finance

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.

Reviewed by JeFreda R. Brown

Real estate investment trusts (REITs) own a basket of properties, ranging from malls to movie theaters, apartment buildings to office parks, and hotels to hospitals. A REIT may specialize in a certain real estate sector, or it may diversify into a variety of property types.

Investing in REITs is appealing for several reasons, especially for income-oriented investors. And while there are risks for the REIT market as a whole, over the long term, REITs have proven to be winners. 

Key Takeaways

• REITs provide investors with access to real estate without them having to own property. This brings liquidity, steady income, and growth potential.
• Selecting a successful REIT involves understanding economic trends and market conditions.
• Well-managed REITs stay ahead of trends and invest in high-demand locations, such as urban retail.

What to Look for in a REIT

For retail investors, REITs hold several advantages over investing in real estate itself. First of all, your investment is liquid. You can buy and sell shares of REITs, which trade like stocks on an exchange. Shares of REITs have low investment minimums, as well; investing directly in an actual property often requires a much more sizable commitment.

REITs generate income from the rents and leases of the properties they own. The majority (90%) of a REIT’s taxable income must be returned to shareholders in the form of dividends. As a result, investors often rely on REITs as providers of a steady cash flow, though the shares can also appreciate in value if the real estate holdings do.

When you’re ready to invest in a REIT, look for growth in earnings, which stems from higher revenues (higher occupancy rates and increasing rents), lower costs, and new business opportunities. It’s also imperative that you research the management team that oversees the REIT’s properties. A good management team will have the ability to upgrade the facilities and enhance the services of an underutilized building, increasing demand.

REIT Caveats

It’s important that you don’t think of REITs as an investment asset in themselves. You need to look at industry trends prior to determining what type of REIT is best for your portfolio.

For instance, mall traffic has been declining due to the increased popularity of online shopping and the decline of suburban neighborhoods (this is the first time since the 1920s that urban growth has outpaced suburban growth). So, REITs that are exposed strictly or heavily to malls will present more risk than those investing in other sorts of real estate.

Or take hotels. To invest in a REIT that focuses on them is to invest in the travel industry. While the industry may be doing well at a given moment, hotels have the potential to be hit by reduced business travel as companies look for ways to cut costs, and web conferencing becomes more common.

In terms of general economic trends, low inflation and lack of wage growth—such as the U.S. has experienced in the 2000s—often limit growth potential for REITs, since they put a damper on rent increases. Even so, REITs have been performing well in the face of these headwinds.

Note

Some REITs focus on niche properties, such as manufactured home communities and RV parks, which can perform well in economic downturns and inflationary periods.

A Far-Thinking REIT

The key is to be forward-looking. For example, millennials favor urban living over suburban living, a trend that has led to the aforementioned decline in suburban mall traffic and an increase in street retail (urban shopping strips anchored by a grocery or other major retailer). One REIT spotted the trend early and has set itself up accordingly.

Acadia Realty Trust (AKR) focuses on urban areas with high barriers to entry that are supply-constrained and highly populated. It also takes the approach of not falling in love with one particular retailer, because a popular retailer today might not be a popular retailer tomorrow. Instead, it invests in a street, block, or building, allowing it always to make adjustments so popular retailers are in place.

What Is a REIT?

A real estate investment trust (REIT) is a company that owns and operates income-generating properties, such as offices, hotels, apartment buildings, and shopping centers. Investors looking to gain exposure to the real estate market without having to buy property can buy shares of REITs like they would stock, and in return receive income, which is derived from the rental income of the properties or the profits of the REIT. REITs are required by law to pay out at least 90% of their income to shareholders.

What Are the Disadvantages of REITs?

REITs make investing in real estate fairly easy but do come with some disadvantages. When interest rates rise, their prices tend to drop because investors can get higher returns from safer investments, like bonds. Additionally, when rates rise, borrowing costs are higher, making it more costly for REITs to buy or develop properties, possibly reducing profits. REIT dividends are also taxed as ordinary income as opposed to capital gains, making them slightly tax-inefficient. Lastly, as an investor, you have no control over the properties or management decisions made by the REIT.

How Can I Invest in a REIT?

