Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Investing, Money Management, Personal Goals, Saving

Financial Planning: A Dose of Truth and Grace

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Planning for a Financial Planner

So you’re considering a financial plan! Perhaps your finances have told you that you need one. Planning with purpose for your financial future is a noble task. Sure many good things come to us in unexpected surprises, but planning for a good future, especially when it comes to finances, is a wise strategy indeed! You’re reading this article because financial planning interests or excites you, and just doing so is taking the first step.

 

Financial planning is a well marked plan to thrive financially, and I don’t know anyone who doesn’t want a secure, successful financial portfolio. It’s never too late to start making changes and never too late to pursue financial freedom. The key is: start where you are. Don’t dwell on where you have been or the mistakes and poor choices that you may have made. Everyday is a fresh start to the life you want to live, to the best you yet!

Your Dreams, Desires, and Goals

You have dreams, desires and goals. Everyone does. But, not everyone lives in such a way as to see them come to pass. Why do some succeed where others fail? Why do some thrive while others seem to strive after the wind? Not all of life’s answers come sugarcoated and some pills are hard to swallow. But, taking in wisdom, advice and eating humble pie is good for us all. With humility comes honor, and sometimes taking a long, hard look at ourselves is truly a humbling endeavor.

Finances are a major test and testimony of our maturity and level of personal responsibility. It’s important in the process of self-discovery to admit the truth about your behaviors and choices and the effects they have had on both your life and the lives of those you influence, whether for good or for bad. Be sure to give yourself a healthy measure of both truth and grace. As imperfect people, who make not so perfect choices, grace is something we all need.

Consider Your Financial Peace

Start today by considering who you are, who you want to be. Consider what your financial situation looks like and what you want it to look like. Consider what it will take to get you there. Look at the situation objectively. Keep negative thoughts and emotions at bay. You are strategizing, planning, preparing and leading. It takes a strong mind and a strong spirit to be a good leader. The first person you lead is always yourself. And the truth is, if you can’t lead yourself, you really can’t lead others, not well, anyway.Financial grace is not a credit card with no limits and no consequences. If you charge, you owe. Same goes in life.

Your material choices have consequences, both positive and negative. Grace goes the extra mile, however. It says, “Yes, you are where you are, but…you don’t have to stay there, and you certainly don’t have to return.” Grace gives us the opportunity to make a change, to make the change we desire. It helps us to feel empowered to walk out the lifestyle we want for ourselves and to make the daily choices that both get us and keep us there. Mary Poppins should have said a spoonful of grace helps the medicine go down.

Planning Short and Long Term Goals

As you begin to plan, look at both short and long term goals. Write out the steps it will take to accomplish them. With your basic plan in hand, your road map, determine if further help is needed to bring clarity or to implement your newly devised strategy. Share your newfound view with others and invite them to partner with you where appropriate. Your close family and friends are key players in the game called “your life.” And, be proud of who you are because no matter where you’ve been, what you have or have not done, you are this day, an overcomer.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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    Car, Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Personal Goals, Saving

    High Car Payments Can Drive You Over the Edge

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    High Car Payments

    It is an all too common story. Many people struggling with debt can trace the beginning of their debt problems to a new car purchase – a big monthly payment, financed for too long. Some households even have two vehicles with large payments in the $400 to $500 range. With the budget maxed out, you can see how this type of financial burden could lead to a crisis. It’s easy to start falling behind on your budget and ultimately turning to credit cards, cash advances or loans to make up where your cash flow is lacking.

    Test Drive the Monthly Payment

    You may think you’re getting a steal of a deal on that new SUV or speedster. After all, the dealer said he’d take $2,000 off the sticker price – how could you pass that one up! You know the saying: Buyer beware. Be aware of what you can afford, and go into the purchase with a plan. Find a comfortable monthly payment that allows room in your budget for maintenance, and possible gas and insurance increases. You want a vehicle that improves your lifestyle, not one that enslaves you to a high monthly expense.

