July 2020 | Chill Maadi

Investigate Before Investing Into Any Cash Gifting Program

In this fast-paced world that we live in today, you can never really tell what or how things will turn out for you. Oftentimes, numerous unexpected events happen. Furthermore, when such unfortunate events occur, numerous individuals find themselves in a dire predicament because they don’t have any fallback plans.

To counter this, some people have looked into the online money-making programs. Online money making programs are very powerful means to make money because you get to leverage the ability of the internet. Due to that, you are able to reach thousands or even millions of individuals effortlessly. A proven online money-making venture that a lot of people turn to either for full-time work or for part-time work is called as cash gifting. Cash gifting is a very simple money-making venture that when executed by the rules and correctly, can reap amazing rewards and benefits.

Numerous people continuously ask, what’s cash gifting and how does it work? In essence, cash gifting is simply receiving and giving gifts that are in the form of cash. Certainly, though, there is a lot more to it than its simple definition. The business of cash gifting is an undertaking that involves a lot of intricate components. Giving and receiving money is one of them, but it definitely is not entirely dependent on such little effort. Some other components that play an important role in the business of cash gifting are marketing and advertising, lead generation, and organizational tactics.

On top of that, because cash gifting is primarily based on leadership and teamwork, it will be more advantageous if you can practice these traits. Cash gifting programs are usually in the nature of membership programs. When people join, they’re entitled to give cash gifts to other members while they get to receive cash as well. The growth of an individual’s earnings will rely on the people he or she will recruit to the membership.

It’s very important to do your due diligence prior to going into any form of investment. The business of cash gifting is just as prone as any other business venture and should thus be explored with caution. Most of the time, because people think that it is an effortless way to make money, they try to deceive the newcomers by promising them amazing rewards and benefits. It is a good idea to search for a lot of cash gifting programs and see them firsthand before making decisions. This is a good way to get to know more about the business while protecting yourself from being a victim of a cash gifting scam.

Investing In Gold As Part Of Retirement Plan

It has been hundreds of years since people have realized the importance, and value of gold around the world. As it is a component in several industries, the demand for gold has actually increased with the passage of time. Now it is also considered a good store of value with more, and more investors opting for gold. This option is worth considering for anyone who is retiring.

The recession and economic downturn have de-motivated the investors; everyone is doubtful about making any investment. However, gold has maintained and even increased its value during this recession period. It is the least affected, and recession-proof investment for retired people, who can maintain a stable, and wealthy living conditions in their old age.

The stock market did collapse, and many big investors dropped from billions to pennies. Any person, near to retirement, is now frightened to make any investment in the stock market. On the other hand, the prices of commodities are rising day by day, and inflation rates are likely to go higher.

Gold is the wisest investment now for the people, especially for retired people who do not have many options to try. Any quantity of gold can contribute to a good saving at the end of the year. Gold bullion value rarely depreciates and makes it an ideal choice for the masses.

All precious metals, including gold, are very smart choices of investment, as they bring a measure of stability to the investment of an individual, or retirement plan. It brings a degree of security to the plan. Other avenues of investment like mutual funds, stocks, and bank deposits are not recommended, as they may deteriorate in value with the changing rates of interest. This is the reason why gold is considered valuable by all as it only increases in its worth with time.

The security, protection, stability, and profitable value of gold cannot be challenged by anyone, even today when prices are increasing. Currencies such as the US Dollar and Pound Sterling may depreciate, but gold never does. Investment into gold is a part of the contingency plan of many investors, and especially those looking forward to retirement.

Different ways by which, you can add gold to your retirement investments are as follows; Gold coins and bullion can be bought from a dealer, but for this, you must have an arrangement of a safe place. You can buy shares of an exchange-traded fund, or you can own individual gold mining stocks. Investing in precious metals mutual or exchange-traded funds is also an option for investing gold. Finally, you can invest in commodities funds, as part of your overall asset allocation strategy.

Those people who invest in gold do not turn all of their wealth or life savings into gold stocks; they simply do it as part of their plan to safeguard their assets to have a lucrative income in the future. This can only be accomplished if a sensible retirement plan has been designed. The fluctuations in the market can never be predicted. Whenever the market looks to be in a position where the demand would increase, the smart investors start to invest. In simple terms, investment in gold is a secure move that is likely to get for you a steady flow of profits in the future.

The Differences in Debt

Debt is one financial matter that fills me with dread. The prospect of owing someone else money is like a crushing weight on my soul. But that being said, debt can, at times, be a good thing.

I classify debt into three categories:

Debt that does not add value.
Debt that adds value.
Debt that does not add directly add value, but is necessary, or has the potential to add value.

