About 1 in 6 children and adolescents ages 2 to 19 (16.1%) are overweight.
Almost 1 in 5 children and adolescents ages 2 to 19 (19.3%) have obesity.
About 1 in 16 children and adolescents ages 2 to 19 (6.1%) have severe obesity.
I want to start my weight-loss story by sharing my weight-gain story. Then we can dive into the 12 weight loss tips I’ve prepared.
It all began back when I started working at a call center. I sat most of the day and enjoyed unhealthy snacks and soda a bit too much.
At that point, I was still on the fast weight-gain track and continued to gain lbs ended up with a big ‘dad bod’ weighing a whole 270 lbs!
I tried many weight loss strategies, such as a low-carb diet, intense intermittent fasting, a low-calorie diet, etc.
Each method was difficult to maintain, and I lost a little weight and then gained it back super fast.
I tried and failed different workout programs. For example, I tried and failed many times to complete the Insanity workout program. Consistency was lacking in my life, and it became very discouraging.
I’m sure many of you can relate to the ups and downs of trying to lose weight.
In 2020, my incredible Son was born, and I realized I had to be in better shape for my Wife and Kiddo.
I became very serious and signed up for a Triathlon with two brothers. I also started 2 HealthyWage challenges, which helped me lose 70 pounds in 12 months and win a total $3,426!
Simply put, HealthyWage is a company that pays you to lose weight!!
Yes, you read that correctly!
You can earn up to $10,000 by losing weight and hitting your fitness goals.
I did 2 challenges with HealthyWage and won a total of $3,426!
HealthyWage is a website that allows you to earn money by losing weight. It is a company that helps people lose weight and get in shape.
People can join teams or go it alone, and if they reach their goals, they can earn money. They are a for-profit business entity. This means that they make money when their clients do well.
They have blended gambling with fitness to create a fun and motivating program.
HealthyWage gamifies the weight loss process to help people stick with it and see results.
How Does HealthyWage Work?
HealthyWage works by allowing you to bet on yourself to lose weight.
You can choose how much money you want to wager and how long you have to lose weight.
If you meet your goal, you get to keep the money!
There are three steps to getting started with HealthyWage:
First, you create an account and set up your profile.
Then, you set your goals and make your bet.
Finally, you start working towards your weight-loss goals.
If you reach your goal, you get to keep the money! If you don’t, you lose your bet. HealthyWage is profitable because they take a cut of the money of the people who lose their bets.
Celebrity fitness expert Jillian Michaels also supports them. Through PR and influencer marketing, HealthyWage has been able to get its name out there and attract attention.
There isn’t a shortage of potential customers, as two-thirds of Americans are overweight or obese.
I did two individual HealthyWage challenges back to back and went from 270 pounds to 200 pounds!
If you sign up with my unique link, you can have an additional $40 automatically added to your prize! Check it out HERE!
The weight loss and the prize money are also both great motivators, but you should also be aware of the potential risks before signing up.
Now I’d like to share with you 12 weight-loss success tips I learned myself and have used to lose 70 pounds in 12 months! These tips have also helped me maintain better mental health while losing weight.
1) Find a way to make yourself accountable (and MOTIVATED)
When becoming very serious about weight loss, I found my WHY but dug into my why and kept asking questions until I found my ‘root’ desire to lose weight.
Try searching for your reason or why FIRST, and then find a way to keep you accountable.
I loved the idea of doing a Sprint Triathlon to keep me accountable and motivated.
I was extremely out of shape when signing up for the triathlon with my two brothers.
Many doubts about being able to get ready in time hit me, but I was able to summon up enough courage to sign up. This action kept me accountable and motivated not to give up when things got tough.
2) Be aware of calorie consumption, but don’t over-stress it!
Alright, so I probably tried 20 + calorie calculators to ensure I have the EXACT amount of calories needed to lose weight each day.
Calories are not all created equally, with some calories keeping you fuller for longer.
I tried low-calorie (and low-carb) diets; both left me hungry most of the time. My calories kept running out too fast!
Don’t get me wrong, having a calorie deficit is important for weight loss, but don’t overstress calorie counting.
For example, I have an idea of how many calories I eat each day, but I try to focus on consuming the RIGHT and BEST calories for my body. Some examples include fruits, veggies, lean meats, etc.
If you’re a busy individual looking for a custom meal plan, I highly recommend trying NutriSystem.
NutriSystem is a very reputable company that provides fully prepared meals that have helped millions of people reach their weight goals.
You can start by taking a survey. Then you will have balanced plus nutritious meals and snacks sent to you!
Many times during my weight loss journey, I would feel down or depressed. Sometimes the cravings felt too hard to resist.
Taking a HUGE step back and going to a quiet, calm place really helps!
I love getting outside for fresh air and taking deep breaths after calming down and remembering WHY the cravings tend to fade. Spending time with the family was a great way to get my mind off things.
I also learned it’s ok sometimes to have sweets or have them in small amounts. Restricting anything 100% is tough and not healthy in the long run.
