financial education

Self-directed investing means you manage your investments, whereas robo-advisors automate the process for you

Fact checked by Vikki Velasquez
Reviewed by Andy Smith

Robo-Advisor vs. Self-Directed Investing: An Overview

For today’s investors, personal control and automation may seem like opposing forces.

On the one hand, self-directed investing implies investor control over their investments. They do the necessary research, select their investments, and manage their portfolios according to their preferences and investment, financial, and economic outlooks.

Self-directed investing puts control and freedom of choice in the hands of investors. It’s a more traditional way of investing.

On the other hand, robo-advisors are wholly automated digital investment platforms that deliver a hands-off approach to investors. They use complicated algorithms to make ongoing investment decisions for you. They may offer some access to human assistance.

Each of these investment approaches offers an investing solution that may be right for different people. So it’s important to understand their differences, advantages, and disadvantages.

That knowledge will help you decide which one aligns best with your personal approach to investing, your financial goals, and your comfort with risk.

Key Takeaways

• With self-directed investing, investors make their own investment choices and control how they manage their portfolios.
• It means that oversight and the potential for higher returns rest in your hands.
• However, successful self-directed investing requires significant time and effort, as well as a solid understanding of investment securities and financial markets.
• Robo-advisors provide investors with an automated, low-effort investing experience, but they may limit your investment options and come with their own set of fees.
• The choice between self-directed investing and a robo-advisor depends on your personal preferences and interest in investing, financial goals, investment knowledge, and available time.

What Is a Robo-Advisor?

At its core, a robo-advisor is a digital investment platform that uses algorithms to manage and rebalance your portfolio.

You simply set your financial goals and risk tolerance, and the robo-advisor takes care of the rest. They’re the digital equivalent of an autopilot for your investments.

Over the past few decades, robo-advisors have evolved and grown significantly. Initially, they were focused on providing automated portfolio management, but today, they offer a range of services, from tax-loss harvesting to retirement planning.

Recognizing the growing demand for a blend of technology and financial management, many traditional financial institutions have launched their own robo-advisory services.

Today, hundreds of robo-advisors are available globally, with billions of dollars in assets under management (AUM).

They offer a low-cost, accessible investment option, especially for those investors who are just starting out or prefer a hands-off approach.

By handling the complexities of investment management, robo-advisors allow you to focus on setting and achieving your financial goals.

Note

Investopedia offers a recommended list of robo-advisors. As of March 2025, Wealthfront is best overall, while Betterment is great for beginners and M1 Finance ranks highest for experienced investors. View them all here.

Advantages and Disadvantages of Robo-Advisors

Robo-advisors shine in their simplicity and ease of use. They handle the heavy lifting of investment management, making them great for beginners or those with a passive investment style.

However, they may not offer the same depth of investment choice as self-directed investing, and their fees, while typically lower than traditional advisors, can add up over time.

Pros

• Automated, hands-off investing

• Typically, low cost

• Low minimums

• Well-diversified portfolios based on proven strategies

• Takes emotion out of trading

Cons

• Lack of flexibility

• Limited asset class selections

• Lack the human touch

• Fees can add up over time

What Is Self-Directed Investing?

Self-directed investing involves managing your own investment portfolio. You choose your investments, whether stocks, bonds, exchange-traded funds (ETFs), mutual funds, or other assets, based on your own research and risk tolerance.

It’s a more hands-on approach to investing, offering you maximum control over your investments. And while considered more traditional than robo-advisors, it itself is a big step away from the classic standard of a full-service broker.

The advent of the internet and online brokerages has made self-directed investing quite accessible.

Online brokers provide a wealth of tools and resources to support individual investors, from research reports, technical analysis tools, and market data to educational content and advanced trading features.

With these at your fingertips, you can make informed decisions about how to allocate your money and manage it on an ongoing basis.

However, these resources cannot replace the fundamental need for financial literacy and an understanding of market dynamics.

For successful investing, it’s essential that you educate yourself about the variety of securities available, different asset classes, various types of risks, market trends, and investment principles.

You’re responsible for making informed decisions and managing risk. It requires time, effort, and updated financial knowledge to be done effectively.

Important

Self-directed investing is about taking ownership of your financial future. You steer your investments according to your vision, whether that involves aggressive growth strategies, conservative income generation and capital preservation, or something in-between. It’s not for everyone, but for those willing to put in the work, it offers the potential for personal satisfaction that’s hard to match.

Advantages and Disadvantages of Self-Directed Investing

Self-directed investing offers the potential for greater returns, as you have the freedom to pursue your own investment strategies.

However, it also requires a significant time investment for research and management, as well as a solid understanding of the financial markets.

Therefore, the risks are substantial, as the responsibility for investment decisions rests solely on you.

Pros

• Flexibility and autonomy

• Potential for superior returns

• Low cost

Cons

• Requires time, effort, and due diligence

• Potential for inferior returns

• Can result in overtrading or trades based on emotions

Robo-Advisor vs. Self-Directed Investing: Key Differences

Self-Directed Investing	Robo-Advisors
You control your investment decisions and are responsible for managing your own portfolio.	Robo-advisors take the driver’s seat in making decisions about your portfolio once you provide basic details.
You must construct your portfolio and rebalance it periodically.	A robo-advisor constructs, and rebalances your portfolio automatically using algorithms.
You’re completely involved in all decision-making for your investments.	Robo-advisors offer investors a completely hands-off investing opportunity.
Substantial time and effort is required to build and maintain your investing knowledge, including analyzing investments, and understanding securities and market mechanics.	Robo-advisors require minimal investing knowledge and time.
Typically, self-directed investing is less expensive, since no advisor is involved. Exception: Individual retirement accounts (IRAs), which may have higher fees than brokerage accounts.	Robo-advisors charge a monthly or annual fee, based on the value of assets in the account. It can diminish your return as it grows over time.
Self-directing investing may carry a higher risk of loss because you’re responsible for how your money is invested. Many factors can affect your efforts, such as lack of information and emotions.	Robo-advisors offer a lower-risk approach using algorithms to build a diversified portfolio that’s based on an investor’s stated risk tolerance.
Self-directed investors can react quickly to changing financial, market, and economic conditions.	Robo-advisors may not react swiftly to changing conditions due to their automation.

Robo-Advisor vs. Self-Directed Investing: Which Is Better for You?

There’s no one-size-fits-all answer to this question. If you value control, have a good grasp of investing, and are willing to put in the time, then self-directed investing may be a good fit.

If you prefer a hands-off approach or are just beginning to invest, then a robo-advisor could be a better choice.

It ultimately comes down to your personal preferences, investment goals, and lifestyle. For example, the best robo-advisors offer specialized services like tax-loss harvesting, which may be important for some investors.

Indeed, the choice between a robo-advisor and self-directed investing is personal. It’s about finding the right balance between control and convenience, risk and reward, and involvement and simplicity.

By understanding your level of interest in investing, investment style, financial goals, and lifestyle, you can make an informed decision about which approach is the best fit for you.

Remember, the goal is not just to choose a method, but to choose the one that will best help you achieve your investment and financial goals.

Should I Use a Robo-Advisor or Do It Myself?

It depends on your interest in investing, investment knowledge, time, and personal preferences. Both approaches have strengths and weaknesses.

Robo-advisors can offer low-cost, diversified, and automated portfolios that are suitable for beginners or busy investors who want to save time and hassle. Doing it yourself can give you more control, flexibility, and customization over your investments, and may cost less. But it also requires more research, monitoring, and, very importantly, discipline.

What Are the Disadvantages of Using a Robo-Advisor?

Limited investment options, lack of flexibility, and fees are the main drawbacks of robo-advisors. They typically invest in ETFs or index funds that track the performance of a market or a sector. This means that you may not be able to invest in individual stocks, bonds, or alternative assets of interest. Moreover, robo-advisors charge an annual fee based on a percentage of your AUM, which can add up over time and reduce your returns. Robo-advisors also often lack the human touch that some clients desire.

How Expensive Are Robo-Advisors?

Robo-advisor fees vary by platform, but are generally lower than traditional human advisors. They usually charge a percentage of the assets they manage, ranging from 0% to 0.5% per year, with the typical fee being 0.25% per year of managed assets. Some robo-advisors may also offer premium plans that include access to human advisors or more advanced features, but for such they charge higher fees. For example, Betterment charges 0.25% per year for digital advice and 0.65% to add access to phone and email advice from its professionals.

How Big Is the Robo-Advisor Market?

