ChatGPT has the potential to revolutionize some aspects of our lives. Tada Images / Shutterstock.com
If you haven’t heard of ChatGPT, chances are good that you will soon. This OpenAI chatbot launched in November and has stunned users with its ability to answer questions in a conversational format and to convincingly generate text that mimics how real-life, flesh-and-blood humans write. Many people — particularly those who write for a living — are scared stiff of ChatGPT. But odds are good that…
Everything you need to know about recessions in just a few minutes.
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Business leaders and economists have been sounding the warning bell about an economic downturn for several months. So, what’s the big deal? What exactly is a recession? And how can you prepare? Find out with our three-minute guide.
The most common way to define a recession is as a prolonged period of economic decline. Recessions can be painful, but they are a normal part of economic cycles. In good times, the economy grows. But in bad times, the economy shrinks.
Some say that if the economy shrinks for two straight quarters, the country’s officially in a recession. The reality is a bit more complicated. There’s an organization called the National Bureau of Economic Research (NBER) that defines when a recession begins and ends, and it uses a few different indicators to make that call.
Recessions can take different shapes depending on what’s caused them and how they are handled. Looking at recessions since 1854, the NBER puts the average length at around 17 months. The shortest recession on record was the COVID-19 recession of 2020, which lasted just two months.
One of the biggest impacts of a recession is that people can lose their jobs. When faced with decreased demand, businesses look to cut costs. One way they do this is to first cut back on plans for new hires and then lay off existing employees. Economic downturns can lead to increased unemployment and reduced job security all round.
Another impact is that the value of your investments may fall. We’ve already seen a bear market in 2022, and some experts predict the stock market’s performance could worsen in 2023. There’s a lot of uncertainty about what might happen. But this type of volatility can have a big impact on people nearing retirement age and looking to withdraw from their portfolios.
The first step you can take to prepare for a recession is to understand your financial situation. Look at how much cash you have in your bank account, what your monthly outgoings are, and how much money you owe. If you aren’t sure where to start in terms of tracking your spending, a budgeting app might help.
Once you know where you stand financially, turn your attention to your emergency fund. Having three to six months’ worth of living expenses socked away in a savings account can make a big difference in the event of a financial emergency such as a job loss.
If you carry high-interest debt, particularly that of the credit card variety, look for ways you can pay it down. If you lose your job or your income gets cut, any debt repayments will eat into your monthly costs. Plus, if you fall behind on your payments, you may have to pay late fees, your credit score could take a hit, and you may eventually have to deal with debt collectors. The more you can pay down before an economic downturn, the better.
Recessions are not fun, but they do pass eventually. We don’t know whether we’ll enter a recession in 2023, and if we do, how severe any downturn might be. The best way to prepare is to strengthen your financial foundations. If we do hit a recession, you’ll be better able to weather the storm. If we don’t, you’ll be well positioned to handle any other financial emergencies that arise.
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Here’s how to determine the right amount of life insurance for the over-60 crowd.
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For many people over 60, life insurance may no longer be necessary or even desirable due to the cost of it. However, there are still some situations in which life insurance can be beneficial. So how much life insurance should someone over 60 have? Let’s take a look at the factors that should be considered when determining life insurance coverage for those over 60.
The amount of life insurance you need at age 60 depends on your age and financial status. One rule of thumb is the DIME formula, which is a good starting point to determine how much life insurance you need. The formula involves adding up:
Debt: Total outstanding bills plus the cost of final expensesIncome: The number of years of income to replace (including the loss of labor a non-working spouse performs)Mortgage: The outstanding balance of a home mortgageEducation: The estimated future education costs for children
Generally, as you get older, the amount of coverage needed decreases because most of your major expenses have already been paid off. So you may not need life insurance to cover debts and a mortgage, but you may want to provide enough funds to cover any unforeseen costs as well as living expenses for any dependents left behind. However, if you have unpaid debts, it may make sense to maintain a higher level of coverage even after age 60.
