Investopedia

Reviewed by David Kindness

Wanting to live well in the moment while saving for an enjoyable retirement can be a financial conundrum. The good news is, it is possible to do both. Balancing these two needs simply means making sure you are keeping your financial house in order while you are enjoying your lifestyle. Individuals can learn to balance these two often-conflicting aims—lifestyle goals and retirement goals—by using the following four-step process:

Key Takeaways

• In order to assess your financial situation, ask yourself questions about how happy your current lifestyle makes you and how you’re handling your money.
• Develop a new lifestyle and retirement goals if your current ones are incompatible.
• Design a strategy for ensuring our goals can coexist, and be sure to check and update your plan every three months.

1. Assess Your Situation

Begin with analyzing the way you live now. One way of doing so is to make a list of questions to ask yourself. This simple test might be called the “happiness barometer.” Examples include the following:

• Am I happy with my current lifestyle?
• Do I feel I have enough financial resources to sustain my lifestyle?
• Am I enjoying life?
• Are there things I want to be doing, but have not yet begun to pursue?
• Am I living where I want to live?
• Am I driving the kind of car I would like to drive and, if not, how important is that?

Then take a look at your finances, and add questions to your list such as:

• Am I saving enough for retirement?
• Am I able to pay my bills on time?
• Do I have enough disposable income?

If you answer “no” to a number of these questions, then you may need to revise some of your goals, change your lifestyle, or both. These revisions should focus on needs versus wants in your life.

2. Develop New Goals

If you find a disconnect between your lifestyle goals and your retirement goals, it very likely means you need to either develop new goals or revise your existing ones. Make sure that these goals are realistically based on your financial resources. Again, you will need to distinguish your wants from your needs.

Lifestyle Goals

To help you keep on track with your lifestyle goals, make a written list of the things you want to do—a list of things that could make your life more pleasurable. This “pleasure list” can include, but is not limited to: hobbies you’d like to pursue, places you’d like to go, restaurants you want to try, places where you want to live, the kind of car you want to drive, and charities you’d like to support.

10x

Experts at Fidelity recommend saving ten times your annual salary by the time you hit age 67. This will allow you to live in relative comfort without outlasting your savings.

Retirement Goals

Review and assess your retirement goals to determine whether you are on track with your projected financial needs and objectives. This includes reviewing your budget and making any necessary revisions.

If you have not yet established retirement goals, now is the time to do so. If you need help with this, seek out a qualified financial planner.

3. Devise a Plan

Once your lifestyle and retirement goals are in place, the next step is to determine whether they can coexist. Incorporate the two sets of goals into your budget and add dollar figures for each lifestyle goal. This is one of the key areas where you will begin to make any necessary adjustments by cutting out non-necessities.

Do not jeopardize your retirement goals. Instead, cut back on less-important budget items. For instance, a lifestyle goal may be to play golf one Saturday each month. If your finances fall short of allowing you to enjoy this hobby, don’t remove it from your list. Look elsewhere in the budget for a source of funding. For instance, you may find that taking leftovers to work instead of buying your lunch two or three days a week could increase your disposable income.

Review each lifestyle goal and determine what it is you need to do in your budget to make this goal achievable. The idea is to make your budget work for you and not vice versa.

4. Monitor and Reassess

After you have put your plan into action, check at least once every three months to ensure the plan is on track, and then reassess your goals, objectives, and budget at least once each year to determine whether you need to make any changes. Monitoring and reassessing may need to occur more often if you are falling short of your goals and objectives.

Make sure to determine what went well, what didn’t, and what you need to change. As you go through this process, you will find that your lifestyle and retirement goals may also change. Be willing to adjust, but be hesitant to abandon important goals. Be persistent in going after what you want.

How Much Should I Have Saved for Retirement?

While there are no hard rules, it is important to save as much as possible to ensure a comfortable retirement. As a rule of thumb, Fidelity Investments recommends aiming for saving ten times your annual salary by the time you turn 67. Aim to have about one year’s salary saved by age 30, three years’ salary at age 40, and six year’s salary by age 50.

What’s the Best Way to Save for Retirement?

The most important rule for retirement savings is to get started early, so that you can take advantage of compound interest. Assuming a 5% interest rate per year, each dollar that you save at age 20 will grow to eight or nine dollars by the time you turn 65. You should also invest as much as possible in tax-advantaged retirement accounts, such as IRAs and 401(k) accounts, which allow your savings to grow tax-free.

What Do You Do If You Can’t Afford to Retire?

Unfortunately, this is a common situation for many older workers who may not have had the opportunity to save much in their younger years. Retirement planners advise workers in this situation to seek out new skills and remain relevant in the job market. In addition, you should write out a detailed retirement plan, based on your expected income and any social security expected social security payments. You may also consider changing your lifestyle to reduce expenses, such as by moving to an area with a lower cost of living.

The Bottom Line

To balance living well now with retiring well, begin with an assessment of your current situation. Then develop a new set of lifestyle goals to achieve what you want. Put a plan in action by determining how you can achieve your goals within your budget, and finally, monitor your plan on an ongoing basis.

Over time, if you’re sticking to your goals and objectives, you should find that your quality of life—and the comfort factor of knowing you’ll have enough to retire—will improve.

Reviewed by Khadija Khartit

Bonds are rated according to their risk of default by independent credit rating agencies such as Moody’s, Standard & Poor’s, and Fitch. Those with lower ratings have higher risks associated with them that investors should consider. Due to increased risks, these bonds typically carry higher coupon rates. Issuers, such as consumers with less-than-perfect credit, must pay more for loans.

While investing in lower-rated bonds carries more risk when buying these junk bonds, do not completely write them off. There are opportunities among lower-rated bonds that can still prove to be good investments; you just have to know what to look for when investing.

Key Takeaways

• High-yield or “junk” bonds are those debt securities issued by companies with less certain prospects and a greater probability of default.
• These bonds are inherently more risky than bonds issued by more creditworthy companies, but with greater risk comes greater potential for return.
• Identifying junk bond opportunities can boost a portfolio’s performance, and diversification through high-yield bond ETFs can cushion any one poor performer.

Junk Bond Opportunities

Identifying good opportunities among junk bonds can be difficult for the average investor. For this reason, the best way to invest in lower-rated bonds is through a high-yield mutual fund, closed-end fund (CEF), or exchange-traded fund (ETF). Investing this way gives your portfolio better diversification across several issues of high-yield bonds. Also, holding shares of a high-yield fund gives you access to professional money management. These mutual fund managers have more knowledge and time to research each bond issue held within the portfolio than an average investor.