According to Morningstar, it’s not as big as it had hoped to become, even though it has grown over the past 20 years. It cites research that shows that 2024 robo-advisor AUM were $634 billion to $754 billion. That’s a small portion of the $36.8 trillion U.S. retail market of accounts with assets ranging from $100,000 to $5 million.

The Bottom Line

Whether you choose a robo-advisor or self-directed investing, the most important thing is that your choice aligns with your financial goals, investment knowledge, and lifestyle.

Both investment options offer unique advantages. Understanding these can help you make an informed decision about which path to take on your investment journey.

Fact checked by Vikki Velasquez
Reviewed by Charlene Rhinehart

What Is the Veil of Ignorance?

The Veil of Ignorance is a thought experiment and philosophical concept introduced by the American philosopher John Rawls in his groundbreaking 1971 work, “A Theory of Justice.” It serves as a powerful tool for evaluating the fairness and impartiality of societal structures and institutions.

By compelling individuals to consider the interests of all members of society, regardless of their own personal circumstances, the Veil of Ignorance acts as a guiding principle that encourages the establishment of a more equitable, just, and compassionate world.

Key Takeaways

• The Veil of Ignorance removes personal biases, compelling individuals to consider the interests of all members of society, ensuring equitable policies and institutions.
• By considering everyone’s interests, the Veil of Ignorance promotes moral consideration and understanding, leading to fairer decision-making.
• Guided by the Veil of Ignorance, decision-makers create rules and institutions that promote fairness, equal opportunities, and social cooperation, contributing to a more just society.

Understanding the Veil of Ignorance

The philosopher Rawls suggests that we imagine that we sit behind a Veil of Ignorance that prevents us from knowing who we are and identifying with our personal circumstances. By being ignorant in this way, we can more objectively consider how societies should operate, he theorized.

Imagine a scenario in which individuals are placed behind a metaphorical veil, stripping them of knowledge about their own social status, talents, and personal characteristics. In this state of ignorance, they are tasked with designing the principles that would govern society.

The idea is that, without information about their own position, these individuals would create a just and equitable society free from personal biases and self-interest. The Veil of Ignorance challenges us to consider the moral foundations of our social systems and encourages the pursuit of a more equal and fair world for all.

Impartiality refers to the unbiased and objective treatment of all individuals or parties, without favoring any particular side due to personal beliefs, biases, or interests. It is a fundamental principle in various contexts, such as law, ethics, and decision-making, to ensure fair and equitable outcomes.

Personal biases are unconscious or conscious preferences, beliefs, or prejudices that influence an individual’s judgment, decision-making, and perception of others. These biases may stem from various factors, such as upbringing, culture, or personal experiences, and can lead to unfair or discriminatory outcomes when not acknowledged or addressed.

What Is the Fairness Principle?

The Fairness Principle, in the context of the Veil of Ignorance, is a guiding concept that emerges from Rawls’ thought experiment. It refers to the notion that when designing a society under the Veil, individuals would create rules and institutions that are fair, just, and impartial, as they lack any knowledge of their own personal circumstances or social position.

The Fairness Principle is grounded in two fundamental ideas:

• Equality: In the original position, behind the Veil of Ignorance, individuals would naturally strive for equal basic rights and liberties for everyone, regardless of their personal characteristics or social status. This is because they would want to ensure that they would be treated fairly and have access to the same opportunities as others, regardless of who they turn out to be in the actual society.
• Social cooperation: The Fairness Principle also emphasizes the importance of social cooperation and mutual benefit. When designing society without knowledge of each person’s specific circumstances, individuals would aim to create systems that benefit everyone and minimize inequalities. They would recognize that a fair distribution of resources and opportunities leads to a more stable, harmonious, and prosperous society.

A prosperous society is one characterized by economic growth, wealth, high living standards, and overall well-being for its citizens, ensuring a thriving and stable environment.

How the Veil of Ignorance Impacts the Fairness Principle

The Veil of Ignorance directly affects the Fairness Principle by creating a hypothetical scenario in which individuals do not know their personal circumstances, social position, or specific talents. This lack of information compels them to design a society that is just, impartial, and fair, as they can’t tailor the rules to benefit themselves or any particular group.

The impact of the Veil of Ignorance on the Fairness Principle can be observed in several ways:

• Objective perspective: By removing personal biases and self-interest, the Veil of Ignorance allows individuals to approach societal design objectively. This impartiality leads to the creation of fair principles and policies that treat everyone equally, regardless of individual characteristics or background.
• Protection of vulnerable groups: When designing a society under the Veil of Ignorance, individuals would naturally want to ensure that even the least advantaged members are protected and provided for, as they also could potentially find themselves in such a position. This promotes fairness by minimizing inequalities and ensuring that everyone has access to essential resources and opportunities.
• Emphasis on basic rights and liberties: The uncertainty about one’s own position in society leads individuals to prioritize equal basic rights and liberties for all, as they would want to guarantee that they have access to these fundamental freedoms and protections, irrespective of their eventual social standing.
• Focus on mutual benefit: The Veil of Ignorance encourages individuals to create a society that fosters social cooperation and mutual benefit. By recognizing that everyone’s well-being is interconnected, individuals would strive for policies and systems that are fair, equitable, and beneficial to all members of society.

Important

Mutual benefit refers to a situation in which all parties involved gain advantages or positive outcomes, fostering cooperation and shared success.

Fairness Principle vs. Tragedy of the Commons

We can draw parallels between the Fairness Principle and the “Tragedy of the Commons,” a concept coined by ecologist Garrett Hardin. This theory suggests that shared resources are prone to overuse unless there’s a fair distribution system. People lack motivation to preserve free resources for others.

Hardin uses the illustration of communal land used by villagers for their cattle. Everyone aims to maximize the land’s utility by grazing as many cattle as possible. However, the land is limited, and eventually, it can’t support any more livestock due to overgrazing.

Applying the Veil of Ignorance principle, people would likely decide to divide the common land evenly among themselves, and limit the number of cattle each one could graze, to prevent depletion.

Ways To Apply The Veil of Ignorance

The concepts of the Veil of Ignorance and the Fairness Principle can be applied to various real-life situations to promote impartiality, justice, and equality. Here are three ways to use these
ideas:

• Policy-making: When developing public policies or legislation, decision-makers can use the Veil of Ignorance as a guiding principle to ensure that their proposals are unbiased and fair. By considering how they would design policies if they had no knowledge of their own personal circumstances, they can create rules that benefit the entire population, rather than favoring specific groups or individuals. This approach can be applied to areas such as education, healthcare, taxation, and social welfare.
• Workplace equality: Organizations can apply the concept of the Veil of Ignorance to create fair and inclusive work environments. By implementing policies and practices that treat all employees equally, regardless of their race, gender, age, or other characteristics, employers can foster diversity, equity, and fairness within the workplace. This might involve measures such as unbiased recruitment processes, equal pay for equal work, and inclusive professional development opportunities.
• Community development: In local communities, the Veil of Ignorance can be used as a framework for decision-making related to resource allocation, community projects, and social programs. By considering the needs and interests of all community members, including the most vulnerable and marginalized, leaders can work toward creating a more just and equitable environment where everyone has access to essential services and opportunities. This might involve supporting affordable housing initiatives, investing in public transportation, or promoting accessible recreational facilities.

By applying the concept of the Veil of Ignorance and the Fairness Principle to these different contexts, we can cultivate a greater sense of justice, impartiality, and equality in our societies, ensuring that the needs and rights of all individuals are taken into consideration in our decision-making processes.

Note

Economic efficiency is the optimal resource allocation that maximizes societal welfare and minimizes waste, promoting productivity, growth, and an improved standard of living.

Criticisms of The Veil of Ignorance

While the Veil of Ignorance and the Fairness Principle have been widely praised for promoting impartiality and justice, they have also faced various criticisms. Some of the main critiques include:

• Oversimplification of human nature: Critics argue that the Veil of Ignorance assumes people are purely rational beings who will always prioritize fairness and equality when designing a society. However, human nature is complex, and individuals may still be influenced by personal biases, emotions, and cultural values, even when attempting to make impartial decisions.
• Lack of concrete guidance: Some critics contend that the Veil of Ignorance offers a limited framework for creating specific policies and institutions, as it focuses on abstract principles rather than concrete solutions. While it encourages fairness and impartiality, it doesn’t provide detailed guidance on how to achieve these goals in practice.
• Cultural relativism: Another criticism is that the Veil of Ignorance may not account for cultural differences and values, as it assumes that there are universally agreed-upon principles of justice and fairness. Different societies may have varying conceptions of what constitutes a just and equitable society, so applying the Veil of Ignorance across diverse cultures could lead to conflicts and misunderstandings.
• Individual vs. group rights: Critics argue that the Veil of Ignorance primarily focuses on individual rights and liberties, potentially overlooking the importance of group rights and collective interests. In some cases, prioritizing individual freedoms may come at the expense of communal values and social cohesion.
• Economic efficiency: Some critics claim that the Fairness Principle, particularly Rawls’ Difference Principle, may undermine economic efficiency and incentives for productivity. By prioritizing the well-being of the least advantaged members of society, it could potentially discourage innovation and hard work, as individuals may feel that their efforts won’t be adequately rewarded.

