Vianca Rivera-Colon has survived her first year anniversary, as a young entrepreneur in downtown Stroudsburg. At the age of 25, Rivera-Colon opened her nail salon Nail’Tique on 526 Main Street.“I was mesmerized by my mother’s beautiful nails when I was little, I loved nails and making them pretty,” said Colon. “I’d spend time in my mother’s hair and beauty salons in New York, sometimes helping arrange nail polish and sometimes working. [...]
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الجمعة، 9 أغسطس 2019
The Future of Web Design: Artificial Intelligence
Artificial intelligence has been trending upward for years now. In fact, according to Google Trends, the search term piqued back in January 2018.
AI is being used for all different types of applications and technology. In the past, I’ve covered the marketing skills you need to survive in the age of AI.
That’s because marketers have been using AI technology to reshape the way that consumers are targeted. Brands and websites are using AI chatbots to improve communication with website visitors. They’re also using this technology to analyze big data. AI is helping business owners and webmasters gain a competitive advantage in their industries.
But today, AI is also changing the way that we design and develop websites. It’s also going to impact the way we design moving forward.
Traditionally, all websites have been created using HTML. While the code has changed and become more sophisticated over the last couple of decades, sites have become more visually appealing than they were in the past.
Although the technology is still in its infantile stages, ADI (artificial design intelligence) is being used for web design and development.
The thought behind ADI is that the majority of web design can be automated using AI technology. Talks of ADI have been growing over the years, which is what inspired me to write this guide.
I want to share all of this information with you so you can prepare for the future of your website and gain a better understanding of where ADI stands today. With that said, I’m not quite at the point where I’m saying every single site needs to leverage AI for design. I don’t think we’re there just yet.
Instead, I just want you to be aware of the technology and how it will impact the future of web design.
Growth and benefits of AI
Before we dive into the specifics of ADI and artificial intelligence used for web design principles, I want to take a moment to discuss AI as a whole. Essentially, here’s how AI works.
AI technology lets machines and computers perform human tasks. Then, the machines are supposed to learn from their experiences completing those tasks and adjust accordingly to optimize any new inputs.
In order for AI to function properly, the technology needs to be programmed efficiently with deep learning capabilities. All of this technology needs to be able to recognize patterns in the data that’s being processed.
AI is being developed at a rapid pace, and revenue from these applications is growing exponentially as a result.
As you can see from the graph, it’s estimated that the revenue from AI enterprise applications in six years will be ten times where it is today in 2019. It’s already eight times higher than where it was just three years ago.
Clearly, AI is on an upward trend.
The technology needs to be applied somewhere, and the theory is that it can be used for both web development and design, in addition to other purposes.
It’s a common misconception that AI is only used for automating tasks that would normally be done manually. While that’s part of how it works, the technology goes so much deeper than that.
The idea behind AI is that it can be used continuously, at scale, and with precision, using data.
This technology is being streamlined for processes in homes and businesses alike. It can be used for applications like classifying images or object recognition. For example, a smart refrigerator using AI can theoretically create a grocery list for you automatically.
With deep learning capabilities, AI technology will continue to grow and become more advanced in the future.
How ADI works
Now let’s look at how artificial intelligence can be applied to web design with ADI.
In the simplest explanation, ADI can use machine learning to recognize and implement trends in web design. It’s just like anything else using AI technology. Computers analyze data, then automatically make input adjustments.
The idea here is that websites can eventually be made on their own, using AI. This is very different from the way websites are being built today.
Right now, there are only a few options for web design and development.
First, you can learn how to code and do everything yourself from scratch. This is definitely not the easiest approach. It takes time, trial, and error.
Alternatively, you can use website builders that don’t require any coding. Drag and drop interfaces make it easy for people with no coding experience to build a website on their own. But still, this approach requires time and manual work. Plus, you need to have an understanding of design in order for your site to be both appealing and efficient.