4) Being consistent MOST OF THE TIME is key
Too many times, I would start BIG. I would try an intense workout or diet, but each time I would fail.
I highly recommend starting small, super small. Find something achievable that can be accomplished regularly.
The key is being consistent MOST OF THE TIME with small, achievable habits when first starting.
When building muscle, I started with 5-10 minutes of floor workouts but would MAKE SURE to be consistent.
5) Remember, you can always start fresh
It’s okay to slip up. Try not to be too hard on yourself, love yourself, and use positive self-talk.
Go back to the basics, and remember those small achievable goals you’ve set.
I’ve also learned the importance of NOT waiting for Monday to come around! Too many times I would put off my health goals until the next week.
Small achievable goals make it much easier to start again immediately – a fresh start is always available.
6) Don’t require perfection; it’s not gonna happen
Getting out of the ‘I’ve completely failed’ mindset is difficult and can still be challenging.
I’ve learned that we should not expect perfection from ourselves but expect improvement.
This also goes back to not restricting anything 100%. This makes cravings more intense and binging more likely to happen. It felt harder to change whenever I had tons of sweets or unhealthy foods.
Remember to love yourself and be forgiving if you make a mistake.
Finding joy in the journey is most important.
7) Exercise takes many forms
Exercising doesn’t always have to be for a specific time or exercise/program. Don’t get me wrong; exercise programs can be great and provide structure/accountability.
What I would like to emphasize is it’s important to be flexible.
I worked full time while going to school full time for a long while and would be hard on myself if I didn’t get in a certain exercise or amount of time in for exercise.
I believe it’s good to have structure and set aside time for exercise, but I would often not have a lot of time, so I would make sure to walk more that day or at least do something.
Try doing exercises that you enjoy, and get creative! Going on an outing or playing sports with family or friends is just one example of an enjoyable form of exercise.
8) When I say start small, I mean small!
This tip goes hand in hand with tip #7 – exercise takes many forms. An example of starting really small is that I would go on many outings with our kids or work on finishing our basement.
At first, I wouldn’t count these activities as exercise and felt I needed to run a mile to get a good workout, but I realized I was walking and moving a lot.
When first creating a new habit, it’s important to start small and acknowledge your successes.
My body was in an ACTIVE STATE, so I knew I was doing something good.
Try building small habits first.
Another example is how I didn’t start running, cycling, or biking every day to prepare for my triathlon. I would start with a 5-10 minute designated walk, then slowly work my way into a jog as the weeks continued.
9) Limit sugar, bad fats, processed foods, and fried foods
It’s best to cut out these types of foods, or at least for the most part.
The truth is, they don’t provide you with the necessary nutrition.
I try to limit these foods and only have them as part of a cheat meal once a week. That way, I didn’t worry about never having them again.
When you eat healthy foods instead of sugars, processed foods, etc., the calories don’t seem to matter very much and do not add up as fast as having a large hamburger with fries – save that for one cheat meal (NOT cheat day, not cheat week).
10) Find alternatives – focus on what you CAN eat
Focusing on alternatives was a great way to help me lose weight.
Finding alternatives is a great way to help train your mind to change.
Instead of saying, “I can’t eat that,” I would try to tell myself, “I can have THIS instead”.
This is a list I used while losing weight that really helped me realize there are many healthy and yummy alternatives out there.
Whole Foods
Fruits
Veggies
Protein Shakes
Zero sugar drinks
Grilled food
Vitamins
Water, water, water
No added sugar foods
Soups (low sodium)
Try writing a list of your favorite alternatives and put it somewhere you can see it frequently to remind you that losing weight shouldn’t be that hard!
The list I provided is more generic, but there are many specific foods (or drinks) for each one that I love.
11) Beware of items labeled “low fat.”
You’ll see lots of items in the supermarket labeled low fat.
I found out that many times they can even be worse for you. For example, reduced-fat peanut butter lacks important healthy fats for your body. Instead, I use “no added sugar” peanut butter.
Any time I see something labeled as reduced or low fat, I will do more research before risking my health.
Many times these types of items have MORE sugar than the regular product.
12) Change your relationship with food
It’s important to have a positive outlook on ALL foods.
Find foods you love to eat, and try new things!
One thing I’ve tried recently that I love is hot lemon & honey water. It’s delicious and refreshing.
Remember, it’s okay to eat unhealthy foods once in a while! Just work on putting more healthy foods into your body.
Extra Thoughts & Summary
Another weight-loss method I used was intermittent fasting which really accelerated my fat loss.
The quote below is simple yet powerful. It helps me remember failure only happens once we give up entirely.
“You never fail until you stop trying”
Albert Einstein
If you are on your journey of losing weight and becoming healthier, remember I’m rooting for you!
Be flexible with your exercise – including when, where, and what type of exercise you do.
Remember the importance of finding healthy alternatives to unhealthy foods.
Focus on getting the RIGHT and BEST calories into your diet. They will give you more natural energy and help you feel fuller longer.
Start with small, achievable habits and work on being consistent most of the time with those habits.
Above all else, love yourself and try to focus on the positives.
