financial education

A major move is underway to enable far wider access to private investments. As platforms like EquityZen and Forge Global make it easier to invest in these vehicles, providers of traditional exchange-traded funds (ETF) are offering retail investors additional and indirect ways to access them.

Stoy Hall, a certified financial planner, CEO of Black Mammoth, and a member of Investopedia’s advisor council, advised caution if you’re considering any of these. More investors should “absolutely be seeking private investments,” Hall said, but he noted, “It is very difficult even for us professionals who vet opportunities constantly.” Below, we take you through the advice Hall and other experts have if you’re looking to dip into these alternative investments.

Key Takeaways

• Private market investments are becoming accessible for retail investors through new dedicated online platforms and exchange-traded funds (ETFs).
• These investments carry significant risks, including extreme illiquidity, limited transparency, and valuation problems that have burned even sophisticated investors.

What Are Private Investments?

When you put money into companies or assets not traded on public exchanges like the New York Stock Exchange, you’re engaging in private investments—just as you’re making a private investment when you buy some real estate. But unlike mutual funds or stocks and bonds that you can buy on public exchanges with a few clicks, private investments traditionally required large minimum commitments and were available only to institutional investors and high-net-worth individuals.

There are reasons why investors might wish to go the private investment route. “The private market returns are not correlated and can be higher and less risky than even the traditional market,” Hall said. However, these investments typically lock up your money for extended periods, often five to 10 years.

They also come with significantly less regulatory oversight and transparency than publicly traded investments.

Who Qualifies as an Accredited Investor?

The SEC limits many private investments to “accredited investors” who meet specific financial or professional criteria, including annual income exceeding $200,000 ($300,000 for joint income), net worth over $1 million (excluding your primary residence), or certain investment professionals.

Hall is critical of these restrictions, saying they were “designed to limit the ability of those less fortunate to have the opportunity to invest like the ‘ultra-wealthy.'” While that is a debatable opinion, the SEC has claimed its focus is on protecting retail investors from potential fraud and abuse in private equity markets, which are often opaque. However, the SEC and some lawmakers have now expressed a willingness to loosen the restrictions during President Donald Trump’s second term.

How To Invest in Private Markets

While the barriers to entry in private investments have come down, Hall and other experts are emphatic that the average investor needs help. “If you are attempting to do it alone, don’t,” Hall said. “Have a financial planner to guide you through this situation.”

Whether with an advisor or not, here are the steps Hall recommends:

1. Build your foundation first: “Investors should first establish a solid portfolio that is made up of ‘traditional’ investments (stocks, bonds, ETFs, etc.),” he said.
2. Set allocation limits: “Every portfolio should have 5% to 20% allocated to ‘alternative investments'” for diversification, Hall said. “Don’t put all your eggs in one basket and truly understand your entire portfolio picture.”
3. Only invest what you can afford to lose: “The easiest [safeguard] is to only invest money that you have that is investable,” Hall said.
4. Perform the due diligence: If reviewing prospects yourself, Hall suggests you vet the founder, CEO, or portfolio managers involved and speak to other investors. Anything not quite right? Move on quickly—even if you’re wrong, there are plenty of solid investments out there. “Do you like what the investment stands for, are you willing to lose all your money for this cause, do you truly understand their vision and purpose?” Hall said. “Follow your gut.”
5. Compare the risk and returns with other alternative asset classes: These might include cryptocurrencies, private companies, and precious metals.
6. Understand the fee structure: Private investment managers charge management fees of 1% to 2% plus performance fees of 12% to 20% of profits. EquityZen has a minimum investment of $10,000, and a one-time sales fee scaled from 3% to 5%. If you’re investing via an ETF, the fees will be lower: the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) has an expense ratio of 0.70%.
7. Plan to be without your funds: Most private investments lock up your capital for five to 10 years. Never invest money you might need soon.

The Bottom Line

Private markets offer potential benefits but require significantly more research, professional guidance, and patience than public investments. While platforms advertise lower minimum investments, many still require accreditation status and substantial commitments that should only be made as part of a comprehensive financial plan.

As Hall emphasized, these investments can enhance your portfolio, but going it alone is a recipe for disaster.

There are no time limits, but there’s still no reason to delay a claim

Fact checked by Vikki Velasquez

Life insurance provides financial support for loved ones once a person passes away, especially if the deceased was the primary earner in the family. A life insurance policy is a contract between a policyholder and an insurance company that pays out a death benefit when the insured person dies.

While life insurance may be necessary, handling insurance claims can be tedious and further exacerbated if one is grieving. Most companies don’t impose a strict timeline for when beneficiaries have to make a claim.

Key Takeaways

• Life insurance helps families financially when a person passes away.
• Policy benefits can help with funeral costs, debt, rent, and other finances.
• Factors like type of policy and cause of death may add to the usual processing time of 30 to 60 days.
• Claims may be delayed due to state escheatment laws.

How Life Insurance Works

Individuals should regularly review their life insurance policies with their insurance broker or the insurer. Policies should be updated to include any life changes, such as death, divorce, or the birth of a child. Policyholders should understand the policy’s terms and any special conditions that may impact a payout.

When a life insurance policyholder dies, the beneficiary listed on the policy receives the death benefit. Often, the benefit may be used to help support the remaining family members to pay for items like debt, a child’s education, or mortgage payments.

According to Guardian Life Insurance, individuals may calculate their life insurance benefit needs based on the value of their future earnings. For example, policyholders aged 18-40 may buy a policy that pays thirty times their current income, or those aged 41-50 may need twenty times their income.

Policyholders can use the DIME method to determine how much life insurance they need by tallying their Debt, total future Income estimate, Mortgage payoff amount, and future Education costs.