If you don’t have the time or the skills to do this, you can hire a developer or a designer to handle everything for you. While this frees up your time, you’ll pay a premium price for those services. Again, the work still needs to be done manually by someone.
Artificial intelligence is a newer method for web design, and it could be the primary design option of the future.
Wix, an industry leader in the website building space released their version and vision for ADI back in 2016.
The concept is fairly straightforward.
Wix asks questions about the needs of your website. Then it takes those responses to create content elements that are both unique and robust from a design standpoint for your website.
Wix will also give you custom images and text if you use their ADI. I talk about this in my step-by-step guide on how to create a Wix website.
The foundation for ADI is supposed to be a machine that has the brain of a web designer. This is achieved by programming technology to observe existing websites.
Then, the technology takes those website design best practices and applies them to a new site that’s being built. All of this happens automatically.
In theory, this would even eliminate the need for templates. Sites could eventually be built without any input from humans.
Applying technology to web design
Let’s take a step back away from AI for a second and just focus on web design.
When most people think about design, they automatically assume that creativity is a requirement. In some instances, that’s true; but only to a certain extent.
Great web designers don’t necessarily need to be the most creative people on the planet or have a background in art. They simply need to know how to apply best practices.
Take a look at the most important factors of web design, according to website visitors.
As you can see from the graph, 76% of people say that they want sites to make it easier for them to find what they’re looking for. Just 10% of people say that a beautiful appearance is most important.
Theoretically, you could design a website without any creativity whatsoever. It’s just a matter of knowing those best practices and implementing them.
That’s where AI can come into play.
AI solutions can be offered as an assistant for people who are building websites. Machines can analyze the design, and compare it to the databases of best practices.
Ultimately, the technology can be used to offer suggestions related to design.
Think of it like software used for SEO. SEO tools analyze your content and give you keyword suggestions based on what’s ranking or what other sites are doing.
This same concept can be applied to web design.
Since the best practices aren’t really creative, the applications can be taught and programmed into machines. For example, optimal CTA placement on a homepage is something that can be learned and applied by a computer using ADI.
Eventually, the idea is that AI will completely take over the design, but we just aren’t at that point yet.
Even platforms like Wix that are using AI in some form are another are still limited. Human inputs such as answering questions and things of that nature are required for it to work.
Examples of AI web design
In addition to Wix, there are a couple of other platforms that are using AI in web design at a more advanced level.
Again, these are still in the earlier stages of development and somewhat limited. But they are a good indication of where the future of design is headed with AI.
AiDA from Bookmark
Bookmark has a website builder called AiDA, which uses AI to create websites. So you can use this platform to build a website, even if you don’t have any design or coding experience.
AiDA stands for artificial intelligence design assistant. By leveraging this software, you can have a custom website up and running in less than two minutes. Here’s how it works.
The software creates a design that’s unique to your needs and business.
All you have to do is choose your business type. There are more than 650 options for you to select, so it’s very specific. But again, it still requires some manual work.
AiDA has the capability to create personal portfolios, business websites, ecommerce stores, and anything in between. Type in your business name, and the software takes care of the rest.
Once the site and design have been built, it’s your responsibility to edit the images and content.
If you’re not happy with the way it looks, just go through the process again, and AiDA will create a new website for you that’s different than the first one.
Bookmark has three different pricing tiers. The first one is free, but it’s very limited and comes with a bookmark.com subdomain. They also have plans for $11.99 per month and $24.99 per month billed annually. Prices increase for month-to-month contracts.
Sacha from Firedrop
Firedrop has AI software called Sacha, which is used for building web pages, as opposed to entire websites.
In theory, you can use this AI platform to build your entire site, but you’d need to go through and do it one page at a time, which kind of defeats the purpose of automation. Either way, this is another example of what’s currently on the market today.
Here’s how it works. Instead of using drag and drop builders, all you have to do is talk to Sacha through live chat.
For example, you could type something like “change the color palette” to get a trending website color scheme on your landing pages.
It’s a great option for those of you who want simple landing pages that are completely customized, as opposed to choosing a template and then editing it to fit your needs.