Many economic terms are seen in the news and discussed by financial experts. It can be difficult to know the real difference between them all. In this blog post, we help explain the terms correction, recession, and depression in detail and compare their main differences.
By the end of this post, you will better understand these terms and know how to apply them to your own life and finances.
This post may contain affiliate links; please see our disclaimer for details.
Correction vs Recession vs Depression
YouTube Video
What Is a Correction?
A correction in economic terms is a reversal of a previous move in price, interest rates, or exchange rates.
A correction is usually temporary with prices typically returning to their original levels after the correction has occurred.
For these reasons, a correction is different than a recession or depression.
There are three main types of corrections:
Price Corrections
Interest Rate Corrections
Exchange Rate Corrections
Price corrections
This is the most common type of correction and occurs when there is a sudden change in price levels. Price corrections occur due to changes in demand or supply, news events, or even rumors.
Price corrections usually last for a short period, and prices will eventually return to their original level.
However, the reason for the price change could be something more serious. Such as a change in the underlying fundamentals of the economy. In this case, the price correction could last for a longer time.
The stock market is a common place to find price corrections.
For example, a price correction happens when a company announces bad news and its stock price falls sharply. It could also happen when there is an overvaluation of stock, and investors suddenly realize this and start selling.
Interest rate corrections
When rates are low for an extended period and then begin to rise. The result is higher mortgage payments for borrowers. Thus leading to many who end up defaulting on their loans.
Lenders may also suffer losses when they have to resell properties going into foreclosure.
While interest rate corrections can be painful for those involved, they are a necessary part of the economic cycle. Central banks use interest rates to manage inflation and keep the economy growing.
Rates dipping too low can lead to inflationary pressures. Raising rates helps to cool the economy and prevent inflation from spiraling out of control.
Eventually, rates will begin to rise again, and the cycle will repeat itself. Remember, interest rate corrections are a normal part of the economic cycle and happen from time to time.
While they may be painful in the short term, borrowers and lenders should remember that interest rate corrections are necessary. They help keep the economy healthy in the long run.
Exchange rate corrections
These types of corrections are usually nothing to fear. A country’s exchange rate is like the price of its currency on the global market. The laws of supply and demand influence exchange rate corrections.
When a country’s currency becomes more valuable, its exports become more expensive for other countries to buy. As a result, the demand for that country’s currency decreases, and its value decreases.
The opposite happens when a currency becomes less valuable.
Exchange rates are always changing, and corrections are a normal part of that process. A correction occurs when a currency’s value suddenly drops or rises sharply.
Various factors cause these corrections, including political instability, natural disasters, or changes in interest rates.
It can be financially dangerous if a currency starts entering hyperinflation. It may lose so much value at this point that it becomes worthless. A currency crisis can also cause a country’s economy to collapse.
For these reasons, monitoring a country’s exchange rate is important if you are planning to do business there. However, it is also important to not be fearful and to know that corrections are normal.
When investing in a country with a volatile exchange rate, it’s important to conduct research and understand any risks. Make sure to diversify your investments to protect yourself from sudden changes in the value of a currency.
Several factors go into play with corrections, but they typically involve some sudden change. Although corrections are usually temporary, they can sometimes last for a longer time, depending on the seriousness of the underlying cause.
Keep an eye on corrections to keep your investment portfolio safe.
As a recap, remember that corrections are normal and a part of the economic cycle.
What is a Recession?
A recession is different than a correction because it is a significant decline in economic activity spread across the economy. The length of time for a recession is more than a few months.
You can see signs of a recession in industrial production, employment, real income, and other indicators.
A recession begins when the economy reaches a peak of activity and ends when it reaches its trough. Between a peak and a trough, there is a period of contraction or decrease in economic activity.
To simplify, we can think of a recession as two consecutive quarters of a decline in real GDP.
The National Bureau of Economic Research (NBER) Business Cycle Dating Committee declares a recession in the United States.
They don’t rely on GDP data alone but also look at other indicators like employment data.
Three features generally characterize recessions:
A significant decline in economic activity. This can be measured by GDP, employment, personal income, etc.
Duration of more than a few months. Generally, recessions last between six and eighteen months.
A widespread decline across the economy. A recession confined to one sector or region is not generally considered a recession.
A recession is often accompanied by a drop in the stock market and higher unemployment. But it’s important to remember that a recession is not the same as a depression.
What Is a Depression?
Unlike a correction or recession, a depression is a more severe economic downturn, lasting longer and with more widespread effects. Social and political unrest can increase during depression as people lose faith in their government’s ability to improve their situation.
Depression-era literature often reflects this sense of hopelessness and despair. The Great Depression was the most significant economic downturn in modern history, lasting from 1929 to 1939.
It led to widespread unemployment, poverty, and social upheaval across the globe. The Great Depression also impacted the arts, with many artists exploring themes of despair and hardship in their work.
While the effects of a depression can be severe, it is important to remember that economies and societies always eventually recover from them. The Great Depression eventually led to a much more prosperous post-World War II era.
So, while a depression can be a tough time, it is important to remember that things will eventually get better.