Furthermore, investing through a mutual fund, CEF, or ETF allows for the use of leveraging techniques, bulk discounts, and some bond issues that are only accessible to institutional investors like a fund. CEFs only issue a specified number of shares, and then the portfolio trades in the secondary market. If you can find a CEF trading at a discount to its net asset value, or NAV, you stand to profit not only from the high income payments but also from some growth on your principal investment.

More than 60 high-yield bond ETFs trade in the United States as of 2025. A few notable high-yield ETFs are the SPDR​ Bloomberg High Yield Bond (JNK) and the iShares iBoxx $ High Yield Corporate Bond (HYG). If you are set on choosing individual high-yield bonds to purchase for your portfolio, recognize that the necessary due diligence on your part will increase. Consider first selecting issues from companies deemed “fallen angels,” those companies that are historically reputable but have temporary financial problems.

Other Considerations

By choosing to invest in bonds from these companies, you are likely to find deep discounts and high yields, but you can rest assured that the chances of the company defaulting on the debt are not as likely as current ratings may reflect in the market. Peruse the company’s financial statements and sentiment toward the company’s stock. If the stock is still valuable, the bond issue is likely to also be fine.

Follow interest rate patterns and changes; you profit from owning high-yield bonds in a rising interest rate environment as prices increase, as yields align with new issues at prevailing higher rates.

What the Experts Have to Say

Advisor Insight

Donald P. Gould
Gould Asset Management, Claremont, California

High-yield bonds are not intrinsically good or bad investments. Generally, a high-yield bond is defined as a bond with a credit rating below investment grade; for example, below S&P’s BBB. The bonds’ higher yield is compensation for the greater risk associated with a lower credit rating.

High-yield bond performance is more highly correlated with stock market performance than is the case with higher-quality bonds. When the economy weakens, profits tend to decline and so does the ability of high-yield bond issuers (generally) to make interest and principal payments. This leads to declining prices on high-yield bonds. Declining profits also tend to depress stock prices, so you can see how economic news, good or bad, could cause stocks and high-yield bonds to move in the same direction.

What Is a Junk Bond?

Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. Junk bonds are also called high-yield bonds since the higher yield is needed to help offset any risk of default.

What Is a Mutual Fund?

A mutual fund pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. A high-yield mutual fund is a type of mutual fund that primarily invests in high-yield bonds, also known as junk bonds.

What Is a Closed-End Fund?

A closed-end fund is a type of mutual fund that issues a fixed number of shares through an initial public offering (IPO) to raise capital for its initial investments. Its shares can then be bought and sold on a stock exchange, but no new shares will be created, and no new money will flow into the fund. A high-yield closed-end fund is a type of closed-end fund that primarily invests in high-yield bonds, also known as junk bonds.

What Is an Exchange-Traded Fund (ETF)?

An exchange-traded fund (ETF) is an investment fund that holds multiple underlying assets and can be bought and sold on an exchange, much like an individual stock. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of stocks. A high-yield ETF is a fund that primarily invests in high-yield bonds, also known as junk bonds.

The Bottom Line

High-yield bonds, also known as junk bonds, are debt securities issued by companies with less certain prospects and greater default probability. With their greater risk comes the greater potential for return.

Reviewed by Cierra Murry

When it comes to understanding the long and short of investing, most beginning investors must learn what seems like a new language. In fact, the phrase “the long and the short of it” originated in financial markets.

In this article, we discuss several key terms that will help you better understand and communicate with other market participants. These terms are used in the equities, derivatives, futures, commodities, and forex (or currency) markets. You will learn what buying, selling, and shorting really mean to investors and how they can use certain terms interchangeably with more confusing words like bullish and bearish. To compound the issue, options traders add in a few other terms such as “writing a contract” or “selling a contract.”

When you start to communicate about the markets more comfortably, you will be better informed and can make wise investment decisions.

Key Takeaways

• Learning several key terms will help beginning investors better understand and communicate with other participants in the stock (equities), derivatives, futures, commodities, and forex (or currency) markets.
• In the stock market, you can have a long position or a short position.
• “Long” and “short” also apply to trading foreign currency pairs.
• “Bullish” and “bearish” are terms to describe market sentiment.
• The derivative/options market comes down to calls and puts.

Long Positions and Shorting

The financial markets allow you to do a few things that are really common in everyday life and a few things that aren’t. When you buy a car, you own that car. In the stock market, also known as the equity market, when you buy a stock, you own that stock. You are also said to be “long” on the stock or have a long position. Whether you are trading futures, currencies, or commodities, if you are long on a position, it means you own it and hope it will increase in value. To close out of a long position, you sell it.

Shorting will likely seem somewhat foreign to most new investors, because shorting a position in the equity market is selling stock you don’t actually own. Brokerage firms allow speculators to borrow shares of stock and sell them on the open market, with the commitment to eventually return the shares. The investor will then sell the stock at the day’s price in the hope of buying it back at a lower price while pocketing the difference. Catalog companies and online retailers use this concept daily by selling a product at a higher price, and then quickly buying it from a supplier at a lower price. The term originates from a situation where a person tries to pay a bill but is “short” on funds.

You may be interested to know that some people consider shorting to be unpatriotic or “bad form.” The phrase “don’t sell America short” was attributed to John Pierpont Morgan Sr. (J.P. Morgan). The debate against short selling rages on to this day.

The Currency Caveat

When trading foreign currencies in the spot market (currencies and many commodities are traded in the futures or spot markets), you are usually long one currency and short another. This is because you are exchanging one currency for another, and therefore, various world currencies trade in pairs.

For instance, if you think the U.S. dollar is going to rise but the euro is going to fall, you could short the euro and be long on the dollar. If you feel the dollar is going to rise and the Japanese yen will fall, you could be long on the dollar and short on the yen.

Bullish vs. Bearish

Other terms that are often new to beginning investors are “bullish” and “bearish.” The term “bullish” is used to describe a person’s feeling that the market will go up, while “bearish” describes a person who feels the market will go down. The most common way people remember these terms is that a bull attacks by ducking its head and bringing its horns upward. A bear attacks by swiping its paws down.

Chicago is the home of commodity and futures markets; coincidentally, the professional basketball team is the Bulls and the professional football team is the Bears. Also, the mascot of the Chicago Cubs professional baseball team is a bear cub.

It is also common for investors to use the terms “long” or “short” to describe their market sentiment. Instead of saying they are bullish on the market, investors may say they are long on the market. Similarly, on the downside, investors may say they are short on the market instead of using the term “bearish.” Either term is acceptable when describing your market sentiment. It is important to remember that short and long usually imply that you have a certain position in whatever market you are trading, but, as you can see, this isn’t always the case.

Calls vs. Puts

The derivative market is also known as the options market. Options are contracts in which one party agrees to buy or sell a certain security (security is a generic term for any financial product) at a set price and set time from or to another party. Options are very common in the equities market but are also used in the futures and commodities markets. The forex (or currency) market is known for very creative derivatives known as “exotic options.”