First, let me clarify that by “value,” I mean some intrinsic financial worth. Not the kind of value that you get when seeing the joy in your kids’ eyes while opening Christmas gifts.

Debt that does not add value is destructive. That new car is not increasing in value; it is depreciating. I know what you’re thinking, “Dude, I love my car, and I need it to drive to work, so it does have value!” Consider my ₹8,00,000 car loan that I took out last year. I’ve diligently been making payments every month, so my liability has decreased. Unfortunately, cars don’t last very long, and the resale value is decreasing even faster than I’m paying it off! This means that even if I were to sell it today, the best I could hope for is to make enough to pay off my loan.

Debt that does add value can actually be a good thing. Most people who open a business do so with the help of a loan. Ideally, the business will begin to make money, and the business will be worth more than the value of the loan. There are many examples of this constructive type of debt. But the idea is that you get a loan for the purposes of making money. This is leverage and thus needs to be used with care. However, if you know that you can borrow money at 6% and you know that you’ll make 8% off of the investment, then you’ve just earned 2% on money that didn’t belong to you. Even better is that (at least in India), you can deduct the interest from investment loans!

The third type of debt lies somewhere between the previous two. For example, taking out an education loan does not immediately provide you with a return. For the four years (or two, or ten, …) that you are in school the loan money does not provide you with a fiscal return on your investment. But in the end, when you get your high-paying job, it does reveal its benefit.

I will also place in this category the most common debt, your mortgage. Many people claim their home is an investment, and therefore it is constructive. I disagree;

You make mortgage payments out of your own pocket rather than having the investment pay for it;
You would not likely sell your ‘investment’ because where would you live;
In India and the USA, these payments can be used against taxes. However, this is not the case in many other countries, such as Canada.

Don’t get me wrong; homeownership and mortgages can be a good thing. I simply argue against it being a constructive debt.

So my goals in order of importance to me are to:

Eliminate all destructive debt.
Reduce necessary or non-value adding debt.
Make use of constructive debt where prudent.

I’m sure most people would agree on the first item. However, it is the last two points that will draw a lot of contention.

In the past few years, people have been loading up the mortgage debt to the point where they can afford little else – all in the name of home-ownership. 25-year mortgages have now become almost commonplace so that you can retire in debt.

With the low cost of borrowing, even so-called constructive debt is running rampant (leveraged buyouts, etc., and included in this). Corporations buying another or an individual buying any arbitrary stock with debt simply because it’s cheap will certainly be sorry once rates rise and/or the company’s finances crumble. That is why I say use leverage when prudent

What is Passive Income?

Recently a friend of mine told me that she believed that the term “passive income” is the most over-used and misused in personal investing. From what she told me, a lot of people she meets are working on producing “passive income” streams even if they are not.

The fundamental source of her frustration was that people had confused the term passive income with streams of income. For example, someone who owns a business on the side, which requires some time and attention does not have a passive income stream. They have another source of income- it is a big difference.

Her challenge to me (and, by extension, the readers) was to list valid sources of passive income.

Passive income, as the term indicates, is income you make without doing anything other than owing the cash flow stream itself. For example, dividend income is truly passive income- you receive a dividend cheque every quarter for evidence of ownership. An inheritance or a trust for your benefit, which pays you money on an interim basis for the rest of your life, is passive income (if only we were so lucky).

In these examples, you sit back, and money comes to you. However, what about the grey zones?

Here is my take on what is and isn’t passive income for streams of income that fall in the grey zones- feel free to add your 2 cents since this list falls in the mushy middle of what is or isn’t passive income:

Real Estate Investing:

If you own and manage investment real estate, you don’t have a passive income stream. You have an alternative source of income. What part of fixing the toilet, collecting rent cheques, advertising to fill rental vacancies and to hire trades is passive?

However, this is where I will make the distinction. If you own commercial investment properties and hire a property manager, depending on how involved you are, it is passive income. Business premises and residential rental units with property managers are most likely professionally managed. A commercial lease downloads almost all of the responsibility of managing the premise to the tenant other than significant repairs and common area maintenance, which is carried out by professional property managers. Thus, substantially all of the income flowing from these types of real estate investments are passive.

Granted, there are some minor responsibilities the property manager cannot do for you, such as renewing the mortgage, but this is some work spread out over time. What I would suggest is that real estate is a more natural way to make income given you don’t have to be there for 9-5, but for most self-managed real estate investments, it is not passive income.

