Money Management

Not happy with your financial advisor? Read on to find out what to do. 

It’s estimated that 32% of Americans use a financial advisor, according to data from intelliflo. And working with one offers several benefits.

A financial advisor can help you better manage your money and work toward your financial goals, whether it’s buying a house or saving for retirement. Working with a financial advisor can also give you more peace of mind that you’re investing in an efficient, appropriate manner given your age, appetite for risk, and objectives.

But there may come a point when it’s time to cut ties with your financial advisor. Maybe you’ve realized you’re being charged higher fees than average. Or maybe your financial advisor is hard to reach and doesn’t explain things to you the way you’d like them to.

It’s very important to be happy with your financial advisor and to feel like you’re getting good service from them. So if that’s not the case, you shouldn’t hesitate to sever that relationship. Here’s what that might entail.

Have an honest conversation

In many cases, breaking up with your financial advisor is really a matter of having an honest conversation and explaining why things aren’t working out for you. A good financial advisor will bow out gracefully and help make the transition to a new advisor as smooth as possible.

Now, your financial advisor may try to offer to change their ways and get you to stay on board if the issue at hand is something like communication. But if the issue is fees, and your advisor knows they won’t budge on those, then they may be more likely to accept your decision and help you move on.

From there, it’s a matter of deciding what to do with your assets. Your financial advisor might have your assets at a well-known brokerage already, and you may have the option to keep your portfolio where it is and manage it yourself.

However, if you’re moving over to a new financial advisor, they might have a specific brokerage they want you to work with. So in that case, you might need to open a new brokerage account and work with your old financial advisor to get your assets transferred into that new account.

You may, in some cases, face a small fee for moving your assets over. Often, this won’t be the case, though.

You should also know that in some cases, you may need to cash out investments if your financial advisor has your money in a proprietary investment product they oversee. That could have tax implications. If you have an accountant you work with, they should be able to help you figure out what those might entail. Or your old financial advisor might give you the courtesy of walking you through them.

A tough move you might need to make

There’s no point in continuing to work with a financial advisor you feel isn’t serving your needs or is charging you too much. If that’s where you’re at, have that conversation so both you and your financial advisor can move on.

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If you’re going to buy a home, it’s important to have the right mindset and expectations. Read on to learn more. 

Buying a home is a major goal for a lot of people. And it’s easy to see why.

When you own a home, you get an opportunity to build equity in that property. And unlike the money you pay as a renter, as you pay off your mortgage loan, you get closer to owning a potentially valuable asset outright.

But there are a lot of misconceptions about homeownership that may be driving some people to purchase a home when that’s not the right move for them. Here are a few things people tend to get wrong about owning a home.

1. It’s a more financially sound choice than renting

You’ll often hear that renting a home is akin to throwing money away because you’re not getting anything out of it in return. In reality, there’s nothing wrong with spending money on rent because it satisfies a need — putting a roof over your head.

When you buy food and consume it, you’re not getting any financial value out of it. But you’re doing something important — keeping yourself nourished.

To put it another way, there are some costs in life that are pure expenses and not investments. And it’s okay if housing is one of them.

Besides, by renting a home, you’re off the hook as far as things like maintenance and repairs go. That could result in a world of savings and free up cash you can use for other purposes, like buying stocks and growing wealth that way.

2. It’s a great investment

If you’re going to buy a home, don’t think of it as an investment. Think of it as an expense.

You might end up making money on the sale of your home if your property appreciates in value, you sell at the right time, and you don’t end up having to sink a ton of cash into that home along the way. But you’re by no means guaranteed to turn a profit when the time comes to sell your home. And it’s important to understand that before buying a place of your own.

What’s more, just because you’re able to sell your home at a price that’s higher than what you paid for it does not mean you’re ending up with a profit. Let’s say you bought your home for $300,000 and are able to sell it for $500,000 after 20 years. But what if, between property taxes, maintenance, and repairs, you spent $250,000 on homeownership costs over those 20 years? When you add up all of the numbers, you’re not looking at a profit at all.

3. It gives you the option to make your own rules

Some people like the idea of owning a home rather than renting one because doing so means not having to follow a landlord’s rules. But if you buy a home that’s part of a homeowners association, or HOA, you may be disappointed to learn that you don’t, in fact, get to call all of the shots.

Some HOAs can be extremely restrictive, dictating what color your shutters must be and what type of shrubs you’re allowed to have in your front yard. And it’s not unheard of for HOAs to ban certain dog breeds, or to prohibit property owners from running a business from home.

Now you might think, “Well fine, I’ll just avoid a home in an HOA.” But that may not be so easy. More than 53% of owner-occupied households in America are part of an HOA. And more than 82% of newly built homes in 2021 were part of an HOA community.

This isn’t to say that it’s impossible to find a home that doesn’t force you to join an HOA. But it’s getting increasingly difficult.

Homeownership can be a rewarding experience. But don’t fall victim to the above misconceptions if it’s something you’re interested in. Instead, understand that you may not make money on your home and you may not get to set your own rules as expected. And if you decide that renting makes more sense for you, know that there’s absolutely nothing wrong with that.