For our purposes, we’ll refer to options in the stock market since it is most investors’ first introduction to derivatives.

Options come down to calls and puts.

Call options give the contract buyer the right, but not the obligation, to purchase stock shares at a set price on or before a set date. Usually, another investor will sell a call contract, which means they believe the stock will stay flat or go down. The person who buys the call is long on the contract, whereas the person who sells the contract is short.

A put option allows the contract buyer to sell stock at a set price before a set date. Like a call option, there is usually another investor willing to sell the option contract, which also means that investor believes the stock will either stay about the same price or rise in value. So the person who buys the option contract is long on the contract and the person who sells the contract is short.

Selling options while using the derivative dialect also gets more complicated because options traders not only use the terms “sell” or “short” regarding the contract, but also say they “wrote” a contract. Today, the contracts are standardized and no one really “writes” the contract, but the term is still very common.

Covered calls are often one of the first option strategies that investors learn—these involve the purchase of a stock and the sale of a call contract at the same time. The purchased stock acts as “collateral” in case the call is exercised by the option buyer and the seller can relinquish the shares while keeping the premium gained for selling the option. Since investors are buying a stock and selling a call at the same time, they use a buy-write order.

What Are the Markets?

• The stock market, also known as the equities market, is an exchange mechanism that helps investors buy and sell shares in publicly traded companies.
• The derivatives market is the financial market for derivatives, a type of financial contract between two or more parties whose value depends on an underlying asset, a group of assets, or a benchmark. Derivatives can be traded on an exchange or over the counter (OTC).
• The futures market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date at a price set today.
• The commodities market involves buying, selling, or trading hard commodities (natural resources such as gold, rubber, and oil) or soft commodities (agricultural products or livestock such as corn, wheat, coffee, and pork) for immediate or future delivery.
• The foreign exchange (forex) market is where banks and individuals buy, sell, or exchange currencies.

Where Can I Learn More Investor Terminology?

More investing terms and definitions can be found at websites like Charles Schwab, the Investment Company Institute, Investor.gov, and J.P.Morgan Asset Management.

Where Can I Learn Investing Terms Daily?

You can learn a new financial term every day, and discover why it’s relevant in today’s investing news, by signing up for our Term of the Day Newsletter.

The Bottom Line

At this point, you may find yourself going back to reread some of the vocabulary that was just discussed. Let’s do a quick recap. Investors will either say they are bullish, or long, on the market—or bearish, or short, on the market. If we are long one currency in the forex spot market, we are short another currency at the same time. This can be confusing but not nearly as confusing as the options market.

In the options market, we can say we are bullish on a stock and then short a put, because while being bullish, we can either buy a call or sell a put. We can be bearish on a stock and long on a put because if we are bearish, we can either buy a put or sell a call. This may also mean that we are short on the market by going long on a put or long on the market by shorting a call. You can imagine the linguistic laughter that comes from a group of options buyers talking to each other.

In many cases, and not just in the financial world, overcoming the language barrier will be one of the vital keys to success. Investing carries with it its own language barriers that must be broken down by translating the terms and subduing the syntax.

You can, but you could end up paying a fee

Reviewed by Margaret James

If you have been arrested, no matter what for, one of the first things that happens during the booking process is the mug shot. States have different laws governing the public availability of criminal records, but many make mug shots publicly available almost instantly, and yours could be online in less than 24 hours. Once it’s posted, is there any way to get it taken down?

On the surface, posting mug shots might seem like a valuable community service, but an arrest doesn’t equal a conviction. You could end up never being charged with a crime, or your case could be dropped. Nevertheless, your published mug shot could be enough to cost you your job or reputation, for your name to be wrongly besmirched. In such a case, should you pay to have your mug shot removed from the Internet?

Key Takeaways

• Publishing mug shots online is a big business, which many call shady.
• More than a dozen states have enacted laws prohibiting publishing mug shots online and charging to take the photos down.
• In states that don’t have such laws once a mug shot becomes public record, any number of for-profit websites can publish them.
• Instead of contacting the sites directly, you can pay one company to remove the photos for you.

The Business of Mug Shots

In recent years, more than a dozen states have enacted laws to limit posting mug shots online. Measures include prohibiting publishing mug shots online altogether, prohibiting charging to take the photos down, and limiting access of mug shots in the private sector. But in states that don’t have such laws, once a mug shot becomes public record, any number of for-profit websites can grab the photos and post them for public view. Even local newspapers generate traffic by publishing photos on their websites.

A simple Google search of someone’s name may return links to these mug shot sites along with the image appearing at the top of the results. Even if the person wasn’t charged with a crime, was found not guilty, or had their records sealed, the images still appear.

The problem is much larger than a single website. Because mug shot images are uploaded to a searchable database, there’s no limit on how many websites could publish the photos. This problem gave birth to a complementary business that some critics say might be as shady as the sites that publish the mug shots.

Contacting all of the websites directly may be daunting, but you can simply pay a company to remove the images for you. Costs range from a few hundred dollars to thousands, depending on how many websites publish the mugshot. There are many companies offering mugshot removal services. However, since mugshots are still public records, there’s no guarantee that a mugshot will not surface again in the future.

Important

In most cases paying a fee will result in removal of the image, but that doesn’t guarantee that it is gone from the internet forever.

Should You Pay to Erase Your Mug Shot from the Internet?

Given that it’s possible to get your mug shot removed, the next question is whether or not you should pay to have it done. As it turns out, that depends on whom you ask and which sites you use for removal. Some will do what they advertise; others won’t. “For the most part the third-party sites are a waste,” says criminal defense attorney Jordan Ostroff. “They will send letters to the other sites and maybe follow up here or there, but it’s really [up to] the main sites that post the pictures to do something about it or not.”

Ostroff believes the most reliable way to get your mug shot removed is paying a fee to the actual site rather than using a third-party service. “The way for that [mug shot website] to make money is to take the payment and take the photo down, whereas the third-party companies just have to [make] a good [try] for you,” he notes.

Cleveland attorney Aaron Minc, who calls the industry “legal web extortion,” disagrees, saying that using a mug shot removal service to get rid of records from multiple websites works. Minc has used them on behalf of clients and found that they’ve done what they advertised. “They just want their money, and then they’ll go away,” he says. “In the past, if you paid one site, the mug shot might pop up on other sites, but that’s not often the case anymore.” As with everyone we asked, he cautioned that there is a history in the industry of scam sites.

In fact, there’s evidence to suggest that some of the removal websites work with the posting websites or, in some cases, may actually be the same company. In May 2018 Califonia’s attorney general charged four owners of Mugshots.com, which was partnered with Unpublisharrest.com, with alleged extortion, money laundering, and identity theft. At the time Mugshots.com would not remove criminal record information unless a fee was paid, usually $399, through Unpublisharrest.com, which has since been taken down.