What Are The Main Differences?
The main differences between a correction, a recession, and a depression are the following:
Time Period:
A correction is a short-term stock market decline lasting no more than a few months.
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months.
A depression is a more severe economic downturn, lasting longer and with more widespread effects.
Causation:
A correction is often caused by a temporary imbalance in the market.
A recession is generally caused by a combination of factors, including tight monetary policy, high-interest rates, and declining consumer confidence.
A depression is generally caused by a major shock to the economy, such as a financial crisis or a major natural disaster.
How To Solve:
Market forces can help to solve corrections.
A recession may require government intervention.
Depressions often require both government intervention and major structural changes to the economy.
Short-Term Effects:
Corrections often lead to a decline in the stock market.
Recessions can lead to a decline in economic activity.
Depressions lead to a decline in both the stock market and economic activity.
Next Economic Period:
Both corrections and recessions are often followed by a period of growth.
Depressions can often be followed by a period of stagnation or decline.
As you can see, there are some major differences between a correction, a recession, and a depression. However, it is important to remember that all three terms refer to a decline in economic activity.
So, if you are experiencing a decline in your economic activity, it is important to seek help and take action to improve your situation.
Conclusion: Correction vs. Recession vs. Depression
Understanding these three different terms correction, recession, and depression can help you better understand the current state of the economy and what you can expect in the future.
If you are wondering whether we are in a correction, a recession, or a depression, do your research and stay informed. Thanks for reading!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
In the investing world, there are a lot of debates about market timing and whether it is better to time the market or stay invested for the long term.
Many people believe that time in the market is always better than timing the market.
According to CNBC, “almost 80% of active fund managers are falling behind the major indexes.” It seems pretty apparent that most day traders have a difficult time beating the S&P 500 in the long term.
This blog post will explore why ‘time in the market’ beats ‘timing the market’. We will examine what these terms mean and discuss some of the top reasons investors should focus on time in the market rather than trying to time the market!
This post may contain affiliate links; please see our disclaimer for details.
What is Market Timing?
The term “market timing” is often used to describe the act of trying to predict future market movements. In other words, to buy or sell stocks at advantageous times.
An investor might believe a stock is due for a short-term price decline and sell the stock before the decline.
Many individual investors and even professional money managers believe they can successfully time the market. But there is no clear evidence that this is possible in the long run.
Most investment experts recommend against attempting to time the market.
What Does Time in The Market Mean?
Time in the market refers to the concept of staying invested for the long term. Even if there are short-term fluctuations in the market, investors should remain patient and not make any rash decisions.
Many experts believe it’s impossible to consistently time the market and let your investments ride the ups and downs.
Top 8 Reasons Time in the Market Beats Timing the Market
There are several reasons why market timing is difficult. Each side of the debate has valid points, but the long-term investor is more likely to come ahead.
Here are eight reasons why time in the market beats market timing:
1) It’s impossible to know exactly when the market will rise or fall
First, it is challenging to predict future market movements with any degree of accuracy, especially if you’re trying to do this long-term.
Even professional investors who spend their careers analyzing companies and markets have trouble consistently making correct predictions. Knowing where the market will go next is a tough task.
2) Difficult to predict the exact time
Second, even if you can correctly predict short-term market movements, you still need to be right about timing your trades.
The market can stay at a certain level long before moving in the predicted direction.
3) Lose out on a great position
If you sell stocks when the share price rises, you might not get back in at the same price. This is because once a stock starts rising, it can continue for a long time.
4) Commission fees
Another factor to consider is commission fees. Every time you buy or sell stocks, you will have to pay a small fee to your broker.
These fees can add up quickly if you are constantly buying and selling stocks. Commission fees can eat into your profits if you’re not careful.
5) Taxes
You will have to pay capital gains taxes if you sell stocks that have increased in value. By holding on to these stocks for more than a year, you’ll be eligible for long-term capital gains tax rate. The long-term rate is lower than the short-term rate.
6) Timing the market is stressful
Attempting to time the market can be a very stressful endeavor. Constantly monitoring your stocks and deciding when to buy or sell can affect your mental and emotional health.
A stock market is a volatile place, and prices can change quickly.
7) Too time-consuming
In addition to being stressful, market timing can also be very time-consuming. If you are trying to predict short-term market movements, you will need to spend a lot of time analyzing data and making calculations. You could be taken away from other important things such as work, family, and friends.
Even if you are not actively trading now, traders that try to time the market still need to spend a lot of time following the market and researching stocks.
8) Miss out on compound interest
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it”. This was a famous quote by Albert Einstein and it is very true.
Compound interest is when you earn interest on your investment, and then you also earn interest on the interest that you have earned. Your money will grow much faster than if you let it sit in a savings account.
If you are constantly trying to time the market, you will miss out on the opportunity to let your money grow through compound interest. You will constantly be moving your money in and out of stocks, which means you will not have the chance to let your investment grow over time.
For example, let’s say you invest $1000 in a stock that goes up by ten percent. After one year, your investment would be worth $1100.