    Car Payment Facts

    • Monthly payment

    Financial experts recommend spending no more than 15% of your monthly take-home pay on a car payment. If your budget is tight, a more conservative figure like 8% would be appropriate. Even though a lender may approve you for more than you have budgeted, you don’t need to spend it. Consider the future effects of your decision and your other lifestyle and financial goals. Balance is key to budgeting.

    • Term of the loan

    According to the Federal Reserve, the average auto loan term has been creeping up over the years. In 1998, the typical car loan was a 4-year term, and now, lenders commonly offer 6-year terms. It certainly lowers your monthly payment and may help you reach the 8% you budgeted for. However, it doesn’t come free of charge. Obviously, you’ll pay a lot more than you signed for because of the increase in overall interest. And, if you want or need to sell, chances are you’ll owe more than what the car is worth. It takes longer to build equity with a long-term loan. Consider what you can afford monthly and base a purchase on a four year loan. This doesn’t have to mean less car. Shopping used cars in your price range can offer a fleet of options.

    • Interest

    Do some investigating and shop around for the best interest rate before negotiating a purchase with a dealer. Check other dealerships and financial institutions. Dealerships and financial institutions often run promotions, offering incentives like lower interest rates, zero down and cash back. Also, if you can afford to send in payments above your monthly payment, it will pay down your premium faster, save on the overall interest and shorten the life of your loan.

    • Pleasure

    Don’t buy a vehicle that you don’t like or are embarrassed to drive. It is important that you are happy with your purchase for more reasons than simply the cost. The best car deal is one that you can afford, meets your lifestyle needs and that you enjoy driving.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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      Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Money Management, Personal Goals, Saving

      Money, Love, and Marriage

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      Marriage and Money

      Roses are red; violets are blue. No matter the cost, I’ll stand by you…

      Have you had the talk yet?…You know, the one about money, spending habits, future goals, budgeting…?

      If you haven’t, it should be a top priority for your relationship.  If you have, have it again.  Discussing finances should be a regular and healthy part of your lifestyle together.  Being on the same page in this area will protect your marriage (or future marriage) against the most common relational enemy.  You’ve heard the statistics.  Money and finances are the number one reason couples argue and ultimately divorce. Don’t let your marriage become a number.

      Make Finances a Joint Venture

      Regardless of you or your spouses accounting or investment skill set, planning out your financial future and implementing those strategies should be a mutual effort.  Coming together to decide matters in the area of finance will allow you both to be on the same page number…of the same book.  Couples drift away from each other day by day when they are not planning their future together.

      Relationships and matters of finance should not be left to one person alone, even if he or she is “better at it.”  This disconnects one partner from a key area and anytime one of the partners is left out of a major area of the relationship, it will lead to the two of them planning and living, by default, two separate lives.  We, as humans, are meant to be in relationship with each other, and drifters will eventually wash up on someone else’s shore.  So, make it a priority to come together and stay together in the area of financial planning.

      Tip for Financial Success

      Use this time of planning as an opportunity to build closeness into your relationship.

      Respect and Love

      The two greatest relational needs. Anytime you are communicating with your spouse, you are communicating either respect and love or their opposites.  Since the topic of finance can stir one or both of you up, be especially careful to communicate this respect, love and trust through words, tone and body language.

      Listen and Speak Lovingly

      Listen for his or her dreams, desires, goals, reasons.  Your partner has spending habits, as we all do.  Find out the why behind the what.  This will help you to understand your partner better and offer support when needed.

      Be a voice of encouragement. Speak highly of and to your spouse.  Build him or her up with your words. Remind your better-half how capable, intelligent and valued he or she is.  You have the power to build up or to tear down, and it starts with a simple comment.

      Give Financial Grace

      If this is a new process for your relationship, a new way of doing things financially.  Give yourselves grace to get through the transition. Old habits may die hard, but building new and healthy patterns into your relationship is definitely worth the initial investment!