Sign up for free to try Sacha. Then you can request a consultation to see customized pricing options from Firedrop.
Conclusion
AI is the future.
One way or another, it seems like this technology is slowly going to become apart of everything we do in the coming years. Web design is no exception.
There are already platforms out there that are leveraging AI technology to design and develop websites. Although this software has yet to reach its full potential, I don’t think we’re too far from seeing that day.
So what does this mean for you right now?
You don’t need to go out and start using ADI. But as the technology advances, don’t be so resistant to change. Keep an open mind and stay up to date with the latest trends to ensure that your website has an optimal design.
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Get the Best Current Mortgage & Refinancing Rates in Oregon
A variety of economic and housing market circumstances impact mortgage rates in Oregon. The state is experiencing a period of financial stability. In the past few decades, Oregon has diversified its economy and has achieved rapid growth in recent years, something that impacts current mortgage rates in Oregon.
The state’s Office of Economic Analysis expects growth to slow down moving forward, but only in a way that is normal as economies mature. The diversity of the state’s marketplaces should allow it to withstand recessions without too much turmoil.
While this prosperity is exciting, it also leads to high housing costs. The median sale price of a home in the United States was $309,700 in October 2018, while the average home value in the state was $339,000, with standard sales prices coming to $329,300. According to Zillow, median home values have increased by six percent in Oregon during the past year.
Ultimately, mortgage prices are primarily dictated by national issues, with local considerations such as the cost of living, foreclosure rates, housing market issues, and banking competition, also influencing figures.
Oregon is among the most expensive states to live in, ranked as having the sixth-highest cost of living in the country, according to a CNBC study. You should, therefore, be prepared to see some of those costs making their way into your mortgage rates, as lenders compensate for those expenses.
4 Elements That Affect Mortgage Rate & Refinance Rates in Oregon
Mortgages are highly variable. In practice, mortgage rates are dictated by a variety of micro and macroeconomic issues. For example, economic growth can lead to easier loan origination for banks as more investment funding is available. However, high housing costs in a region such as Portland, Oregon, can lead to high-interest rates due to risks associated with the loan.
It’s vital to consider the full range of factors that influence your mortgage or refinancing rates and do what you can to put yourself in the best to get a loan that meets all your needs. Ultimately, even just one percentage point on a loan can save or cost you thousands of dollars per year, so it’s important to understand your options.
Here’s a look at four issues that have a significant impact on your mortgage rates in Oregon.
Credit Score
Lenders lean heavily on credit scores to evaluate borrowers and determine reasonable mortgage rates. The Consumer Financial Protection Bureau recommends you verify your credit score before looking for a mortgage.
This analysis can help you identify any errors or pin down negative issues impacting your credit score. Once you have a clear understanding of your credit score, you can take action to improve it. Your credit score has an equal impact on your mortgage or refinancing rates, so it can be helpful to check on it periodically to stay ahead of any problems.
Lender and Loan Type
Different financial services providers tend to target varied audiences with their loans. If you live in rural Oregon, for example, you may find a local lender with an in-depth knowledge of the county’s economy can offer you a very different loan than a large national bank that is concerned about the value of a property in a small town with a limited economy.
Some lenders will offer loans specifically structured for first-time homebuyers, with smaller down payments and more services through the closing process, but with higher rates.
Conversely, other loan types may require a specific down payment, but save you money in the long run by requiring less mortgage insurance or letting you apply funds toward points that reduce your loan. This is a significant part of why a report from The Washington Post recommends mortgage seekers shop around to find the right lender and loan type.
Loan Term
A more extended loan will typically come at a higher rate, but with lower monthly payments. The Consumer Financial Protection Bureau explained that a shorter loan will, in most cases, come with a lower total cost than a longer option.
The key is to evaluate your specific situation and understand precisely what you can afford. This is especially true when refinancing your mortgage, as you can change the term to reduce costs if necessary.