You can invest in REITs as you would invest in stocks. To invest in a REIT, open a brokerage account, such as Fidelity or E*Trade, fund your account, and select the publicly traded REIT you would like to purchase. You can also choose to invest in REIT mutual funds or exchange-traded funds (ETFs).

The Bottom Line

REITs allow for a hassle-free way of investing in property without needing to own the property. This brings benefits such as low-cost entry, liquidity, steady income, and the potential for growth.

To successfully benefit from REITs, investors need to understand industry trends, the economic climate, and the management quality of the REIT. Certain retail sectors, such as malls and hotels, face higher risks, while urban retail may be more stable. As with any investment, understanding the complexities is essential to making the right long-term bet.

As of the date this article was written, the author does not own AKR.

Reviewed by Samantha Silberstein

In the financial world, the Black-Scholes and the binomial option valuation models are two of the most important concepts in modern financial theory. Both are used to value an option, and each has its own advantages and disadvantages.

Some of the basic advantages of using the binomial model are:

• A multiple-period view
• Transparency
• Ability to incorporate probabilities

Let’s explore the advantages of using the binomial model instead of the Black-Scholes model and provide some basic steps to develop the model and explain how it is used. 

Key Takeaways

• The binomial model provides a multi-period view of the underlying asset price as well as the price of the option.
• The binomial model can also be used for projects or investments with a high degree of uncertainty, resource allocation decisions, and projects with multiple periods.
• While both the Black-Scholes model and the binomial model can be used to value options, the binomial model has a broader range of applications.

Multiple-Period View

The binomial model provides a multi-period view of the underlying asset price as well as the price of the option. In contrast to the Black-Scholes model, which provides a numerical result based on inputs, the binomial model allows for the calculation of the asset and the option for multiple periods along with the range of possible results for each period (see below).

The advantage of this multi-period view is that the user can visualize the change in asset price from period to period and evaluate the option based on decisions made at different points in time. For a U.S-based option, which can be exercised at any time before the expiration date, the binomial model can provide insight as to when exercising the option may be advisable and when it should be held for longer periods. By looking at the binomial tree of values, a trader can determine in advance when a decision on an exercise may occur. If the option has a positive value, there is the possibility of exercise whereas, if the option has a value less than zero, it should be held for longer periods.

Transparency

Closely related to the multi-period review is the ability of the binomial model to provide transparency into the underlying value of the asset and the option as time progresses. The Black-Scholes model has five inputs:

1. The risk-free rate
2. The exercise price
3. The current price of the asset
4. Time to maturity
5. The implied volatility of the asset price

When these data points are entered into a Black-Scholes model, the model calculates a value for the option, but the impacts of these factors are not revealed on a period-to-period basis. With the binomial model, a trader can see the change in the underlying asset price from period to period and the corresponding change in the option price. 

Incorporating Probabilities

The basic method of calculating the binomial options model is to use the same probability each period for success and failure until the option expires. However, a trader can incorporate different probabilities for each period based on new information obtained as time passes.

For example, there may be a 50/50 chance that the underlying asset price can increase or decrease by 30 percent in one period. For the second period, however, the probability that the underlying asset price will increase may grow to 70/30. For example, if an investor is evaluating an oil well, that investor is not sure what the value of that oil well is, but there is a 50/50 chance that the price will go up. If oil prices go up in Period 1 making the oil well more valuable and the market fundamentals now point to continued increases in oil prices, the probability of further appreciation in price may now be 70 percent. The binomial model allows for this flexibility; the Black-Scholes model does not.

Developing the Model

The simplest binomial model will have two expected returns whose probabilities add up to 100 percent. In our example, there are two possible outcomes for the oil well at each point in time. A more complex version could have three or more different outcomes, each of which is given a probability of occurrence.

To calculate the returns per period starting from time zero (now), we must make a determination of the value of the underlying asset one period from now. In this example, we assume the following:

• Price of underlying asset (P) : $500
• Call option exercise price (K) : $600
• Risk-free rate for the period: 1 percent
• Price change each period: 30 percent up or down

The price of the underlying asset is $500 and, in Period 1, it can either be worth $650 or $350. That would be the equivalent of a 30 percent increase or decrease in one period. Since the exercise price of the call options we are holding is $600, if the underlying asset ends up being less than $600, the value of the call option would be zero. On the other hand, if the underlying asset exceeds the exercise price of $600, the value of the call option would be the difference between the price of the underlying asset and the exercise price. The formula for this calculation is [max(P-K),0]. 