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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        Home, Home & Mortgage, House, Loans, Mortgage

        Mortgage Loan Types – Home Buying

        Home Buyers and First Loans

        Buying your first home? You may be thinking the hardest decision you have to make is picking a house.  However, the hardest decision you will be making in this process is what mortgage loan to sign for.  The main types of loans are: fixed rate, adjustable rate, interest only and reverse.

        Federal Housing Administration (FHA) Loans

        For first time home buyers, Federal Housing Administration (FHA) Loans may be the best option.  This program offers competitive interest rates, allows smaller down payments and has easier qualifications.  The typical down payment required with this program is 3.5 percent of the purchase price of the home.  FHA mortgage loans also require insurance, but they do offer a refund on it.

        Fixed Rate Mortgage

        A fixed rate mortgage is also referred to as PITI, Principal Interest Tax Insurance.  With this mortgage everything is included: principal, tax, interest and insurance.  For example, if you have a fixed mortgage, you don’t have to worry about forking over extra cash during tax season because you already paid this tax along with your mortgage. Usually a fixed mortgage is for 30 years, but you can also get a 15 year mortgage, depending on your finances.  If you do qualify for a 15-year mortgage you can expect a lower interest rate, but higher monthly payments.

        Adjustable Mortgage

        An adjustable mortgage has lower payments at the beginning of the loan.  You can get this mortgage for 15 or 30 years.  During this time, payments can be adjusted upward; as the market changes so do your payments.  This type of loan comes with more risk because your payments change regardless of whether your income increases.

        Interest Only Loan

        An interest only loan usually takes 5 or 10 years to pay off, during this time your entire payment is going to pay off the interest.  It’s a waste because although you are making monthly payments, you are not paying off your home.  The only positive aspect about this loan is that it allows customers who expect to increase their income in the future to take out a bigger loan than they can currently afford.  This type of loan comes with a high risk.

        Reverse Mortgage

        Reverse mortgage is especially made for those over the age of 62 and it was created through the government program HUD.  These citizens get a portion of their equity and receive a payment every month.  To become a part of this program there is no income or credit requirement.  However, the cost to enroll in this program can be more than $8,000.  Also, once the borrower dies, the bank settles the debt with the heirs.

        A Debt Free American Dream

        Achieving the American Dream without getting further into debt is possible.  Regardless of which mortgage you sign for make sure you know the details.  The key to avoiding traps is knowledge.  Be realistic and buy a house within your means.

        Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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          Christian Credit Counselors, Debit & Your Credit Score, Money Management

          Credit Reports – The Knowledge You need to Know

          Improving Your Credit Score

          The best way to improve your credit score is to improve your knowledge on credit reports.  There are three major credit bureaus that put together your credit report: Equifax, TransUnion, and Experian.  Although the information they gather is yours, you do not own it, these agencies own your information.  They have collected the information and they give you the right to view it.  You can view your credit report for free on www.anualcreditreport.com.  You can view one or all three, depending what you need it for.  Your credit score will be between 500 and 840, anything over 700 is a good score.

          How your score is tabulated is unknown, but what makes up your credit score is no secret.  Some of the items that are calculated into your credit score are employment, department store credit card(s), credit card(s), installment loan(s), collection item(s), and inquiries.

          Department Store Credit Card Accounts

          For department store credit card accounts they look at highest credit allowed, balance, and date opened.  The rating scale on this account is R1 to R9 with R9 being the worst.  The R stands for revolving, and it tracks how well you pay.  A similar scale is used for installment loans, I1 to I9, where I9 means the account is in collection.  On this scale, I7 means they took back the collateral.  For example, on a car loan I7 means the car was repossessed.  All accounts, department store credit cards, credit cards, installment loans, etc., have a twenty four month window.  If you fall behind and make a late payment on any account, you must make twenty three on time payments to get the late payment to drop off.  Inquiries made on your account have a very small effect.  If you are shopping for a new car, the inquiries made by the dealerships have no significant effect on your score.  However, if you have fifteen inquiries in one month it will cause a big impact because it appears you are desperate for credit and this raises a big flag.