It’s also important to take local market issues into account when evaluating loan terms and their impact on rates and monthly payments. For example, homeowners in Portland spend a disproportionate share of their monthly income on their mortgages.
The average household in Portland spent 26.1 percent of its income on its mortgage as of the second quarter of 2018, while the national average is just 17.5 percent. Understanding how loan term impacts monthly costs is vital in figuring out what you can actually afford.
Points
If you have funds available, you can purchase points with your mortgage lender to achieve a lower interest rate for your loan. In practice, this reduces its long-term cost, but you’ll still want to be careful to avoid damaging your equity to all-in on points.
An informational report from the Federal Trade Commission recommended that individuals seeking a mortgage ask for a quote in a direct dollar amount, as many institutions will initially portray how many points are needed to reduce a rate, making it difficult to identify exactly how much money you’ll need to spend.
How to Get the Best Mortgage & Refinancing Rates in Oregon
The first thing to do is to shop around. The Consumer Financial Protection Bureau found that fewer than 50 percent of homebuyers compare lenders. However, going from a 4.5 percent rate to 4 percent on a conventional fixed-rate loan can save you as much as $60 per month, or $720 a year. Over thirty years, this adds up to $21,600.
We live in an era where it’s extremely simple to get quick quotes online or over the phone. Many institutions can process an application with just a quick form and a bit of time to analyze your application. Because of this, it’s easy to get quotes quickly from a variety of lenders and loan types.
As mentioned above, everything from the target audience of a loan to its term can impact your long-term costs. It’s valuable to shop around and obtain quotes for a few different loan varieties from different types of vendors.
Once you have initial quotes, it’s crucial to negotiate the details. RefiGuide explains that a typical mortgage will come with fees for everything from appraisals and loan origination to document preparation and title-related processes.
Some of these fees can be negotiated with your lender, so it’s important to ask about all of your options and go into the process already equipped with knowledge.
Recommended Mortgage Lending Companies in Oregon
Choosing the right lender is a very personal decision, but researching a combination of local, national, and online lenders can give you a full picture of your options. Here’s a look at four companies we recommend if you’re looking for loans in Oregon to help you get started:
- Quicken Loans: Quicken Loans is widely regarded as the nation’s largest online mortgage lender. It offers a fully automated online lending process, with rates for its 15-year fixed mortgage at 4.25 percent as of November 29, 2018.
- Ally Bank: Another online lender, Ally Bank serves the entire U.S., emphasizing its customer-friendly online lending processes. As of November 29, 2018, rates for its 15-year fixed mortgage product, assuming a loan of $300,000 and 20 percent down payment, was 4.25 percent for those with -0.10 points. Lower rates are available for those who purchase points.
- J.G. Wentworth: J.G. Wentworth has been expanding its home lending offerings in recent years, and currently offers a variety of loan options based around its accessible online platform. Though the lender doesn’t directly advertise its interest rates, you can easily obtain a quote on its website in just a couple of minutes without providing personal information.
- New American Funding: As one of NerdWallet’s top lenders for Oregon mortgages for those with a low credit score, New American Funding stands out for its blend of manual and automated processes that create flexibility. Like J.G. Wentworth, they don’t directly promote their rates, but instead, make it easy to get a direct quote by answering just a few questions online or via phone.
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Get the Best Current Mortgage Rates in Dallas
Dallas is one of the major metropolises in Texas, part of the bustling Dallas-Fort Worth area. If you want to make a new start in the Lone Star State or get closer to the action in the big city, you may be looking for a mortgage in Dallas.
If you already live in the city, you could still have a close eye on trends in the housing market to determine whether now is the right time to refinance. A number of financial forces currently active around Dallas appear set to make 2019 very different from 2018 when it comes to house prices and availability.
The most recent average house price for the U.S., in general, is $309,700, according to the Census Bureau. The median price is $395,000. Per the most recent Zillow market data, the median home value in Dallas is a much lower $206,400.
The price of listed homes on the market, however, is $378,975. The aggregator lists the market as “cool,” which means it favors buyers more than sellers.