$begin{aligned} &max{left[left(P-Kright),0right]}\ \ &textbf{where:}\ &P=text{Price of underlying asset} \ &K=text{Call option exercise price} \ end{aligned}$​max[(P−K),0]where:P=Price of underlying assetK=Call option exercise price​

Assume there is a 50 percent chance of going up and a 50 percent chance of going down. Using the Period 1 values as an example, this is calculated as

$begin{aligned} &max{left[left($650-$600right),0right]}*0.5+max{left[left($ 350-$ 600right),0right]}*0.5\ & = $ 50 * 0.5 + $ 0 = $ 25\ end{aligned}$​max[($650−$600),0]∗0.5+max[($350−$600),0]∗0.5=$50∗0.5+$0=$25​

To get the current value of the call option we need to discount the $25 in Period 1 back to Period 0, which is

$$25/left(1+1$$25/(1+1%)=$24.75

You can now see that if the probabilities are altered, the expected value of the underlying asset will also change. If the probability should be changed, it can also be changed for each subsequent period and does not necessarily have to remain the same throughout.

The binomial model can be extended easily to multiple periods. Although the Black-Scholes model can calculate the result of an extended expiration date, the binomial model extends the decision points to multiple periods.

Uses for the Binomial Model

In addition to its use as a method for calculating the value of an option, the binomial model can also be used for projects or investments with a high degree of uncertainty, capital-budgeting and resource-allocation decisions, and projects with multiple periods or an embedded option to either continue or abandon the project at certain points in time.

One simple example is a project that entails drilling for oil. The uncertainty of this type of project is whether the land being drilled has any oil at all, the amount of oil that can be drilled, if the oil is found, and the price at which the oil can be sold once extracted. 

The binomial option model can assist in making decisions at each point of the oil drilling project. For example, assume we decide to drill, but the oil well will only be profitable if we find enough oil and the price of oil exceeds a certain amount. It will take one full period to determine how much oil we can extract as well as the price of oil at that point in time. After the first period (one year, for example), we can decide based on these two data points whether to continue to drill or abandon the project. These decisions can be continuously made until a point is reached where there is no value to drilling, at which time the well will be abandoned.

The Bottom Line

The binomial model gives a more detailed view by allowing multi-period views of the underlying asset price and the price of the option for multiple periods as well as the range of possible results for each period. While both the Black-Scholes model and the binomial model can be used to value options, the binomial model has a broader range of applications, is more intuitive, and is easier to use.

Fact checked by Suzanne Kvilhaug
Reviewed by Gordon Scott

You may have heard about iron condors, a popular option strategy used by professional money managers and individual investors. Let’s begin by discussing what an iron condor is, and then how you can benefit from learning how to trade them.

Key Takeaways

• An iron condor is an options strategy that involves four different contracts.
• An iron condor represents a ‘market neutral’ trade, which means there is no inherent bullish or bearish bias.
• This options strategy also allows you to own positions with limited risk and a high probability of success.

What Is an Iron Condor?

Some of the key features of the iron condor strategy include:

• An iron condor spread is constructed by selling one call spread and one put spread (same expiration day) on the same underlying instrument.
• All four options are typically out-of-the-money (although it is not a strict requirement).
• The call spread and put spread are of equal width. Thus, if the strike prices of the two call options are 10 points apart, then the two puts should also be 10 points apart. Note that it doesn’t matter how far apart the calls and puts are from each other.
• Most often, the underlying asset is one of the broad-based market indexes, such as SPX, NDX or RUT. But many investors choose to own iron condor positions on individual stocks or smaller indexes.
• When you sell the call and put spreads, you are buying the iron condor. The cash collected represents the maximum profit for the position.
• It represents a ‘market neutral’ trade, meaning there is no inherent bullish or bearish bias.

