Money Management

Freelancers are really small business owners. Like other business owners, they need business insurance or they risk financial loss. Here’s why. 

There are lots of types of insurance. This includes the typical things, like car insurance and homeowners insurance. But it also includes a whole host of other insurance, from business insurance to body part insurance.

For many folks, the only thought they give business insurance is when they need to sign a waiver, like saying you won’t sue the gym if you hurt yourself on the treadmill. But corporate gym chains are hardly the only businesses that need insurance.

Indeed, even self-employed freelancers could be asking for trouble by not having the right insurance. From consulting liability to equipment theft, freelancers can be subject to all manner of financial risks to their small businesses. The right insurance could save you thousands in the event the worst happens.

Types of insurance for freelancers

Your insurance needs are simpler when you don’t have employees, and even simpler still if you work remotely. That said, you may still need one or more of the following types of insurance coverage.

General liability insurance

This is the broadest type of coverage, and it applies to third-party claims of bodily injury, property damage, or personal and/or advertising injury. For example, if you were sued for libel or if someone tripped and fell in your home office. According to Progressive, the median cost of a general liability policy was $53 a month.

Professional liability insurance

We all make mistakes, but some of those mistakes cost more than others. This type of insurance covers you in the event that a professional mistake or oversight causes a client to lose money. You may hear this type of insurance referred to as Errors and Omissions (E&O) insurance. The median cost of a professional liability policy is around $42.

Commercial auto insurance

There’s a fine line between a car you use to drive to work — and one you drive for work. If you stray over the line, your regular car insurance policy may not cover everything (or, in the worst case scenario, anything). Commercial auto insurance policies will cover your on-the-clock driving. In some cases, you may be able to simply add a rideshare addendum to your existing policy. Commercial auto insurance policies typically run about $600 to $2,400 a year.

Commercial property insurance

Being a freelancer often means accumulating a lot of gear and equipment you pay for yourself. You may even purchase storage or studio space. When used for business, this property won’t fall under most personal insurance policies, which is when commercial property insurance becomes necessary. Small businesses can expect to pay around $67 a month, though the amount of coverage will impact your rate.

Business owner’s policy

A business owner’s policy is basically an insurance bundle that combines general liability insurance with commercial property insurance. Some insurance companies will offer it at a lower cost than the individual policies.

Cybersecurity insurance

Data breaches are more common than ever. If you store sensitive client or customer information, you may be liable in the event of a data breach. This insurance helps cover the costs of informing customers and investigating the breach.

Home-based business insurance

Your general homeowners policy may cover your home office as part of your house, but it may not cover everything it contains. If you have expensive equipment or inventory in your home, it may be worth looking into a separate policy or addendum.

Don’t forget health insurance, too

Although the focus of this list article has been business insurances, it’s worth mentioning that you should definitely have some kind of health insurance, too. This can be a little harder than when your employer picks your policy — and more expensive — but there are ways to save. One good place to start is the HealthCare.gov portal.

Deciding whether you need insurance is always a matter of your personal risk tolerance. Insurance has always been about “just in case.” Not everyone needs insurance; more people still don’t care to bother with it. But if you find value in peace of mind, it’s definitely worth consideration.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

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Investing has historically been one of the most effective ways to build wealth. See how much money you could make by investing $10,000. 

“Start investing” is one of the most common pieces of financial advice — and for good reason. It’s a powerful way to build wealth. The stock market has grown about 10% per year, on average, going back decades.

Numbers like that give you an idea of how much investments can grow. But if you’re on the fence about investing, it also helps to see some real dollar amounts.

How much money you can make by investing $10,000

Let’s say you’ve saved $10,000. You decide to invest it in the stock market. One easy way to do this would be with a total stock market index fund, which is available with any of the top stock brokers.

We’ll err on the side of caution and assume you make an 8% annual return on your investment. Here’s how much that $10,000 would grow over the years, without adding any more money to it.

It’s important to mention that the stock market can be volatile, and returns fluctuate. There will be some years where your investments do very well. There will also be some years where your investments lose money. And there will be a lot of years in between those extremes, as well. You won’t get a steady 8% return year after year.

However, we know that historically, the stock market has averaged returns in that range. Over time, those returns add up to massive growth. After 30 years, your $10,000 investment could be worth over $100,000.

That’s also without adding to it. What if you started by investing $10,000, but then continued investing $500 per month over the next 30 years? Assuming the same 8% return, you’d end up with $780,326.