If you reinvested this money and the stock rose by ten percent again, your investment would be worth $1110 at the end of the second year. After 30 years, you will have $17,449.40. If you were to try and time the market, you would likely miss out on some of these gains.
If you sat on the sidelines and stayed in the market for 15 years, you would have only made $4,177.25. This is only if you picked the 15 years that the stock sustained a 10 percent average.
You may be able to time the market a few times, but to do it consistently over multiple decades, is highly improbable. The longer you stay in the market, the higher probability you will continue to compound your investments into financial freedom.
The more you trade, the higher the probability that a mistake will be made, leading to a large loss of both time and money.
It is important to remember that the stock market is a long-term game. After all, if one of the most intelligent minds in history prefers time in the market over timing the market, it should be good enough for the regular person.
The Bottom Line
There is no clear evidence that anyone can successfully time the market in the long run. Many investment experts recommend against attempting to time the market, and there are several reasons why time in the market beats market timing. Some traders are successful. However, about 80 percent or higher lose money.
If you leave your money in an index fund that tracks the S&P 500, you are more likely to make money than if you try to time the market. This is especially true when you let compounding happen and stay patient for decades.
There are many reasons why market timing is difficult, but ultimately the long-term investor is more likely to come ahead.
By staying invested in a diversified portfolio of index funds, you can weather the ups and downs of the market and be well on your way to reaching your financial goals!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
You may have been hearing a lot about stock splits lately and wondering what they are and how they affect you as an investor. In this article, we’ll discuss these questions and the following:
Define what a stock split is and why companies do them
Look at how the split affects you as an investor
Give our opinion on whether or not you should take advantage of a stock split
First Off, What Is a Stock Split?
A stock split is when a company divides its existing shares into multiple new shares.
For example, if you own one share of XYZ company and it splits two-for-one, you would then own two shares. A stock split doesn’t change the overall value of your investment, but it does increase the number of shares you own.
When a company does a stock split, the price per share decreases but the number of outstanding shares increases. For example, Company XYZ is trading at $100 per share and has 100 outstanding shares.
If they do a two-for-one stock split, each shareholder will end up with twice as many shares, dropping the price to $50 per share. The total shares outstanding will then be 200. If you do not sell shares, you will still own the same amount of equity in the company.
Why Do Companies Do Stock Splits?
There are a few reasons why companies might do stock splits.
The first reason is that it can make the stock more affordable for small investors. When a company’s stock price gets too high, it becomes less accessible to investors with smaller budgets. Splitting the stock decreases the price per share, making it more affordable.
Another reason companies do stock splits is to increase liquidity. Each share is worth less when more shares are outstanding, so they trade more frequently.
This increased liquidity can attract new investors and make it easier for current shareholders to buy and sell shares.
Finally, stock splits can signal that a company’s management is confident about the future of the business. When a company announces its stock is splitting, it can be a vote of confidence by management, encouraging more people to invest.
A stock split is usually accompanied by an increase in the company’s share price.
How Does a Stock Split Affect You?
If you are a shareowner and receive notification that your company is doing a stock split, don’t panic.
Whether it’s a two-for-one stock split or a three-for-two stock split, the main thing you need to know is that the value of your investment hasn’t changed. Only the number of shares you own has increased.
Take the current market price of your shares and divide that amount by the number of new shares you will receive.
For example, if you own 100 shares of stock trading at $80 per share and the company does a two-for-one stock split, you will end up with 200 shares valued at $40 each.
The reverse is also true. If a company does a reverse stock split (also called a “reverse split”), the number of shares you own will be reduced. However, the market price per share will increase in proportion to the reduction in shares.
A reverse split can be done on any ratio but is typically either a one-for-two or one-for-three reverse split.
In this scenario, each share you own will be worth more, but you will end up owning fewer shares. Let’s say you own 100 shares of stock trading at $40 per share, and if the company does a one-for-two reverse split, you will end up with 50 shares valued at $80 each.
Another term for the stock split is “equity dilution.”
This is because each shareholder’s ownership stake in the company is diluted when the number of outstanding shares increases. This dilution can affect the voting power of shareholders and the company’s earnings per share (EPS).
However, it’s important to remember that a stock split doesn’t necessarily mean that a company is doing well. In some cases, a company might do a reverse split to boost its stock price and avoid being delisted from a stock exchange. There are multiple factors to consider when determining if a stock split is a good thing.
You can use stock splits as a tax-saving strategy. When a company’s stock price gets too high, shareholders who want to sell may have to pay a higher capital gains tax.
By doing a stock split, the shareholders can sell more shares for a lower price and pay less in taxes.
Another way that stock splits can affect investors is through trading psychology, which can lead to bad decision-making.
For example, some investors might see a stock split as an opportunity to buy more shares, regardless of the company’s financial health. This could lead to them buying more shares than they can afford or investing in a company that isn’t doing well.
Even if you do not buy or sell, other investors may drive up the price of buying. This can cause the company to become overvalued, which may give you the wrong idea about the company’s true worth.
If you are a long-term investor, you should not worry too much about stock splits. But if you are a short-term investor or trader, it is important to know how stock splits can affect share prices.