Note

States that don’t allow mug shots to be posted online and/or companies to charge to take them down include: California, Colorado, Connecticut, Florida, Georgia, Missouri, New Jersey, New York, Oregon, South Carolina, Texas, Utah, and Virginia.

What If the Case Was Sealed?

If the case was sealed or expunged, you might be able to have the image removed free of charge. New York criminal lawyer Todd Spodek says, “[In New York] if you have a court order sealing the file, including mug shots, and present it to the actual website, they will have to take it down or face legal repercussions.… With the case sealed or expunged, it’s tough for anyone to follow up and confirm the arrest.”

How Do You Find Someone’s Criminal Record?

In the United States, you can look up conviction records on the website of your state’s Department of Corrections. For federal crimes, check the Public Access to Court Electronic Records (PACER) service. Although there is a fee on PACER, most state record searches are free.

How Do You Get Rid of a Mugshot?

Mugshots are public records, which means they are legal in many states to post online, whether or not you are ultimately convicted. However, some states prohibit this practice, or prohibit companies from charging a fee for removal. Your first step should be to contact the website posting your records—if your case has been dismissed, expunged, or acquitted, they may remove it without a fee. If that fails, try contacting Google and other search providers to have those pages removed from search results.

How Much Does It Cost to Remove a Mugshot?

There are many mugshot removal services offering to remove arrest records and booking photos from the internet. Prices vary depending on the number and type of the offense, with one site charging $250 to remove a mugshot and $1,595 to remove records from background checks. However, it’s not clear how effective these services are. There are also reputation management firms that can help bury arrest records so that they do not show up on internet searches.

The Bottom Line

Most experts use terms like “extortion” to describe these sites, but the practice isn’t illegal in many states. Anything posted to the internet is available somewhere. It becomes a matter of personal choice whether you want to pay a fee to have a mug shot removed from the internet. But paying to remove what is plainly visible will likely work.

Reviewed by Margaret James

Some people claim that owning and leasing residential rental property is a surefire way to make money. In reality, it can sometimes be more of a headache than it’s worth. The challenges start early, and they almost always involve time and money.

Here are six classic challenges that landlords face. Consider these before entering the residential real estate market.

Key Takeaways

• Investing in residential rental property can be lucrative, though it can come with many difficulties.
• Potential challenges include finding good tenants and maintenance issues.
• Hiring a property manager can lessen the burden of managing a rental property but will cut into your profits.
• Removing tenants can be a time-consuming and expensive task.

Challenge 1: Finding a Property

Finding a suitable residential rental property is crucial. Buy too expensive a place, and you’ll never make money. But trying to snag a bargain can be troublesome, too. Buying a fixer-upper requires that you have the skills, time, tools, and cash to make the necessary repairs and renovations.

If you’re in no hurry, this may be a way to get a bargain on your investment. If you already have a full-time job and a family, every minute spent repairing the rental is a minute not spent on a more profitable or enjoyable activity. However, nowadays, management companies can do a lot of this legwork—from locating a property to rehabbing it—for you, for a fee, of course.

Challenge 2: Preparing the Unit

Getting just about any piece of real estate into rental condition often requires fresh flooring and paint at a bare minimum, and both items require time and money. Window screens, deck stains, and lawn maintenance are other common needs. Every time a tenant departs, these issues need to be revisited, too.

Challenge 3: Finding Tenants

Rental listings sites provide a fast and inexpensive way to find prospective tenants. You can also sign up with a real estate company that will vet tenants for you. Some realtors will show an apartment on behalf of the landlord for a commission. Another way to find tenants is to share this information with friends and family members who may be able to make recommendations.

When you vet tenants yourself, you will need to conduct credit and background checks, which can be expensive, but is often a smart idea. Responsible tenants pay their rent on time, don’t abuse the property, and don’t require you to engage in the costly and time-consuming eviction process.

Challenge 4: Hassles

Even great tenants and perfect rental properties come with a host of hassles. There are broken pipes, stuffed drains, and pet stains, for example. Tenants will want your full and immediate attention when the sewage is backing up into their home, or the cable company accidentally cuts the telephone lines.

Certain tenants pose an even more significant challenge. Daily calls and late or unpaid rent can add to the hassles.

The move-out day is another challenging time. Damage to walls, floors, carpets, and other components of the home can lead to disputes and costly repairs.

Challenge 5: Maintenance

Maintenance of significant components and amenities is a big-ticket item. New appliances cost hundreds of dollars. A new roof or driveway can cost thousands of dollars. If the rent is $1,500 per month and the roof is $10,000, you can find yourself losing money fast. Add in carpet or new hardwood floors, paint, and a new stove, as well as tenants that don’t stay long, and the property could lose money for years.

Challenge 6: Interest Rates

What do interest rates have to do with anything? Plenty. When rates fall, it’s often cheaper to buy a home than to rent, and so the demand for your unit(s) might drop. Lowering the rent to remain competitive can damage your ability to make a buck.

Important

You’ll probably need to take out landlord insurance—no, your regular homeowner’s policy isn’t sufficient.

Hiring a Property Manager

Property managers can handle a variety of roles. What that is, exactly, is up to you to negotiate with your manager. It is essential to identify what their role will be and develop a list of duties and responsibilities. Will your property manager find tenants? Or will they handle day-to-day maintenance and collecting rent?

A property manager can be an independent contractor or an employee. You should speak with your tax accountant to determine the most favorable approach and determine specific obligations you may have.

You can also hire a property management company, a firm you contract with, to deal directly with all aspects of the rental property. This can be expensive, but it may be ideal if you have multiple rental properties.

Make sure any property manager who you’re considering meets the appropriate local and national licensing requirements.

An experienced manager should help you with advertising, marketing, tenant relations, collecting rent, budgeting, leasing, and maintenance. A good property manager will also be knowledgeable about local and state laws. As the property owner, you can be held liable for the acts of your manager, so you can be sued if your manager violates any fair housing laws. 

Once you decide on a property manager and the terms of the arrangement, you should write a property management agreement that identifies the manager’s duties, compensation, and termination conditions.

A rental property provides you with the flexibility of when to sell a property. You can avoid a weak real estate market by renting the property and waiting to sell it.

Can Owning Rental Properties Be a Full-Time Job?

Yes. Some landlords treat their rentals like a full-time job. They incorporate, buy multiple buildings, and do a significant portion of the work themselves. It’s a business that requires time and energy, and a mastery of tax strategies such as rental property tax deductions and the 1031 exchange.

What Does a Property Manager Do?