How to start investing today

One of the most common investing questions is “where do I start?” With so many investment options available, it can feel overwhelming as a beginner.

It’s not as hard as it seems. Here’s how to start investing:

Open a brokerage account.Fund your account by transferring over money from your bank.Choose an investment.Place an order.

If you don’t have a brokerage account yet, check out our list of the best stock brokers for beginners. These are all easy to use and have excellent customer service, so they’re great for those who are new to investing.

The most challenging part is usually choosing an investment. I recommend going with exchange-traded funds (ETFs) or mutual funds. These are investments that spread your money across a large number of stocks or bonds. Instead of needing to pick a bunch of stocks yourself, you can buy an ETF or mutual fund that does it for you.

RELATED: ETF vs. Mutual Fund: What’s the Difference?

For example, you could invest in a total stock market ETF or mutual fund. This type of investment provides exposure to the entire U.S. stock market. If you invest in one of these, your investment portfolio will follow the stock market’s performance.

That’s just one option. No matter your strategy, getting started with investing is one of the best financial decisions you can make. As the numbers show, patient investors can make a significant amount of money.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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If you want to pay off your mortgage more quickly, there are three possible methods you can try. Check out these options. 

If you’re a homeowner with a mortgage, you may be very eager for the day when you can say goodbye to your home loan for good. After all, those monthly payments coming out of your checking account each month can feel like a financial burden.

The good news is, there are a number of ways to pay off your home loan ahead of schedule. In fact, here are three techniques you may want to try that would allow you to be debt-free sooner and own your home free and clear ahead of schedule.

1. Biweekly payments

Making biweekly payments is one approach that could help you pay your mortgage down more quickly. Basically, to do this, you’d just make half your mortgage payment every two weeks instead of paying your entire mortgage bill once a month. As a result, you end up making 13 full payments instead of 12, since a year has 52 weeks in it.

Many people are paid biweekly, so this approach can make sense since you’ll just pay half your bill with each paycheck. Your mortgage lender may have a system in place to let you do this, or you can transfer the amount to a high-yield savings account every two weeks and then make your mortgage payments out of that account (including the extra payment when the money is in there).

Paying your loan biweekly can cut years off your payment timeline. The table below shows how biweekly payments could impact your loan if you start them right away after borrowing $300,000 on a 30-year mortgage at 7.00%.

You would save an estimated $100,661 in interest by switching to biweekly payments, and become free of your mortgage debt years earlier. If you want to try this approach, ask your mortgage lender if it allows a biweekly payment option. If not, open a savings account today and start paying your mortgage into it by making half your monthly payment every two weeks, then transferring those funds to the lender.

2. Lump sum payment

Another option is to make a lump sum payment either once or several times over the life of your loan when you get access to extra cash. A lump sum payment can make a surprising difference, even if you only make it once, since it will reduce your principal balance more quickly, which in turn can reduce future interest you pay.

RELATED: Mortgage Calculator

Let’s say, for example, that you borrowed $300,000 at 7.00% and made a lump sum payment of $5,000 in year eight of your loan. Here’s how that would affect your mortgage.

3. Refinance

Finally, you could potentially refinance your loan to pay it off faster. This technique would work if you either:

Refinanced to a loan with a shorter term: Be aware that this could substantially increase your monthly payment, even if you are able to get a loan at a lower rate, since you’d be reducing your payoff time.Refinanced to a loan with a lower rate and kept making your same monthly payment: More of your payment would go toward principal in this situation, allowing you to pay off your loan more quickly.

The potential savings associated with refinancing would vary depending on the new loan term you choose and the new interest rate you obtain. Your refinance lender would provide you with details about the total cost of repayment and timeline so you could decide if this was right for you.

Any of these three techniques could help you become free of your mortgage debt more quickly, so consider whether implementing any or all of them could be a good option for you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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You don’t need much money to start a passive income business. Read on to find a few good ways to get started. 

Creating passive income is one of the best ways to build wealth and protect your personal finances from an emergency, like losing a job or having your salary cut. According to U.S. Census Bureau data, about 20% of Americans have some level of passive income, with the average amount earned from passive income being $4,200 annually.

Passive income strategies aren’t get-rich-quick schemes, and many initially require a significant time investment. The good news is that many can be started with $100 or less. Here are a few inexpensive ways you can start generating passive income.

1. Buy stocks

Some people think that owning stocks is only for rich people. It’s not. In fact, 61% of Americans own stocks, according to Gallup. And while you won’t get rich investing $100, you do have the potential to easily make money.