Who Can Be a Beneficiary?

Anyone can be a beneficiary, including any family or non-family member. Additionally, entities and organizations such as charities can also be beneficiaries.

If there are multiple beneficiaries, disputes may arise, which may delay the claims process. This is particularly poignant when the policyholder didn’t update their policy after important life events, such as divorce. Issues caused by delays may require beneficiaries to go to court to receive the payout, which will cost time and money.

Claim Process

Most policies do not impose a strict timeline for an initial claim. Depending on the insurer, there may be clauses included in the policy regarding conditions that need to be met to receive the claim. Beneficiaries may have the option of receiving the payout as a lump sum or as a life insurance annuity, paid out regularly over a specified period. To claim a payout, beneficiaries commonly follow these steps:

1. Contact the insurer: Notify the insurer of the policyholder’s death and provide the basic information, such as the name of the deceased and the policy number, to get the process started.
2. Provide required documents: This usually includes the death certificate, the policyholder’s Social Security number, the policy number, and a death benefit claim form. If there’s more than one beneficiary, each person will have to complete a form and submit the required documentation to claim their portion of the benefit.
3. Follow up: Beneficiaries can expect to wait up to 60 days for a claim to finalize, but should follow up with the insurer as often as necessary.
4. Seek legal counsel: If there are issues with a claim or if the claim is denied, beneficiaries may need to seek legal help. An attorney specializing in life insurance law will be able to help navigate the process.

Statutory Time Limits

States have various insurance laws that could affect a beneficiary’s claim and when they get it. Some states have escheatment laws whereby uncollected claims go to the state’s unclaimed property office. While beneficiaries can still claim the benefit, this will significantly complicate the process. Here are additional points to consider:

• Contestability period: All life insurance policies generally have a contestability period of two years for the insurer to assess the policy for any signs of fraud or errors. Any claims made during this period may be delayed. After the contestability period expires, the insurer cannot deny the claim. They can deny a claim at any time if they identify fraud.
• Disputing denied claims: While there is no time limit on when a beneficiary can file an initial life insurance claim, there are time limits on how long they have to dispute a denied claim. This will depend on state rules. The same rule applies when a beneficiary sues a life insurance company.

Factors That Can Affect Claim Timelines

It generally takes 30 to 60 days for an insurer to pay out a life insurance claim; however, certain factors could delay the payout.

• Policy type: There are two primary life insurance policies available: term life and permanent life (whole life or universal life). Term life policies are straightforward and can be paid out easily. Permanent life policies include an investment component, are more complex, and may take longer to pay.
• Complexity: A policy may include special clauses or riders that make it more complicated, which in turn affects the timeliness of payouts. If a policy includes an accidental death rider, for example, the insurance company may ask for proof of the nature of the death.
• Cause of death: If the cause of death is out of the ordinary, the insurance company may take longer to investigate within the contestability period. For example, many policies have a suicide clause whereby the policy will not be paid out due to suicide if it occurs within a certain time frame after buying the policy.

Important

Individuals having suicidal thoughts can contact the National Suicide Prevention Lifeline at 988 for support and assistance from a trained counselor. Those in immediate danger should call 911. For more mental health resources, see the National Helpline Database.

The Bottom Line

Life insurance payouts can help support a family’s needs by paying off debt, funeral costs, rent, and mortgage payments. While there is no deadline imposed by insurers to file a life insurance claim, doing so sooner will avoid complications down the line, such as loss of documents, escheatment, and company delays.

Reviewed by Caitlin Clarke
Fact checked by Vikki Velasquez

The 2008 financial crisis was one of the most devastating financial episodes in modern history. It caused massive job losses, home foreclosures, company closures, and a global recession. Structural issues and wrongdoing by financial institutions culminated in an economic disaster.

Many key figures in the United States government and the financial industry played roles in the crisis, both in causing it and helping to recover from it. Below, we discuss some of them and where they are now.

Key Takeaways

• The 2008 financial crisis severely damaged the world economy and led to job losses, bank failures, and a severe recession.
• Key figures Henry Paulson, Ben Bernanke, and Timothy Geithner played major roles in the recovery, with several continuing to influence finance today.
• Some, such as Jamie Dimon, strengthened their careers, while others, such as Richard Fuld, saw their reputations destroyed.
• Only one investment banking executive served time for their role in the crisis.

Henry Paulson

Henry Paulson served as the U.S. Secretary of the Treasury from 2006 to 2009 under President George W. Bush. He played an important role in creating the $700 billion Troubled Asset Relief Program (TARP), which provided emergency bailout money to banks and other institutions to prevent a financial system collapse.

Some of the largest recipients of TARP funds were Citigroup, Bank of America, AIG, JPMorgan Chase, Wells Fargo, General Motors, Goldman Sachs, and Morgan Stanley.

Before serving as Treasury Secretary, Paulson was the CEO of Goldman Sachs. This gave him unique insight into the crisis.

After leaving office, Paulson created the Paulson Institute in 2011, focusing on environmental and economic policies. The organization is “dedicated to fostering global relationships that advance economic prosperity, promote sustainable growth, and maintain global order in a rapidly evolving world.”

He also wrote many books on the financial crisis, including “On the Brink,” published in 2010.

While he has primarily stepped away from politics, he weighs in on economic issues via speaking engagements and by writing articles for notable publications, such as The Washington Post.

Ben Bernanke

Ben Bernanke was chairman of the Federal Reserve from 2006 to 2014 and led its charge in responding to the financial crisis.

The Fed cut interest rates to stem the economic crisis and began very large quantitative easing programs. Interest rates went from 5.25% in June 2006 to between 0% and 0.25% in December 2008.