A property manager can handle many of the duties of running a rental property. This includes marketing, selecting tenants, maintenance, budgeting, and collecting rent. You may consider hiring a property manager if you want to delegate these tasks, though it will cut into your profits.

What is House Hacking?

House hacking is sharing residential space by purchasing a duplex (or other easily divisible structure). It’s often a profitable undertaking. Since you are on-site and plan to take care of the property anyway, the extra cash is a bonus. Of course, living on-site means that you are always available and will be in close contact with your tenants. Plan appropriately and screen carefully.

As a Landlord, What Do I Need to Know About Section 8?

One way to earn money is by leasing to Section 8 tenants through a voucher program administered by the U.S. Department of Housing and Urban Development. Through the program, the government pays for 70% of the rent. It’s a way for you to provide housing for families in need.

The Bottom Line

Is becoming a landlord worth the effort? Only you can decide. Just be sure to look before you leap and go into your new endeavor with realistic expectations and a solid game plan. If you know what you’re getting yourself into, you’re more likely to enjoy the experience.

How Financial Hardships Shaped the Lives and Policies of Five U.S. Presidents

Although the White House often conjures images of affluence and power—with presidents from George Washington to Donald Trump having substantial fortunes—the financial backgrounds of America’s commanders-in-chief have been far from uniform.

Alongside those born into wealth, several presidents had to overcome significant financial challenges. This article looks at five presidents whose personal fortunes remained modest throughout their lives, exploring how their economic hardships (or humble origins) contrasted with the grandeur of the nation’s highest office.

Key Takeaways

• Not all U.S. presidents were wealthy; some faced significant financial challenges.
• Chester A. Arthur and Woodrow Wilson had modest financial backgrounds.
• James A. Garfield and Calvin Coolidge rose from poverty to political prominence.
• Harry S. Truman’s financial struggles were alleviated by post-presidency opportunities.

Criteria for Determining Presidential Wealth

Assessing a president’s financial standing isn’t as straightforward as comparing bank balances. We’ve taken into account the following:

• Peak net worth: Adjusted for inflation, this figure offers insight into the maximum personal wealth attained over one’s lifetime. Notably, many of the “poorest” presidents never became millionaires (after adjusting for inflation).
• Assets and real estate: Ownership of property and other tangible assets can signal long‐term wealth.
• Income: Aside from the presidential salary, many modern leaders profit from speaking engagements, memoirs, and business ventures. Still, several presidents maintained only modest earnings both before and after leaving office.
• Debt: For some, failed business ventures or chronic indebtedness played a role in reducing overall net worth.

5. Chester A. Arthur

• Term in office: 1881-1885 (21^st president)
• Prior occupations: Teacher, lawyer, quartermaster general, customs official 

Chester A. Arthur (1829-1886) is best remembered for promoting civil service reform with the Pendleton Act, which reduced corruption by requiring government jobs to be awarded on merit rather than political patronage. He also pushed for lower tariffs as tax relief for middle-class consumers and indebted farmers.

Born to an Irish immigrant family with limited resources, Arthur took on a career in public service rather than lucrative private enterprise. He worked as a schoolteacher, tried his hand at law, served in the U.S. Civil War, and eventually climbed the political ladder as a government official. His rise, however, was fueled primarily by the cronyism and patronage notorious of the era. In 1880, James Garfield chose Arthur as his running mate, which put him next in line for the presidency when Garfield was assassinated just months into his term.

While in office, Arthur did enjoy a taste of luxury—for example, he secured funds from Congress to furnish the White House with rare and high‐quality items, including pieces from Louis Comfort Tiffany. However, these expenditures were meant to signal the office’s dignity rather than bolster his personal fortune. When he died in 1886, he left behind a modest fortune, not the vast sum typical of business tycoons then and now.

4. Woodrow Wilson

• Term: 1913-1921 (28^th president)
• Other occupations: Lawyer, professor, university president, governor of New Jersey

Woodrow Wilson’s (1856-1924) personal finances were far more modest than those of many of his contemporaries. Raised in a modest household as the son of a Presbyterian minister in Virginia, Wilson went on to earn a Ph.D. in political science—the only president to hold a doctoral degree. Despite a long academic career, including time as Princeton’s president, Wilson never amassed substantial wealth.

Wilson is best known for leading the U.S. during World War I (1914–1918) and for his role in shaping the postwar world, including his support for the League of Nations (a precursor to the United Nations), and his signing of the Federal Reserve Act (which created the modern central banking system), antitrust laws, and labor protections. He also resegregated federal offices, promoted the virulently racist film Birth of a Nation (quotes from his writings on race appeared in several intertitles and he gave it the first White House film screening), and worked to ensure a Japanese proposal to recognize the principle of racial inequality was excluded from the Versailles Treaty.

His 1919 stroke and decline meant his post-presidency, which he spent in a Washington, D.C. home, purchased with the help of supporters, wouldn’t offer him the path to wealth followed by other presidents.

3. James A. Garfield

• Term: March-September 1881 (20^th President)
• Other occupations: College president, Army officer, U.S. Congress

James A. Garfield, the 20th president (1831-1881), was born into a life of hardship in a log cabin in Ohio. His early years were defined by the necessity of working odd jobs—from carpentry to janitorial duties—to fund his education. These early struggles instilled in him a determination and work ethic that would propel him to higher office.

Even as Garfield’s career advanced—becoming a college president and later a decorated military officer during the Civil War—his financial rewards remained modest. His service in Congress, though highly respected, offered salaries that, even when adjusted for inflation, fell short of what many modern leaders earn.

Garfield’s presidency was cut short by an assassin’s bullet only months after taking office.

2. Calvin Coolidge

• Term: 1923-1929 (30^th President)
• Other occupations: Lawyer, politician, author, columnist

Known affectionately as “Silent Cal,” Calvin Coolidge (1872-1933) carried a reputation for quiet dignity and fiscal prudence—a reflection of his own modest background, but at odds with the Roaring ’20s over which he would preside.

Growing up in rural Vermont, Coolidge was no stranger to the value of hard work. After passing the bar, he ran a small law practice in Massachusetts, earning a steady but unremarkable income.

Once in the White House, Coolidge championed tax cuts and reduced government spending, promoting austerity and prudence. He remains the last chief executive to have actually cut the size of government.

Post-presidency, Coolidge’s income from writing a memoir and syndicated magazine column remained relatively modest.

1. Harry S. Truman

• Term: 1945–1953 (33^rd President)
• Other occupations: Farmer, soldier, shop owner 

Often cited as the poorest president to enter office in modern history, Harry S. Truman (1884-1972) had, on his account, significant financial struggles both before and following his time in office.

Truman was born into a farming family in rural Missouri. After military service, he attempted to run a men’s clothing store—a failed venture that almost ruined him.