You can open an online brokerage account for free and typically buy stocks for either little or no fees these days. The hard part is figuring out what company you think will do well over the long term so that you get the largest return.

Let’s look at one popular company that many people own stock in: Apple. Let’s say you invested $100 annually over the past 10 years to buy Apple’s stock and reinvested any dividends you received to buy more shares. Thanks to Apple’s phenomenal growth over the past decade, your stock would be worth $4,848 — a 385% return on your investment.

Of course, picking stocks can be difficult. If you want to potentially earn passive income in the market without picking specific stocks, you may want to buy shares of an exchange-traded fund (ETF). These funds follow market indices and can be purchased for as little as $1, thanks to online platforms that allow you to purchase fractional shares.

2. Rent out an extra room

This one is super easy and might cost you $0 if you already have the extra space. The latest Census Bureau data shows that 27.6% of Americans live alone. This means that many Americans may have a spare room in their home that could be transformed into a passive income stream.

While it’s not for everyone, renting out a room in your home could be one of the easiest ways to generate passive income because you’re already in the space — either renting or as a homeowner — so all you need to do is find a roommate and collect their rent payments.

This could be a very lucrative way to boost your income, considering that rent prices have skyrocketed over the past few years.

3. Rent out your car

With 13% of full-time Americans working from home right now and 28% on hybrid schedules, many cars are sitting unused throughout the work week. With some planning and effort, your vehicle could quickly begin generating income through car-sharing websites like Turo.

You can list your vehicle on the site for free and pay Turo a fee when you’ve rented out the vehicle. Turo says the average annual income for one car on its site is $10,516. Of course, some work is required to keep the vehicle clean and coordinate pick-up and drop-off. Still, renting out your vehicle could be a low-cost way to earn semi-passive income.

4. Create an online course

Many people have accumulated many skills through jobs and even hobbies. You likely know how to get certain things done that someone else would find very useful — and pay for.

There are many online platforms — including Udemy, Skillshare, and Thinkific — where you can create your own professional course and then sell it to an established online audience.

You’ll need to do a fair amount of work upfront creating your course — including planning the sessions, recording videos, and making other content — but once you have it up and running, you can earn passive income from your hard work.

Some course-creating platforms charge a monthly fee, while others may take a percentage of each sale you make. But while this option isn’t free, it’s certainly inexpensive.

5. Start a dropshipping business

There are many different businesses that fall under the dropshipping category, including selling T-shirts online or print-on-demand content like notebooks and journals.

The startup cost for dropshipping businesses is low because you don’t buy any inventory and don’t have to rent an office or retail space. Instead, you’ll spend money setting up a website and potentially selling ads to market your products. You can even become a seller on Amazon and sell products without investing in your own online shop.

You’ll have to invest significant time on the front end to build your business. Still, once you’ve found a niche and have established the relevant products, dropshipping allows you to spend minimal time keeping up the business while still making online sales.

Keep these things in mind

While all of these ideas will cost you little money and have the potential to generate passive income, you’ll still need to invest time and mental energy in setting them up. For example, you may need to do a lot of research before setting up a dropshipping business or launching an online course.

Like anything worthwhile, be patient and take small steps to get started. You likely won’t be an overnight success, but making any progress toward generating passive income will move you further toward your personal financial goals.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Amazon.com and Apple. The Motley Fool has a disclosure policy.

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New construction homes tend to have higher property taxes. Read on to see why your bill might increase shortly after moving in. 

If you’ve been trying to buy a home but haven’t had any luck, you may want to look at new construction. In July, newly built home activity rose almost 6% compared to a year prior. And while you’ll generally be looking at a larger mortgage when you buy a newly built home, in exchange, you usually won’t have to worry about signs of wear and tear or major issues that come with buying a home that’s already been lived in.

That said, when you buy new construction, you’re not just looking at higher mortgage payments. You might also be dealing with higher property taxes. New homes tend to be assessed at a higher value than existing homes from the start.

But don’t get too comfortable with your initial property tax bill when buying new construction. If your experience is anything like mine, you may be in for a major shock during your second year in that home.

Your property taxes are never set in stone

One thing you must know about property taxes before buying a home is that they’re not set in stone. If you sign a fixed-rate mortgage with a monthly payment of $1,000, that payment can’t turn into $1,200 after a year and $1,400 the year after that. But you could start out with a property tax bill of $6,000 that becomes $6,300 your second year in your home and $6,500 a year later.

