Thursday, April 28, 2022

KillerStartups

KillerStartups

What Are the Disadvantages of IRR in Real Estate Evaluation?

Posted: 27 Apr 2022 08:25 AM PDT

We have used the internal rate of return – or IRR – for generations in commercial real estate investing.

After all, it does help investors cut through some of the market's complexities. Additionally, it's very useful in terms of deciding a project's worthiness. That makes it invaluable when it comes to establishing budgets and setting priorities.

However, for all its popularity, the internal rate of return does have its disadvantages. Let’s take a look.

Tell me what IRR is?

First things, first. In essence, the internal rate of return is a metric used to determine a project's current performance or the likely return rate of a potential project.

Another way to say it is, IRR is the yearly growth rate a project is expected to deliver.

Is IRR easy to calculate?

Yes, it is, if you use a calculator or Excel – which nearly everyone does — because the formula is complex. It leans heavily on "profit" and "time."

You likely know what profit is. That's not the complicated part. "Time," though, is more dynamic, and has to do with external factors such as housing trends and over-time changes in the value of money.

With that, then, we use IRR to help investors understand an investment's profitability or prospective profitability – in relation to "time."

Benefits of IRR

That whole "relationship to time" thing is good because, with IRR, all future cash flows are mixed in with the calculation.

This means that every cash flow carries the same weight. This ultimately delivers a more accurate result.

Then there's the ease of calculation, and the ability to compare properties in terms of expected profitability. We can use the tool to compare an investment to another one in a whole other field.

In addition, it's also easy to use IRR along with an additional tool so that your result covers other angles IRR may not.

What are some disadvantages of IRR?

For one thing, IRR results do not include factors such as financial risk, inflation, capital costs, and the risk-free rate.

Even with a favorable result, it's important to know that IRR does not factor in the possibility of, say, previously uncovered property damages. These can increase investment costs or cause an unexpected decrease in rental rates.

Also, IRR makes it challenging to determine – in real dollars – the amount of profit realized.

Why? Because there's no way of knowing how much a $500,000 investment, that has an IRR of 9 percent over 30 years, is worth today. And that's because we can't know what $500,000 will be worth years from now.

In addition, IRR makes capital costs an essential part of its calculation. That can be a problem because the metric delivers an incomplete future view.

As well, there's no consideration of a project's scope or size, and the internal rate of return ignores potential costs such as fuel and maintenance.

And the fact that the internal rate of return does not consider reinvestment rates is another issue. After all, the assumption that the value of future cash flows can be reinvested at the same rate as the IRR is not always a good one.

Now that you know the disadvantages of IRR in real estate evaluation, you can still use the tool…assuming you take its shortcomings into consideration. After all, there aren't that many viable metrics in real estate out there.

You may even wish to use IRR with another instrument so that you cover all your bases.

If you want to learn more about IRR and real estate, consider contracting the alternative platform Yieldstreet, which has resources you'll likely find helpful.

The post What Are the Disadvantages of IRR in Real Estate Evaluation? appeared first on KillerStartups.

Where to Find Help with Credit Card Debt

Posted: 27 Apr 2022 05:20 AM PDT

Are you struggling to pay off your credit card debt? If so, you’re not alone. According to a recent study, the average household in the United States owes more than $6,270 in credit card debt.

However, that doesn’t mean you have to struggle on your own. There are many credit card debt resources available to assist you to get your debt under control and start improving your financial situation.

Engage with the credit card issuer.

One of the best places to start is talking to your credit card issuer. Many issuers have programs in place to help customers who are struggling to make their payments.

For example, some issuers may be willing to lower your interest rate or waive late fees. Others may offer a temporary reduction in your minimum monthly payment.

If you’re having trouble making your payments, contact your issuer and explain your situation. They may be able to help you find a solution that works for you.

Work with debt relief companies.

Credit card debt can be a major burden, causing stress and financial problems. If you are struggling to make your monthly payments, you may be considering debt relief options.

One option is to work with a debt relief company such as Freedom Debt Relief. These companies specialize in helping people get out of debt, and they can often negotiate with your creditors to lower your interest rates or reduce your monthly payments. They may also be able to help you consolidate your debts into one single payment.

Debt relief companies typically charge a fee for their services. Still, if they can successfully negotiate a payoff plan with your creditors, they can save you thousands of dollars in interest charges and late fees.

When working with a debt relief company, thoroughly research the company before agreeing to any services. You can find reviews of debt relief companies online, or you can ask friends or family members for recommendations. Once you have found a reputable company, schedule a consultation to find out how they can provide credit card debt help.

Consult your family and friends.

If you’re struggling with credit card debt, you might be considering asking for help from family and friends.

While this can be a difficult conversation, it can also be a beneficial solution if done correctly. Here are a few things to keep in mind if you’re thinking about asking for credit card debt help.