Licensing/Franchising:

If you sell a license or franchise your business, it is only passive income if you have no obligation to the licensee or franchisee afterward. For example, you license software with no obligation to provide patches or upgrades. Franchising cannot be considered a passive income stream- the franchise has obligations to provide sales/marketing and administrative support. The franchise is a great revenue source because someone else is paying you for copying your homework (sort of speak), but I would not define it as a passive income source.

Infopreneurship/Publishing:

“Infopreneurship” is a relatively new term to the business lexicon. It refers to the selling of information, whether through seminars, training modules, or blogs. Its the new economy’s version of traditional publishing. This is where things get really murky. Infopreneurship, which involves the constant updating of information from the owner-manager (i.e., a blog), is not passive income.

An aggregator site that publishes articles from other sources is passive income only if a program has been devised to find the articles and post them-but it is only passive income after a lot of work has been putting into setting up the program.

Despite the thousands of dollars, Google can pay to a site; sites need constant updating, so it cannot be strictly defined as passive income. However, if you develop a training module, seminar, e-book that can be sold many times over via e-commerce, it is passive income because you don’t have to do anything to get a sale- but again, it comes with the same limitation that you had to put a lot of work in beforehand.

These are just my opinions. It is definitive by any stretch of the definition. Let me know what you think about what real passive income is.

Limiting how much someone can steal from your credit card

I’m sure anyone reading this page has ordered something from the internet if not many things. Every time you make a purchase you’re exposing your credit card to strangers, you might think its just computers talking to computers but at my previous company, I was hired to create a new e-commerce site for them that interacted with an AS400 system they used for phone orders.

Their old method was

1. Someone places an order online
2. Each day it was someone’s job to PRINT out the orders WITH CREDIT CARDS NUMBERS
3. That person would then hand key them into the AS400 system, if they didn’t finish them they left a stack of orders on their desk overnight tech supports, janitors, salesman, etc… basically, anyone could stroll by, glance at the order on top and get your CC number and your billing address, everything they need to use your card. This was at a multi-million dollar e-commerce site too, not just some 5 order a day place, we’re talking hundreds of orders a day, just sitting around.

As a consumer you cannot prevent your credit card information from being stolen in this manner, all you did was key it into a browser now it’s on someone’s desk waiting to be keyed in. Since that experience what I did was contact my bank and get a credit card that I specifically use for the web with a $1000 limit, so the most I could get hosed for is a grand or less if there is a balance. I’m sure a lot of people out there enter their cards with 10, 20, 30 thousand dollars available. Why take the risk, get a small card just for the net, $250, $500, $1000 limits. This is also helpful for gas stations, restaurants, etc.

I know a few people first hand, one waiter and one full-service gas pumper who would copy CC numbers down from customers cards and then use them that night to order whatever they wanted, it worked and they got away with it.

College Debts – Paying Them Off

As if college weren’t hard enough, getting out of those hallowed halls may be the lesser of your worries. Once you leave the grounds you are faced with the challenge of finding a job – or starting a business – in your new career path. This is much easier said than done since most companies want experience and, unfortunately for you, most college training does not count toward that so-called “real-world experience”. It’s a problem because now that you’ve completed school you have something that is common among a majority of college students: debt.

You struggle to create a life for yourself, and the moment you are out the starting gate you’re confronted with immediate hardship. You’re most likely well aware of debt by now in this stage of the game, but credit cards and some utilities aren’t even a comparison to the possibility of several hundred thousand dollars in school loans. Without a job you certainly can’t repay it in a timely manner.

Though you may figure it can wait, your college debt is not going to disappear, so there is no good reason to postpone the process of repayment. It’s important to realize the critical nature of debt repayment. It’s also smart to be aware that many companies have added a policy to check potential employees’ credit records as part of their pre-hire considerations. So beginning to pay off that loan is in your best interest.

Student loans are typically deferred for at least six months upon graduation. This can, unfortunately, motivate the proliferation of “professional students” who are afraid to complete college, fearing the financial trap of their loans despite running up even more charges. Don’t continue in school simply to postpone the repayment of your college loans. Have you begun to pay it or rather, like most, looked at it then casually discard it into the “I’ll pay this later” pile? Granted, having no job means paying is hard if not impossible. However, a college debt, as well as your other loans or credits, impact your credit rating. So even if you can only pay $20, do so. It’s a start.

The simplest way to get to that debt is to develop a budget plan. Make a list of all your fixed bills like car loans, rent, personal loans, etc. and add to that list your variable debt like credit cards. Prioritize the list and compare it against any income you may have. For some bills, you can briefly postpone them or work with a creditor to lower payments over time or even ask them to temporarily stop charging you interest. Whatever money you have left should be allocated, at least partially, to your student loans.