Despite these criticisms, the Veil of Ignorance and the Fairness Principle remain influential concepts in moral and political philosophy, providing valuable insights into how we can strive for a more just and equitable society.

However, it is essential to consider the criticisms when applying these concepts to real-world situations, ensuring that we take a nuanced and comprehensive approach to achieving fairness and justice.

What Is the Veil of Ignorance and Its Purpose?

The Veil of Ignorance’s purpose is to ensure fairness and impartiality when designing societal structures and institutions. By imagining ourselves behind a veil where we lack knowledge of our social status, talents, or personal circumstances, we are more inclined to create a society that treats everyone fairly and equally, irrespective of their background. The philosopher John Rawls believed that this concept would lead to the development of just principles and policies that prioritize equal rights, social cooperation, and the well-being of all members of society, including the least advantaged.

Who Popularized the Veil of Ignorance?

The Veil of Ignorance was popularized by the American philosopher John Rawls through his seminal work “A Theory of Justice,” published in 1971. The concept has since become a key idea in moral and political philosophy, influencing discussions on fairness, equality, and social justice.

Can the Veil of Ignorance Be Applied Conceptually for the Greater Good?

Yes. By encouraging decision-makers to imagine themselves in a position where they are unaware of their own personal circumstances, this thought experiment promotes impartiality and fairness in the development of policies and institutions. The approach helps ensure that the principles and systems created serve the interests of all members of society, including the least advantaged. Nevertheless, you need to know the limitations of the Veil of Ignorance.

The Bottom Line

Using the Veil of Ignorance, individuals can approach decisions with a more objective perspective, as they disregard personal biases and self-interest. This leads to the creation of policies and systems that emphasize equal opportunities, protection of vulnerable groups, and a focus on mutual benefit. The concept serves as a valuable tool in various contexts, such as policy-making, workplace equality, and community development, helping to cultivate a more just and equitable society.

However, it’s crucial to consider its limitations, such as potential oversimplification of human nature and cultural relativism, to ensure a comprehensive and nuanced approach when applying the Veil of Ignorance to real-world situations.

Fact checked by Vikki Velasquez
Reviewed by Andy Smith

What Are Real Estate Syndicates?

A real estate syndicate is a partnership where investors pool their money to buy and manage properties. Typically, a sponsor (sometimes called a syndicator) scouts for prospects, raises capital, and manages the assets, while passive investors deliver much of the equity for the syndicate. Investing in property through syndication allows you to get in on deals that may otherwise be inaccessible. Syndicates can be a more hands-off investment, with professionals overseeing the day-to-day management.

Key Takeaways

• Real estate syndication offers investors the opportunity to pool their funds and invest in larger properties.
• Investing in real estate syndicates can supply passive income and potential tax benefits.
• It is important to research and evaluate the track record and credibility thoroughly of the syndicate’s sponsors before investing.
• Real estate syndication has risks, including illiquidity, dependence on the syndicate’s performance, and conflicts of interest.
• Investors should consider alternative investment options, such as real estate investment trusts (REITs) and direct property ownership, before deciding on real estate syndication.

Factors to Consider Before Investing in Real Estate Syndicates

Conducting careful due diligence is crucial before handing over hard-earned money in any investment, including a real estate syndicate. Failing to research key elements of any deal can lead to subpar or even negative investments. Here are some important aspects to evaluate:

Track Record of Sponsors

The experience, credentials, and past performance of the sponsors of the syndication need to be examined closely. Review their background to understand their investing experience, education, industry connections, and previous results. More experienced sponsors tend to perform better over time and have done so through good and bad market cycles.

Request the background on previous projects to evaluate actual net returns to investors after fees. Verify claimed returns with independent audits or directly contacting past investors. Sponsors with a strong history of achieving projected internal rates of return show more trustworthiness; they also don’t need to worry about giving you the information you need. Records, not promises, are the coin of the realm here.

Investment Strategy and Financial Projections

Understand the specific business plan and underwriting assumptions for the project. Carefully review projected costs, revenues, appreciation rates, capitalization rates, debt terms, occupancy rates, and other financial projections to determine if they are reasonable. Stress test assumptions to account for economic fluctuations. What would be the worst-case scenario? How devastating would it be for your investment? Ensure the sponsors have a sound method for their projections.

Be wary of sponsors making unrealistic projections since their goal may be collecting large fees, not the long-term health of the syndicate. Experienced syndicators tend to outline conservative growth estimates and focus more on downside protection than maximizing projected returns.

Property Fundamentals

Research all details available on the property being considered: location, asset class (e.g., multifamily, retail, office, etc.), history of tenancy, occupancy rates, debt levels, cap rates, and net operating income. Evaluate current leases to determine revenue stability. Analyze the industries of the tenants to account for economic risks; diversification among the tenants, if possible, is a plus.

Generally, properties with higher occupancy rates in growing metro areas make safer investments. Territories experiencing population and job growth and solid market fundamentals will be more likely to have sustainable rental demand and better appreciation over the investment term.

Fees

Syndicates can charge fees for services like acquisition, asset management, property disposition, refinancing coordination, tenant coordination, audit preparation, and capital raising. Carefully analyze the fee structure to determine the overall costs so that the sponsors’ incentives are properly aligned with yours.

Note

Reputable sponsors focus more on the success of the investment over quick profits from excessive fees. The fee terms should be clearly explained in the offering documents.

Benefits of Investing in Real Estate Syndications

Access to Institutional-Grade Properties

Real estate syndication can enable the pooling of capital for single high-quality properties worth potentially $10 million to $100+ million, sums out of reach for most individual investors.

Top sponsors leverage extensive networks and industry expertise to source exclusive off-market prospects before they hit the listings. Pooling funds gives you a seat at the table for investing in class A institutional properties, usually only accessible to large institutions or REITs.

Potential for Leveraged Returns

Professionally managed real estate syndicates can have strong leveraged returns. Cash-on-cash yields from rental income and back-end appreciation tend to increase over time.

When leverage is strategically employed, annual returns can be doubled or tripled. The ability to employ leverage to enhance equity returns is a key benefit driving investors to commercial real estate investing.

Tax Benefits

Commercial real estate investments can increase after-tax returns through depreciation shields, deferred capital gains, and cost recovery deductions. Capital gains taxes can also be deferred through 1031 exchanges when there’s a sale of the new property.

Important

For assets held until death, heirs can typically inherit properties at a stepped-up cost basis, greatly reducing tax exposure. Savvy syndicate sponsors structure deals to maximize your after-tax cash flow and returns.

Diversification

Investing in real estate helps to diversify your portfolio, and its returns fluctuate according to their own rhythm. Their returns don’t necessarily correlate with those of stocks and bonds.

In addition, property values and rent tend to rise with inflation over time. This provides a potential hedge when rising prices are affecting traditional securities. Hence, diversifying into private real estate investments can lower a portfolio’s risk-adjusted returns.

Passive Income Generation

Most real estate syndicates only need you to invest your capital if you’re a limited partner. There are ordinarily no further obligations. Thus, you can passively earn attractive property yields without personally sourcing or managing assets.

Risks and Challenges of Investing in Real Estate Syndicates

Illiquidity of Investments

The illiquid nature of private real estate investments is perhaps their biggest drawback. Most syndicates have a projected hold period of five to seven years or more. Your investment, then, will likely remain locked up for the entire duration with little opportunity to exit early.

Nevertheless, events in your life may mean that you need your funds sooner. Without a secondary market, the only option would be finding a buyer to take over the remaining stake—a difficult task. Thus, you have to calculate this as part of your risk and be comfortable with your money being out of reach during the period of the syndicate deal.

Reliance on Sponsor Credibility and Performance

Investors depend wholly on the skill and experience of the syndication sponsor for their returns. Even with the best due diligence, sponsors may fail to execute business plans after unforeseen events.