1. Explain your situation honestly and openly.

Make sure you explain your financial situation to your family or friends honestly. This includes how much debt you have, your monthly payments, and why you’re having trouble making your payments. This will help them understand the full extent of your situation to know how they can best help you.

2. Have a plan.

Before you ask for help, have a clear plan for how you will get out of debt. This will show your family and friends that you’re serious about solving the problem and give them confidence in your ability to do so.

3. Be prepared to follow through.

Once you’ve asked for help, be prepared to follow through on your plan. This means making all the necessary changes to your spending habits and lifestyle. Your family and friends will be there to support you, but they won’t be able to do it all for you.

Talk to a financial advisor.

If you’re struggling with credit card debt, another option is to talk to a financial advisor.

A financial advisor can help you create a budget, help you plan to get out of debt, and offer guidance and support. They can also provide information on different options for consolidating your debts or reducing your interest rates.

Consult your lawyer.

A lawyer can negotiate with your creditors on your behalf and help create a repayment plan that fits your budget.

A lawyer can assist you in filing for bankruptcy, if necessary. In addition, your lawyer can help you understand your rights as a consumer and steer you clear of predatory lenders.

While hiring a lawyer may require an upfront investment, it can be worth it in the long run if it means getting out of debt and regaining financial stability.

Take Away

Knowing where to find help with credit card debt is the first step in taking control of your finances.

If you’re struggling to make your monthly payments, consider working with a debt relief company, talking to a financial advisor, or consulting with a lawyer. These professionals can help you create a plan to get out of debt and offer guidance and support.

The post Where to Find Help with Credit Card Debt appeared first on KillerStartups.

Think Startup Work Is Beyond Your Reach? Think Again!

Posted: 26 Apr 2022 09:50 AM PDT

When it comes to finding work, most people prefer to find an established company to work for, if only because they know it's more secure, and likely loaded with benefits. This is true even if that means taking a pay cut in the process. But does that mean you should turn down startup work? Absolutely not.

Startups actually offer more security than you might think. The trick is to work for a startup that manages its finances tightly.

It's true that, in the long run, most will not succeed. However, if you see an established base along with those looking to bring its vision to life, then going with startup work might not be the worst thing. In fact, working for a startup just might be the thing to brighten your resume and your future in the market.

Let's take a look at a few reasons why.

1. Everyone pretty much begins as a startup.

Do you think that the likes of big businesses these days ended up this way overnight? We can tell you that they didn't. Of course not.

Apple got its start in a garage way back in the early 1980s before they ever released their first iPhone. Amazon began as an online bookstore before becoming one of the world's biggest merchants, with mega-sized warehouses across the globe. McDonald's was a simple Mom-and-Pop burger joint back in the mid-1950s before some savvy marketing (and billions of consumers) turned it into a worldwide chain of greatness.

That's something to keep in mind. When you join a startup, you may not have any idea of what you're in for. Could it fail? Sure, but the same could be said working for a big company. Larger businesses usually see layoffs more often than not. Even Amazon lays off people after the holiday season, and they sell billions of dollars of merchandise on a weekly basis.

So you might as well take a gamble and see what startup work can do for you. Stick with it long enough. Put in the right initiative, and you could very well see it take off.

2. You’ll get your chance to shine.

Another factor to consider when it comes to accepting startup work is that the focus is more on you.

Let's look at it this way. If you get a job working in an Amazon warehouse, you do get a steady paycheck and decent benefits. However, you're viewed more as an asset, what you can produce compared to who you are. For some, this is fine when it comes to getting through a 9-5 shift. But it's hardly something you can consider a career inspiration.

Now, working for a startup, there's more to it than that. Considering it's a much smaller company, that means there's more reliance on what you can bring to the team. That means you actually get a chance to shine. While it's great to see what your talents can do, the owners of a startup are likely looking at what you bring to the table as a person, rather than a product.

Granted, this really depends on the basis of the startup, as there could be hundreds of employees working in a warehouse or what-not. But with a smaller company, you're likely to see work that really makes you stand out, compared to being just another digit in a larger corporate line.

Taking on startup work, you have a chance to create your own story — and that, in turn, can help you gain more stature in the company. Who knows, you could even end up with an office sooner rather than later. (Again, depends on the business…but dream big.)

3. Remember, creature comfort is key.

One other aspect to consider when it comes to startup work is that you're likely to be more comfortable.

We'd hate to bring up Amazon again, but we have to. They work ten-hour days with minimal bathroom breaks and a 30-minute lunch. That can add up to a lot in a day. It can leave you worn out and wishing you could just run for the doors. (Maybe even screaming that you're not going to take it anymore.)

It shouldn't be like this. Working should never be like this.

One of the key aspects that makes startup work stand out is how most of these new companies are built around comfort. Spaces are built with efficiency in mind. Spaces that say "It's fine to work here" instead of "Okay, give me ten hours of your life, you slag." Something that doesn’t just say "you belong," but actually makes you feel like you belong.