These actions helped stimulate the economy and stem the fallout from the crisis. After serving his term as Fed chairman, Bernanke joined the Brookings Institution as a distinguished fellow with the Economic Studies program.

In 2022, Bernanke won the Nobel Prize in Economic Sciences for research on banks and financial crises. As of 2025, he works consulting and is invited to speak on financial issues.

Timothy Geithner

During the financial crisis, Timothy Geithner was the President of the Federal Reserve Bank of New York. He oversaw the bailout of institutions based in New York, such as AIG and certain banks. He also played a role in the decision to let Lehman Brothers collapse.

Geithner became the U.S. Secretary of the Treasury under President Obama, further overseeing the nation’s economic recovery from the financial crisis. He expanded TARP and ensured recipients paid back bailout money as quickly as possible.

He was involved in the Obama administration’s $787 billion American Recovery and Investment Act.

After completing his term in 2013, Geithner joined the private sector, serving as chairman of Warburg Pincus, a private equity firm.

Geithner wrote a 2015 memoir about the financial crisis called “Stress Test.”

As of 2025, he is the chair of the Program on Financial Stability at Yale University. In addition, he serves as co-chair of the Aspen Economic Strategy Group and is a member of the International Rescue Committee Board of Advisors.

Richard Fuld

Richard Fuld was the last CEO of Lehman Brothers, one of the most prestigious financial firms on Wall Street. It collapsed during the economic crisis when the government refused to bail it out. Its bankruptcy reverberated through the global financial markets.

Lehman was a big player in the mortgage-backed securities (MBS) space, and poorly structured MBS were a main cause of the financial crisis. When Lehman filed for bankruptcy in 2008, it had $613 billion in debt.

With his legacy forever tarnished, Fuld disappeared from the public spotlight for many years. In 2016, he founded the asset management firm, Matrix Private Capital Group, where he still serves as chairman.

Important

Kareem Serageldin, a managing director and trader at Credit Suisse Group, was the only Wall Street investment banking executive to go to jail for their role in the 2007-2008 financial crisis.

John Mack

John Mack was the CEO of Morgan Stanley, which was on the verge of collapse but saved by a government bailout and a $9 billion investment from Mitsubishi UFJ Financial Group. Mitsubishi UFJ Financial Group’s investment gave Mitsubishi 21% control of Morgan Stanley.

Like others, Mack wrote a book on the financial crisis about his time at Morgan Stanley entitled “Up Close and All In.” He has also served on various boards, such as New Fortress Energy and Glencore.

Lloyd Blankfein

During the financial crisis, Lloyd Blankfein was the CEO of Goldman Sachs. The company survived thanks to a $10 billion government bailout and by converting itself into a bank holding company in order to access emergency funding.

Blankfein remained at Goldman Sachs until 2018. Since then, he has served as a Compass Speaker for the Robert F. Kennedy Human Rights Foundation, and frequently provides insight into economics and finance at business events and media appearances.

Jamie Dimon

Jamie Dimon is the CEO of JPMorgan Chase, a position he held during the financial crisis. His reputation improved during that period as he deftly handled the fallout. It helped that JPMorgan avoided the worst of subprime mortgage lending.

Under his leadership during the period, JPMorgan acquired Bear Stearns and Washington Mutual at extremely low prices, though Dimon would go on to say that the acquisitions were not the best strategic decisions.

Jamie Dimon continues to be an important figure in finance in 2025. JPMorgan has become the most prominent bank in the U.S. and his advice is often sought by the media, other professionals, and politicians.

Note

JPMorgan Chase is the largest bank in the U.S. and the fifth-largest bank in the world by assets.

Ken Lewis

Ken Lewis was the CEO of Bank of America during the financial crisis. During that period, he oversaw the purchase of Merrill Lynch and Countrywide Financial, poor decisions that nearly ruined the bank due to the toxic assets held by these entities.

Lewis was later sued by regulators in a civil case for misleading shareholders, and he settled by paying $10 million to resolve the claims. Since retiring in 2009, he has remained out of public view.

Kathleen Corbet

Many MBSs contained subprime mortgages at the time of the financial crisis. Yet their credit ratings, which were higher than warranted, didn’t reflect this.

Though most investors believed MBS to be safe, when subprime borrowers defaulted on their mortgages, the securities built on them plummeted in value, with many becoming worthless. Credit rating agency Standard & Poor’s was heavily criticized.

Kathleen Corbet was president of S&P from 2004 to 2007. She resigned shortly before the crisis, but many of the MBS were rated under her tenure, and it is assumed she was asked to step down as criticism grew.

Since leaving S&P, Corbet has served on many boards, such as MassMutual Financial, Waveny Lifecare Network, and BlackRock TCP Capital. She is a venture capitalist entrepreneur and founded Cross Ridge Capital, a venture capital consulting firm.

George W. Bush

George W. Bush was the U.S. president during the financial crisis. He supported the various measures used to combat it, including TARP. As the collapse occurred towards the end of his time in office, it overshadowed his second term, and much of the recovery was handed over to the Obama administration.

Since leaving office, Bush has largely remained out of the spotlight, focusing primarily on his philanthropic activities, his art, and veterans’ issues.

He does not partake in economic, financial, or political discussions much, though he has written several books about his time in office and after.

The Bottom Line

The 2008 financial crisis was a catastrophic moment for the global economy, causing distress for people all over the world. It also affected the careers and lives of the people at the center of it.

While many key figures have gone on to have successful careers and remain influential in the financial sphere, others had their reputations damaged and faded from the public eye.

The lessons of the crisis can be seen today in economic, government, and financial policies designed to ensure that such disastrous events don’t happen again.