The Home Buying Institute noted that Dallas is paradoxically one of the “hottest” housing markets in the country while going through a “cooling” price growth trend. House prices are rising faster than the national average, but new construction is similarly accelerated, with 35,00 housing starts in the third quarter of 2018.
More available inventory should cut price increases and promote affordability. When you’re considering your next purchase, it pays to remember that numerous factors can affect your ability to get a loan and the amount of money available.
5 Critical Elements that Affect Mortgage Rate & Refinance Rates in Dallas
As the supply of available homes in Dallas increases and pricing stabilizes along with this rise in inventory, it may soon be an ideal moment to search for your dream house in the Dallas-Fort Worth metropolitan area. To ensure you have an accurate and up-to-date picture of your buying options in the area, there are personal financial factors to consider.
While market forces in a given region are important determinants of pricing and affordability, there are other traits that determine what type and size of mortgage you’ll be able to receive, and by extension, how much house you can purchase or refinance.
The following are five separate elements of your finances you should consider when applying for your mortgage or refinancing a property:
Your Down Payment Amount
How much money are you ready to pay for a home upfront? The long-cited standard amount is 20 percent of the purchase price. If you can spend one-fifth of the home’s value at the beginning of your mortgage, many lenders will offer perks, such as not requiring you to pay for mortgage insurance each month.
The Home Buying Institute explained that interest rates also tend to be tied to down payment amount. Lenders take on less risk when you make a large down payment, enabling them to offer preferential interest.
With that said, there are loan types that facilitate low down payments but don’t carry the same requirements. VA loans, for instance, may negate the need for mortgage insurance.
FICO Credit Score
There’s more than one credit score measure, but the most popular number is your FICO score. The Consumer Financial Protection Bureau specified that a good credit score is one way to secure a preferential interest rate.
The score represents your credit history over time, and a higher number broadcasts to lenders that you are a trustworthy borrower. The CFPB recommended not applying for many new lines of credit over a short period of time, as this lowers your score. Mortgage lenders who see this activity may hesitate to give you optimal rates.
Type of Home
Mortgage products differ based on the kind of house you’re interested in, and the purpose you intend to put that home to. If you’re buying a single-family dwelling to serve as your primary residence, you pose a lower risk of defaulting than someone considering a vacation house, according to The Home Buying Institute.
Since second properties have seen historically higher rates of loan delinquency, lenders may have tighter restrictions for such houses, as well as higher interest rates.
Debt-to-Income Ratio
Determining how your income stacks up to your total debts is one way to determine what types of mortgage interest rates you’ll be able to secure, and which types of mortgages are available. You calculate your debt to income ratio by totaling monthly debt payments and dividing them by your income over that period.
According to the CFPB, homeowners should be conscious of the significance of a 43 percent DTI. Companies offering Qualified Mortgages, which are defined by their low-risk features, typically offer these products to individuals with 43 percent DTIs or lower.
While there are offerings other than Qualified Mortgages, the 43 percent mark remains a key measure of financial availability.
Special Factors
Your membership in certain groups may open up new mortgage options, as may your choice of home location. For example, if you’re eligible for military benefits, you may be able to apply for a VA loan, qualifying for special features which can include low up-front payments and a lack of mortgage insurance.
When you search out homes in a rural area, such as one of the small Texas towns stretching out beyond Dallas city limits, you may qualify for a U.S. Department of Agriculture Rural Development Mortgage. Working with lenders to see if you qualify for these products can introduce new value and possibilities to your home search.
How to Get the Best Mortgage & Refinancing Rates in Dallas
Considering the factors mentioned above, along with the unique trends affecting the Dallas market, you can work closely with a mortgage lender to get the best possible rate for your new home loan. Not every mortgage provider is alike in offerings, policies, and regional coverage.
If you shop around for your next home loan, choosing between multiple offers, you may find one of these financial institutions is a clear winner with the right rates and offerings for you.