Perspective is everything. And even if a company looks like it's going through rough spots as it's being established, it could end up building to something greater. That's why you should give startup work a heavy amount of consideration.

Is it a risk? Sure. But that's the great thing about new jobs — with risk comes reward.

The post Think Startup Work Is Beyond Your Reach? Think Again! appeared first on KillerStartups.

3 Startup Myths, Debunked In 3 Minutes

Posted: 26 Apr 2022 07:35 AM PDT

Ever hear of startup myths? These are practically business rules concocted by other startups in the hopes of motivating someone or giving you an idea of just how tough building a startup really is. But here's the problem — most of the time, they live up to their name when it comes to being myths. Having startup myths debunked might be wise before you even start raising capital.

That's because even though a startup may go the way of the dodo, that doesn't mean they all will. Startup myths are just that, and the truth is they're usually debunked by good old fashioned business sense, or perhaps even with a bit of research.

Not much, though. In fact, the following three startup myths were able to be debunked in a matter of three minutes. All you have to do is read between the lines, and — BOOM! — they're as good as dead. You're on your way to your next step in business.

So without further ado, let's look at three of the bigger startup myths out there. Learn why they're exactly that and hardly any real threat to your business plan.

1. There’s a desperate need for deadlines.

In general, companies like to put deadlines into place. Whether it's the release of a movie, the development of a video game, or simply pushing a product out in time for the holiday season, a lot of them set these in order to keep business flowing smoothly.

But there's a big problem with that. It means putting reliance more on the bottom line of a product, rather than the product itself.

So, no, a startup does not need deadlines to survive.

Are they important in some cases? Sure, depending on which avenue of business you're in. But you don't need them in order to keep business flowing.

The problem with meeting deadlines is putting a business environment into what's called a "crunch" period. This means many late nights in which people are worked tirelessly beyond their means.

What's worse, if the product fails, all that effort is for naught, and people become exhausted with their jobs.

That's why it's one of those startup myths. You do not need deadlines to get by. In fact, a lot of companies these days prefer to go at their own pace. That way, people can work comfortably and get a quality product out there. That might not be everyone's speed on the market — but it certainly should be.

2. Everyone should be in the same space.

When it comes to startups, most people like to set up a comfortable working space, one in which everyone can work together without having to be crunched together.

But, surprise, those of you suckered by another one of those startup myths will believe that everyone needs to work in a tight, enclosed area, where communication is better made rather than through electronic means.

This is easily debunked for two reasons.

  • The first is comfort. If you put an employee into an uncomfortable scenario and force them into a working environment where they can barely breathe, it's going to create something of bad form.
  • The second and more important thing, however, is health.

We are just coming out of a COVID-19 pandemic, and even though we're starting to clear up, there's still caution to be had. That's why a small workspace is a no-no, mainly because people are starting to get used to going back to the office alone.

Having a big work area in which people are spread out, but still in a manageable spot to communicate, is the better — and far healthier — way to go.

So, yeah, you don't need everyone in one spot. In fact, the more spread out the better. This is primarily true for health reasons. It also means not having to smell the office buddy who's in love with their Axe spray.

3. You won't make money right away.

How in the world are you going to start up a business built on the most ridiculous of the startup myths out there? “You're in a position where it's going to be a while until you make money.”

How did this become a thing?

Here's why that's debunked. The right business partners can easily set aside a financial plan in which their office space is defined. The right people are hired. Productivity scheduling is put in place so the money doesn't go into the wrong resources.

It's all a matter of funneling the budget into the right areas. If that's done, then there's very little reason why a business shouldn't make money.

Now, with the wrong business partners — the ones that throw around cash like it's going out of style and immediately say they'll be a hit — those are likely the party members that made this startup myth happen in the first place. But, alas, they run out of business quickly, and guess who are the ones left standing? That's right, the business partners that have it right.

So there's no reason to be worried when it comes to these particular startup myths. Just keep your head on straight, remember to take care of your finances and those that work for you, and create a business space more around convenience and comfort than crunch. You'd be surprised just how long your startup will sustain.

The post 3 Startup Myths, Debunked In 3 Minutes appeared first on KillerStartups.

How to Retire Early with Zero Regrets and Extra Cash for Life

Posted: 26 Apr 2022 05:00 AM PDT

Depending on who you ask, early retirement has different definitions. Generally, any time before your 62nd birthday when you are eligible to draw Social Security benefits. Recent years have seen the growth of the "Financial Independence, Retire Early" or FIRE movement, which encourages people to retire even in their 30s and 40s.

Many Americans do not know how much they will need to save for retirement, which poses a challenge. However, many people can achieve early retirement with dedication and planning. To find out if you can retire early, here's an overview on how you can make that dream a reality.

What is Early Retirement?

Traditionally, early retirement was defined as retiring at age 60 as opposed to 65. Even though this is technically true, the notion of early retirement has evolved.