Truman’s ascent through public service—from a county judge to U.S. Senator and finally President following FDR’s death—was, too, marked by modesty. After his term, he returned to Missouri and took a modest pension.

However, Truman did eventually cash in on his time as president, selling rights to his memoirs to Life in 1954 for over $500,000 (about $6 million in 2025 dollars).

Truman’s Legacy: The Former Presidents Act

Despite the money from Life and other sources of income, Truman’s postpresidential life helped bring about the enactment of the Former Presidents Act (FPA, 1958), as the former president repeatedly told the nation of his poor financial plight—and the disreputable ways he could earn money were he inclined to doing so.

“The United States government turns its chief executives out to grass,” Truman told CBS News anchor Edward S. Murrow in a prime-time interview in 1958. “They’re just allowed to starve.”

Archival researchers have suggested Truman’s claims were overblown—far from penury, he left the White House comparatively wealthy, and he built upon that significantly in the years ahead. Nevertheless, presidents since have been given far more substantial support after their terms are over.

While in office, the presidential salary (since 1999) is $400,000 per year. Post-presidency, the benefits that accrue to the president from the FPA continue:

• Pension and benefits: Ex-presidents receive a federal lifetime pension of around $220,000 per year, as well as office space and staff support for several months after leaving office.
• Security: While not “earnings” per se, the President also benefits from lifetime security provided by the U.S. Secret Service.

In addition, most modern ex-presidents have capitalized on lucrative memoir deals and speaking engagements (sometimes reaching into the tens of millions). The title and legacy of the presidency often provide intangible benefits—such as influence, prestige, and a platform for public discourse—that can’t be measured solely in dollar terms.

The Bottom Line 

Not all U.S. presidents have been millionaires. However, despite entering the Oval Office with relatively modest means, many were able to leave a lasting impact on American society. In many ways, their experiences underscore a powerful message: leadership is defined not by personal wealth but by dedication, integrity, and the ability to serve the public good.

Exploring the Benefits and Risks of Buffett’s 90/10 Allocation

The 90/10 rule comes from legendary Warren Buffett’s advice for average investors. Put 90% of your money into a low-cost S&P 500 index fund and the other 10% in short-term government bonds.

The idea is simple: most people don’t have the expertise needed to make great decisions about investing in individual stocks—don’t take that as a knock since Wall St. money managers often fail to match the returns of simple index funds. So save money on management fees, bet on the American economy, and be patient, Buffett says.

But is this a good strategy for all investors? Below, we take a closer look at the thinking behind the 90/10 rule and whether it stands up to the test of time.

Key Takeaways

• Warren Buffett’s 90/10 strategy involves allocating 90% of assets to a low-cost S&P 500 index fund and 10% to short-term government bonds.
• The 90/10 rule offers simplicity, lower fees, and the potential for higher returns.
• The strategy is based on historical returns for the S&P 500, as well as Buffett’s skepticism about the performance of the average fund manager.
• Critics say such a high allocation to equities isn’t suitable for all investors, particularly those nearing retirement or already retired.

Background of the 90/10 Strategy

Buffett explained the 90/10 strategy in a 2013 letter to Berkshire Hathaway Inc. (BRK.A) investors. A devotee of legendary value investor Benjamin Graham, Buffett described investing as buying “small portions of businesses” and noted that the average investor lacks the skill to analyze companies similarly.

“I have good news for these non-professionals: The typical investor doesn’t need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts).”

In fact, the typical investor also doesn’t need today’s fund managers or their fees, Buffett said. He has long been critical of most asset managers, noting that most can’t consistently beat the S&P 500 (he’s right). So it’s little wonder he would advise people not to chase soaring individual stocks or a rampaging bull market. “Remember the late Barton Biggs’ observation: ‘A bull market is like sex. It feels best just before it ends,'” he said.

In the same letter, Buffett went on to explain that in his will, he advised the appointed trustee to invest the cash he planned to leave his wife (his Berkshire Hathaway shares will go to charity) the same way: 90% in a “very low-cost” S&P 500 index fund and 10% in short-term government bonds.

“I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions or individuals—who employ high-fee managers,” he wrote.

Components of the 90/10 Investment Strategy

There are two basic elements of the 90/10 investment strategy:

1. Invest 90% of your liquid assets in a low-cost S&P 500 index fund (Buffett recommended Vanguard’s). Buffett argues that stocks will continue to provide higher returns over the long run than bonds or cash.
2. Invest the remaining 10% in short-term government bonds such as U.S. Treasury bills. This ensures liquidity (your ability to buy or sell with relative ease) while reducing your overall risk in market downturns.

The idea is to maximize long-term growth with the broad equities investment while maintaining a small cash cushion and minimizing the management fees that can eat up portfolio returns.

Advantages of the 90/10 Strategy

The 90/10 strategy offers a number of benefits:

• Long-term returns. The S&P 500 has provided reliable long-term returns for almost a century, averaging about 10% a year before inflation.
• Limited risk. While a 90% allocation to equities might make some investors a bit nervous, the risk is limited by the diversification provided by a broad index fund and the quality and size of its companies.
• Lower fees. Because of compounding, even slight differences in annual fees can add up to big differences in portfolio size over time—thousands or even tens of thousands of dollars on a modest initial investment. An S&P 500 index fund should keep fees to the bare minimum.
• Less time is needed. It doesn’t get much simpler than 90/10. Rebalance quarterly or even annually, and you’re good to go. No need to spend a lot of time considering different investments.
• Less stress. Many investors, especially those with less experience, struggle to manage the emotional roller coaster of investing in the market. While the S&P 500 has had its share of stomach-churning drops, owning such a big chunk of the market—as opposed to a portfolio of tech growth stocks—should help most investors sleep soundly. And so should knowing that the market has always moved higher over the long term.

90/10 Rule Compared With Traditional Allocations

Some investors and market analysts have questioned the wisdom of the 90/10 rule, including whether it makes sense for all investors, particularly those nearing retirement, which is an age when most people start dialing back on investments in equities. Others have noted that such a high allocation to equities may not be suitable for any investor who is deeply uncomfortable with volatility.

Javier Estrada, a finance researcher at IESE Business School in Barcelona, Spain, decided to put the strategy to the test. Estrada wanted to test how such an allocation would work during a 30-year retirement with an investor withdrawing 4% a year. His point was that retirees need an allocation that carefully balances the risk of the investor outliving the account versus spending so little that their lifestyle suffers.

The one change he made to the 90/10 rule was that the annual withdrawals would be made from stocks if stocks had gone up, and from bonds if they had gone down, giving the stocks time to recover. Using historical data, Estrada then ran a series of simulations testing the 90/10 rule—with that slight tweak—versus other allocation ratios. “Buffett’s advice proves to be (unsurprisingly) not only simple but also sound,” he wrote.