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Renting out a portion of your home is a great way to generate income. But read on to see why one expense might catch you off guard. 

Owning a home can be an expensive prospect. You might struggle to keep up with your mortgage payments, property taxes, maintenance, and repairs. And even if your home is paid off, there are still a lot of expenses you’ll have to cover. That’s why if your home has a separate area that lends to privacy, like a finished basement or garage, you may want to consider renting it out.

Renting out a portion of your home will mean giving up some living space. It might also mean giving up a degree of privacy.

Plus, as a landlord, you’ll have to address issues a tenant of yours brings up right away. If the bathroom in your basement stops working, you can’t simply put off addressing it during a busy week if you have a tenant living down there (whereas if you weren’t renting out that space and have other bathrooms in your home, it might be something you can wait to deal with).

But still, there’s something to be said for being able to generate a steady stream of monthly income. If you’re a newer homeowner, those rent payments might cover most or even all of your mortgage payments. And if you’re a retiree who doesn’t want to downsize, the rental income you collect could nicely supplement your retirement plan withdrawals and Social Security benefits.

But if you’re going to rent out your home, you might have to brace for one large expense. And it’s an unavoidable one at that.

Prepare to pay taxes on your rental income

The IRS is entitled to a piece of any income you get your hands on, whether it’s a paycheck from work, a distribution from a traditional IRA or 401(k) plan, or interest in your savings account. Similarly, the IRS considers rental income taxable. You must report all of your rental income when you file your tax return and pay the IRS accordingly.

So, let’s say you charge $1,200 a month in rent. You might think you’re walking away with a cool $14,400 a year. But that profit may be much lower when you account for your associated tax bill.

Now that said, you are allowed to deduct expenses associated with renting out part of your home. For example, if you have to purchase supplies to repair your tenant’s living quarters, you can deduct their cost on your taxes, and that deduction will offset the amount of tax you need to pay on your rental income.

Don’t get thrown for a loop

Renting out part of your home may be a lucrative prospect for you. But don’t forget to account for taxes as part of that deal.

Remember, when your tenant hands over a check for rent every month, the portion due to the IRS won’t be deducted magically. So before you spend all of that money, you may want to set some aside so you’re able to cover your associated tax bill in full. The last thing you want is a tax debt on your hands because you didn’t reserve funds for the IRS.

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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.
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Is a given tool worth buying? Read on to see how to find out. 

Now that we’re deep in the throes of home improvement season, many people will inevitably face a big dilemma — deciding to rent tools versus buy them. Renting tools for maintenance, home improvements, and repair projects could end up being more cost-effective than purchasing them outright, but that’s not always the case.

And also, there are factors to consider beyond just cost. Ask yourself these questions to see what makes the most sense.

1. How many times will I use it?

Renting a tool might result in a lower credit card tab than buying it. But if you’re going to use the tool often enough, it might eventually pay for itself.

As an example, you can rent a pressure washer from Home Depot for $88 a day. But you can purchase one outright for $293. So after four uses, it will pay for itself.

If this is an item you think you’ll use just once a year, renting it might make more sense. After all, a pressure washer might break down after a few years, or a better model might come out that makes the work at hand much easier. But if you have a need for a pressure washer several times a year, then buying could be your better bet.

2. Do I have a place to store it?

Maybe there’s a tool you think you’ll use often enough to make a purchase worth your while. But if you don’t have room to store it, that’s a moot point. You don’t, for example, want to clog your garage with tools to the point where there’s no room for your car in the middle of winter. So consider your storage situation before deciding to buy.

3. Do you have neighbors with whom you can share the cost?

You may be thinking of purchasing a large lawn mower to maintain your lawn rather than have to pay up for a gardening service. You may even have room to store a giant lawn mower. But a quality, ride-on lawn mower could cost upward of $2,000. That’s a large sum to withdraw from your savings account.

However, if you have neighbors who also want to mow their lawns, you might be able to go in on a lawn mower share of sorts. And that’s apt to be far more cost-effective than hiring a mowing service to cut your lawn every other week during the warmer months.

Sometimes, it makes sense to own tools when doing so means saving money and it’s not a hassle to keep them stored away. But in other cases, a rental could make more sense. Run through these questions before making your decision, but keep in mind that once you buy a tool, you may be stuck with it — even if you don’t love how it works.

If you rent a tool you find ineffective or difficult to use, you’ll be able to give it back at the end of the day. So if you’re on the fence, renting might be a lower-risk proposition. And that alone might drive you to rent rather than make a purchase.

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Starting a business can be quite challenging, especially for small businesses. Fortunately, there are several grant programs available for small businesses. Read on to learn more! 

Starting a small business can be a costly venture. You need to invest in equipment, pay for supplies, rent and utilities, as well as marketing and advertising costs. These expenses can quickly add up, which is why many entrepreneurs look for funding opportunities.

One fantastic way to get funding for your small business is through grants. Grants typically have an extensive application process and require you to put together a proposal outlining your business or project and how it will benefit from the grant money. If you get one, many grants send the funds straight to your business bank account and you don’t have to pay it back. If you’re a startup in need of funding, here are five grants you should apply for.