Taking early retirement doesn't mean you're completely done working. Instead, you work because you want to. In other words, you have the financial freedom to do whatever you please.

Early retirement is possible for people as early as their 30s or 40s. The majority of these people, however, also work in some way, often on their passion projects or some other activity.

To put that more succinctly, those who work this way work purely for their own sake, not as a necessity.

Remember that work can provide us with meaning, purpose, and fulfillment. Moreover, some studies suggest that people who retire early and do not work at all may die earlier than people who continue to work.

On the flipside, retiring early allows you to pursue hobbies or spend more time with friends and family. You can also launch your own business. Or, maybe you're just fed up with the rat race.

It is therefore not the goal for many to stop working altogether. The goal is to be free to choose whatever you want to do.

How to Retire Early

If you want to retire early, there are a lot of factors to consider. But, here's a blueprint you can refer to to get started.

Get the foundation in place.

Want to retire early? You first need to posses the right mindset. And, you'll also need a financial plan in place — ideally as soon as you're kicking off your career.

Take your savings strategy to the next level.

It's crucial to change your attitude towards money if you're serious about retiring early. And, to get started, a conscious tradeoff must be made whenever money is spent.

More specifically, a little belt-tightening won't do the trick — despite popular opinion. Rather than swearing off your daily latte, the key is cutting back on high-cost expenditures. So, while making your coffee at home can help you stick to a budget, it's also not going to make early retirement possible.

To put it simply, you should live well below your means. As result, you'll be able to stash away a large part of your earnings.

How much should you be saving? Financial planners advise aiming for 30% of one's earnings over a typical 40-year career instead of 10% to 15%.

That may sound like an unachievable goal. But, it's possible if you automating your savings so that you don't spend it. Also, whenever you come across a windfall of cash, think bonuses or tax refunds, contribute these funds to your nest egg.

Do not succumb to lifestyle creep.

If you get a huge raise or promotion, you know you should treat yourself. But as you earn more, there's a natural tendency to spend more. Financial advisors call this "lifestyle creep." Again, setting up an automatic deduction from your paycheck or a bank transfer can ensure that you save half of those additional dollars.

At the same time, it's important to spend your dollars carefully without feeling restricted. For example, you can still travel after researching the best deals or finding ways to reduce your spending. Maybe you could visit a friend or family member and stay with them for a couple of days instead of booking a hotel room.

Again, just because you "retire" doesn't mean that you're no longer working. You could work part-time or maybe start a side hustle. This way you'll have more free time while still having an income stream.

Spend less on housing.

Your greatest expense, and therefore greatest opportunity for saving, is probably your house. In fact, the average American's housing budget consumes a third of their income, according to the Bureau of Labor Statistics.

But, what if want to buy a new home? Keep your home if it is large enough. If not, then don't buy the biggest house you can buy.

To find out what you can realistically swing, use online calculators from Bankrate, NerdWallet, or Mortgage Loan. Based on your income and other financial information, these tools will let you figure out how much mortgage you can afford. Keep in mind, though, that you do not have to borrow the maximum amount. Keep your housing expenses to 30% of your income or lower if you would like to maximize your savings.

Make the most of tax savings.

Are you serious about retiring early? If so, you should put away as much money as possible in tax-favored accounts.

The most obvious place to start would be maxing out your 401(k). Employees can contribute up to $20,500 for 2022 to their 401(k). An additional $6,500 catch-up contribution is available to individuals over the age of 50 in 2022.

Another option is a Roth IRA.

Contributions to Roth IRAs are made after-tax. Remember that Roth IRAs require a certain level of income to qualify for contributions. You must have a Modified Adjusted Gross Income (MAGI) under $140,000 for the tax year 2021, or under $144,000 for the tax year 2022, if you file as a single person. If you're married and file jointly, though, your MAGI must be under $208,000 for the tax year 2021, or under 214,000 for the tax year 2022 to contribute to a Roth IRA.

Combined, you can contribute the following amount to all of your IRAs;

  • Under age 50, $6,000
  • If you are 50 years old or older, you will receive $7,000

Furthermore, a SEP-IRA can be used to save a portion of the income from your side job, as well as your regular job.

If you've maxed out these retirement contributions and the funds in your budget, you may also want to buy an annuity. This is tax-deferred insurance product that guarantees a lifetime income. It's a safe to prevent outliving your savings and can be a supplemental retirement income stream.

In addition, if you've got a high-deductible health plan, put as much into a health savings account as possible. When certain factors apply, an HSA can be a better investment than a 401(k). If the money is used for qualifying medical expenses today or in the future, HSA earnings aren't taxed, and withdrawals are tax-free as well. As of 2022, for self-only coverage, you can contribute $3,650, and for family coverage, $7,300

Estimate your retirement savings.

Expenses and income estimates will be essential if you want to plan a successful early retirement lifestyle. Based on your Social Security income, your pension income, and any side jobs you may have, it is generally easy to estimate your retirement income.