Reviewed by Eric Estevez

What Are the Top Five Companies Owned by DuPont?

E.I. Du Pont De Nemours and Company was founded in 1802 as a gunpowder mill by Éleuthère Irénée du Pont. Most of us know it by its more common name, DuPont (DD). The American conglomerate is one of the world’s largest producers of chemicals and science-based products.

Headquartered in Wilmington, Delaware, DuPont is responsible for developing innovative materials such as Teflon, Mylar, Dacron, Lycra, and Orlon. In August 2017, the company merged with Dow Chemical, forming DowDuPont. The two split in 2019, which was the same time that DuPont spun off its agricultural chemicals into a separate company. The result was three separate companies: Cortiva, Dow, and DuPont.

Acquisitions aren’t new to DuPont. In fact, it has acquired a number of companies over the years that continue to help it grow its broad range of science-based products. The following is a list of the top five companies under the DuPont umbrella.

Key Takeaways

• DuPont is one of the world’s largest producers of chemicals and science-based products.
• The company merged with Dow Chemical in 2017, formed a new company called DowDuPont and split two years later, forming three subsidiaries.
• Over its long history, DuPont has acquired a number of companies that have helped grow its broad range of products, including Danisco and Pioneer.

1. Danisco

• Acquired: 2011
• Purchase Price: $6.3 billion

Danisco A/S was established in 1989. It is a Danish-based biotech company with a range of “specialty food ingredients, including enablers, cultures and sweeteners.” Danisco specializes in producing enzymes that are used to preserve foods and make biofuels.

Now operating under the name DuPont Danisco, it is one of the largest producers of the thickening agent guar gum and the gelling agent carrageenan, which adds texture and stability to dairy desserts, processed cheeses, and jellies. The company claims that its ingredients are in much of the world’s ice cream.

This company also develops many natural enzymes and antioxidants that preserve the shelf life of food worldwide.

2. Pioneer

• Acquired: 1999
• Purchase Price: $7.7 billion

Founded in 1926, DuPont Pioneer is a large U.S. producer of hybrid seeds for agriculture. The Iowa-based company is one of the largest producers of genetically modified organisms (GMOs), specializing in genetically modified crops with insect or herbicide resistance.

Pioneer produces, markets, and sells hybrid seed corn, sorghum, sunflower, cotton, soybean, alfalfa, canola, rice, wheat, and other seeds in more than 125 countries.

3. Corian

Created by DuPont scientists in 1967, Corian is the brand name for a solid surface material marketed by DuPont primarily as a countertop and is composed of acrylic polymer and alumina trihydrate.

Along with DuPont’s similar solid surface material Zodiaq quartz, Corian is used in the residential and commercial design industries, as well as food service and health care.

These durable products have many applications because they can be designed and cut to order. Common uses for Corian include public bathroom stalls, office partitions, and kitchen countertops.

Note

As part of its 2024 Sustainability Report, DuPont reported $12.1 billion of net sales earned by its 24,000 employees.

4. Tyvek

Tyvek is a synthetic material developed and marketed by DuPont. The strong material is primarily used as a house wrap that protects buildings during construction. It allows water vapor to pass through while blocking liquids.

It also provides buildings with additional insulation and resists wood rot and mold growth. DuPont trademarked the material in 1965 and began selling Tyvek in 1967.

Tyvek is also used in protective shipping envelopes and in a line of protective apparel for industrial workers that includes laboratory coats and coveralls. It is often used for light hazmat applications, such as asbestos and radiation work. Tyvek’s sub-brand Tychem is rated for a higher level of liquid protection from chemicals.

5. Kevlar

Kevlar was developed by DuPont in 1965. It was first used commercially in the 1970s as a replacement for steel in racing tires. The high-strength material is typically spun into ropes or fabric sheets. Its applications include:

• Body armor
• Personal protection equipment
• Automotive
• Fiber optic cables

Due to its high tensile strength-to-weight ratio, it is considered to be five times stronger than steel.

Kevlar is used in a wide variety of consumer products, such as tires, socks and shoes, sports equipment, and mobile phone cases. While it has many other applications, Kevlar is best known for its use in ballistic and stab-resistant body armor for law enforcement and the military around the world.

What Does DuPont Make?

DuPont was established in 1802 as a gunpowder manufacturer. The company expanded its footprint to a variety of industries, including aerospace, automotive, building and construction, electronics, energy, medical, manufacturing, packaging, and water protection. Some of the products that come with the DuPont name include adhesives, construction materials, fabrics, medical devices, personal protective equipment, and solar solutions.

What Role Does the DuPont Family Play in the Business?

DuPont was founded by Eleuthère Irénée du Pont in 1802 as a manufacturer of gunpowder. He left France and came to the United States during the French Revolution. The company, which expanded its footprint beyond gunpowder, was family-owned until it went public. Eleuthère I. du Pont, one of the heirs to the family fortune, was appointed to the company’s board in 2019.

Where Is DuPont Based?

DuPont is headquartered in Wilmington, Delaware, but the company has businesses all over the world. According to its website, DuPont has offices, manufacturing centers, and other business units in more than 50 different countries.

What Is the DuPont Analysis?

The DuPont analysis is a popular financial tool that can help analysts and investors determine a company’s profitability. It was developed in 1914 by F. Donaldson Brown, who was an employee of the DuPont Corporation, to analyze and compare the operational efficiency and profitability of two related companies. Donaldson combined earnings, investment, and working capital into return on investment (ROI). Once used exclusively by DuPont, it became a financial tool for other companies.

Reviewed by Andy Smith
Fact checked by David Rubin

The equity method and the proportional consolidation method are two types of accounting methods used when two companies are part of a joint venture. Which one is used depends on the way the companies’ balance sheets and income statements report these partnerships.