Subpar operators could mismanage properties, and soon, they will be over-leveraged, have high vacancies, or require unexpected capital infusions. Transparency and clear, consistent communication about property operations will be key. In addition, ill-equipped sponsors can spread themselves too thin across many projects. Alternatively, there’s the chance of fraud.

Assessing the sponsor’s character and competence takes significant due diligence. It would be best to analyze past deals, speak with industry references, and verify all background claims. Look for key signs of integrity: strict adherence to Securities and Exchange Commission (SEC) guidelines, transparent reporting, aligned incentives, and testimonials from previous investors. If the sponsor isn’t fully transparent or if you find reasons to think the sponsor isn’t fully trustworthy, walk away. There are many investment vehicles available that won’t leave you with misgivings at the start.

Despite your best efforts, newer syndicators can still be difficult to evaluate until they have finished a few successful projects. As such, the risk of a problem sponsor is another reason why it’s important to diversify across different syndicates or other investment vehicles as part of a long-term, prudent investment plan.

Conflicts of Interest

Syndication fees can pose conflicts of interest regarding how the sponsor is compensated. Sponsors may choose to flip properties prematurely instead of doing what’s best for the asset over the long term. Alternatively, they may over-leverage properties by pulling out cash, leading to a greater risk of default.

Also, the sponsor may decide to act as a broker on both the buying and selling sides, drawing commissions from both transactions. Look for fee terms to ensure a fair alignment between your interests and those of the sponsors with incentives like profit splits.

Structuring a Real Estate Syndicate

Limited Liability Companies (LLCs)

Limited liability companies (LLCs) are favored for their simplicity and flexibility in managing and protecting against personal liability. In an LLC, there are generally two key roles: the general partner (GP) or syndicator, who manages the investment, and the limited partners (LPs), the investors. The GP handles acquiring, managing, and eventually selling the property, while LPs provide capital and share in the profits, usually without participating in day-to-day management.

All members of the LLC have an ownership interest in the company and enjoy limited liability protection. This means that your personal assets are generally protected from the company’s liabilities.

Limited Partnerships (LPs)

LPs are like LLCs, but some legal and tax differences exist. In a limited partnership, there are still GPs and LPs. However, GPs have unlimited liability and are responsible for managing the partnership, while LPs have limited liability and typically don’t participate in management.

LPs can offer more favorable treatment for passive losses, which can be particularly beneficial in some real estate investments. As an LP, you may be able to use passive activity losses to offset passive income, a benefit that can be more restricted in LLCs. Moreover, income distributed to LPs is typically not subject to self-employment tax, though LLC members may be liable for this tax for their share of the LLC’s income. This difference can result in significant tax savings for LPs.

Corporations

Corporations are less common in real estate syndication but can offer more structure, with shareholders, directors, and officers. As an investor, you’ll become a shareholder with a stake in the corporation. Directors make major decisions, while officers handle daily operations. This structure offers liability protection but can be less tax-efficient and more complex for real estate investments.

Trusts

Trusts are used in specific scenarios, like estate planning or when specific legal protections are desired. In these cases, the trustee manages the property held in the trust, while the beneficiaries (investors) receive income generated by the trust’s assets.

Types of Real Estate Syndicates

Real estate syndicates come in several forms, each with unique risks and rewards in particular circumstances. Understanding these differences is key to choosing the right investment path.

Debt Syndicate

In debt (mortgage) syndication, investors essentially act as lenders. They pool their money to offer loans for real estate projects. The borrower could be a property owner or a developer. The investment is secured by the property itself, much like a residential mortgage. Investors earn money from the interest paid on the loan.

The risk with debt investing is generally lower compared with equity syndications since creditors are prioritized in repayments. In equity investments, the profit potential can be higher. However, the potential returns are usually capped at the agreed-upon interest rate.

Equity Real Estate Syndicate

Equity syndicates are the most common, involving direct fractional ownership in an investment property. Investors receive periodic income distributions and back-end proceeds from the eventual sale of the asset.

Returns depend on how well the property performs and the appreciation of its value over time. Investors receive returns as rental income and a share of the property’s sale price once sold. The syndicator usually manages the property and deals with tenants, maintenance, and other operational details.

Equity syndicates carry a higher risk than debt but benefit from leverage and upside potential. The risk in equity syndicates is typically higher since returns depend on the property’s performance, which is related to conditions in the market. However, the potential for higher returns is significant, especially if the property increases in value.

Commercial vs. Residential Real Estate Syndication

Commercial syndication involves apartments, office buildings, retail centers, self-storage, and other income-generating properties. These assets depend on business activity, which can fluctuate in line with the economy. However, the longer-term leases generally used for these properties can add income stability.

Residential syndicates focus more on home rentals, single-family houses, or small multifamily buildings. Residential investments can have higher vacancy rates and expenses without commercial lease contracts, making underwriting more complex.

Land Syndicate

Land syndication is the purchasing of vacant land for future development or farming. Investors in these syndicates anticipate that the land will increase in value as the demand for housing, commercial space, or agriculture grows. Given the unpredictability of correctly speculating on land value, these investments are a higher risk.

Affordable Housing Syndicate

Some sponsors specialize in affordable housing apartment communities that qualify for tax credits or other government subsidies. These investments support socially responsible objectives around accessible housing and come with downside protection and stable, capped returns. What you get in exchange is less in potential profits.

Opportunity Zone Syndicate

These investments target economically distressed areas designated as qualified opportunity zones, which use compelling tax incentives to bring in investors. Capital gains can be deferred until 2026 and potentially exempt from 15% of the gains if held for seven years. Opportunity zone deals can provide outsized returns, but they have potentially greater risks in unproven markets.

Evaluating Sponsor Credibility and Track Record

Conducting thorough sponsor due diligence is important before your involvement in a syndication. Warning signs like exaggerated return claims, frequent missteps, or lack of transparency should raise red flags.

Here are signs of sponsor credibility:

• Five or more years of real estate investing experience across several market cycles
• Strong industry reputation with references from investors, brokers, and partners
• Adherence to securities regulations and accredited investor requirements
• Willingness to share documents like past financial reports, projections, and private placement memorandums (PPM)
• Evidence of successful exits and realized returns from previous projects

Verify sponsor backgrounds on the Financial Industry Regulatory Authority’s (FINRA’s) BrokerCheck and confirm SEC-registered investment advisor status. Trustworthy sponsors, careful with their reputation, will focus more on long-term returns than quickly racking up fees.

Reviewing Investment Strategy and Projections

The syndicate’s business plan and projections should demonstrate a deep knowledge of the market and focus on achievable targets. Here are key areas to evaluate:

• Conservative revenue and expense growth assumptions
• Detailed explanations justifying all projection line items
• An analysis testing diverse economic scenarios
• Leverage levels below 50% loan-to-value (LTV) ratio
• Minimum five-year hold period for suitable asset appreciation

Request examples of underwriting for past investments. Note, however, that sponsors may have proprietary models not shared publicly. Nevertheless, the methodology and care taken should reflect experience and expertise. Reviewing strategy and forecasts prevents speculation risk and builds trust around return goals.

Joining a Syndicate

Once satisfied with your due diligence, you can start with a few key steps.

For most syndicates, you must have accredited investor status. If so, confirm that you qualify as an accredited investor: You have had a minimum of $200,000 in individual income for the past two years or $300,000 in household income, and there’s an expectation that you can maintain it. Or you have a net worth of over $1 million, excluding your primary residence (with a spouse or partner). For entities, $5 million in assets also clears the eligibility bar. Meeting SEC accreditation standards makes investors automatically considered “sophisticated” enough to evaluate complex deals.

Next, request access to the PPM, which has comprehensive details on offering terms, property and market characteristics, risks, sponsor backgrounds, and more. Legal disclaimers are also given that emphasize how the investment is speculative, illiquid, and only suitable for those willing to accept high risk for higher returns.

Once you’re agreeable to the proposed terms and have carefully reviewed them with a financial advisor or lawyer (preferably both), you can sign the required paperwork. Subscriptions are typically filled on a first-come basis once investment capital minimums are met, usually $50,000 to $250,000 for individual investors. Partners with active syndicate roles may put in more given their added responsibilities.

Finally, fund your investment commitment when required by the syndicators, which is once the deal becomes fully subscribed. Consider diversifying across several syndicates at appropriate allocation sizes to mitigate isolated property risk.