As a retiree, most of your income is likely to come from Social Security and, to a lesser extent, pensions. These payments can usually be collected early, often as early as age 55 with a pension and at 62 for Social Security. You will, however, receive smaller monthly benefits if you take benefits early. Even if Social Security is simply the cherry on top of your retirement cake, that will affect your bottom line.

If you claim your benefits early, it will be projected on your Social Security website. It may be best to visit a Social Security office or meet with a financial professional if you're part of a couple with two incomes to weigh options.

For example, if you die with a higher monthly benefit than your spouse, your spouse will receive your benefit. The early you claim your benefits, the less you receive, and the less your spouse could benefit if you die early.

You can estimate your monthly pension payments at different ages by asking your employer's pension administrator. After you have these estimates, you'll have a better idea of how much income you can expect for any specific period of time.

Calculating your expenses, on the other hand, can be difficult.

Create your post-work budget

Consider the lifestyle you want and how much it is likely to cost you when you are within five years of your desired early retirement. Identify where you will live as well as what activities you'll pursue. Most people incorrectly believe that when they stop working, their expenses will decrease. The truth is that retired people spend about 20% more than they while working.

While you'll have more time to pursue hobbies and take trips, this obviously costs more than working all day. And, if you leave the workforce young, you'll likely have the energy and health the enjoy an active and most likely pricey retirement.

You should be aware that some items in your budget may increase faster than inflation as a whole. The cost of health care, for example, could increase by as much as 7% to 10% every year.

A retirement income calculator like T. Rowe Price's Retirement Income Calculator can show you whether your portfolio is on track to make early retirement possible. Choosing between boosting your savings, reducing your lifestyle expectations, or delaying retirement will be a difficult choice.

In short, add up the pensions, Social Security, and savings you may be entitled to. Next, calculate your anticipated monthly expenditures (including income taxes) if you were to retire five years early and would be eligible for Social Security and pension benefits sooner. This should help you figure out your retirement budget.

The average American household budget.

If you look at the average American household budget, you can see how your budget compares. Using the Bureau of Labor Statistics' Consumer Expenditure Survey, it is possible to determine how much is spent on everything from housing and transportation to clothing, entertainment and charitable contributions. Currently, data from 2020 is available.

According to the BLS survey, the average household earns $84,352 a year and spends $72,258 a year. Data shows that roughly $5,854 is spent on bills and other expenses a month. So, let's break this down.

Housing

In 2020, households spent an average of $21,409 on housing, including rent, mortgage payments, utilities, furnishings, laundry and cleaning supplies, according to the BLS survey.

Taxes, interest, and maintenance accounted for about $7,473 of homeowners' annual expenses;

  • Mortgage interest: $2,962
  • Property taxes: $2,353
  • Maintenance, repairs, and insurance: $2,158

Utilities

American households paid an average of $4,158 in 2020 for utilities, up from $3,737 in 2013, representing about 19 percent of all housing-related expenses. The calculation includes heating and cooling, internet service, and cellphone service.

  • Natural gas: $414
  • Electricity: $1,516
  • Fuel oil and other fuels: $105
  • Telephone services (including cellphone service): $1,441
  • Water and other public services: $682

In the U.S., energy costs vary significantly by region, so Americans pay different prices to heat and cool their homes.

Transportation

In 2020, stay-at-home orders and remote work brought down transportation costs by nearly 9 percent per household as a result of stay-at-home orders and remote work. On the other hand, household expenditures on vehicles increased slightly – just over 3 percent – in 2020 over 2019.

In 2020, the average household's transportation expenses were:

  • Vehicle purchases: $4,523
  • Gasoline, other fuels and motor oil: $1,568
  • Other vehicle expenses: $3,471
  • Public and other transportation: $263

Taxes

According to figures from the U.S. Census Bureau, American households earned an average of $84,352 in 2020 and paid an average of $9,402 in personal income taxes after accounting for $1,911 in stimulus payments from the government. Due to stimulus payments, taxpayers paid the lowest amount of taxes since 2015.

Federal taxes amounted to $8,812; state taxes amounted to $2,430; and other taxes amounted to $72.

Additional expenses.

  • Food: $7,316
  • Health care: $5,177
  • Entertainment: $3,341
  • Apparel and services: $1,434
  • Personal care products and services: $646

Engage rather than beat the market.

Low-fee index funds are preferred over riskier, volatile investments like stocks or cryptocurrencies by those looking to retire early — specifically FIRE followers. If you're unaware, the S&P 500 is an index fund that reflects the performance of the 500 largest companies in the U.S. based on market capitalization. Index funds are basically baskets of stocks that track the performance of a major stock index.

"The best advice I have is the conventional wisdom in the financial independence community is that it's better to participate in the market than to try to beat it," Ed Ditto of Early Retirement Dude told CNBC. "And one of the best ways to do that is to buy low-cost index funds. You'll find that the Vanguard S&P 500 ETF is the darling of the FIRE set."