Some popular stocks, such as Amazon and Tesla, have done stock splits in recent years. Both company’s share prices increased significantly afterward.
If you had invested in these companies before their stock splits, you would have seen a nice return on your investment.
Stock splits can allow you to begin buying shares as the price is cut in half. For example, if a share of XYZ company is worth $1000, that may be too expensive for you. But if the company does a two-for-one stock split, the per-share price will be $500 and suddenly become more affordable.
Remember that just because something is cheaper does not mean the company’s future outlook has changed. A stock split does not increase or decrease the value of a company, it simply makes the shares more affordable.
This can be a trap for some investors who think a company’s share is on sale because its stock price has been cut in half. You are not receiving more equity, and the company’s value can potentially decline. The $500 share you bought could fall to $250 or even lower.
On the other hand, taking advantage of a stock split could allow a window of opportunity to buy normally high-priced shares at a lower cost.
If you believe in the company’s long-term prospects, this could be a good time to buy. The price may rise, causing a struggle to save enough money to buy the shares later.
However, just because a company does a stock split doesn’t mean you should automatically buy its shares. You should always research a company before investing; a stock split shouldn’t be the only factor you consider. The worst-case scenario would be if you bought shares of a company just before it filed for bankruptcy.
It is also worth noting that some companies do stock splits multiple times. There could be more opportunities to buy shares, but it could be an overvaluation of the company’s share price.
In short, stock splits can be a good thing or a bad thing. Before investing in a company that announced a stock split, research the company to sure it is a good investment.
When making investment decisions, remember the fundamentals of the company and its long-term prospects. A stock split is simply a way to make shares more affordable. It should not be the only factor you consider when making an investment decision.
Some important factors include the company’s financial stability, competitive advantages, and future prospects.
There is no right or wrong answer when asking, “Should I invest in a company that recently went through a stock split?” The answer depends on the individual company and your investment goals.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
You’ve probably heard the term “compound interest” before, but do you know what it actually means? In essence, compound interest results when an investment’s earnings are reinvested so they can earn interest on their own.
The result is a snowball effect that can lead to significantly increased earnings over time. We love compound interest so much because it has allowed us to reach COAST Fire; for more on this story, check out Coast FIRE: The Easiest Way to Join the FIRE Movement.
In this article, we will discuss what compound interest is and how it works. We’ll also look at some examples to help illustrate the concept.
This post may contain affiliate links; please see our disclaimer for details.
What Is Compound Interest?
Let me explain compound interest by examining how it differs from simple interest.
With simple interest, you only earn interest on the principal or original investment. However, you can calculate compound interest on both the principal and any accumulated past interest. This accrued interest is then added to the principal sum, and the new total becomes the base upon which future compound interest calculations are made.
In other words, compound interest is calculated on both the principal and the accumulated past interest.
Simply put, compound interest is the interest you earn on your initial investment plus the interest you earn on any previous interest that has been added to the account.
Compound interest in retirement planning is important because it can dramatically impact an investment’s growth over time.
Compounding works best when you start early and allow the amount to continue for a long period.
The waiting process takes time. However, the effects are POWERFUL.
Think of compound interest as “interest on interest.”
With compound interest, you earn money on your original investment and the interest that has accrued. The more frequently interest is paid or compounded, the greater the impact on the principal sum.
Where can your money’s interest be compounded?
The most common investment that compound interest works with is a savings account.
The bank pays you interest when you deposit money into a savings account. You can see a payout for the interest typically once per year.
However, some banks offer accounts that compound interest more frequently, such as monthly or daily.
With these types of accounts, the interest in one period adds to the principal sum. You can then calculate the interest for the next period on this new total.
You can also use the formula to assess other assets, such as stocks, bonds, and ETFs. These can be invested in using a brokerage or retirement account.
Although the calculation may be a little off as these asset variables are constantly changing, it can still give you a good idea of what you could expect in the long run.
To summarize, compound interest allows investors to make money by reinvesting their earnings and allowing them to grow over time. This growth can be significant, especially when the account compounds over a long period.
You can even support the compounding effect by including a DCA strategy. In brief, a DCA (dollar-cost-average) strategy is an investment technique in which an investor breaks up a lump sum of cash into smaller investments, buying them over time.
This technique can help reduce the effects of volatility on your investment portfolio and take advantage of market dips to buy assets at a lower price. When combined with compounding, a DCA strategy can profoundly affect your portfolio’s growth.
What Is the Formula for Compound Interest?
We can calculate compound interest using the following formula: A = P(l+r/n)^nt
Variables:
A = the future value of the investment: This is the total amount of money you earn from the investment.
P = the principal investment amount: This is the original sum of money you use to invest.
l = the annual interest rate: The yearly rate at which interest will be earned on the investment.
r = the periodic interest rate: Divide this number by n
n = the number of times that interest compounds per year: This can be monthly, quarterly, semi-annually, or annually.
t = the number of years the money for the investment: This is the length of time that the investment will grow for.