If you provide a major source of income for your family or dependent children, then more life insurance coverage may be necessary. It is important to consider how much money your family would need to live comfortably without your paycheck coming in each month. Consider all expenses including housing costs, medical bills, education costs (if applicable), food bills, utilities, and any other regular expenses they may incur on an ongoing basis.
This will give you an idea of how much money your survivors would need if something happened to you and will help determine how much life insurance coverage is needed for them to remain financially secure after your passing. If you are in good health and don’t expect to pass away anytime soon, then it might be worth considering purchasing a policy with more coverage so that your loved ones will not be left with any outstanding debts if something were to happen to you.
Life insurance can also provide funds for final expenses, such as funeral costs or estate taxes. Final expense policies are designed specifically for this purpose and typically provide lower levels of coverage than traditional policies (usually around $10,000). This type of policy can be helpful in ensuring that there are enough funds available to cover these costs without depleting any existing assets or savings account balances.
Figuring out the right amount of life insurance for someone over 60 can seem daunting, but it doesn’t have to be complicated. By taking into account factors such as age and financial status, family responsibilities, and final expenses, it becomes easier to determine the best amount of coverage needed at this stage in life. It’s important to keep in mind that life insurance coverage is not just about providing financial security after your death — it also provides peace of mind while you are alive. Knowing that your family will be taken care of financially if something were to happen to you is invaluable, no matter how old you are.
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The housing market is likely to remain cool in many places, but these markets will lead the way to a warm-up in 2023. Daniel Korzeniewski / Shutterstock.com
Last year was a roller coaster for the housing market. At the beginning of the year, home values soared. But by December, higher mortgage rates and other factors had brought housing sales to a standstill in many places. As the calendar turns to 2023, the cooling in housing is likely to continue, according to Zillow. In a recent report on the state of housing in America, Anushna Prakash…
Everything you need to know about NFTs and minting.
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Non-fungible tokens (NFTs) were so popular in 2021 that Collins Dictionary made it the word of the year. Several NFTs sold for millions of dollars, with one piece — Pak’s “The Merge” — selling for over $90 million. However, their moment in the spotlight was relatively brief. Interest in pretty much everything crypto related fell away last year, including NFTs.
The easiest way to understand a non-fungible token is to think of it as a digital certificate of ownership. These certificates get stored on the blockchain, which — in theory — means they form a secure, permanent record that can’t be tampered with. Anything can be made into an NFT, including music, art, movies, and even my coffee cup.
Discover: Best places to buy bitcoin
More: Check out our updated list of best crypto apps including one offer with a $100 crypto bonus
Without getting too technical on you, non-fungible refers to something that is unique and isn’t interchangeable. So a dollar bill is fungible, because the bill itself isn’t special; it can be replaced with any other dollar bill and you’d still be able to spend it. On the other hand, if that dollar bill had been signed by George Clooney, it would become unique and non-fungible and worth more than a dollar.
Minting an NFT is the process of publishing your NFT on the blockchain. There are a few different ways you can do this, depending on how much you’re willing to pay and what market you’re trying to reach. In addition to the work you want to turn into an NFT, you’ll need the following two things:
An NFT walletAn account with an NFT marketplace
There are a number of different NFT marketplaces. Have a look to see which one suits you — consider the reputation of the platform, how big its community is, what fees it charges, and how user-friendly it is. Some marketplaces have a process to authenticate content creators, which basically establishes you as a legitimate seller. Be prepared to jump through some hoops if you want to get approved.
It’s also important to consider which blockchain you want to mint on. You pay a gas fee for every transaction that’s made on the blockchain. Gas fees on Ethereum (ETH) are more expensive than on other chains, but Ethereum is also the most popular blockchain for NFT sales. Some NFT platforms will allow you to mint on other chains, such as Polygon (MATIC), Solana (SOL), and Avalanche (AVAX).
A couple of platforms will let you skip the gas fees altogether by only recording the NFT on the chain when someone agrees to buy it. It’s sometimes known as gas-free minting or lazy minting. In this scenario, the buyer will pay the minting fees. However, this can make it harder to sell your masterpiece.