Property taxes are calculated by taking your home’s assessed value (namely, what it’s likely to sell for based on its condition and market conditions) and multiplying it by your local tax rate. If properties in your area are assessed every year, you run the risk of seeing your property taxes rise every year. This holds true whether you’re buying new construction or an older home.

Why new construction could lead to a shocking rise in your property tax bill

Even though your property taxes could spike from one year to the next with any home, with new construction, that’s more likely to happen early on. It’s what happened to me. Between my first year of being in my newly built home and my second year, my property tax bill rose roughly $2,000. And there’s a reason for that.

When a home is newly built, its full value sometimes isn’t assessed correctly right away. This can happen because sometimes assessments are done at a point when the build hasn’t been finalized. As such, you might see your property tax bill rise after another assessment is done. That’s an expense you’ll want to prepare for.

I happen to live in a state with very high property taxes, which explains why my bill rose by $2,000. If your state or area has lower property tax rates, you may not see such a dramatic spike. But it’s still important to prepare yourself for an increase. So when you crunch the numbers to see if you can afford your home, don’t just run with the property tax bill you’re given at the time. Instead, inflate that number and make sure you’re still within your budget.

RELATED: Mortgage Calculator

To put it another way, if you live somewhere with moderate property taxes and your initial tax bill is $4,500 on your newly built home, make sure you can afford a bill of $5,500. You might see your taxes climb by $1,000 between your first and second year in your home.

Another good bet? Talk to your real estate agent and ask what sort of property tax increase to expect. They may be familiar with those increases if they’ve sold a lot of newly built homes in the area.

Property taxes are an unavoidable part of owning a home. But be aware that when you’re buying new construction, yours might start out higher to begin with and climb rapidly after a year.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Costco has some great deals, but a pricey membership. Here’s one workaround for low prices without the membership cost. 

Low prices aren’t the only reason people are loyal Costco shoppers. However, your personal finances are certainly a good reason to consider a membership. That little card gets you all the Kirkland Signature you can stand!

Of course, if you’re more interested in name brands than store brands, you may still be able to get those Costco prices without forking over the membership fee. How? Price matching!

Some stores will meet — or occasionally beat — competitors’ advertised prices. Often, all you need is the ad and you can get an instant savings at the register.

Nine retailers that price match Costco

Many retailers specifically exclude warehouse stores and/or stores that require a membership to shop at, which means Costco is out of the running. However, some pretty major retailers will let you price match Costco:

DysonKohl’sTargetJCPenneyPetSmartStaplesBest BuyGNCTractor Supply Co.

Avoiding membership fees isn’t the only reason to price match at another retailer. You can also avoid Costco’s Visa-only credit card policy to maximize your credit card rewards. Plus, you can take advantage of store loyalty programs.

How to find store price-match policies

Want to know if your favorite retailer price matches? You can usually find the info online with a quick search using the name of the store and the term “price match.” Alternatively, pop into a local store and ask the customer service associates.

Some stores will have a list of retailers they specifically price match. Others will have a list they specifically don’t price match. And, as noted above, many stores will exclude warehouse stores or stores that require a membership.

Additionally, retailers may have certain requirements for price matching, such as the advertised sale price being available at a local store within a certain distance. Read the fine print to be sure your item qualifies.

Other ways to shop Costco without a membership

If your items aren’t available elsewhere or otherwise can’t be matched, you may have to give up — or find another way to get it from Costco. Here are a few ways to shop at Costco without paying for a membership:

Go with a friend: Costco has more than 120 million members, so there’s a good chance you know someone who already has a membership. Plan a shopping date, hotdogs on you!Get a Costco Shop Card: These Costco store gift cards can only be purchased by members, but if you can get your hands on one, you can have full access to shopping your local Costco warehouse (at least as long as your gift card holds out).Shop Costco.com: Some items on Costco.com can be purchased without a membership, though there’s an upcharge that may make the deal less valuable.Use the satisfaction guarantee: If push comes to shove, you can “trial” a Costco membership. Pay for a regular membership and give it a try. If you don’t feel as if it’s worth keeping, you can get a full refund thanks to Costco’s satisfaction guarantee.

Costco isn’t for everyone, but there’s no argument it has some great deals. In the end, you may even decide that having a membership works out for you and your family.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy, Costco Wholesale, Target, and Visa. The Motley Fool has a disclosure policy.

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