          This information is sold to banks by the credit bureaus; this is how they make money.  With this information banks look at who is a credit risk, will pay over a long period of time, and earn them the most money.  For example, banks look at bankruptcy filers to offer them a credit card with high interest.  Also, the bank is attracted to those who recently purchased a home because most of them will make big purchases like furniture, home improvements, etc.

          Managing Your Money

          There are some simple rules that will help you better manage your money and increase your credit score.  Prioritize your bills, and pay your bills immediately.  As stated by the President and CEO of Christian Credit Counselors, Greg McTaggart, “the longer you have that credit card, the more they make off of you.”  Think of your purchases.  Do not just focus on the present, focus on what you will need 4 to 8 years from now.  Poor planning leads to impulse buying, pre-schedule bills, balance check book, and have cushion for savings and emergencies.  To avoid fraudulent activity on your credit report, do not give out your information generously.  Check your report annually and dispute any irregularities with the credit bureau.

          Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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            Kids & Money, Loans, Student Loans

            Student Loan Forgiveness Options

            Student Loan Forgiveness

            After my last post about Student Loans, I received a question asking for more in depth information about student loan forgiveness.  I researched and found the following information.  These are the careers that can possibly eliminate your student loans.  If you decide to partake in one of these programs, make sure beforehand that you can use it towards loan forgiveness.

            Military Forgiveness

            Students who are in the Army National Guard may be eligible for their Student Loan Repayment Program, which offers up to $10,000.

            Teaching Forgiveness

            Students who become full-time teachers in an elementary or secondary school that serves students from low-income families can have a portion of their Perkins Loan forgiven under The National Defense Education Act. This program forgives 15% of your loan for the first and second years of teaching service, 20% for the third and fourth, and 30% for the fifth. Contact your school district’s administration to see which schools are eligible.

            See also the US Department of Education’s pages on Cancellation/Deferment Options for Teachers and Cancellation for Childcare Providers, as well as the Teacher Loan Forgiveness Form.

            The US Department of Education maintains a database of low-income schools eligible for teacher loan cancellation for Perkins and Stafford loans.

            Legal and Medical Studies

            Many law schools forgive the loans of students who serve in public interest or non-profit positions. For more information, contact Equal Justice Works.

            The US Department of Health and Human Services offers loan forgiveness programs through the National Health Service Corps and the Nursing Education Loan Repayment Program. These programs offer loan forgiveness to physicians and registered nurses who agree to practice for a set number of years in areas that lack adequate medical care (including remote and/or economically depressed regions).

            The US National Institutes of Health’s NIH Loan Repayment Programs repays up to $35,000/year of student loan debt for US citizens who are conducting clinical medical research.

            The US Department of Agriculture’s Veterinary Medicine Loan Repayment Program (VMLRP) offers loan forgiveness of $25,000 per year for three years for veterinarians who commit to work in a veterinary shortage area for three years. The application deadline is June 30.

            Federal Agencies

            The Federal Student Loan Repayment Program allows federal agencies to establish loan forgiveness programs to help recruit and retain employees. This is technically a loan repayment program and not a loan forgiveness program, as the agencies make payments directly to the loan holder and the payments represent taxable income to the employee. The agencies can repay up to $10,000 in Federal student loans per employee per calendar year, with a cumulative maximum of $60,000 per employee. Employees must agree to work for the agency for at least 3 years.

            Public Service Loan Forgiveness Program

            This program lets borrowers off the hook from their remaining student loan debt after 10 years of full-time employment in public service.

            To be in the program, borrowers must be employed by the federal, state or local government; or any nonprofit, 501(c)(3) organization; or work full-time for AmeriCorps or Peace Corps.

            To qualify for loan forgiveness, the borrower must have made 120 payments during a decade as part of the Department of Education’s Direct Loan program.

            But, if the payments fall short or the borrower stops working full time, then there is the same risk of being kicked out of the program, with no loan forgiveness.

            I hope this information helps you further understand your options for eliminating student loans.