If you invest in index funds, you get exposure to stocks from a wide variety of industries, explains Trina Paul for CNBC. Therefore, when you invest in an index fund that provides diversification, you take on less risk than if you bought individual stocks. You might see gains in another sector which will offset a decline in another.

FYI, from 1970 to 2020, the S&P 500 returned an average of 10.83% per year, according to Investopedia.

Getting started with investing.

TD Ameritrade, E*TRADE, or Vanguard are all solid options if you want to get started investing, suggests Paul. Unlike traditional brokers, these platforms don't charge commissions for the trades they execute.

The money you invest in these funds, however, will be subject to expense fees known as expense ratios. An expense ratio is a fee charged to manage a fund. As an example, a fund charging 0.15% expense ratio would cost you $1.50 for every $1,000 you invest, clarifies Paul.

A robo-advisor, such as Wealthfront, Betterment, or Charles Schwab, is a great place to start if you don't know where to begin assembling your investment portfolio. A robot advisor invests on your behalf after obtaining a picture of your current finances and future goals.

Typically, you'll enter your age, risk tolerance, and investment horizon, she adds. After the portfolio is constructed, the robo-advisor will select stocks and bonds from a large selection. Upon reaching your financial goals, your portfolio will then be automatically adjusted over time by sales and purchases of funds.

Along with fund expense ratios, robo-advisors charge accounts fees. By reading the fine print, you will know how much money you will need to invest.

Following their success with index funds, some early retirees and FIRE followers move on to other asset classes requiring more expertise and knowledge.

"As time goes along, and as your portfolio starts to build, you owe it to yourself to take new risks," Kiersten Saunders of rich & REGULAR. "I think what people find when they get online is they start to see all of the hype and the buzz around crypto, NFTs, real estate, these types of asset classes that are either very risky or have high barriers to entry."

Know how far your money will go as inflation increases.

In order to plan for a comfortable retirement, you should consider inflation. "After all, if your retirement is 20 years away and you aim to save $1 million for it, that $1 million won't have the same purchasing power in 20 years as it does today," writes Selena Maranjian for the Motley Foul.

The inflation rate has averaged about 3% annually historically. Although, it has been different in different years. Over the course of 25 years, an interest rate of that kind will roughly halve your dollar's purchasing power.

To illustrate how you can include inflation in your planning, imagine you're still 20 years from retirement and anticipate living on the equivalent of a $50,000 income. "You could take the number 1.03 and raise it to the 20th degree — by punching buttons such as 1.03 ^ 20 on your calculator — getting 1.81," states Maranjian. "Then multiply $50,000 by 1.81, getting $90,306. That's the actual income in 2040 that would have a similar purchasing power as $50,000 in 2020."

Dividend-paying stocks help combat inflation because they typically increase their dividends annually. As such, the stock price will rise over time as well.

"If you have, say, $100,000 invested in dividend payers with an overall average yield of 3%, you'll receive $3,000 in dividend income this year," she explains. "If those payouts grow by an annual average of 5%, in 10 years they will be generating close to $4,900 per year."

The cost of annuities with inflation-adjusted features may also help combat inflation, as can investing in Treasury Inflation-Protected Securities (TIPS) bonds.

Consider your health (insurance).

In the years between early retirement and Medicare eligibility at age 65, no one wants to burn through their retirement savings by paying for unanticipated healthcare costs. Until you qualify for Medicare, you'll need some health insurance coverage if you lose your employer-sponsored policy.

You can continue your employer-sponsored coverage through COBRA, join your spouse's health insurance plan, or enroll in a health insurance plan through the Health Insurance Marketplace at HealthCare.gov. If you belong to an organization, such as AARP, you may be eligible for discounts on coverage.

Additionally, "long-term care insurance may be worth considering," recommends Due Founder and CEO John Rampton. "In addition to the costs associated with long-term care, medical insurance for it can be expensive as well." You might want to look into it while you're still in your middle age to save money. Richer people may be able to pay for it themselves, while those with less wealth may not be able to afford it. This makes middle-income individuals the ideal candidates.

"By eating more nutritiously and exercising more, you may also be able to save a lot of money and years in retirement by taking care of your health," John advises. And, if you have dependents, like a spouse or children, purchase a life insurance policy to protect their livelihood.

Work with a financial advisor.

You are faced with two major challenges if you wish to retire early;

  • The retirement savings period is shorter.
  • In retirement, you will have more time on your hands.

Working regularly with a financial advisor is a good idea unless you're a season investing pro To make it easier for you to meet your retirement goals, an advisor can develop an investment strategy. A financial planner can also show you how much you need to invest each month to achieve your goals within a certain period of time.

You can work with your advisor to make sure that the money you receive lasts after you retire. Dividend income, required minimum distributions, Social Security, defined-benefit plans, and real estate investment income are examples of income streams.