Syndication vs. Other Real Estate Investments

Real Estate Investment Trusts (REITs)

REITs are companies that own and operate real estate assets and trade like stocks on public exchanges. Investors can buy shares in REITs to participate in portfolios of very different property types, with many REIT shares listed and traded on major stock exchanges. REITs are legally required to pay investors 90% of their operating income in the form of dividends each year.

• Pros: Higher liquidity; lower investment minimums; professional management; stable cash flow
• Cons: No influence on assets; vulnerable to market swings; lower returns

Direct Rental Property Ownership

You might also choose to acquire rental properties yourself, picking among single-family homes, apartments, retail store locations, and more. You would own these assets and manage them without any fund sponsor involvement. Returns depend greatly on location, asset selection, and management skills, either yours or a property manager that you hire.

• Pros: Greater control; all gains realized; pride in ownership
• Cons: Hands-on management; unlimited liability; smaller properties

Real Estate Crowdfunding

A newer option, real estate crowdfunding, essentially enables syndication sponsorship roles to be re-created by an online platform company. These are often open to non-accredited investors. Sponsors use crowdfunding platforms to source deals, raise capital, and manage regulatory paperwork. Returns may be higher given the added risk from less seasoned operators or projects that couldn’t find more traditional lending sources.

• Pros: Low investment minimums (can be as low as $1,000); online access and ease of selection; pre-vetted deals
• Cons: Potentially untested or poorly vetted sponsors and platforms; fees can be higher; offerings may be more speculative or high risk

Example of Real Estate Syndicate

The Dental Real Estate Syndicate specializes in acquiring and managing high-quality, geographically diversified dental real estate. They handle all aspects of property management and maintenance while overseeing financial operations, including the distribution of tax-advantaged quarterly dividends to investors. In 2025, Dental announced it would expand into the Southeastern and Southern Sunbelt regions.

In February 2025, the company published a survey of dentists who own dental real estate. The survey was sent to 2,000 dentists, with 431 respondents (22%) participating. Most respondents indicated that they acquired real estate to maintain control over their practice location and financial future. However, 81% stated they were unlikely to acquire additional dental real estate, reflecting concerns about management complexity, financial risks, and market uncertainties. For this reason, syndicates like Dental can exist to not only help alleviate the financial burden of acquiring real estate but oversee operational functions as well.

What Are the Potential Tax Benefits of Real Estate Syndication?

The main tax benefits are depreciation deductions that lower your taxable income and deferred capital gains tax when properties are sold. You can also conduct 1031 exchanges to defer taxes after sales by reinvesting proceeds into another property. Under certain conditions, investors in real estate syndicates may be eligible for a pass-through tax deduction, allowing you to deduct up to 20% of your business income.

What Happens If I Need to Sell My Stake in a Real Estate Syndicate?

Liquidity is very limited since most syndications have five- to seven-year timelines. Trying to sell shares before the end of that period would be extremely difficult without a buyer lined up. This is one of the tradeoffs with this kind of investment, so you’ll have to be comfortable with your capital being unusable for the syndication period. In certain cases, a syndicate might refinance the property, providing a partial cash-out option for you.

Can Anyone Invest in a Real Estate Syndicate?

No. Current SEC regulations generally require investors to be accredited ($200,000 individual income, $300,000 joint income, or $1 million net worth) before buying shares in riskier, illiquid private real estate offerings. This is because of their more complex structure and illiquidity. Non-accredited investors can explore some private offerings in real estate; they also have options like REITs and crowdfunding.

The Bottom Line

Real estate syndicates allow investors to pool resources and access larger properties, providing the potential for passive income and significant tax benefits, such as depreciation and pass-through deductions. Meanwhile, the property would be managed by professional syndicators who handle all aspects except for your initial capital investment. Nevertheless, you should be clear about the risks involved, including the illiquidity of these investments, reliance on the syndicate’s performance, and possible conflicts of interest.

To make an informed decision, conducting thorough due diligence is key. This includes scrutinizing the syndication sponsors’ track record and credibility, understanding the property fundamentals, and evaluating the investment strategy and fee structure. While real estate syndicates offer the potential for attractive returns and portfolio diversification, they require a commitment to long-term investment and an understanding of their complex nature, making them more suited to investors prepared for a hands-off yet significant commitment in real estate.

Native Americans are subject to federal income taxes, while tribes set their own sales taxes

Fact checked by Suzanne Kvilhaug
Reviewed by Andy Smith

Some forms of taxation can work differently for Native American people because of their unique status within the United States.

Tribes, as sovereign governments, are exempt from taxes. But, in general, individuals are expected to submit the same income taxes as others living in the U.S. However, there are exceptions to this general rule.

For example, lands held in trust by the government for the benefit of Native Americans are spared from taxes. Native Americans who own some of this land don’t have to pay property taxes on it.

Key Takeaways

• As sovereign governments, tribes set their own sales taxes.
• Individuals, in contrast, are required to pay federal taxes to the U.S. government.
• Revenue from lands held in trust is not taxed by the U.S. government.

Individuals and Tribes

Native Americans are expected to pay taxes to the federal government.

In the eyes of the U.S. government, all members of tribes were recognized as citizens beginning in 1924 with the passage of the Indian Citizenship Act. That law means Native Americans are expected to pay federal income tax.

But there’s an exception. Notably, tribal members do not pay taxes on income from lands held in trust, where the title is held by the U.S. Department of the Interior on behalf of tribes or individuals.

The U.S. holds around 55 million surface acres and 59 million acres of subsurface mineral estate in trust. The money that this land generates is intended to benefit Native Americans, and it is not taxed. This means that if a tribe operates a casino on trust land, it doesn’t pay taxes on that land or the proceeds.

Important

In contrast to individual tribal members, federally recognized tribes are sovereign and therefore are immune from tax obligations. This means that the tribes themselves do not pay federal or state taxes.

The tribal tax base is typically the consequence of agreements made with states and local governments. Because their lands are held in trust, tribes do not levy property taxes. This leaves them without the usual sources of tax revenue for a government. As a result, many tribes have turned to sales and excise taxes.

Due to the high levels of poverty and unemployment on tribal lands, advocates argue that these sources of tax revenue are inadequate to fund basic tribal government services. In practice, different tribes have different policies, meaning that some Indigenous people are released from obligations like sales taxes for purchases that occur on reservations, though for transactions outside of reservations, they would still pay local and state sales taxes.

Federal Income Taxes

For the most part, income taxes for Native Americans are the same as for other U.S. citizens.

The major exception is for income derived from a specific trust or treaty. The United States holds land as trust assets for tribes, which can be leased out to corporations. Federal taxes are not levied on income from such business arrangements, though interest income, capital gain income, and some royalties are subject to federal and state taxes.

State Taxes

As with federal taxes, tribes do not have to pay state taxes. By law, without explicit permission from Congress, states cannot impose taxes on tribes.

But just like the federal government, a state can individually tax Native Americans who live within the state’s territory, rather than on a reservation.

Sales Taxes

Tribes themselves are exempt from sales taxes for purchases on reservation land.

However, states can collect sales tax from transactions with nontribal members even when the point of purchase occurs on tribal land. But the tribal government doesn’t have responsibility for collecting the tax.

Some have argued that these taxes represent “the latest variation on centuries of wealth extraction” because the collection of these taxes by states discourages tribal governments from levying their own tax for fear of scaring away economic activity. Instead, many tribes have struck revenue-sharing agreements with state governments. Each year, these practices siphon hundreds of millions of dollars away from tribal governments, according to an estimate from The Center for Public Integrity, an investigative reporting organization.

Property Taxes

Real estate taxes rest on the same criteria as other forms of tax liability.

Native American lands held in trust are considered immune from taxation. However, since it is the trust or sovereignty status that establishes the immunity, Native Americans would be expected to pay property taxes on lands not held in trust or on reservations. 

Tribal Casinos

Tribal casinos are a significant revenue stream for a number of tribes.

Tribal casinos are likewise free from U.S. taxes. However, for the right to operate, tribal casinos sometimes pay “gaming exclusivity fees” based on profits. These can be significant sums.

For example, Oklahoma collected over $210 million in fees for tribal gaming exclusivity rights for fiscal year 2024. Those fees came from $3.47 billion in revenue, according to an estimate from the state of Oklahoma.

Do Native Americans Pay Property Taxes on a Reservation?

Native Americans living on reservations are exempt from U.S. property taxes. These lands are usually held in tax-exempt trusts.

Do Native Americans Pay Taxes on Cars?

If the sale of a car takes place in Indian Country, then the Native American will not need to pay tax on the vehicle. But even on reservation land, Native Americans have to pay fuel taxes in most states.