            Information found on finaid.org and money.cnn.com

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              Budgeting, Christian Credit Counselors, Credit, Money Management

              Financial Literacy: Money Lessons

              Financial Literacy Month

              We are back! I hope you had a Happy Easter with family and friends. And even though April is coming to an end, it is still Financial Literacy Month. Gregory Karp of the Chicago Tribune has put together a money quiz to help contribute to your understanding of money topics. Here is a chance to test your knowledge and hopefully learn a thing or two that will ultimately help you with your finances.

                • Do your credit scores rise when you get a higher paying job?

              Simply put, no. Your income in not shown on your credit report, so that isn’t a factor when determining your credit score. Using credit, and using it well, is what really matters.

                • Is a household budget meant to restrict your spending?

              Restrict is the wrong word. Budgeting allows you to tell your money what to do instead of wondering where it disappeared to. If you keep track of your spending and budget wisely you can set aside money to spend on fun things. Indulging once in a while will keep you on track so you don’t feel so restricted.

                • Should I pay off highest interest-rate debt first?

              Mathematically, using extra money to pay off high-rate debt, such as credit cards, makes sense. But if you have many different debts, you might get a psychological boost by wiping out smaller debts first.

                • What is the only official site for getting your credit report?

              You can request a free credit report annually from the three main credit bureaus: Equifax, Experian, and TransUnion. For the most part, they have the same information, so you could request one every four months to keep track of your score throughout the year.

                • If a thief steals your credit card and charges $1,000, you’re responsible for how much?

              Federal law says you’re responsible for $50, but most major credit-card issuers absolve you of all liability if it’s a clear case of a stolen card or number.

                • What is likely to provide the highest returns over time: stocks, bonds or CDs?

              Most financial advisers suggest a mix of stocks and relatively safer bonds, with the mix getting more bond-heavy as you approach the time you’ll need the money. Stocks have provided the highest returns over long periods, especially if you’re talking about decades.

                • Which is more expensive for a family of four: food or financing a new car?

              Food costs more, unless you’re talking about an especially pricey car. The American family of four spends about $8,700 on food in a year, or $725 per month, according to the most recent government Consumer Expenditure Survey. That’s far more than most monthly car payments. People will research for months to get a good deal on a car, but many won’t look at a sales flier or clip a few coupons.

                • How large should your emergency fund be?

              Three to six months of bare-bones living expenses, most money experts advise. But with the current state of the economy, six months should be the minimum.

               

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                Money Management

                April is Financial Literacy Month

                Financial Literacy

                In a proclamation on March 31st, President Obama explained how important it is to be financially literate and to have access to trustworthy financial services and products.

                “The financial crisis was fueled by a lack of responsibility from Wall Street to Washington,” Obama said. “It devastated ordinary Americans, many of whom were caught by hidden fees and penalties or saddled with loans they could not afford. Preventing a recurrence will require both better behavior and oversight on Wall Street and more informed decision making on Main Street and in homes across our country.”

                Financial Protection Laws

                It is our duty as Americans to be financially responsible and contribute to the financial education of the men, women and children around us. It is important that they know the importance and the freedom that comes with being debt free.

                President Obama is in the process of enacting more consumer financial protections into law, continuing what he started with the Credit Card Accountability, Responsibility, and Disclosure Act and the Dodd‑Frank Wall Street Reform and Consumer Protection Act signed into law last year.

                For the remainder of the month of April, our posts will be about some basic financial education topics that we have found to be helpful. Feel free to respond in the comments below with suggestions or topics you would like to learn more about.

                 

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                  Budgeting

                  Finances and Your Options

                  Payday Loan Facts

                  You have probably seen the ads on the radio, television and the internet. You may have even received ads in the mail. They refer to payday loans, which can come at a high price.

                  If you are not sure that you are ready to take a payday loan, there are other options for you to think about in regards to handling your finances. Payday loans are great given specific circumstances, but taking them out frivolously can be dangerous. If you are having problems with your finances in general, a payday loan will not help you there.