Since you might end up working with that advisor for decades, it's imperative to find someone you trust and are comfortable with. Also, the cost of a financial advisor should not be seen as merely their time, but as their expertise, too. After all, you will more than make up for the costs of that advisor if you work with one with the right expertise who can also steer you in the right direction.

Frequently Asked Questions About Early Retirement

How do I know when I should retire?

There are various factors you need to examine when you're deciding when to retire. First and foremost, you need to how much you already have saved and will it help you maintain your lifestyle.

Additionally, you need to consider when you can start receiving different benefits. And, you need to determine when you can start taking advantage of your retirement plans.

What is the ideal age to become debt-free?

It's often recommended that individuals are debt-free by the time they are 45 years old. Why at this age? By 45, you should have no debts except good debt like a mortgage. And, at this point, you should begin saving for retirement because this is where you should be in the second half of your career.

When can I start withdrawing from my 401(k) without penalties?

When you stop working, you can typically withdraw funds from your 401(k) without incurring penalties after age 59 1/2. As soon as you turn 72 (or 70 1/2 if you were born before July 1, 1949), you are required to take the required minimum distributions. If you retire later, you must take the required minimum distributions by April of that year.

How does early retirement impact Social Security?

"Workers planning for their retirement should be aware that retirement benefits depend on age at retirement," notes the Social Security Administration. "If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent."

"Starting to receive benefits after normal retirement age may result in larger benefits," adds the SSA. "With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70."

When you retire early, you lose 5/9 of one percent of your benefit for every month before the normal retirement age, up to 36 months. A benefit reduction of 5/12 of one percent per month occurs if the number of months over 36 is exceeded.

"For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent," the SSA states. "This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent."

What is a good monthly retirement income?

Each individual will have a different definition of a good monthly retirement income. A good retirement income will depend on a variety of factors. At the minimum, this includes expected lifestyle in retirement, dependents, such as children or grandchildren, outstanding debts, and overall health.

However, a good retirement income is generally considered to be 70% to 80% of an individual's last income before retirement.

Image Credit:

How to Retire Early with Zero Regrets and Extra Cash for Life was originally published on Due by John Rampton.

The post How to Retire Early with Zero Regrets and Extra Cash for Life appeared first on KillerStartups.

The Hands-Down Best Quotes About Startups

Posted: 25 Apr 2022 12:25 PM PDT

When it comes to startups, there are so many ways it can go. However, you need to have the right approach. If not, like so many on the market these days, you could end up folding up shop before it has a chance to grow. Best to listen to those who have gone ahead of us. That’s where memorizing some of the best quotes about startups can really help you keep your path clear.

It's always good to have the best advice on hand so you can help it thrive and keep both your business and employees going.

What follows are some of the best startup advice bits we could find across the internet. They range from smaller tips to things that point out more of the larger picture at hand. Heed these tips well, because they're really going to come in handy. This is true whether you're starting your first month on the market, your third year, or whatever.

What is the path to success?

Speaking with Forbes, Matt Bailey, who serves as founder and CEO for B2B technology-themed GameOn, provided one of the best quotes about startups when it came to setting about a path to success — avoid limitations.

"Don't be fixated on a single path to success because there are so many ways to win. You just have to find the right one and be flexible in going in different directions."

While it helps to have a strong end goal, you'll want to keep your options open. Because you never know what's going to happen in your current market — or what you can do to fit better into it.

Know your market.

Research is everything. Knowing what your market is and how your product can fit into it is also everything. That's why Bill Green, author and CEO of Lendingone, has one of the best startup quotes when it comes to this topic, as he explained to Inc.

"Once you've landed on what it is you're passionate about, you need to take a step back and evaluate the market size. What's the potential? Let's say you build this business idea into something best-in-class. What's the ceiling? And more importantly, is that ceiling high enough for you?"

He added, "You need to think long and hard about any idea you have before you risk your livelihood in it. Building a business isn't like finding a job. In fact, it should never 'feel like a job.' It should be something you're willing to work tirelessly to build – for yourself, and those around you."

Sage advice, and the kind that can really get business thriving.

Don't expand too quickly, focus on what works first.

Everyone likes expansion. Watching their company spread to new heights is something of great beauty.

However, if you work at it too quickly, you spread things a little too thin, and that's where a collapse could easily take place.

Hicham Amine has some solid advice stated in this article for Medium, explaining why it's best to take the slow and steady route. This is the best startup advice you can get when it comes to how to expand.

"Most founders are tempted to try a bit of everything instead of a lot of one thing. Yet, doing so is equivalent to shooting yourself in the head, because it will require more time to learn from your experiments, therefore taking longer to decide whether to kill a channel or double down on it. As a result, you end up with no focus."

So there you have it. Don't create too big an avenue that you can't control. Keep business shifted and then work on organic growth. You'll be far better off.

Don't be afraid of challenges.

Finally, when it comes to growing a business the right way, you shouldn't be thrown off by challenges. With the right team — which you can build as you continue to go upward — you can overcome pretty much anything thrown at you.