Iron Condor Positions, Step by Step

To illustrate the necessary components or steps in buying an iron condor, take the following two hypothetical examples:

To buy 10 XYZ Oct 85/95/110/120 iron condors:

• Sell 10 XYZ Oct 110 calls
• Buy 10 XYZ Oct 120 calls
• Sell 10 XYZ Oct 95 puts
• Buy 10 XYZ Oct 85 puts

To buy three ABCD Feb 700/720/820/840 iron condors:

• Sell three ABCD Feb 820 calls
• Buy three ABCD Feb 840 calls
• Sell three ABCD Feb 720 puts
• Buy three ABCD Feb 700 puts

How Do Iron Condors Make/Lose Money?

When you own an iron condor, it’s your hope that the underlying index or security remains in a relatively narrow trading range from the time you open the position until the options expire. When expiration arrives, if all options are out-of-the-money, they expire devoid of worth and you keep every penny (minus commissions) you collected when buying the iron condor. Don’t expect that ideal situation to occur every time, but it will happen.

Sometimes it’s preferable to sacrifice the last few nickels or dimes of potential profit and close the position before expiration arrives. This allows you to lock in a good profit and eliminate the risk of losses. The ability to manage risk is an essential skill for all traders, especially ones employing this strategy.

The markets are not always so accommodating, and the prices of underlying indexes or securities can be volatile. When that happens, the underlying asset (XYZ or ABCD in the previous examples) may undergo a significant price change. Because that’s not good for your position (or pocketbook), there are two important pieces of information you must understand:

• How much you can lose; and
• What you can do when the market misbehaves.

Maximum Loss Potential

When you sell 10-point spreads (as with XYZ), the worst-case scenario occurs when XYZ moves so far that both calls or puts are in the money (XYZ is above 120 or below 85) when expiration arrives. In that scenario, the spread is worth the maximum amount, or 100 times the difference between the strike prices. In this example, that’s 100 x $10 = $1,000.

Because you purchased 10 iron condors, the worst that can happen is that you are forced to pay $10,000 to cover (close) the position. If the stock continues to move further, it won’t affect you further. The fact that you own the 120 call (or 85 put) protects you from further losses because the spread can never be worth more than the difference between the strikes.

Loss Buffer in Premiums

There’s some better news: Remember, you collect a cash premium when buying the position, and that cushions losses. Assume you collect $250 for each iron condor. Subtract that $250 from the $1,000 maximum, and the result represents the most you can lose per iron condor. That’s $750 in this example.

Note: If you continue to hold the position until the options expire, you can only lose money on either the call spread or the put spread; they cannot both be in-the-money at the same time.

Depending on which options (and underlying assets) you choose to buy and sell, a few different circumstances can come about:

• The probability of loss can be reduced, but reward potential is also reduced (choose further out-of-the-money options).
• Reward potential can be increased, but the probability of earning that reward is reduced (choose options that are less far out-of-the-money).
• Finding options that fit your comfort zone may involve a bit of trial and error. Stick with indexes or sectors that you understand very well.

Introduction to Risk Management

The iron condor may be a limited-risk strategy, but that doesn’t mean you should do nothing and watch your money disappear when things don’t go your way. Although it’s important to your long-term success to understand how to manage risk when trading iron condors, a thorough discussion of risk management is beyond the scope of this article.

Just as you don’t always earn the maximum profit when the trade is profitable (because you close before expiration), you often lose less than the maximum when the position moves against you. There are several reasons that this might occur:

• You may decide to close early to prevent larger losses.
• XYZ may reverse direction, allowing you to earn the maximum profit.
• XYZ may not move all the way to 120. If XYZ’s price at expiration (settlement price) is 112, then the 110 call is in-the-money by two points and is worth only $200. When you buy back that option (the other three options expire without worth), you may still have earned a small profit – $50 in this scenario.

Practice Trading in a Paper-Trading Account

If this strategy sounds appealing, consider opening a paper-trading account with your broker, even if you are an experienced trader. The idea is to gain experience without placing any money at risk. Choose two or three different underlying assets, or choose a single one using different expiration months and strike prices. You’ll see how different iron condor positions perform as time passes and markets move.

The major objective of paper trading is to discover whether iron condors suit you and your trading style. It’s important to own positions within your comfort zone. When the risk and reward of a position allow you to be worry-free, that’s ideal. When your comfort zone is violated, it’s time to modify your portfolio to eliminate the positions that concern you.