The CFBP released a cautionary statistic: When buying a new home, 47 percent of people don’t compare multiple lenders, going with their first choice. These buyers may be missing out on thousands of dollars in savings.
The agency explained an interest rate change as little as 0.5 percent could yield savings of $3,500 over the first five years of a 30-year fixed-rate loan. If you don’t want to turn down potential savings, you should consider several lenders active in the Dallas area for your next purchase or refinance.
Furthermore, the first offer you get from a particular lender may not be the best possible rate that the company is willing to provide. If you negotiate with the financial institution, you may be able to secure a better offer. RefiGuide pointed out that many of the charges associated with refinancing a home, such as a document preparation fee or application fee, are negotiable.
Recommended Companies in Dallas
There are numerous lenders, both local and national in scope, active in Dallas. The following are four potential matches for the next time you purchase or refinance a house in the area. Remember that it pays to compare rates at more than one lender.
- Ally Bank: This large-scale lender offers loans in every U.S. state except Hawaii. The bank offers hints for first-time home buyers and boasts an online portal that is designed to grant access to every loan document digitally.
- J.G. Wentworth: With a national reach, J.G. Wentworth offers multiple specialized home loan products that may help you move into your dream home. From USDA Rural Development Loans to VA loans and Federal Housing Administration Loans with low down payments, there are several offerings to choose from in addition to conventional loans.
- North American Savings Bank: When you work with NASB, you’re interacting with one of the top lenders in the U.S. in scale. The bank is especially active as VA lender, with 15,000 veteran customers using its loans since 2010. It is one of the top 15 VA lenders in the country.
- Rocket Mortgage: Rocket isn’t its own lender, but a subsidiary of Quicken Loans. Rocket is designed to be a fast, digital way to qualify for a loan. It takes in financial information quickly and automatically and gives out a loan rate you can lock in for 90 days.
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What Are Stocks? What Are Bonds?
Max writes in:
Can you explain what the difference between stocks and bonds are? Tried to read up on this on Wikipedia and other sites but it’s not clicking.
I’ve explained what a stock is in the past, but it never hurts to dig into a core idea like this again, so let’s start from the beginning.
What Are Stocks?
Stocks are tiny slivers of ownership of a company. When you own a share of stock (“stocks” is basically a short way of saying “shares of stock”), you actually own a very tiny piece of the company that stock is associated with. If you own a share of Coca-Cola, you own a very tiny sliver of the Coca-Cola Corporation.
How does that have value? There are a couple of reasons.
First of all, a share of a company entitles you to a tiny sliver of the company’s profits. When a large company makes a profit, the board of directors has to decide what to do with it. Should they reinvest it in the company? They do that sometimes. Much of the time, however, they choose to give that money to the shareholders in the form of a dividend.
A dividend is simply a small payment to the owner of each share of stock of the company. Usually, a dividend is a small amount – say, $0.25. If you own a share of Coca-Cola and the board of directors issues a dividend of $0.25, you’ll receive $0.25. This usually pops up in your brokerage account and is often just quietly reinvested in more shares.
The promise of future dividends is what gives a share of stock much of its value. People buy and sell them in hopes of earning those future dividends. If a company’s future looks great, that probably means lots of dividends coming in the future, so the price of that share goes up. Similarly, if a company is struggling, the likelihood of lots of future dividends goes down, so the price of that share goes down.
Another reason is that in some situations, a share of stock gives you voting rights and the ability to attend the company’s annual meeting. Voting rights usually just refer to the ability to be involved in electing new people to the board of directors. For some people, this voting right is enough to make the stock desirable (for example, if you want to control the company’s future direction).
In rare cases, companies may buy back their stocks, actually paying the shareholders for each share.
Because shares of stock confer dividends and (sometimes) voting rights and the possibility of being bought back, they have value, which is why it costs money to buy a share and why others will pay you for the shares you have. Companies will often issue new shares in order to raise money for the company (often for some big new initiative). It’s a way for a company to raise money without going into debt.