Note that since 2013, for the most part, only the equity method is still in use.

Key Takeaways

• The equity method of corporate accounting is used to value a company’s investment in a joint venture when it holds significant influence over the company it is investing in.
• The proportional consolidation method of accounting looks at income, expenses, assets, and liabilities in proportion to a firm’s percentage of participation in a joint venture. 
• As of 2013, the International Accounting Standards Board (IASB) abolished the use of proportional consolidation and it is no longer recognized by IFRS.

Joint Ventures

A joint venture is a type of business agreement involving two or more parties that group their available resources in a common undertaking. Each party in a joint venture has a certain amount of control and responsibility for the costs associated with the venture, as well as sharing profits or losses. Joint ventures are commonly used to invest in foreign and emerging market economies.

Joint ventures offer an expedient way for companies and individuals to pool knowledge, expertise, and resources to accomplish a potentially lucrative deal while decreasing each party’s exposure to risk. The joint venture is an enterprise in and of itself, separated and set apart from any other business deals or interests in which the partnered companies are involved.

The Equity Method

The equity method of accounting is used to assess the profits earned by their investments in other companies. The firm reports the income earned on the investment of its income statement. Under the equity method, the reported value is based on the size of the equity investment.

If a company holds more than 20% of another company’s stock, the company has significant control where it can exert influence over the other company. The initial investment is recorded at cost and each quarter adjustments are made depending on the value at the end of the period.

For example, Company A buys 10,000 shares of Company B at $10 per share; Company A would record the investment cost of $100,000 for the initial period. Any profit or income on the investment in the coming years would also reflect changes in the value of the investment.

The value reported by each company represents only that firm’s relative share of the costs and assets. This equity method of accounting is more commonly used when one company in a joint venture has a recognizably greater level of influence or control over the venture than the other.

If a firm comes to a point where it is no longer maintaining any significant level of control over the investment, the equity method can no longer be used. At that point, a new value is recorded in the company’s profit and loss records, determined on the basis of the current cost.

The Proportional Consolidation Method

The proportional consolidation method of accounting records the assets and liabilities of a joint venture on a company’s balance sheet in proportion to the percentage of participation a company maintains in the venture. In calculating those assets and liabilities, the company would list all income and expenses from the joint venture and include them on its balance sheet and income statement.

For example, if Company A has 50% controlling interest over Company X, Company A would record the investment at 50% of the assets, liabilities, revenues, and expenses of Company X. So if Company A has revenues of $100 million and Company X has revenues of $40 million, Company A would have in total $120 million.

Those favoring the proportional consolidation method argue that it provides a more accurate and detailed record because it breaks down how well a joint venture performs. This method allows each company to see the operational effectiveness of various steps in the joint venture process including production costs, shipping costs, and the profit margin.

Accounting Rules

Under the U.S. generally accepted accounting principles (GAAP), a firm’s interest in a joint venture is accounted for using the equity method.

Moreover, since 2013 the proportional method has largely been abandoned. In addressing accounting for joint ventures, the International Financial Reporting Standards (IFRS) sought to eliminate inconsistencies in the reporting of “joint arrangements,” which the IFRS classifies as either “joint operations” or “joint ventures,” in accordance with IFRS 11. International Accounting Standards (IAS) 31 merged joint operations and joint ventures, and IFRS 11 requires the use of the equity method and the abolition of the proportional consolidation method.

Though the proportional consolidation method was previously accepted by the IFRS, it also allowed the use of the equity method.

The Bottom Line

There are proponents for the use of each of these accounting methods, and different accounting standards organizations are split as to which is the more appropriate practice. Companies generally use the method that fits best with their overall operations and existing accounting practices.

The International Accounting Standards Board (IASB) decided it was no longer appropriate to use proportional consolidation effective Jan. 1, 2013.

Actionable insights from a financial advisor

I once had a client who made many trips to the post office when she was going through a divorce. She wasn’t mailing legal documents to her attorney. Rather, she was seeking comfort from the pain of the breakup through online spending sprees, and ultimately returning many of the purchases she bought that overspent her budget.

As financial planners, we frequently detect emotional influences behind our clients’ decisions—when they turn to money to react to feelings of stress, sadness, or even joy. Thankfully, there are ways we can put them back on the right financial track.

Key Takeaways

• Goal setting, like creating a financial plan, empowers clients to stay on track and resist impulse purchases.
• Budgeting tools can help clients identify “for fun” purchases and help them have a clearer vision of their spending.
• The 24-hour rule encourages clients to pause before making non-essential purchases, helping them align spending with their financial goals.
• Seeking professional support from financial therapists can significantly improve clients’ financial behaviors and well-being.

What I’m Telling My Clients

Here are the key steps I use with clients to navigate these delicate conversations:

1. Start With Goal Setting

 Work with clients to help them establish financial goals. By mapping out these, clients can better resist impulse purchases, knowing they have financial markers to reach. For instance, understanding the number you need to save for retirement or your child’s college education can help dissuade against purchases that detract from that.

Note

According to Schwab’s 2024 Modern Wealth Survey, of the people who reported having a written financial plan, 76% said they’re more in control of their finances because of it.

2. Use Spending Management Tools

Budgeting tools are a great way to keep clients on track. By knowing how much they have allotted towards “for fun” purchases, they will better understand when it’s time to splurge and when to hold off.

3. Practice The 24-Hour Rule

I suggest the 24-hour rule, whereby clients should wait 24 hours before making non-essential purchases. This allows clients to consider whether the purchase supports their financial goals. One of my clients was able to eliminate a $900 monthly budget deficit using this practice!