As you can see, several factors go into calculating compound interest. To influence the variables to your favor, focus on finding investments with consistently high-interest rates that compound frequently.
You can also start with a larger principal amount and be willing to wait for more years.
The incredible thing about compound interest is that math accurately predicts how much an investment will be worth in the future.
Compounding is a geometric progression, meaning that each successive year, the interest earned grows faster.
However, the prediction may be wrong only because of human nature. Panic selling, reinvesting at the wrong time, or letting fees eat into returns, can all reduce the final value of an investment.
So, while the math works, other external variables are in your control. Understanding both math and psychology is important to successful compounding.
The formula can be overwhelming to look at. Luckily you do not have to be a math wizard to be able to calculate your potential compound interest. Many online calculators can do the work for you.
In the next section, we’ll simplify the formula with an example of how it works.
How Does Compound Interest Work?
The effect of compounding can be significant. For example, let’s say you have a savings account that pays you simple interest at a rate of five percent per year. After one year, your total balance, including interest, would be $105 (the original $100 plus five percent, or $105).
But if your interest compounds annually–meaning that the interest adds to the account at the end of each year and becomes part of the principal–your balance after one year would be $110.25.
The next year, you would earn interest not only on the original $100 but also on the $105 from the first year, for a total of $110.25. As you can see, compound interest has a snowballing effect and can add up over time!
All in All
Investing works best when it compounds. This is because compounding is a geometric progression, meaning that each successive year, the interest earned grows faster.
Compounding can have a significant effect on the growth of your portfolio. Make sure to keep this in mind when making investment decisions.
The longer you invest, the more pronounced the effects will be. This is why it’s important to start investing early and to have a long-term investment horizon.
Compound interest is often referred to as “the eighth wonder of the world.”
Albert Einstein says it is “the most powerful force in the universe.”
While compound interest can work wonders, it’s important to remember that it is a slow process. The compounding effects are not immediately noticeable, and it can take years for your investments to reach their full potential.
Patience is key when investing, but the rewards can be great if you’re patient and disciplined.
Compound interest is a powerful tool that can help you grow your wealth over time. By understanding how it works and using it to your advantage, you can build a bright financial future for yourself and your family.
It’s never too late to start investing. The earlier you start, the more your wealth will compound!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
The Federal Reserve (the Fed) is raising interest rates. This is an important event that will significantly impact the housing market in the United States.
This article will look at what the Fed rate hikes mean for home buyers, sellers, and homeowners.
This post may contain affiliate links; please see our disclaimer for details.
What’s the Federal Reserve?
The Federal Reserve is the central banking system of the United States. Congress created it in 1913 in response to a series of financial panics that plagued the country.
The Fed’s primary responsibilities are:
Promote economic growth and stability
Supervise and regulate banks and other financial institutions
Provide financial services to the government and the public.
The Fed is often referred to as “the lender of last resort.” This is because they can provide loans to banks when they are experiencing difficulty obtaining funding from other sources.
They are not federal entities at all but are quasi-public entities. Its creation was to serve as a buffer against financial panics and recessions. There are a lot of divisive opinions about this establishment.
One perspective is that the fed is too powerful. The rate of currency creation can raise inflation, making it more difficult for consumers to save money. Many people that live paycheck to paycheck resent this inflationary pressure.
When the federal reserves increase the inflation rate, savers lose their currency’s value. Borrowers make money by taking advantage of low debt costs to invest in assets.
The Fed manipulating interest rates can have widespread effects. For example, one of the reasons for the subprime mortgage crisis in 2008 was caused by the Fed keeping rates artificially low for too long. This led to a housing bubble which eventually burst, causing a financial crisis.
An opposing perspective is that the fed isn’t powerful enough. The fed’s primary tool is interest rates, and there are limits to how low they can go before hitting zero.
This means that the Fed doesn’t have a lot of room to maneuver when it comes to stimulating the economy.
The decision of the Fed to raise interest rates will have different effects on different groups of people. Make sure to keep reading to find out how it affects you.
What Does the Federal Reserve Do?
The Federal Reserve performs several important functions, but its two main goals are:
Promoting maximum employment
Stabilize prices (inflation). The Fed does this by setting interest rates.
When the economy is strong, and inflation is low, the Fed will raise rates to prevent the economy from overheating. Conversely, when the economy is weak or inflation is high, the Fed will lower rates to stimulate economic growth.
This incentives investors and business owners to borrow currency to reinvest into the production of goods and services.
The Federal Reserve also regulates banks and other financial institutions to promote stability in the financial system. By controlling the banking systems, the Fed can influence the availability of credit and the cost of borrowing. This lending helps to prevent bank failures and maintain confidence in the banking system.
As a real estate participant, this affects you. When banks have more confidence, they are more likely to lend money, and when borrowing costs are low, it affects your mortgage rate.
Unless you are paying for the property in 100% cash, the interest rate on your mortgage directly correlates with the Federal Reserve’s actions.
When the Fed raises rates, it becomes more expensive for banks to borrow money. As a result, banks will raise the prime lending rate. This is the rate at which banks lend money to their best customers.