That’s because Buffett’s 90/10 split puts your portfolio in a middle ground between the best-performing strategy for upside potential (100% stocks) and the best-performing for downside protection (60/40 and 70/30).

The Bottom Line

Warren Buffett’s 90/10 rule is a simple, low-cost strategy that aligns with his long-held belief in the power of the American economy and his skepticism toward the average professional money manager. By allocating 90% of assets to a low-cost S&P 500 index fund and 10% to short-term government bonds, investors can benefit from historically proven long-term market growth while maintaining a cushion for downturns.

Still, Buffett’s approach may not be the best fit for all investors, particularly those who are already retired or nearing retirement—they’d have less time for the market to recover from any severe downturns. Investors with less tolerance for market gyrations may also be happier with a different allocation. Ultimately, though, Buffett’s advice underscores a timeless investing principle: simplicity, patience, and controlling costs often outperform more complex strategies.

Reviewed by Charles Potters

Technical analysis is a trading tool that uses trading activity statistics, specifically price movement and volume, to try and predict future movement in the market. When a technical trader talks about price action, they are referring to the day-to-day fluctuation in the price of a particular stock. 

Key Takeaways

• Price action is the daily fluctuations of a company’s stock price.
• Price action trading involves analyzing a stock’s price movements and patterns to predict future trends.
• It is a subjective strategy as each trader interprets the results differently, which is why it’s important to use price action trading along with other strategies.
• Traders rely on technical indicators like the relative strength index (RSI) and the moving average convergence divergence (MACD) to understand the price movements.

What Is Price Action?

Traders gauge a stock’s price action by monitoring patterns and indicators to help find order in the seemingly random movement of price. Generally, a trader uses candlestick charts to better visualize and contextualize price movement.

It’s a subjective art; two traders might study the same price action and arrive at completely different conclusions about what the pattern represents. This is one reason that price action is best considered just one part of the overall trading strategy. 

Price action trading is a trading strategy in which trades are executed strictly on the basis of an asset’s price action. It’s a tactic most often employed by institutional and retail traders. Generally, these traders use leverage to place large trades on the basis of small underlying price movements.

Important

Price action traders need to be aware of “false breakouts” where the price temporarily breaks a support or resistance level but reverts back.

Predicting Price Actions

Hundreds of indicators have been designed to help predict an asset’s future direction. These include the relative strength index (RSI), the moving average convergence divergence (MACD), and the money flow index (MFI). They use historical trading data to analyze and predict price movement. 

Short-term traders plot this information with charts, such as the candlestick chart. Common chart patterns include the ascending triangle, the head and shoulders pattern, and the symmetrical triangle. Patterns are an integral part of price action trading, along with volume and other raw market data. It’s a difficult strategy, part art, and part science, that even experienced traders struggle with. 

Ultimately, in trading, no two people will analyze every bit of price action in the same way. As a result, many traders find the concept of price action to be elusive. Like other areas of active trading, gauging the price action of a stock is completely subjective and price action should be just one of many factors under consideration before entering into a trade.

What Is an Example of Price Action?

Price action is the movement of a financial security’s price over time. For example, Company ABC’s stock price opens at $50 on Monday and closes at $55, confirming an upward trend. On Tuesday, the price opens at $56 but during the day drops to $54, before closing the day at $55. The price action shows that while there was a pullback during the day, it maintains its support at $54, indicating buyers are still active. Technical traders may infer this as a continuation of the uptrend, looking to see if the share price breaks above $55 in the following days.

What Is Technical Analysis?

Technical analysis is a method of evaluating and predicting the price movement of a financial security, such as a stock. Technical analysts study historical price data and volume, using charts and indicators to identify patterns and trends to help determine exit and entry points (buy and sell decisions). The belief is that past price data can predict future price data. Technical analysis is suited for short-term trading and stands in contrast to fundamental analysis, which is better suited for long-term trading. Fundamental analysis focuses on a company’s financial profile to make investment decisions.

What Are Common Technical Analysis Indicators?

Common indicators used in technical analysis include moving averages (MA), relative strength index (RSI), moving average convergence divergence (MACD), Bollinger Bands, and stochastic oscillators.

The Bottom Line

Price action trading, a component of technical trading, studies a stock’s historical price movement and volume to predict future trends. It uses candlestick charts and patterns, like triangles or head and shoulders, to make its predictions.

The process is a subjective approach because traders interpret the price action differently, so as with most trading strategies, it is best used in conjunction with other strategies. Short-term traders use other indicators, like RSI and MACD to refine their results.

Reviewed by Margaret James

The forward price-to-earnings ratio (P/E) is a valuation metric that measures and compares a company’s earnings using expected earnings per share and the current stock price.

The forward P/E ratio measures the relationship of the current stock price to the forecasted EPS figures. Here’s how to calculate a company’s forward P/E ratio for the next period using Microsoft Excel.

Key Takeaways

• The forward P/E ratio forecasts a company’s earnings for a period.
• Published data can be used to calculate forward P/E in Excel.
• Excel can help you quickly compare multiple companies.

Understanding the Forward P/E Ratio

The forward P/E is similar to the price-to-earnings ratio, which measures the relationship of the current stock price to the current or historical EPS, except it forecasts P/E. You can calculate a company’s earnings per share using the data provided from its financial statements, but companies will typically estimate future EPS for you in their forecasts.

Companies generally provide you with the expected earnings per share for each of the upcoming quarters. From there, you can calculate the forward P/E ratio using the formula:

Forward P/E ratio = Current Share Price ÷ Expected EPS for a period.

The forward P/E ratio is helpful because it can signal whether a company’s stock price is high or low compared with the expected EPS in the upcoming quarters. You can also compare the forward P/E of a company to other companies within the same industry to get a sense of whether the stock price is overvalued or undervalued.

Company executives often adjust their EPS forecasts (up or down) throughout the year. If you follow a company’s forward P/E over long periods, you can determine whether the stock price is accurately valued relative to the newly adjusted EPS forecasts. As a result, the forward P/E ratio can more accurately reflect a company’s valuation vs. using the historical P/E ratio.

Here are the steps to calculate forward P/E in Excel.

#1 Format Your Worksheet

In Microsoft Excel, first, increase the widths of columns A, B, and C by highlighting the entire sheet. Click on the corner of the worksheet (to the left of column A and above the numeral 1 in row one). Once the sheet is highlighted, right-click on the top of any column (labeled A, B, C), and a dropdown menu will appear. Left-click on “Column Width” from the dropdown and change the value to 30.

It helps to first establish the column heading names. You can label these however it works best for you, but this example follows this format:

• A1 = Merge cells A–D and enter a label
• A2 = Company
• B2 = Stock Price (or Market Price)
• C2 = EPS (expected)
• D2 = Forward P/E

Once you have that done, you can begin entering your data.