Tip

I encourage clients to replace the short-term relief of spending with physical exercise, mindfulness practices, or hobbies. These can also provide bonus effects, like helping boost self-esteem and overall fitness.

The Bottom Line

Not only do we help our clients make more rational decisions by acknowledging the psychological aspects of spending, but we also promote their overall well-being.

By mapping out their goals, offering budgeting and time management tactics, and knowing when to offer professional support, we can help clients combat their emotional spending. This ultimately paves the way towards greater financial security and independence they can carry throughout their lives.

​The legendary investor Warren Buffett has repeatedly denounced the efficient market hypothesis (EMH), which claims that stock prices reflect all relevant information and always trade at their fair value. Beyond simple luck, this should make it impossible to consistently beat the market. Pointing to his own success, Buffett instead argues that savvy investors can achieve superior results through meticulous analysis and disciplined investing strategies.

Yet, Buffett has long promoted the view that retail investors should mostly use index funds, which seems to conflict with his critiques of the EMH since that passive strategy tends to align with EMH principles. We take you through how he resolves this seeming contradiction below.

Key Takeaways

• According to the EMH, stock prices reflect all available information, suggesting that it’s impossible for investors to find undervalued stocks.
• Buffett argues against the EMH by pointing to examples of value investors, including himself, who have outperformed the market.
• Still, Buffett recommends that non-professional investors should choose low-cost index funds because successful value investing takes time and expertise.

What Are ‘Efficient’ Markets?

The EMH describes financial markets as “informationally efficient,” where asset prices incorporate all available information instantly. The EMH suggests that trying to time the market can’t consistently generate better returns than the broader market (especially after fees and taxes) because any information affecting a company’s value would already be reflected in its stock price.

It’s no coincidence that passive index funds got their start in the 1970s, not long after major discussions about the EMH by economists. These funds focus on replicating market returns instead of outperforming them overall.

Buffett’s Contrarian View

Buffett has said that while the market is “generally fairly efficient,” he doesn’t think that supports an EMH strategy in investing, arguing that taking that approach would be a “terrible, terrible mistake.” Instead, he has said that investing is about valuing businesses.

“It’s crucial to understand that stocks often trade at truly foolish prices, both high and low. ‘Efficient’ markets exist only in textbooks,” Buffett wrote to stockholders in 2022. To bolster his case, Buffett has pointed to successful value investors, including his mentor Benjamin Graham, who consistently outperformed the market by identifying and buying undervalued stocks. 

More to the point, Buffett’s own impressive results suggest he’s right to doubt market efficiency. His management of Berkshire Hathaway Inc.’s (BRK.A) portfolio has resulted in returns that far exceed market averages across lengthy spans, which he says proves that dedicated analysis and disciplined investment practices can yield better performance.

Buffett’s Advice for Average Investors

Still, Buffett argues that despite his investment success and critique of EMH, most individual investors should choose low-cost index funds, including a sizable allocation to an S&P 500 index fund.

Although the advice appears in conflict, it just means different investors should have different strategies that fit their goals, lifestyle, and risk tolerance. Buffett recognizes that active value investing can beat the market, but doing so takes time, expertise, and strong emotional control that most investors don’t have. 

So, instead of trying to time the market, he advises buying index funds by putting a set amount aside, regardless of market conditions. Known as dollar-cost averaging, this strategy removes emotion from the equation and ensures investors always have a stake in the gains from the market’s long-term growth.

“The goal of the non-professional should not be to pick winners,” Buffett wrote in a letter to shareholders in 2013. Instead, they should “own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.”

Buffett has wryly noted he might need to thank EMH proponents for some of his success. “Naturally the disservice done students and gullible investment professionals who have swallowed EMT has been an extraordinary service to us,” he wrote in 1988. “In any sort of a contest—financial, mental, or physical—it’s an enormous advantage to have opponents who have been taught that it’s useless to even try.”

The Bottom Line

Although Buffett argues against the idea that markets price in all available information—something opposed to his own value investing approach—he supports index fund investing for most people, given the real difficulties of beating market performance consistently. 

Reviewed by Eric Estevez
Fact checked by Amanda Jackson

A few theories exist regarding the origin of the abbreviations used for debit (DR) and credit (CR) in accounting. Both have Latin roots. An increase in liabilities or shareholders’ equity is a credit to the account, notated as “CR.” A decrease is a debit, notated as “DR.”

Bookkeepers enter each debit and credit in two places on a company’s balance sheet using the double-entry method.

Key Takeaways:

• The terms debit (DR) and credit (CR) have Latin roots. Debit comes from the word debitum and it means, “what is due.” Credit comes from creditum, meaning “something entrusted to another or a loan.”
• An increase in liabilities or shareholders’ equity is a credit to the account. It’s notated as “CR.”
• A decrease in liabilities is a debit that’s notated as “DR.”
• Bookkeepers enter each debit and credit in two places on a company’s balance sheet using the double-entry method.

Understanding Debit (DR) and Credit (CR)

Luca Pacioli, a Franciscan monk, developed the technique of double-entry accounting. Pacioli is known as the “Father of Accounting” because the approach he devised became the basis for modern-day accounting. He warned that you should not end a workday until your debits equal your credits. This reduces the possibility of errors of principle.

Assets equal liabilities plus shareholders’ equity on a balance sheet or in a ledger using Pacioli’s method of bookkeeping or double-entry accounting. An increase in the value of assets is a debit to the account and a decrease is a credit.

Important

This method is also known as “balancing the books.”

Debit (DR) vs. Credit (CR)

The terms debit and credit both have Latin roots. The term debit comes from the word debitum, meaning “what is due.” Credit is derived from creditum, defined as “something entrusted to another or a loan.”