Unfortunately, the time to pay the loan without hardship may be long past. If you’ve ignored your college debt for too long, claims can be filed against you. It would then be prudent to seek alternative methods of paying off your debts, such as a personal loan. The interest will tend to be lower and the bill will get paid.

You need to repay your debts – college included – as soon as you can. You should practice debt-free living at every step of your life. Think about simple things like extra clothing, trips, dining out, and movies – all of which can be scaled back, if not eliminated, to help repay your loans. Before purchasing such items, consider whether you really need them. If not, at least defer the expenses to later. Make the elimination of debt your higher priority.

Creative Ways to Shop on a Budget

A survey by Gallup in 2019 found that only 32% of Americans maintain a household budget. Roughly half of Americans are living paycheck to paycheck, meaning many of us have to get creative in how we shop for things like groceries, clothes, and entertainment.

Living on a shoestring budget can be stressful, but it is possible with some of these creative tips to shop and make the most of what you have.

Grocery shopping on a budget

Food tends to be one of the biggest spending categories in anyone’s budget. The USDA estimates that Americans spend an average of 6% of their budget on food; 5% of income also goes to dining out. How can you stretch that grocery shopping budget to go even further?

First, time your shopping trip to capitalize on sales and promos:

Wednesdays: The middle of the week is often when grocers release their weekly circular. “You’ll have first dibs on sale items for the week ahead and, if you’re lucky, the store may still honor price reductions on items you forgot to pick up from the previous week’s sale,” says one expert.

Avoid Tuesday and weekends: Weekends tend to be busier as people shop on non-workdays. Tuesdays can also be crowded as other shoppers try to take advantage of last week’s expiring deals, and therefore sale items go quickly.

Shop late or early: The hour before closing is when some grocers reduce prices on bakery items or produce items that won’t last until the next day. Early in the morning is also when there is less competition for sale items.

Next, before you head to the store, download an app. Not just any app, but one that gives you discounts: try Food on the Table, an app that lets you type in your food preferences and then generates a list of recipe options based on current promotions at your go-to grocery store. Or, try Ibotta, an app that lets you retroactively apply coupons to items you purchased by scanning your receipt and claiming deals. Many grocery stores also have apps that deliver exclusive offers and digital coupons.

Finally, put your dining out budget into your grocery shopping budget. A meal at a fast-food restaurant costs around $8; if you stop eating an $8 lunch every day during the workweek, you can save $40 a week ($160 a month!).

How to budget for an apartment

Rent is a big budget item for most people, and there are lots of hidden costs in budgeting for an apartment. Whether you’re on the hunt for a new lease or looking to reduce your utility costs and other apartment expenses, there are a few key things to consider when budgeting for your apartment.

First, if you’re looking to sign a new lease, try to find an apartment that’s close to public transportation. Longer-term leases (a year or more) tend to be cheaper, as the landlord doesn’t have to search for a new tenant or spend on renovations as often. If there are fixes that need to be made, offer to do them yourself in exchange for a discount on the security deposit.

If you’re in an apartment and hoping to save on utility costs, go beyond basic steps like turning off lights and turning down the heat. Think about turning off the devices that consume energy in a passive way, like your microwave and water heater that you aren’t using constantly. Winterize your apartment to cut your cooling and heating bills (winterize is a bit of a misnomer, as many of these steps can also keep your apartment cool in the summer). And, avoid running your energy-intensive appliances – washing machine, dishwasher, or dryer – during “peak hours”. Electricity companies tend to discount rates during the night when fewer people are using their grid.

Thrifting and other shopping ideas

What about other expenses: clothes, gifts, and entertainment? There are creative ways to shop on a budget for these items too.

Thrifting is an obvious choice for saving your clothing budget. Many shoppers also turn to fast-casual brands like H&M and Forever 21 – but be aware that those retailers may be more expensive in the long-term. Spending $10 on a t-shirt that lasts fewer than 10 wears is worse than spending $50 on a shirt you’ll own forever. “Unless it’s practically free, you’re better off buying clothing items from good brands with a reputation for well-made items,” wrote The Simple Dollar.

Look to see if clothes are well made by checking the seams and material. Seams on a good quality item will be perfectly straight, with no dangling strings; any patterns should match up well. The material should be higher-quality. Look for natural fibers and blends like wool, and avoid synthetics like polyester.

For gifts, go for something thoughtful rather than expensive. Find gifts that are unique to the recipient and require time, rather than cash. For instance, give someone the gift of time by babysitting or hiring a house cleaner. Give your family member a recipe book of meals from your childhood. Or, start a new tradition – holiday cookie-baking, for instance – that leads to memories rather than things.