The Bottom Line

Iron condors allow you to invest in the stock market with a neutral bias, something that many traders find quite comfortable. This options strategy also allows you to own positions with limited risk and a high probability of success.

Fact checked by Vikki Velasquez

The labor market is strong and competitive, with millions actively looking for work. But simply sending out your resume in this tough labor market may not help you stand out. Experts say getting yourself noticed by potential employers requires the development of these much-needed skills while you execute your search.

You should have both soft and hard skills to get noticed, including attention to detail, communication, and strong tech skills.

Key Takeaways

• Millions of people are actively seeking employment, making the job market strong and competitive.
• Employers are focusing on skills-based hiring over traditional qualifications.
• Focus on how you can bring attention to detail, communication skills, the ability to work independently and with a team, and adaptability to potential employers.
• Tech skills are becoming a priority for many employers.
• Know who you are and tailor your resume to the job postings that catch your eye.

Job Hunting in 2025

Job seekers faced many challenges finding work in 2024, due largely to a weak global economy and general labor shortages across the board. Experts suggest this trend is likely to continue in 2025 as employers are still struggling to find and hire professionals.

“Skilled workers remain in high demand as companies ramp up their efforts to secure top talent,” Noelle Stagias, senior director at KForce. Even with high demand, she suggested, the talent pool continues to dog employers.

The ratio of unemployed individuals to job openings was 1 to 0.9, according to the Society for Human Resource Management’s (SHRM’s) January 2025 labor market report. As many as 22% of unemployed professionals carry over their job search from 2024 into 2025, while 28% say they’re giving up because of the tough labor market climate.

With so many challenges, it’s important to set yourself apart to get noticed among other job seekers in a demanding job market. But how do you do that?

Note

If you’re looking for work, you’re not alone. According to the U.S. Bureau of Labor Statistics (BLS), 5.5 million people actively sought employment in the United States in January 2025.

Focus on These Skills

According to research, as many as 95% of hiring employers are prioritizing skills-based hiring over traditional qualifications. That’s why it’s important for anyone looking for a new position to focus on soft and hard skills.

“There are a few key skills that companies in every industry are looking for: attention to detail, strong communication, ability to work both independently and in a team, and being coachable and adaptable,” according to Stagias. “These skills have always been desirable, and they stand out even more in the hybrid and remote world. Companies want employees who are proactive and can hit the ground running.”

With the rise in artificial intelligence (AI) and technology, it’s also a good idea to bring strong tech skills to the table. Be sure you’re prepared with knowledge of a new program if a job posting calls for it. Not only does it show employers that you’re willing to learn new programs, but it also demonstrates that you’re willing to adapt.

Stagias, who focuses on recruiting in finance and accounting, said hiring managers look for candidates who “present themselves as well-rounded, committed, and adaptable” and prove they can grow with the company. Review your resume to make sure it fits with the jobs you’re applying to so you can speak about it “in detail and bring (your) experience to life in an interview.”

Important

Don’t forget to start your job search by knowing who you are as a professional. Understand what you bring to a potential employer, and look for positions that match your skill set.

10 Fastest-Growing Occupations and How Much They Earn

The U.S. Bureau of Labor Statistics tracks employment by sector, and by 2033, they predict these industries will have the highest employee demand. That’s contrasted with their current median annual wage. The jobs list is dominated by medical and technology fields.

1. Home health and personal care aides: $33,530 per year
2. Software developers: $132,270 per year
3. Medical and health services managers: $110,680 per year
4. Nurse practitioners: $126,260 per year
5. Computer and information systems managers: $169,510 per year
6. Substance abuse, behavioral disorder, and mental health counselors: $53,710 per year
7. Industrial machinery mechanics: $61,420 per year
8. Data scientists: $108,020 per year
9. Information security analysts: $120,360 per year
10. Personal financial advisors: $99,580 per year

The Bottom Line

Despite the high demand for skilled workers, companies aren’t hiring just anyone. If you don’t have the skills they’re looking for, your job search could be for naught. Focusing on your soft and hard skills and tailoring your resume to the positions you’re applying to can help you get noticed.