As an example, assume Company A has a current stock price of $50 and an expected EPS of $2.60 for a particular quarter.

#2 Enter Your Data

Next, enter the data for your first company into your spreadsheet:

• Cell A3 = Company name
• Cell B3 = $50
• Cell C3 = $2.60

#3 Calculate the Forward P/E

As a reminder, the formula to calculate the forward P/E Ratio is:

Market Share Price / Expected EPS

So, to calculate the ratio:

• Place your cursor in cell D3.
• Please note that all formulas in Excel begin with the equal sign.
• Type the forward P/E formula in cell D3 as follows: =B3/C3
• Press Enter or Return on your keyboard

You’ll notice that Excel highlights the cells involved in the formula automatically. Once you press Enter, the calculation will be completed:

#4 Compare Multiple Companies

If you want to compare the forward P/E ratios of multiple companies, you can follow the same process, inputting the information in each row for the companies you’re analyzing.

However, when comparing multiple companies, you don’t have to rewrite the formula in each cell within Column D. Instead, you can place your cursor in the results cell, right-click, and choose copy. Next, click on the next cell in the column, right-click, and select paste. You can also click the first cell with the formula, move your mouse pointer to the bottom right corner of the cell, click and hold, and then drag the pointer down to the row desired. The cells should autofill with the appropriate results.

What Is the 12-Month Forward PE Ratio?

A 12-month forward P/E ratio forecasts P/E 12 months into the future. This figure is commonly used when companies forecast earnings for one year.

What Is COST Forward P/E Ratio?

As of Feb. 21, 2025, Costco (COST) had a 2025 forward P/E ratio of 57.39.

How to Calculate Forward Price?

Forward price is calculated as follows:

• Current Spot Price x 2.7183^{(Risk-Free Rate x Years)}

If carrying costs exist, the formula will change to:

• Current Spot Price x 2.7183^{(Risk-Free Rate + Costs) Years}

The Bottom Line

Once you know how to format the formula in Excel, you can analyze the forward P/E ratios of various companies before choosing to invest. Remember that the forward P/E ratio is only one ratio and shouldn’t be used exclusively for determining a company’s stock price valuation. Many financial ratios and metrics should be used along with forward P/E, and it’s important to compare those metrics to companies with similar companies in the same industry.

Fact checked by Vikki Velasquez

With climate risks and high home insurance costs becoming a growing concern for homebuyers, Zillow has identified seven Midwest cities where homes face minimal threats from flooding, wildfires, wind, and other extreme weather events.

According to Zillow, fewer than 10% of new home listings in Cleveland, Columbus, and five other Midwest markets carry significant climate risks. Here’s why these cities make the list—and what buyers should know when evaluating climate risks in any town.

Key Takeaways

• Zillow ranks Cleveland, Columbus, Milwaukee, Indianapolis, Minneapolis, Detroit, and Kansas City, Mo. as the U.S. metro areas with the lowest climate risk.
• Fewer than 10% of new home listings in these cities face major threats from floods, wildfires, or extreme heat.
• Before making a purchase, check a home’s disaster history and understand insurance requirements to avoid unexpected costs and protect your investment.

Which U.S. Cities Face the Lowest Climate Risk?

New home listings in key Midwest markets hold the lowest climate risk in the country, according to Zillow’s climate risk score, which evaluates how likely a property is to experience climate-related hazards over the next 30 years.

The website evaluated historical weather data involving five climate threats—floods, wildfires, wind, heat, and air quality—and found that while states like California, Florida, and Louisiana see a significant percentage of new listings classified as high-risk, seven Midwest cities remain largely insulated from these threats.

According to Zillow, fewer than 10% of new listings face a major climate-related risk in Cleveland, Columbus, Milwaukee, Indianapolis, Minneapolis, Detroit, and Kansas City, Mo.

These cities fared much better than the national average. Across all new U.S. listings, Zillow found that more than half (55.5%) faced a major risk of extreme heat, and about one-third faced a major risk of extreme wind exposure.

About 16.7%, 13%, and 12.8% of new listings faced major climate risks related to wildfires, air quality, and flooding, respectively.

Unlike many regions where multiple climate threats overlap, the Midwest benefits from natural geographic advantages that mitigate certain risks. Though it remains a hotspot for tornados, the Midwest’s cooler climate and distance from ocean coastlines make it less inclined to experience severe weather events such as heat waves and wildfires.

Why Climate Risk Matters for Homebuyers 

For buyers, climate risks can be costly in unexpected ways. High-risk homes often require additional insurance policies, face stricter lending requirements, and could see fluctuating property values.

Zillow’s research shows that over 80% of prospective homebuyers now factor climate risks into their decision-making, and for good reason. In 2024, only about $140 billion of the $320 billion of losses attributable to natural disasters were covered by insurers—meaning nearly 60% of losses were not.

If you’re considering a move, here’s what to keep in mind:

Do Your Research

Before you buy a home prone to adverse weather events, make sure you’ve done your research to understand the home’s condition and whether any safety upgrades—such as storm panels for flood protection—have been put in place.

A professional home inspection can help reveal issues you may have overlooked, especially in important areas such as drainage systems and the foundation.

Factor in Insurance Costs

Homes in high-risk areas often require flood, wildfire, or wind insurance that adds to your long-term expenses even if your home escapes disaster.

Check with your mortgage lender to see if the home comes with any additional requirements for insurance, and consider options outside of private providers. The Federal Emergency Management Agency, for example, offers flood insurance through the National Flood Insurance Program, and some states also offer special types of insurance.

Consider Property Value

Long-term home value trends are increasingly tied to climate risk.

Historically, homebuyers have prioritized affordability and quality of life, leading to rapid growth in Sun Belt states like Florida and California. But, rising insurance costs and frequent natural disasters in these areas are changing migration patterns, pushing buyers toward regions with more climate stability.

As a result, properties in low-risk areas like the Midwest may see stronger demand and more stable long-term value, while homes in high-risk zones could become more expensive to insure and harder to sell.

Warning

Climate change could wipe out an estimated $1.5 trillion in U.S. home values over the next 30 years, according to climate nonprofit First Street.

The Bottom Line 

Climate risk is reshaping where Americans want to live and what they’re willing to pay for a home. If you’re looking to avoid these risks, Midwest cities like Cleveland, Columbus, and Minneapolis are good options for your new home, according to research from Zillow.

These cities boast a lower exposure to floods, wildfires, and extreme heat than other parts of the country.

While no location is completely risk-free, understanding how climate risks affect insurance, home values, and long-term affordability will help you make a more informed homebuying decision—one that could save you money and give you peace of mind for decades to come.