Speaking of debt, let’s talk about bonds.
What Are Bonds?
A bond is like a small loan that you give to a business or a government entity. A bond usually consists of several elements: a principal, which is the amount that the bond is issued for and is usually the amount paid by the person buying the bond to the business or organization issuing the bond; the end date, which is the date at which the amount will be repaid; and the interest payment plan, which is the dates and amounts where interest on the loan will be paid.
So, let’s say for example that a company wants to raise $1 million for a project. They might issue 1,000 bonds, each with a face value of $1,000. These bonds state that the $1,000 will be repaid in ten years and that every six months, the company will pay the person holding the bond $20.
You buy that bond for $1,000. Every six months, the company sends you a check for $20, until ten years are up, at which point they send you $1,000 and the bond is terminated.
Bonds are also bought and sold. A bond where the interest payments are high might sell for more than the face value, while a bond with really low interest payments might sell for less.
There are services out there, like Moody’s, Standard and Poor’s, and Fitch, that offer grades for bonds, evaluating how stable the company or government is. The more stable the company or government, the lower the interest rate on their bond probably will be.
So, if a company isn’t very stable and issues a bond, it might have a high interest rate with it, meaning the person buying the bond will earn a nice return, but if the company were to grow more stable and the bond rating goes up, that bond will probably sell for more than the face value because now it’s suddenly a safer investment with a higher interest rate.
Stocks Are Riskier Than Bonds
Stocks tend to be a riskier investment than bonds for a number of reasons.
One, bonds carry a fixed rate of interest and thus are backed by a promise of future funds from whoever issued the bond. Stocks can have a dividend, but there’s no guarantee – the board of directors could just stop issuing dividends.
Two, bonds will eventually pay out their face value to the holder. Stocks could be bought back, but it’s unlikely. Usually, the only way to get money out of a stock is to sell it to someone else, and that might be at a loss.
Three, bonds are graded, as noted earlier, and that enables people to buy bonds that are quite safe if they so choose. It’s usually much clearer how much risk you’re taking on when you buy a bond. A highly rated bond is pretty safe.
However, Stocks Usually Have a Better Long Term Return Than Bonds
The reason for this is pretty simple. Although bonds are more stable and reliable, it’s also much easier to figure out what they’re worth. The interest payments that they provide and the money you’re paid when the bond matures are baked right in and can’t be changed. The only question is whether the organization itself remains stable enough to keep paying out, which is a pretty minor question for most highly rated bonds. (Junk bonds – those issued by pretty unstable companies and governments – are another story, but they’re typically not included in coverage of the overall bond market, just like penny stocks – stocks issued by pretty unstable companies – aren’t included in coverage of the overall stock market.)
Stocks, on the other hand, have a much more variable worth. Since they are almost never “bought back” by the company, they’re never going to turn into cash. Rather, their value is mostly determined by the long term likelihood of dividends. If a company’s future looks strong, then it looks like they have a long run ahead of paying out dividends, so the stock value will jump sharply. This is why most companies want to issue earnings reports that show increases in earnings as it will keep the stock climbing rapidly in value, and since most of the board of directors are shareholders themselves, that’s a lot of money for them.
Basically, if a company is well run and in an industry that looks to continue to thrive, the value of the shares of that company will almost definitely strongly outpace the bond market. The trick, of course, is finding those well-run companies, and since that’s often hard to do for individual investors, they usually invest in mutual funds or index funds, where either a professional investing team is finding those companies or you simply invest in a slice of all companies at once (because, historically, the stock market average has done better than the bond market average over the long haul).
Final Thoughts
Stocks are small pieces of ownership in a company. If a company does well, you’re entitled to a small share of the profits forever, as long as you own that share of stock. If the company does poorly, you’re entitled to nothing.
Bonds are small pieces of a loan taken out by a company or other organization. It guarantees you regular interest payments and then, eventually, a full repayment of the bond’s face value at specific dates. You know what you’re getting, and the only concern at all is the stability of the entity issuing the bond.