Although your skills will set you apart from the pack, Stagias also says employers still want to see the “tried and true measures”. Notably, you bring a strong job history and demonstrate how you’ve taken on responsibility over time.

Reviewed by Khadija Khartit

How Do BitTorrent Sites Make Money?

BitTorrent sites act as hubs where internet visitors download, share, and search for torrent files. A torrent file is the colloquial name for a peer-to-peer computer tracker to share large digital files, sometimes known as metadata files. BitTorrent sites primarily stream TV shows, movies, music, and other media data.

File hosts can make money through advertising revenue generated by the site. Others can make money by distributing malware. Most uploaders do not make any money.

Key Takeaways

• BitTorrent sites don’t generally make much money, but when they do, it is often in the form of ad revenue.
• Some malware uploaders who prey on the BitTorrent-seeking public may make significant income.
• BitTorrent sites tend to operate at a net loss, and many even need donations to stay in business.

Understanding How BitTorrent Sites Make Money

Not Much Money

Most BitTorrent sites do not make much money. Despite some claims by bombastic uploaders—Kim Dotcom famously showed expensive luxury cars and houses when boasting about torrent income—there is very little evidence that BitTorrent websites produce much income.

One study found that really good BitTorrent plugging can generate up to $200 per day for a website. The study further found that a very small percentage of users generated roughly 66% of content on such sites.

Types of Torrent Uploaders

The vast majority of files shared through BitTorrent sites are done out of communal altruism. For example, a listener who really enjoys a song may decide to share it as an experience for others. Other data may be uploaded to gauge public reaction. This type of file share still brings in advertising revenue to the website, but those individual contributors do not see any revenue.

Malware—the combination of viruses and adware or spam—is rampant on BitTorrent sites. Malware is primarily designed to promote piracy, identify theft, forced cryptocurrency mining, and illicit online material, such as pornography. These few individuals who distribute malware are sometimes well-compensated for their efforts, although that is not the purpose of a BitTorrent site.

A small subset of uploaders, similar to malware distributors, upload fake movies or CDs hoping to receive codec fees before getting caught. Again, these are a minority of uploaders.

Most of the moneymakers upload or establish websites and own the content that generates ad revenue. This is not normally a big income earner, but major websites with thousands of files can generate a lot of clicks. The income is based on click-through rates and site visits.

Advertising Revenue

The ultimate driver of BitTorrent income is advertising revenue, just as with the vast majority of for-profit web 2.0 sites. Another finding of the aforementioned study found that the advertising revenue for BitTorrents tends to be modest and often produces a net loss compared with hosting costs, which is why even some relatively major BitTorrent sites rely on donation drives for some portion of their revenue.

On the whole, torrent websites are generally not established to produce large amounts of money; rather, these are forums for peers to share information and media with an online community.

What Is the Most Popular BitTorrent Site?

The world’s most popular site that uses BitTorrent protocol is The Pirate Bay. The Pirate Bay is a file-sharing website that allows the distribution of very large files such as those containing movies and electronic games. It has been shut down several times, and its founders have been tried and convicted in Sweden on charges of promoting copyright infringement. However, the site is still active as of 2025.

How Much Is BitTorrent Worth?

BitTorrent’s market capitalization was estimated at around $1.18 billion in November 2024. While BitTorrent is traditionally considered a large player in the file-sharing market, its market cap also has to do with entering the cryptocurrency market.

When Did BitTorrent Branch into Cryptocurrency?

In 2018, the nonprofit Tron Foundation (now the Tron Decentralized Autonomous Organization) purchased BitTorrent. Ownership introduced a BitTorrent token cryptocurrency, BTT, in 2019 with the goal of expanding its protocol and incentivizing network participants. Tron also has its own native token, TRX.

The Bottom Line

Most BitTorrent sites make money through advertising revenue, while others profit by distributing malware, and some may even seek donations.

While the BitTorrent file-sharing protocol and software are usually free of malware and viruses, the files shared may not be. Always download from trustworthy sources, and use reliable antivirus software to scan downloaded files for potential threats. One final note of caution: Although BitTorrent itself is legal, using it to share copyrighted material is not.