping.

Your first stop should always be secondhand shops and local thrift stores.

Also check neighborhood email lists and Facebook yard sale groups specifically for moms in your area. You’re likely to find gently used nursing wear at reasonable prices.

If you don’t see any nursing clothes listed, don’t be afraid to post an “In Search Of” request, as long as they’re allowed under the rules of the group. Sometimes people forget what they have in their closets until someone reminds them!

For trendy, brand-name or work-worthy items you haven’t been able to find elsewhere, check out Thred Up. This site offers like-new, brand-name maternity and nursing clothes at big discounts.

4. Shop the Sales

If you’re ready to invest in a few new nursing tops or tanks, avoid paying full price by scouting sales.

Common brands such as Motherhood Maternity and Pea in the Pod offer regular sales and deals on clearance items.

By shopping these sales, I managed to score a couple of nice shirts to wear when I needed something a bit more professional than a tank and cardigan — for less than $40.

5. Make the Clothes You Buy Last Longer

To get your money’s worth, make sure everything you buy will do double duty.

Invest in pieces you can layer, and make sure nursing tops you buy can be worn beyond nursing, or throughout pregnancy and nursing.

6. Save on Formal Wear

If you find yourself in need of something formal but want it to be nursing-friendly, there are some common styles that work well and won’t require you to buy a nursing-specific outfit.

Rent the Runway is a great option for renting formal wear at a fraction of the cost of a new outfit.

While shopping, look for wrap, V-neck or drape-front tops or dresses that’ll give you nursing access while still looking stylish.

Or if you’d rather get something made specifically with nursing in mind, rent maternity and nursing formal wear from Mine for 9.

Don’t forget to check your local thrift stores, Facebook groups and email lists, as well.

With a little time and creativity, you can formulate a nursing wardrobe that works for you without eating into your budget.

Your Turn: How have you built a nursing wardrobe without spending a fortune? Share your tips in the comments!

Ami Spencer Youngs is a freelance writer and yoga teacher, raising her career alongside two boys under four. Learn more about her life and her writing at writingherlife.com or on Twitter at @writingherlife.

The post 6 Simple Ways to Save Money on Nursing Clothes appeared first on The Penny Hoarder.

source The Penny Hoarder http://ift.tt/1T6Asig