Do Native Americans File Tax Returns?

Yes, Native Americans have to file tax returns. The Internal Revenue Service (IRS) notes that “As a general rule, Native Americans are subject to federal income tax just like every other American.”

Could Native American Tax Statuses Change in 2025?

President Donald Trump’s administration could have a number of impacts on Native Americans. Tax issues include the status of tribally chartered corporations and clarification of the Tribal General Welfare Exclusion Act of 2014.

The Bottom Line

U.S. recognition of tribal sovereignty presents a potentially confusing tax situation. In general, though, tribal members are expected to pay federal tax, despite some exemptions—such as sales taxes for interactions on tribal land, or income from land held in trust. Tribal governments, on the other hand, cannot be taxed by either states or the federal government.

Fact checked by Vikki Velasquez
Reviewed by Samantha Silberstein

Many traditional gender roles have disappeared but one gender-based distinction remains: the wage gap. Women earned about 84 cents in 2023 for every dollar men earned as reported by the U.S. Bureau of Labor Statistics. 

The Investopedia and REAL SIMPLE 2024 Her Money Mindset survey found that 54% of women surveyed said they were struggling to cover at least one monthly expense and 44% said they had just $250 or less after covering bills each month. Sixty percent of women had never asked for a raise and fewer than one in four women who had talked with their friends about money were transparent about how much they earned.

Women can take control of their incomes, however, and they can support other women who are doing the same. Individual actions can build barrier-busting wealth.

Key Takeaways

• The wage gap refers to the disparity in earnings between men and women in the workplace.
• Societal factors play a significant role in perpetuating the wage gap.
• Negotiation skills are crucial for women to achieve fair compensation and benefits.
• Skills development and education can help bridge the wage gap.
• Pay equity depends on improving workplace policies and practices.

Understanding the Gender Wage Gap

The gender wage gap is the difference between what men and women earn. The most common way to analyze and express the gap is to measure the difference in median earnings of women versus men.

Congress and state governments have passed several laws to address the gap. The Equal Pay Act of 1963 prohibits employers from paying men and women different wages for performing similar duties under similar conditions. The gender pay gap persists despite these efforts.

Women earned 71 cents for every dollar earned by men in the United States in 2023, according to a 2025 report released by the National Women’s Law Center. The difference varies widely by region, however. California and Vermont have the smallest gaps where women earn 85 cents or more for every dollar earned by men. Women in Louisiana and Utah lag far behind, earning 71 and 73 cents respectively.

Societal Factors

Society has come a long way in treating men and women fairly but biases take generations to entirely disappear and women still face numerous challenges.

Gender Discrimination

Women generally have to work harder to gain equal recognition and women who advocate for more compensation or better treatment are often cast as troublesome or unaccommodating.

Racial Discrimination

The wage gap is worse for many women of color than it is for White women. Black and Latina women earn median weekly pay of $978 and $844 respectively as of the fourth quarter of 2024, according to racial wage gap data from the U.S. Bureau of Labor Statistics. This compared with median weekly earnings of $1,094 for white women and $1,321 for white men.

Motherhood

Having a baby also has a significant impact on a woman’s earnings. Research from the U.S. Census Bureau indicates that the gender pay gap within a couple doubles between two years before a child’s birth and one year after. The wage gap continues to grow until the child is 10 years old, representing a massive loss of income over the mother’s career.

Occupational Segregation

Unequal compensation for equal work is a core issue but access to equal work is also a primary driver. The National Partnership for Women and Families found that women made up 63.6% of the workforce in the 20 lowest-paying jobs in 2023 compared to only 30% of the workforce in the 20 highest-paying jobs.

Unpaid Family Care

Women are more likely than men to take career breaks to care for aging or sick family members. Long breaks in employment can raise questions with prospective employers or cause women to lag behind industry trends and new skills, further depressing wages.

Impact of Workplace Policies

Many federal and state laws prohibit discrimination in pay but certain workplace conditions persist to prevent the gender wage gap from shrinking.

Salary History

Some states prohibit employers from asking prospective employees about their salary history and research has found that this ban has helped narrow the wage gap. Many companies work around this by asking applicants for pay expectations, however. This can lead to a perpetuation of women being underpaid if they don’t feel comfortable asking for a higher salary.

Pay Transparency

The historical secrecy of salaries and its taboo nature as a topic of discussion have frequently left women in the dark about how large the gender wage gap is. The National Bureau of Economic Research found that pay transparency laws reduced the gap by 20% to 40%.

Individual vs. Group Salary Negotiations

Data also shows that women fare better with collectively negotiated compensation. Women in unions earn an average of 89.6% of their male counterparts’ wages compared to non-unionized women earning 82% of their male counterparts’ wages.

Note

The gender wage gap doesn’t just lead to a smaller paycheck for women every two weeks. It has lifelong consequences. Female workers amass less wealth than their male counterparts and have less financial stability as they earn less during any given period.

Talk About What You Earn

Reducing the gender wage gap is a complex problem but there are some ways in which women can help themselves and each other to reach wage parity with men.

The Investopedia and REAL SIMPLE 2024 Her Money Mindset survey found that only 15% of the women who talk about money with their friends will mention if they’re asking for a raise or promotion and only 24% discuss how much they earn.

Discussing raises and salaries can be very beneficial for all parties involved and it can be a powerful tool. You can learn a lot by comparing notes: how often and how much people are negotiating in raises, what sort of salary and bonus structures are out there, and whether you’re making less than market standards.

Note

Thirty-one percent of women who took the Her Money Mindset survey said they think it’s important for women to talk to their friends about money.

The hardest part may be breaking the ice but you can bring up the issue by casually incorporating a financial topic into a conversation to get a pulse for how your friends feel. It also can be helpful to set ground rules such as agreeing to confidentiality.

Negotiate Higher Compensation

The 2024 Her Money Mindset survey found that 60% of women have never asked for a raise and 69% have never requested a promotion. Women with higher household income levels were more likely to have asked for a raise or promotion.

“I don’t think people realize the impact that the gender wealth gap can have on our lifetime earnings,” says Gloria Carcia Cisneros, a certified financial planner and wealth manager at Lourd Murray. “When you start with a lower base salary, it means that for all the subsequent pay increases, you are getting less than someone who is getting the same percentage increase but has negotiated higher pay from the beginning.” 

She also notes that companies expect candidates to negotiate. “The earlier the better. Make sure you start negotiating in your 20s and 30s to take advantage of the exponential growth.”  

Note

Investopedia and REAL SIMPLE’s survey found that 30% of women in the millennial generation and younger have a goal to get a raise and/or promotion in the next three years.

One negotiating tip from Michelle Kruger, certified financial planner and senior financial planner at Gratus Capital, is using benefits as a tool for negotiating salary. “Bring cost differences like an increased health insurance premium or a lower 401(k) match to your potential new employer’s attention,” Kruger says. “Calculate the value of the lost benefits to you and ask for a commensurate increase in the offer.”

Consider these key strategies when asking for a raise:

1. Prepare in advance: Collect data for comparable jobs at your company and in your industry. Plan the key points you want to make and be ready for pushback.
2. Be assertive: Treat your boss with respect but ensure that it’s mutual and advocate for yourself.
3. Practice: Ask a friend to roleplay your boss and rehearse your talking points. Make sure they throw you some curveball questions.
4. Negotiate: Bosses often have budget constraints that limit how flexible they can be. Push for your desired salary but be ready to make concessions elsewhere such as additional paid time off or other benefits.
5. Time your request: Set yourself up for success by asking for a raise when it’s likely you’ll get a positive reaction. You’ll face more resistance if your company just went through a round of layoffs or the economy is trending down.

Enhance Your Skills and Education

The next step is to bolster what you can do at work by enhancing your skills or seeking further education. Learning new skills can help break down occupational segregation in many cases.

Office managers and executive assistants are often women, many of whom have extensive business experience and a wide range of abilities. They end up pigeonholed in administrative jobs, however, limiting their earning potential. They can advance their careers and shrink the wage gap by developing specialized skills in accounting, human resources, or project management.

Women have a range of options for building their skills and resumes:

• Professional certifications: Professional certifications offer a concrete way to increase earning potential by demonstrating specific skills and qualifications to prospective employers.
• Company-sponsored development: Many companies cover some or all of the costs of professional development courses. Everyone benefits because employees learn more skills and employers gain access to those skills.
• Returning to school: Going back to college might seem daunting but ongoing education can fit any schedule with the proliferation of online learning. Finishing a degree or getting a new one can open up opportunities to earn more.