Shopping on a budget isn’t always easy. Sometimes, what you really need is a little Lift to cover a shortfall or meet a financial emergency.

This article is contributed by LiftRocket.

Asset Location Is As Important As Asset Allocation

The science of asset allocation gets a lot of attention in the personal finance realm, but it only tells part of the story. In an ideal world, there would be no taxes or transaction costs, so that asset allocation would be the only game in town. You’d simply divide your portfolio between the various asset classes and forget about it.

Rebalancing would be a non-issue because there would be no tax consequences, and you wouldn’t have to worry about which account is most suitable for your small-cap value fund. If you have all of your retirement savings in your 401K or an IRA substantially, you can get away with doing that. Unfortunately for the rest of us, Uncle Sam wants his cut.

Nobody Loves The IRS

Excepting congress, which needs enormous sums of tax dollars for important projects like building bridges to nowhere and llama farms for orphan llamas, nobody likes the IRS. I am no exception, and if you too share my raw hatred of the IRS, you would be wise to think long and hard about asset location.

Asset location is the art of placing different asset classes in various types of accounts, depending on a combination of the tax-efficiency of that asset class and the tax characteristics of the kind of account in question.

Here’s an example to make what I just said make sense.

Suppose you have a target asset allocation for your retirement portfolio of 50% stocks and 50% bonds. Furthermore, about half of that portfolio is in your 401K at work, and half is in either a regular taxable account or a Roth IRA. The best course of action would be to put the bonds in your 401K and stocks in your taxable account or Roth. The reason for this is that bond interest is taxed as regular income and stock dividends, and long-term capital gains are taxed at lower capital-gains rates. Since everything in your 401K will eventually be taxed at standard income tax rates when you liquidate, putting stocks in it would amount to intentionally paying more taxes than necessary.

In contrast, bond interest is taxed as income, so you lose nothing by putting them in your 401K. Proper asset location can make a huge difference in your long-term returns, so it’s well worth paying attention to.

Here is a list of asset classes and the optimal type of account they should be placed in, if possible.

Least tax-efficient

place in a tax-deferred account (401k, traditional IRA, etc.)

High-yield bonds
TIPS
Taxable Bonds

Medium tax-efficiency

place in a tax-free account (Roth IRA, Roth 401k)

REITs
Balanced Funds
Small-cap stock funds
Actively-managed stock funds
Value stock funds
International Stock funds

Most tax-efficient

fine to place in a taxable account

Broadly diversified stock index funds
Tax-managed stock funds
I/EE savings bonds
Tax-exempt municipal bonds

How To: Budget your Money

If you are on a fixed income or need to save money its probably best to start by creating a budget for yourself. Whether you need to pay off bills or just are in need of saving money for future projects or events it’s never too late to start. Whatever the reason behind wanting to budget your money should be the push you need to choose your budget and stick with it.

Determine Income/Expense

The first thing you should do is figure out how much total income you make as well as total household bills and debts that need to be paid. If you have the ability to pay your bills online this will save you time and money in the long run. Also, you will be able to calculate how much they exactly are if you are paying them at the same time.

Bills that are common for most individuals are things such as mortgage payments, car payments, normal household bills, and food. Try to fix your budget so you’re paying bills that are a must and leaving a bit of extra for an occasional splurge. While you still need to have the freedom to go out or spend on yourself occasionally you will have to be serious about how to budget your money or you will fail.

Where to Put Your Money

Once you have figured out your budget you should invest the money either in a CD or savings account that will gain interest. Try to put money into your savings account out of each paycheck or a part of the extra money that comes in. Aside from your savings account if you are in need of paying off bills then split a part of your paycheck to go towards the savings account while the rest of it goes to paying off high-interest credit cards or loan payments.

Goals and Stress

By setting a budget your finances you will not only help to reduce the stress of financial worries but you will also slowly be taking on a more responsible you. By this I mean you are learning restraint and responsibility at the same time. This will benefit you later down the line when you actually need to purchase an expensive item or need a loan for a must-have such as a house or automobile.

You should always try to work towards your goal monthly and if you happen to slip don’t be too hard on yourself because it will take time to change your lifestyle especially if budgeting is a drastic change from what you’re originally used too.

Conclusion

While it may seem that you are the only one who is currently struggling with the way the economy is today many others are in the same shoes and needing to learn to manage their money better as well. There are also counselors that can provide you with tips on how to budget your money and to plan for the future. Keep in mind that regardless of how bad things may seem if you are willing to put in a bit of work you can fix any issues even if it takes time.