1. Grants.gov

The Grants.gov program is a centralized location for federal grants. The site has over 1,000 grant programs, offering the most comprehensive database of free government money. Every year federal agencies post funding opportunities that amount to more than $500 billion.

With grants.gov, you can find specific programs that fit your business type, and the application process is straightforward and streamlined. By taking advantage of these opportunities, you can gain the necessary funding to take your startup to the next level.

2. The U.S. Small Business Administration (SBA)

The SBA provides several programs and services to help small businesses get started and grow. One of the ways it does this is through grants. While the SBA does not provide direct grants, it partners with a number of organizations that offer grants to small businesses. To learn more about SBA grant programs, visit its website or contact your local SBA office.

3. Fedex Small Business Grant Contest

Fedex has awarded more than $1.5 million in cash and prizes to over 100 small businesses since 2012. The contest awards unique and innovative small businesses. In 2022, nearly 18,000 small businesses entered the contest.

Any eligible for-profit small business that has been in business for at least six months, has a FedEx shipping account number, has fewer than 99 employees, and has a shipping need for their business is eligible to enter the contest.

4. Fresh Start Business Grant

This grant is for an entrepreneur to receive $2,500 to put toward business start-up costs. They will also receive free formation services from IncFile. IncFile’s Gold plan includes ($385 value) incorporation services in your state, free Registered Agent services for a year, and a free tax consultation.

Applicants need to create a short, two-minute video telling IncFile how entrepreneurship will impact their life and submit a sample business plan.

5. The National Association for the Self-Employed

The National Association for the Self-Employed (NASE) is a membership organization that provides a variety of resources and services to self-employed individuals and micro-businesses, including grant opportunities.

One example is its Growth Grants program, which provides financial assistance of up to $4,000 to help businesses grow and create jobs. Since 2006, the NASE has awarded nearly $1 million to its members.

These are just a handful of the thousands of grant programs that offer funds for small businesses of all types to get off the ground and succeed. Though the grant application process can be quite competitive, taking the effort to research and apply for the right grant can pay off in the long run. With these five small business grants, your startup is one step closer to achieving its goals.

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The warehouse giant recently made headlines when it sold the most expensive item ever in its history. Read on to learn what it was. 

When most people think of Costco, they think of bulk groceries, electronics, and other household items. However, there is one item that Costco has sold recently that could easily be considered the most expensive item ever sold within its walls. This item is so expensive, in fact, that it’s even higher than the cost of today’s average mortgage loan!

$600,000 diamond

During an earnings call in 2020, Chief Financial Officer Richard Galanti told analysts and investors that Costco had sold a cushion-cut 10-carat solitaire diamond ring “for over $600,000.”

The cushion cut, a square or squarish-rectangular diamond, has gained popularity in recent years. Its rounded corners give it a unique brilliance and sparkle. The fact that the diamond is 10 carats in size, which is quite large, makes it even more special and rare. The 10-carat diamond is part of the 247,000 carats of diamonds the company sold that year.

Despite the high price tag, the diamond may have been a bargain. Costco is known for offering high-quality products at a lower cost than other retailers, and the diamond industry is no exception. A 10-carat cushion cut stone with a top color and clarity gradings could cost over $850,000. With a potential savings of $250,000 on such a ring, the cost of a Costco membership is well worth it if you’re shopping for jewelry.

So, who bought the diamond, and where was the sale made? Unfortunately, we don’t know the answer to either of these questions. The company has chosen not to disclose any details about the buyer or the location of the sale. This only adds to the mystery and intrigue surrounding the sale.

$400,000 diamond sold in 2019

The sale of this 10-carat diamond at Costco is a testament to the changing landscape of the fine jewelry industry. Historically, high-end jewelry was sold exclusively at luxury retailers and jewelry stores.

However, with the rise of online shopping and wholesale retailers like Costco, more and more people are able to access high-quality jewelry at lower prices. In May 2019, Costco sold another diamond, this time for $400,000.

Currently on its website, Costco has 10 diamond rings costing over $100,000. The most expensive is a Radiant Cut 1.54 ct Center VVS1, Fancy Pink Diamond Platinum Halo Ring that is selling for $349,999. The second most expensive is a round brilliant 6.55 ct VS1 G color diamond platinum solitaire selling for $329,999.99.

These sales mark a shift in the types of items that Costco is selling. Traditionally, the store has been known for selling bulk items and groceries. But in recent years, the company has begun to branch out into new product categories. From luxury watches to high-end appliances, Costco is proving that it can sell more than just everyday products.

The sale of a 10-carat diamond for over $600,000 at Costco is certainly noteworthy, as it is one of the most expensive items the company has ever sold. The sale of these high-value diamonds at Costco is a sign of the changing landscape of the fine jewelry industry. Before you decide to splurge on a diamond costing as much or more than a house (or really, any high-end jewelry), do your research and make sure it fits your budget. Whether you’re a Costco regular or a casual shopper, this news is sure to make you think twice about what the store has to offer.

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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 positions in and recommends Costco Wholesale and Gala. The Motley Fool has a disclosure policy.

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