Build Wealth by Investing

Setting money aside for investments can be hard when you’re juggling multiple financial goals or just trying to make ends meet. Investing helps women close the wage gap in several ways, however.

It allows women more freedom to make career choices as they amass more wealth. Women can explore more lucrative opportunities and advance professionally when they’re not tied to a job just to keep bills paid,

Many types of investments don’t just grow over time. They also generate income. Passive income can supplement wages from employment and increase overall wealth whether it’s dividends from stocks or rent earned from real estate.

A high-yield savings account can be a good option if you’re just starting out. You’ll see compounding gains from interest as time goes on. The money is FDIC-insured so there’s no risk of loss. And it’s easy to access if an emergency comes up and you need the funds. You can diversify into other investments as time goes on:

• Index funds spread your money across groups of different stocks, insulating you from the risk of one company hurting your portfolio.
• Individual stocks can perform well but require more research and active management.
• Bonds are a relatively stable investment but they have smaller payoffs and take time to mature.
• Crypto has the potential for large gains but the lack of regulation introduces significant risk.
• Real estate often has a high cost of entry but it generates income over time.

Financial advisors generally recommend a diverse portfolio based on the investor’s age. Younger investors can afford more risk. Older investors tend to move toward more stable choices like bonds.

Support Women in Leadership

Women made up 46.9% of the American workforce in 2024 but they remain underrepresented in the upper echelons of business. Only 10.6% of CEOs and 30.4% of board members at Fortune 500 companies are female. Breaking through the glass ceiling isn’t easy, but it has an immense payoff.

Elise Awwad serves as DeVry University’s president and CEO. She started her career with the company as an admissions advisor. Awwad says that while working her way up in the company, “I recognized the need to support other women in the workplace…The male-dominated culture is still prevalent in many tech companies and can make women feel like they don’t belong.” 

She established EDGE (Empowerment, Diversity, Growth, and Excellence) in 2019, a network of leadership scholars and professionals who promote the enhanced career experience and advancement of women in leadership roles at DeVry and in the broader community. She also spearheaded DeVry’s Women+Tech Scholars program, created to “empower women through mentorship, job search resources, credentialing, and scholarships, encouraging them to take the first step toward a tech-focused career.”

Debbie Sanders, COO of Visory Health, also notes the importance of advocacy and support for career advancement. “Look for a mentor and look for positions and jobs where you feel supported and will be respected and compensated for the great ideas and hard work you put forth,” Sanders says. “Getting places in your career usually means not only do you need to excel at what you do but also have someone in an executive position to support you as internal politics increase.” 

What Countries Have the Highest Gender Wage Gap?

Not every country provides reliable wage data but Korea had the highest gender pay gap at 31.2% in 2022. The only other country above 25% was Israel at 25.4%, according to the Organisation for Economic Cooperation and Development (OECD).

Which Countries Have the Lowest Gender Wage Gap?

Belgium’s gender wage gap of 1.2% was the smallest in the world in 2022 based on the same OECD data. It’s joined by four other countries under 5%: Costa Rica at 1.4%, Colombia at 1.9%, Bulgaria at 2.5%, and Norway at 4.5%.

How Has the Gender Pay Gap Changed Over Time?

Women made significant gains in the later part of the 20th century. Pew Research found that women’s earnings relative to men’s rose from 65% to 80% between 1982 and 2002. The gap remained relatively stable, hovering between 80% and 85%, over the next 20 years, however.

Researchers haven’t found evidence of any single factor causing the stagnation.

The Bottom Line

There’s no quick solution to closing the gender wage gap and much of the struggle unfortunately involves deeply rooted cultural biases. Every woman has to advocate for herself by negotiating higher pay and building personal wealth. Women can fight collectively to empower their peers in leadership and lift each other up.

Systemic change takes years but we can build a workforce where our daughters and granddaughters receive equal pay with our sons and grandsons through continued efforts for equality.

It looks promising but existing AI applications still require human oversight

Fact checked by Vikki Velasquez
Reviewed by JeFreda R. Brown

Artificial intelligence (AI) technology is making a big impact on businesses in many respects, including the preparation and filing of business taxes.

The Internal Revenue Service (IRS) is evaluating AI’s potential applications for tax administration while considering how to minimize any associated risks.

The technology promises businesses easier tax prep and filing, while streamlined tax administration could mean shorter customer wait times and more efficient services.

However, AI in business tax applications has its limitations and concerns some professionals. Human expertise and oversight are still necessary.

Key Takeaways

• AI is setting up to play a significant future role in streamlining the tax preparation process for businesses.
• It may help to ensure tax compliance and identify potential tax risks and errors.
• AI does help improve the accuracy and efficiency of categorizing transactions and data processing.
• But AI’s ability to analyze and interpret complex business tax scenarios is limited, so human oversight and expertise remain crucial.
• There are several tax prep software options available on the market that incorporate AI, with more startups and solutions on the horizon.

How AI Can Help Tax Preparation and Filing

AI-powered call bots and online chatbots, such as those used by the IRS and H&R Block, offer to assist business taxpayers with answers to frequently asked questions and other routine tax prep queries.

With the goal of facilitating and enhancing 24/7 customer service, they’re used to shorten taxpayer wait times and free human agents to focus on more complex cases.

Automation enabled by artificial intelligence is also speeding up the delivery of taxpayer refunds by the IRS. Since 2022, the agency has used AI to digitize paper tax returns and accelerate their processing.

AI-Based Tax Preparation Software

Many tax software products incorporate AI to streamline the tax preparation process for business taxpayers.

However, due to the often complex nature of business taxes, most tax software uses AI only as a virtual assistant or for specific applications. It does not use it to make tax calculations.

Furthermore, some of those involved in business tax prep and filing have concluded that AI can’t interpret data effectively or make useful recommendations yet.

There’s no doubt that ongoing, powerful advances in AI will drive greater and better use of it in tax prep software.

Examples

Intuit Assist, an AI assistant in certain TurboTax and Quickbooks software packages, uses traditional and generative AI that answers tax questions, analyzes data to find deductions and credits, and checks for mistakes in tax returns.

H&R Block, offers AI Tax Assist, which provides AI-generative chat at any stage of the tax preparation process.

Reconcile is software with AI-powered tools for entrepreneurs and individuals who manage multiple income streams. It offers tax assistance and broader financial assistance. Its chatbot answers questions and provides custom recommendations.

FlyFin is an AI- and CPA-powered tax filing product aimed at self-employed individuals and business owners. The AI tool categorizes expenses, uncovers tax deductions, and answers questions.

One AI business tax assistant with more to offer is TaxGPT. It handles time consuming tax research to update you on regulatory changes and ensure tax compliance, analyzes your business tax documents, and secures them for document management.

TaxGPT creates customized content for internal emails or IRS communications and produces tax documents and reports for your business. It helps you to respond to inquiries from clients, vendors, and other business contacts quickly and efficiently.

AI-Powered Business Tax Software
Software	Plans and Pricing	Target User	Overview
Intuit Assist	Varies by software and pricing package	Self-employed individuals and small business owners	AI assistant included in select TurboTax and QuickBooks plans
H&R Block AI Tax Assist	Included in $55 Deluxe Online package and higher	Self-employed individuals and small business owners	AI assistant that provides 24/7 real-time tax preparation support
Reconcile	Monthly fee of $30	Entrepreneurs and individuals managing multiple income streams	AI tax assistant, automated bookkeeping, and AI-powered financial analysis
FlyFin	Pricing information available in the app	Freelancers, self-employed individuals, and business owners	AI-powered tax tools plus review and tax filing by a CPA
TaxGPT	Contact sales team for pricing	Small, mid-market, and enterprise businesses	AI-powered tax support for research, document management, and communications

Tax Compliance

AI-driven analysis and automated transaction categorization can help businesses with tax compliance and to file their taxes on time.

TaxJar is software that aims to help small to midsized ecommerce businesses manage their sales tax compliance across jurisdictions. It automatically calculates sales tax rates, classifies products, and does multistate filing.

It can also integrate with different ecommerce and enterprise resource planning (ERP) platforms.

AI that’s able to process and analyze vast amounts of data will also be able to keep track of changing regulations and tax requirements to ensure that businesses are in compliance.

Closing the Tax Gap

While AI has improved the efficiency of customer service and data retrieval for businesses, it’s also helping the IRS combat fraud and close the gap between businesses that pay the taxes that they owe and those that do not. The agency uses AI to pinpoint large partnership returns—particularly difficult to assess due to their complexities—for audits.