Some of the best quotes about startups you can embrace come from Ashira Prossack, who spoke about this in a detailed Forbes article.

"Building a business is not always smooth sailing. There will be days when you feel like you want to give up and that you just can't keep going, but if you push through, you'll come out on the other side stronger than you were before. This is all part of your growth as an entrepreneur. Without those challenges, you wouldn't be able to savor the successes in quite the same way."

With that, we conclude with one more nugget of greatness from Bailey. "Know that it's going to be tough, but you just need to find a way to keep going, to survive. And remember, there's more than one way to win."

That could be amongst the best quotes about startups provided in this entire article. The will is what drives a business, as well as the will of the people behind it. Push forward and watch the success continue to grow.

The post The Hands-Down Best Quotes About Startups appeared first on KillerStartups.

10 Unusual Ways You Can Save Money with Your Startup

Posted: 25 Apr 2022 10:05 AM PDT

Creating a startup is cool, but creating a successful startup is even cooler. Cash is typically in limited supply, but there are several ways you can save money with your startup.

You'd be surprised how many people blew their potential with their startup by burning through money way too fast. Whether throwing all their cash behind an elaborate office space or paying employees way too much and making way too little in return, it's easy to watch all that money burn up.

So how can you save money with a startup? It's easy, really.

In fact, these next ten tips can actually assist you with utilizing more cash when you're trying to get through the basics of a business. Who knows, you might just last longer following these steps and making a name for yourself. And don’t be afraid of a little humility along the way — that's just the nature you’ll need to save money with your startup.

1. Save money with your startup by finding other work.

This may not be an option for all involved with a starting business. Perhaps the execs want to keep the engine running at full speed.

However, it never hurts to have some secondary work happening in an effort to keep the revenue from going down. If you're trying to save money with your startup, a second job isn't the worst thing to have on hand.

2. Quality, not quantity.

Think you've got that ideal product figured out for a startup? Hey, great. But remember, Rome was not built in a day.

You want to focus on getting your quality just right before you mass-produce, lest you find mistakes and have to pay an even bigger price later. Remember, slow and steady wins the race. You don't see the tortoise packing a rocket-fueled shell to get things done.

3. Deal with businesses that offer a discount.

You'd be surprised how many discounts get offered by partners to startups. Some of them will offer significant discounts if you order supplies or other items in bulk.

Heck, you can probably store a breakroom with enough snacks for a month rather than buying them weekly. It never hurts to have extra supplies, rather than spending and spending to keep them piled up.

4. When you must travel, don't go extravagant.

You'd be shocked how you can save money with a startup simply by avoiding booking at the Doubletree Hotel or someplace on the New York strip.

Instead, this is a good time to consider affordable alternatives, such as Airbnb's or even smaller hotels. Sure, they look tacky, but you're not going to hang out in them on business trips anyway. (Just make sure the Wi-Fi is solid, at least.)

5. Rent an office space alongside others.

While having your own office space is groovy and all, it's shocking to see how much of your finances get burned by high rent rates.

With that, if you're just getting started with your business, look around and see who's got office space to share. Make sure you've got space to work, of course, but find something that's a little cheaper on the market. You'll thank us later.

6. Grants aren't just for college.

Let's say your finances aren't exactly the greatest, but you still want to save money with a startup. Easy – check out the available grants.

No, they're not just limited to universities. You can look around and find grants across state and city governments, as well as higher-up companies. You'll need to meet the terms provided, but it'll help you with finances in the long run.

7. The environment is your friend.

At first, some may scoff at the idea of "going green" and using environmental resources in your office. However, considering how you can save money with your startup, they just might be worth looking into.

Consider recycling, which can land some cashback in your pocket, as well as refillable ink cartridges and other little helpful things around the office. You might just last a little longer!

8. Sometimes a trade works better than cash.

Trading goods for other goods? Hey, we've seen it with pirating in the past, as well as certain businesses long ago. So why not use the practice again to save money with your startup?

Work with other companies to offer services and/or goods in return for other things that you can use around the office. Beats paying top dollar for them down the road, right?

9. Oh, hello, social media!

Why paying top-dollar for marketing is a key business choice for some, it could be just out of reach for others getting started. So why not look for free marketing instead?

Using social media tools is definitely a plus, and you can also create a reputable business entity with a video push across YouTube and TikTok as well. Just avoid dancing, because there are already enough dancing videos going around, thank you very much.

10. Look for big company partnerships.

There are a ton of programs being offered by big companies right now to help out startups. Amazon's business services, U.S. mail, credit card companies – a lot.

And if you want to save money with your startup, the first step is knowing who to partner with so you're not stuck with large bills later. Like grants, finding the right ones can really pay off – and you'll have tons of supplies to work with as well.

The post 10 Unusual Ways You Can Save Money with Your Startup appeared first on KillerStartups.
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