The change in the account is a debit when you increase assets because something (the value of the asset) must be due for that increase. An increase in liabilities is a credit because it signifies an amount that someone has loaned to you and which you used to purchase something (the cause of the corresponding debit in the assets account).

The terms debit and credit signify actual accounting functions, both of which cause increases and decreases in accounts depending on the type of account. Simply using “increase” and “decrease” to signify changes to accounts won’t work.

A few theories exist when it comes to the DR and CR abbreviations for debit and credit. One asserts that the DR and CR come from the Latin present active infinitives of debitum and creditum, which are debere and credere respectively. Another theory is that DR stands for “debit record” and CR stands for “credit record.” Some believe that the DR notation is short for “debtor” and CR is short for “creditor.”

Account Types

A company’s chart of accounts contains types of accounts. The balance sheet accounts include:

• Assets: The asset account contains a company’s resources such as cash, accounts receivable, and inventory.
• Liabilities: The liability account reflects what the company owes such as accounts payable and wages.
• Equity: Equity refers to company ownership such as in the form of stock and investment.

How Debits and Credits Affect Account Types

Every transaction that occurs in a business can be recorded as a credit in one account and a debit in another. Whether a debit reflects an increase or a decrease and whether a credit reflects a decrease or an increase depends on the type of account.

Account	Debit	Credit
Asset	Increase	Decrease
Expenses	Increase	Decrease
Liabilities	Decrease	Increase
Equity	Decrease	Increase
Revenue	Decrease	Increase

Examples of Debits and Credits

Say Company XYZ issues an invoice to Client A. The company’s accountant records $1,000, the invoice amount as a debit or DR in the accounts receivables section of the balance sheet because that is an asset account. The company records that same amount again as a credit or CR in the revenue section.

The accountant records the amount as a credit (CR) in the accounts receivables section, showing a decrease, when Client A pays the invoice to Company XYZ. A debit (DR) is recorded in the cash section, showing an increase.

Why Is Debit a Positive?

A debit on a balance sheet reflects an increase in an asset’s value or a decrease in the amount owed (a liability or equity account). This is why it’s a positive.

Is Accounts Payable a Credit or a Debit?

Accounts payable is a type of liability account that shows money that has not yet been paid to creditors. An invoice that hasn’t been paid increases accounts payable as a credit. It’s a debit when a company pays a creditor from accounts payable, reducing the amount owed.

Does Debit Go on the Left or the Right?

Debit, or DR, is entered on the left in traditional double-entry accounting. Credit, or CR, is entered on the right.

The Bottom Line

CR is a notation for “credit” and DR is a notation for debit in double-entry accounting. Credit is a term that’s used to mean “what is owed” and debit means “what is due.” Understanding how to use CR and DR will help you make sense of a company’s balance sheet and gain useful insight into the increases and decreases of key accounts.

Reviewed by Michael J Boyle
Fact checked by Ryan Eichler

With so much cash thrown around in Silicon Valley, it’s not easy for an acquisition to cause a stir. Facebook’s (META) (now Meta) acquisition of WhatsApp in 2014 did just that—surpassing Google’s $3.2 billion purchase of Nest Labs and Apple’s $3 billion Beats Electronics procurement—to become one of the largest tech buys of all time.

WhatsApp, a text messaging app used widely across the globe, stole headlines with its initial $16 billion bid from Facebook. The deal was later finalized at $19 billion. In 2013, the app lost $138 million and brought in $10.2 million in revenue. So how did the company win over Facebook?

Key Takeaways

• Facebook purchased WhatsApp in 2014.
• Facebook’s $16 billion initial bid and the $19 billion closing price were astronomical, even for Silicon Valley.
• WhatsApp uses internet either mobile or WiFi rather than SMS technology.
• WhatsApp has over 2.95 billion users as of March 2025.
• WhatsApp helped Facebook grow in developing markets where it is widely used to communicate.

WhatsApp Acquisition

WhatsApp is an ad-free mobile application that allows users to send unlimited messages to contacts using WiFi or mobile data. The app is free to download and is an alternative to the cell provider’s traditional text messaging service. The app was founded by Jan Koum and Brian Acton, two former Yahoo! executives.

When Facebook announced its plans to acquire WhatsApp in February 2014, WhatsApp’s founders attached a purchase price of $16 billion: $4 billion in cash and $12 billion remaining in Facebook shares. This price tag is dwarfed by the actual price Facebook paid: $21.8 billion.

Facebook agreed to pay $19.6 billion—adding $3.6 billion to the original price as compensation to WhatsApp employees for staying on board at Facebook. However, Facebook share prices soared to $77.56 from $68 when the regulatory approval process concluded in October. By then, the agreed-upon 184 million Facebook shares inflated the final sale price by an additional $2.2 billion. 

WhatsApp’s six-month revenue for the first half of 2014 totaled $15.9 million, and the company incurred a staggering net loss of $232.5 million. However, the majority of that loss was for share-based compensation.

Why WhatsApp?

WhatsApp is Zuckerberg’s most significant acquisition and one of the most enormous Silicon Valley has ever seen. It is over 20 times larger than its Instagram acquisition, making quite the splash in 2012. That begs the $22 billion question: why did the social media giant break the bank to buy WhatsApp?

The answer is user growth. In 2014, over 450 million people used WhatsApp monthly, and the service added more than 1 million users per day. With 70% of WhatsApp users being active daily, the app was expected to quickly reach one billion users.

The app launched in 2009 and, as of 2020, had more than 2 billion users. As of 2020, Facebook had 2.8 billion monthly active users. With a shared mission of enhancing global connectivity via internet services, the merging of forces will likely accelerate growth for both companies.