The prime lending rate is used as a benchmark for other rates, such as the rate for a home equity line of credit (HELOC) or a 30-year fixed mortgage.
The Fed’s decision to raise interest rates will affect different groups of people differently.
Homeowners with adjustable-rate mortgages will see their monthly payments go up. The same is true for people with home equity lines of credit and student loans. On the other hand, savers will earn more interest on their deposits.
Why Is the Fed Raising Interest Rates?
The main reason why the Fed is raising interest rates is to keep inflation in check. When the economy is strong and growing quickly, prices for goods and services tend to go up.
The Fed’s goal is to raise rates just enough so that inflation stays healthy, but not so much that it slows down economic growth.
As mentioned earlier, the Fed is raising interest rates to prevent the economy from overheating. When the economy is doing well, it can sometimes lead to too much growth. This can cause problems, like what happened in 2008 when there was a housing bubble. The Fed can slow economic growth and prevent these bubbles from forming by raising rates.
Finally, the Fed is raising interest rates to normalize monetary policy. The Fed has kept rates at historically low levels for the last few months to stimulate economic growth. Now that the economy has started to recover, it’s time for rates to return to a more normal level.
How does the Federal Interest Rate Increase Affect Home Buyers?
As a home buyer, you may wonder how the Fed’s decision to raise interest rates will affect you. The most immediate effect will be higher mortgage rates. If you are shopping for a home, you may want to consider locking in a rate now before they go up any further.
If you have already been pre-approved for a mortgage, you may still be able to lock in a lower rate if you act quickly. The good news is that even with higher rates, your home can still be an asset if you rent out space in your new home. A larger down payment can also help alleviate the debt burden.
In the longer term, the Fed’s decision to raise interest rates could impact home prices. When rates go up, borrowing money becomes more expensive, which can lead to slower economic growth. This could cause prices to rise slowly or even fall in some markets.
Of course, the Fed’s decision is just one factor that can affect home prices, so it is impossible to say exactly how this will play out. If you are considering buying a home, it is important to research and talk to a financial advisor to get the best advice for your situation.
To summarize, the effect on home buyers is more complicated, but there are two main ways that higher interest rates will influence buying decisions:
Homebuyers who were on the fence about whether or not to buy may now decide to wait because their monthly mortgage payment will be higher than it would have been otherwise. This could lead to lower demand for homes and put downward pressure on prices.
On the other hand, higher interest rates could lead to more people wanting to buy now because they are worried that prices will go up even further in the future. This could increase demand for homes and put upward pressure on prices.
It is impossible to say definitively how the Fed’s decision will affect home buyers, but it is important to be aware of the potential implications before making any decisions.
How does the Federal Interest Rate Increase Affect Home Sellers?
Home sellers are not likely to see an immediate or significant change due to the Fed’s interest rate hike. However, over time, higher interest rates could make it more difficult for buyers to afford a home, leading to fewer sales.
Another way that higher interest rates could affect home sellers is by influencing the decision of whether or not to buy a replacement home. If you are considering selling your home and buying another one, you may consider doing so sooner rather than later. This is because it will likely be more expensive to finance a new purchase when interest rates are higher.
Finally, it is important to remember that the Fed’s decision is just one factor that can affect the housing market. Other factors, such as job growth and the economy’s overall strength, will also play a role in determining whether now is a good time to sell your home.
If you are considering selling your home, it is important to talk to a real estate agent to get the most up-to-date information on the market in your area.
It can be difficult to know what to expect in the current market, but a real estate agent can give you the most accurate advice.
In summary, while higher interest rates may eventually lead to fewer sales, it is not likely to significantly impact home sellers in the short term.
However, if you are considering selling your home and buying another one, you may want to do so sooner rather than later.
How does the Federal Interest Rate Increase Affect Homeowners?
As mentioned, homeowners with adjustable-rate mortgages (ARMs) will see their monthly payments go up.
For example, if your rate is currently at a low rate of three percent, and the Fed raises rates by a quarter-point (0.25%), you would see your interest rate jump to three and a quarter percent. And that could continue to rise as the Fed raises rates in the future.
If you have a fixed-rate mortgage, your monthly payments will stay the same for the life of your loan. Homeowners in this situation have less to worry about with the Fed interest rate hikes.
It’s important to know how much the interest rate will rise and if you can still afford the monthly payments. You may need to start looking at ways to cut costs in other areas of your budget. Raising your income is also a possibility. You may want to consider refinancing your mortgage to lock in a lower interest rate if rates continue to rise.
Final Thoughts
In conclusion, the Federal Reserve’s decision to raise interest rates will have different implications for home buyers, sellers, and owners. Before making any decisions, it is important to be aware of how this could affect your situation.
Understanding what the Federal Reserve does and how its decisions affect the economy is important regarding your financial future. The most important thing to remember is to consult a financial advisor to get the best advice for your situation.
It’s also important to continue learning more about economics and how it affects your finances. Knowledge is power, whether you are a real estate investor, home broker, or mortgage borrower. Check out other articles published on this website to improve your financial IQ.
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
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