Since the payout structure of bonds is so much clearer, it’s easier to identify exactly how much they’re worth. With stocks, you’re banking on a company being well run and a board of directors wanting to give all shareholders a piece of the profits, but the potential payoffs there are enormous if the company is really strong. Thus, stocks offer much higher risk than bonds, but the potential for much higher rewards.
Over the short run, it’s better to invest in bonds because of their stability. Stocks can drop rapidly in value during an economic downturn, whereas bonds will just keep paying out. Over the long run, stocks have significantly outperformed bonds throughout their history.
Good luck!
The post What Are Stocks? What Are Bonds? appeared first on The Simple Dollar.
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Dear Penny: I’m 65 and Times are Tight. Should I Get a Reverse Mortgage?
Dear N.,
Tom Selleck makes it sound so simple in those AAG commercials where he touts reverse mortgages as a way for seniors to have a secure retirement while staying in the homes they love.
Of course, it’s safe to assume that Selleck — whose estimated net worth is $45 million — isn’t in need of the product he’s shilling. But it’s easy to understand the appeal of a reverse mortgage for average senior citizens.
Consider that about 48% of households headed by someone age 55 or older had nothing saved for retirement, according to a 2019 report from the U.S. Government Accountability Office. But about 82% of people age 65 and up own a home.
That means there’s a good chance many seniors will use their home equity to fund at least part of their retirement with a reverse mortgage. But there are some risks you need to be aware of before you pursue one.
First the basics on reverse mortgages: They’re available to homeowners age 62 and older who own their homes outright or have significant equity.
With a regular loan, you’d make regular payments to the lender, but with a reverse mortgage, your lender makes payments to you. They can come in the form of a lump sum, monthly payment, line of credit or a combination.
Interest is tacked onto your loan balance, which isn’t due until you die, sell the home or move out.
As you receive payments, your equity drops. That might not sound like a big deal now, especially if you plan to stay in your home for many years. But since you’re only 65 — meaning you can expect to live another 21 years on average — you need to consider the impact of reducing your equity should you need to sell your home at some point.
You’re still responsible for property taxes, home insurance and any homeowner association fees. Fall behind on these, and your lender could foreclose on you. That’s a real concern I have for you should your income drop significantly.
You’ll also pay hefty fees to get a reverse mortgage, including closing costs, a 2% mortgage insurance premium up front and a loan origination fee of $2,500 or 2% of the first $200,000 of the home’s appraised value, plus 1% of its additional value.
If you decide the risks and costs of a reverse mortgage aren’t worth it, you could try to sell your home and downsize to a cheaper one.
But if you decide to pursue a reverse mortgage, try to wait as long as possible. Generally, the older you are when you take out a reverse mortgage, the higher your payout will be.
This may sound impossible given that your employment prospects are shaky where you live. But a growing number of companies have work-from-home jobs that could let you earn income without moving. (Shameless self plug: The Penny Hoarder regularly posts remote job opportunities available throughout the U.S.) Another option would be to stay put and take on a renter to generate additional income.
If you proceed with a reverse mortgage, you’ll have to meet with a HUD-approved counselor first, and when you do so, take full advantage. The world of reverse mortgages is filled with incredibly confusing terms and conditions and misleading claims. So be sure you fully understand all the details before you sign anything since we’re talking about your most valuable asset.
Robin Hartill is a senior editor at The Penny Hoarder and the voice behind Dear Penny. Send your questions about mortgages and homeownership to AskPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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How to live the good life (and save a fortune at the same time)
How to live the good life (and save a fortune at the same time) Rebecca Goodman Fri, 08/09/2019 - 11:43
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2YCTgiH
First published on 8 August 2019
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2YCTgiH
My money lessons: Funding retirement travel plans with a fixed-term annuity
My money lessons: Funding retirement travel plans with a fixed-term annuity Tony and Bever… Fri, 08/09/2019 - 11:41
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2MPjlnD
First published on 8 August 2019
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2MPjlnD
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