For Zuckerberg’s company, user growth comes first and monetization later.

WhatsApp and Mobile Users

WhatsApp helped fuel Facebook’s growth in developing markets where internet connectivity is sparse, and WhatsApp is widely used. Facebook then gained access to these mobile user bases. Connecting to WhatsApp users in these areas will also aid the Facebook Connectivity initiative; Meta CEO Mark Zuckerberg’s plan to implement internet access to parts of the world not yet online.

However, the company does believe it will profit from WhatsApp down the line as phone calls become obsolete and mobile messages reign. This is why Zuckerberg spent one-tenth of his company’s (then) market value to buy the text messaging app, nearly doubling Google’s (GOOG) bid. In doing so, he successfully kept the company out of the hands of other tech rivals.

The Bottom Line

WhatsApp plays a significant role in global areas crucial to Meta’s future growth. By putting monetization efforts on hold, Meta is focusing on the future of international, cross-platform communications. Through the acquisition of WhatsApp, the company is poised to reach billions of people, and Meta is sure to find a way to eventually cash in.

Reviewed by Margaret James
Fact checked by Melody Kazel

An all-in-one mortgage allows you to combine your mortgage and savings. The combined accounts function like a home equity line of credit (HELOC).

This kind of arrangement can help lower the interest you pay on your mortgage because the balance of the savings you add to the account is applied to your principal, thus reducing the amount of interest you owe.

Key Takeaways

• All-in-one mortgages allow for the combining of a mortgage and savings. They require the combination of a checking account, home equity loan, and mortgage into one.
• The benefits of an all-in-one mortgage include seamlessly using extra cash flow to pay down a mortgage, as well as having increased liquidity beyond typical home equity loans.
• All-in-one mortgages typically charge a $50 to $60 annual fee and are 30-year adjustable rate mortgages.

What Is an All-in-One Mortgage?

An all-in-one mortgage combines elements of a mortgage, a bank account, and a home equity line of credit (HELOC). This structure provides the homeowner with immediate access to home equity without a separate loan. The homeowner makes payments like they would with a traditional mortgage, and those payments are applied to the principal and interest on the loan.

However, unlike a traditional mortgage, payments are deposited into a savings account, making them available for withdrawal. Because of this setup, borrowers can deposit the amount of their typical monthly mortgage payment plus the amount of their typical monthly expenses, including savings. Because all of that money goes toward paying down the principal, interest payments can be lowered.

Important

An all-in-one mortgage is different from an offset mortgage, which is not available in the U.S. due to tax laws. 

Example of an All-in-One Mortgage

A conventional 30-year fixed mortgage for $400,000 at 6.00% would result in a monthly payment of about $2,398 and total interest payments of about $463,352 over the life of the mortgage. If you also are putting $1,000 toward your savings every month, an all-in-one mortgage would allow you to apply both amounts—a total of about $3,398— to your mortgage balance each month while still giving you access to your savings. Doing this without withdrawing any of those funds would allow you to pay off your mortgage in less than 15 years and save about $258,283 in interest payments.

A key to this example is not withdrawing any of the funds. In order to reduce your interest payments and speed up the time it takes to pay off your mortgage, you need to be disciplined enough to avoid constantly tapping into the available equity.

All-in-One Mortgage Fees and Rates

Offset and all-in-one mortgage lenders charge a $50 to $60 annual fee on top of other standard loan expenses, and higher rates usually apply for accelerated mortgages. Most accelerated loans are 30-year adjustable-rate vehicles that are tied to the LIBOR index.

A key issue to consider here is the lifespan of the loan. A slightly higher interest rate could be worthwhile if the loan is paid off several years sooner than a lower-rate loan. Remember that the time for repayment for an accelerated loan is not fixed. Therefore, the borrower’s projected surplus cash flow must be taken into account when making this comparison.

All-in-One Mortgage Suitability

One of the main caveats of this type of loan is that most lenders who offer accelerated mortgages require borrowers to have relatively higher FICO scores in order to qualify. This is because this type of mortgage will only benefit a borrower who has a consistent positive cash flow, with surplus funds available to reduce the principal of the loan on a regular basis.

One way to decrease mortgage-related debt is to secure a mortgage with a low-interest rate. It’s important to shop around as different lenders may offer different interest rates on the same type of mortgage and in the long-run securing a mortgage with a lower interest rate could save you thousands of dollars.

What Is an Offset Mortgage?

An offset mortgage combines aspects of a traditional mortgage with one or more deposit accounts at the same financial institution, The interest charged on the mortgage is based on the principal amount less the amount on deposit in the savings component (which offsets the loan principal). Offset mortgages are not available in the U.S. due to greater tax regulation. Instead, the all-in-one mortgage is a viable alternative for some U.S. homeowners.

Who Should Avoid All-in-One Mortgages?

Although the benefits of this type of loan can be substantial, suitability is still a key concern, just as with any other loan product. Financially undisciplined borrowers may want to steer clear of taking one of these loans. Possessing too much available credit through the equity line aspect of the account could trigger spending sprees for some people, which will add to their overall debt.

What Are Some Alternatives to an All-in-One Mortgage?

If you want to access home equity, you can refinance your existing mortgage with a cash-out refi. You can also take out a home equity loan or HELOC. If you are instead looking to pay off your mortgage sooner, you can recast your mortgage or else pay additional principal early.

The Bottom Line

A combined mortgage, savings account, and HELOC is a special product that allows homeowners to pay down their mortgage principal faster, thus lowering the total amount of interest they will pay over the life of the loan. For this to work, average monthly expenses cannot exceed average monthly deposits, meaning borrowers need to refrain from tapping into their home equity.