                  Check cashers, finance companies, and others are making small, short-term, high-rate loans that go by a variety of names: payday loan, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.

                  Typically this loan involves a borrower writing a personal, post-dated, check to the lender for the amount he/she wishes to borrow. The company gives the borrower the money minus the fee.

                  Fees that are charged for payday loans are usually a percentage of the face value of the check or a fee per amount borrowed, for instance for every $50 or $100 loaned. If you happen to extend or rollover the loan, you will pay extra fees for each extension.

                  Under the Truth in Lending Act, the cost of payday loans – like other types of credit – must be disclosed. Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis).

                  These loans are great for specific circumstances. This would include emergency bills that are otherwise going to be charged late fees or to prevent certain services from being turned off.

                  Perhaps you are going to be charged huge late fees to a creditor if you don’t make your next payment. But this next payment falls in-between your paychecks. If this is your situation, then it is wise to know that you can pay the loan back when you get your next payday.

                  Otherwise, if you are too broke to pay your bills, then you need more financial help that a payday loan can give you. Auto repairs are another situation when a payday loan can help. But unlike traditional lenders, payday lenders don’t need to know why you are borrowing the money.

                  Alternatives to Payday loan

                  There are other options. Consider the possibilities before choosing a payday loan:

                  When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR – consider a small loan from your credit union or small loan company, an advance on pay from your employer, or a loan from family or friends.

                  A cash advance on a credit card also may be a possibility, but it may have a higher interest rate than your other sources of funds: find out the terms before you decide. Also, a local community-based organization may make small business loans to individuals.

                  Compare the APR and the finance charge (which includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost.

                  Ask your creditors for more time to pay your bills. Find out what they will charge for that service – as a late charge, an additional finance charge, or a higher interest rate.

                  Setting a Budget

                  Make a realistic budget, and figure your monthly and daily expenditures. Avoid unnecessary purchases – even small daily items. Their costs add up.

                  Also, build some savings – even small deposits can help – to avoid borrowing for emergencies, unexpected expenses or other items. For example, by putting the amount of the fee that would be paid on a typical $300 payday loan in a savings account for six months, you would have extra dollars available. This can give you a buffer against financial emergencies.

                  Find out if you have, or can get, overdraft protection on your checking account. If you are regularly using most or all of the funds in your account and if you make a mistake in your checking (or savings) account ledger or records, overdraft protection can help protect you from further credit problems. Find out the terms of overdraft protection.

                  If you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service. There are non-profit groups in every state that offer credit guidance to consumers.

                  These services are available at little or no cost. Also, check with your employer, credit union or housing authority for no- or low-cost credit counseling programs.

                  If you decide you must use a payday loan, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the next payday.

                  Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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                    Investing

                    Investing 101

                    Saving and Investing

                    The difference between saving and investing is that when you invest, you put money in hoping to get something better back out. Every contribution is a step towards the goal of having the kind of retirement you want. Here are some of the most common choices:

                    Stocks—these are shares of ownership that a company sells to individuals to raise the money it needs to conduct business. The value of the shares usually rises and falls over time, depending on how the company is doing. However, there is potential for high long-term growth. Stocks have the highest risk and return potential.

                    Bonds—these represent loans to a company or government to finance operations. The loan is paid back after a fixed number of years and the investor receives regular interest payments. Typically, the risk is lower than that of stocks, but may not earn as much in the long run. Bonds have moderate risk and return potential.

                    Mutual Funds—these are professionally managed funds where your money is combined with money from other investors to invest in a variety of stocks and bonds. This is a good way for smaller investors to gain diversity of their investments. The risk level depends on the stock and bonds in which the mutual fund invests.

                    Cash Investments—these are the most basic type of investments but produce the lowest returns. Types include bank and savings accounts, money market mutual funds, certificates of deposit, and treasury bills.

                    As always, investments don’t come without risk, but if you’re investing for the long term and start early, you’ll have more time to ride the ups and downs in the market. Whatever you do, choose the investments that are right for you.

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