Like many things related to the blockchain, it is early days and we don’t know how this technology will unfold. There’s certainly a value in being able to store a digital certificate of ownership, and crypto advocates argue that one day we might use NFTs to store real estate records, amongst other things. NFTs have the potential to change the way we own things and the way we sell them.
One of the oft-touted benefits of NFTs is that they empower creators. For example, artists can take credit for work they created, and, in some cases, receive royalties when the work gets sold on. Plus, musicians and artists don’t need to rely on galleries or record labels to sell and promote their work, as they can connect directly with their audience
Once an NFT has been minted, there’s an easy way to track the authenticity of each piece, including who has owned it and who made it. That’s all very well. Unfortunately, people have been minting NFTs of work they didn’t create, without the artist’s permission, and selling them on NFT marketplaces. NFT fraudsters and scammers have made off with hundreds of millions of dollars in different ways.
The NFT market of 2021 had many hallmarks of the dot.com bubble of the early 2000s. Relatively ordinary pieces of art became more valuable just because they were NFTs. People who’d never bought art before speculated on these digital assets in the hope of getting rich. That doesn’t mean NFTs are inherently worthless. Indeed, it could be part of the next generation of the internet and transform the way we own things.
But if you’re going to enter the world of NFTs, don’t buy or mint NFTs for the sake of it. Use this technology as a tool and understand the value of the item itself. There’s an environmental and physical cost to minting NFTs, and there are no guarantees you’ll make back your minting costs. NFTs are vehicles, so they are not inherently valuable or worthless. It all depends on what’s inside.
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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.Emma Newbery has positions in Avalanche, Ethereum, Polygon, and Solana. The Motley Fool has positions in and recommends Avalanche, Ethereum, Polygon, and Solana. The Motley Fool has a disclosure policy.
Protect your hard-earned cash by avoiding these fees.
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Recently, finance expert and author Ramit Sethi tweeted out a conversation between two people discussing their investments. His tweet accompanying the conversation warned that many people — including one of the individuals involved in the discussion — “never realize they’re being ripped off for literally hundreds of thousands of dollars.”
So, what was the fee Sethi was talking about, and are you paying it too?
In the conversation Sethi was commenting on, one of the individuals involved said: “My investment advisor told me it is being managed by a portfolio manager justifying the 2.5% fees.”
It was this fee that could end up costing you hundreds of thousands of dollars over the course of your life — and it is a totally unnecessary expense that virtually no one should be paying.
See, all evidence points to the fact that actively managed portfolios rarely, if ever, outperform passively managed investments like index funds. With actively managed portfolios, people — presumably investment experts — pick individual stocks or other investments to buy. With passively managed investments, your money is invested with the goal of mimicking the composition of some type of financial index, such as the S&P 500.
Index funds are much less expensive because there’s no person who has to be paid to pick investments. And, historically, index fund investing actually ends up producing higher returns in the vast majority of situations compared with actively-managed funds.
But, some people — like those who were having the conversation Sethi was talking about — get talked into choosing an actively managed fund because they believe it will actually net them more money. Unfortunately, even in the rare cases where the investment advisor does pick great stocks and the fund outperforms index funds, the high fees charged end up eating away most of the returns.
Take the 2.5% fee described in the tweet. Let’s say you invested $10,000 per year for 30 years and paid that fee each one of those years. You would end up losing $438,851 in fees to your investment manager. That is hundreds of thousands of dollars that could have been in your portfolio but wasn’t.
The good news is, it’s not hard to avoid these huge fees. You just need to watch what you are being charged for anything that you invest in.
If you work with a financial advisor who offers you guidance on what to do with your money, try to find a fee-only advisor so their interest will be aligned with yours. An advisor who works on commission has an incentive to try to get you to invest in things that pay that advisor the most rather than to invest in whatever is best for you and your investing goals.
And when you make any investment in your brokerage account, pay attention to the expense ratio. Unless the returns are consistently substantially higher than the 10% average annual returns you could earn from investing in a low-cost S&P 500 index fund, you should steer clear of putting any money into an investment that comes with a high cost.
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