Benefits and Limitations of AI for Business Taxes

Benefits

AI can improve the tax preparation and filing process for businesses in several ways:

• Streamlining data: AI-powered business tax software tools can import and analyze financial or sales data from other sources, including customer relationship management (CRM), ERP, and ecommerce platforms.
• Increasing accuracy: AI can keep up to date on changing regulations and is a useful tool for confirming regulatory compliance in relevant jurisdictions and filing years for things like sales tax and specific tax provisions.
• Driving efficiency: Data entry and organization tasks such as categorizing expenses and sales can be automated with AI to save businesses time.

Limitations

However, AI technology also presents potential issues and raises concern:

• Potential to present false information: AI has generated errors and nonsensical information (referred to as AI hallucination), which can have serious implications for business tax filing.
• Limited ability to analyze and interpret: Generative AI models are limited in their ability to analyze tax regulations and interpret context or relationships between tax code sections that might override one another. As such, they are not a substitute for consulting a trained tax expert, particularly for a complex tax situation.

Important

Business taxpayers should not rely exclusively on AI to prepare or file their taxes.

The Future of AI for Business Taxes

As AI technology continues to advance, some trends are emerging for AI-powered business tax applications.

For one, more and more tax agencies are using AI virtual assistants to cut down on customer queries so that their human agents can focus their attention on addressing more complex cases.

However, there is a lot of room for improvement, as many AI tools generate incorrect or irrelevant answers to straightforward tax queries.

Second, there are also more AI startups looking to harness AI for business tax preparation. One example is april, a company offering embeddable tax filing software to the fintech, financial services, and employee benefits industries.

Third, the potential impact that AI could have on reducing the effort and expense for businesses of tax preparation and filing could be huge.

The Taxpayer Advocate Service (TAS) estimated that the average small business spent roughly 82 hours and $2,900 on tax compliance in the 2022 financial year, while business entities in the U.S. spent a cumulative 1.14 billion hours and $48.3 billion on tax preparation.

In 2024, the IRS estimated that it took a business 105 hours on average to complete Form 1120, the tax return for corporations. Small corporations spent 55 hours working on it while large corporations took 830 hours (more than 20 weeks) to get it done.

And as for what businesses had to spend, according to the Tax Foundation, “The compliance cost of business (corporate) income tax returns is nearly $119 billion. Their quarterly tax filings cost $44.7 billion to comply with while depreciation schedules cost another $25 billion.”

As such, ongoing AI improvements in accuracy and efficiency could have a major material impact on the day-to-day operations and budgets of businesses.

What Are the Benefits of AI-Based Tax Software Over Regular Tax Software?

AI promises benefits such as increased efficiency and accuracy for tax filing, as well as the streamlined processing of financial and sales data. But, AI’s reliability in tax software is still a work in progress. Be sure to maintain human oversight when preparing your business taxes and consult an expert when needed.

What Is the Most Popular AI-Based Tax Preparation Software?

Popular tax preparation software tools like TurboTax and H&R Block have introduced AI assistants within some of their packages. Other business tax preparation software tools include Reconcile, FlyFin, and TaxGPT.

Will AI Replace Accountants?

Not any time soon. A 2023 survey of tax and accounting professionals revealed that, while ChatGPT may prove useful for basic research applications, it cannot replace the judgment of experienced professionals needed for complex tax scenarios. And a 2024 review of TurboTax and H&R Block’s AI tools revealed that they often gave wrong or irrelevant answers to basic tax questions.

The Bottom Line

As more AI startups enter the tax software space and AI technology continues to develop, taxpayers and tax agencies alike may be able to take advantage of the increased efficiency, data analysis capabilities, automated workflows, and more that AI has to offer.

Even the IRS is looking to AI to identify “compliance threats” and reduce the number of unnecessary audits it conducts.

While AI has been implemented in several tax software products and offers promising future applications for business taxes, the complex nature of tax preparation and filing warrants continued human oversight and interpretation.

Typically no, but there are some exceptions

Fact checked by Suzanne Kvilhaug
Reviewed by Andrew Schmidt

Home improvements can add value, style, and safety to your home but do they also add to your tax deductions? Generally, no, but some home improvements are tax deductible. They include capital improvements, energy efficiency improvements, and improvements that are related to medical care.  

Key Takeaways

• Homeowners can benefit from tax deductions that are related to select, eligible home improvements.
• Not all home improvements are tax deductible and it’s essential to understand the criteria for eligibility.
• Capital improvements that make permanent structural or restoration changes to the home, necessary medical-related improvements, and select home office changes may qualify for tax breaks.
• Energy-efficient home improvements may also qualify for tax credits and provide additional financial incentives for homeowners.

Can You Write Off Home Improvements?

Homeowners can take a tax deduction for specific home improvements if they meet the minimum criteria of the Internal Revenue Service (IRS). Home improvements that homeowners can deduct are referred to as capital improvements. They include any addition of a permanent structural change or the restoration of some aspect of a property.  

The IRS details the three criteria for classifying a home improvement as a capital improvement or a tax-deductible home improvement. It must enhance the property’s overall value, prolong its useful life, and adapt it to new uses.

A home improvement is tax deductible when it meets all these conditions. , it is tax deductible. A tax-deductible expense means the homeowner can reduce their adjusted gross income (the amount they pay taxes on) by the home improvement expense. 

Homeowners do not reduce their taxable income by the entire amount of the capital improvements in one year. Instead, these capital improvement expenses are depreciated over time (usually 27.5 years), so the full cost of the home improvements divided by the time is the tax-deductible amount each year.  

Important

An example of a home improvement project meeting all of these criteria is replacing the siding of a house rather than making a few repairs to cracks. If replacing the siding is $27,500, then $27,500 divided by 27.5 means that $1,000 is tax deductible each year for 27.5 years.

Improvements vs. Repairs

According to the IRS, there is a big difference between home improvements and home repairs. Home repairs are modifications made that keep your home in “an ordinary, efficient operating condition,” and these are not tax deductible unless they are part of a larger home improvement project.

Home improvements are tax deductible if they meet the three qualifying criteria:

1. Betterment: Amounts paid to repair something that will increase the value of the home or to add a feature that increases the value of the home
2. Adaptation: Amounts paid to change a property into a new or different use
3. Restoration: Amounts paid to repair or restore a significant component or substantial part of the property to its original condition

Other Tax Breaks for Homeowners

Energy-Efficient Home Improvements

Energy-efficient home improvements like replacing leaky doors and windows, equipping your home with solar panels, or installing better insulation all deserve a high-five from Mother Nature, but does the IRS feel the same way?

These home improvements are not tax deductible, meaning the expenses do not reduce a homeowner’s adjusted gross income. However, they still provide tax breaks for enterprising homeowners looking to make their homes more energy efficient. Energy-efficient home improvements offer tax credits that reduce tax bills dollar for dollar.

Homeowners can receive credit for 30% of the expense up to the maximum allowable credit each year. The yearly limits are:

• Up to $1,200 for energy-efficient home improvements in total. Each door has a limit of $250 per door ($500 total per year). Windows have a limit of $600 per year. Home energy audit limits are $150 per year.
• Homeowners may receive a $2,000-per-year credit for heat pumps, biomass stoves, and biomass boilers.
• These limits are each year with no cap on the amount of credit received in a lifetime.

Medically Necessary Home Improvements

A green cabinet color may make you feel sick, but you will still need more evidence for the IRS to allow you to write off your home improvements for medical purposes. Specific, necessary medical home improvements are tax deductible, though. Home improvements or special equipment explicitly needed for the medical care of you, your spouse, or your dependent are all deductible from your adjusted gross income.

The way these medical home improvements are qualified for tax deduction purposes is a bit murkier, though. The nuance comes from whether the home improvements that you need for medical care increase the value of your home or not.

If the improvements increase the value of your home, they are considered capital improvements and are tax deductible. If the home improvements do not improve the value of your home, then they are not tax deductible.  

Homeowners needing more information about what qualifies as a medically necessary tax-deductible home improvement can visit the IRS website. 

Home Office Improvements 

Homeowners and renters alike are eligible for home office tax deductions for simply running all or a portion of their business from their home, as long as the business is the principal place of their business and the working area of their home is used exclusively for business.

Anyone spending hours a week in their home office might be considering upgrading their space. The IRS allows for home office improvements to be tax deductible if they meet a few criteria. The home improvements or repairs must be made exclusively to the office space to deduct the whole amount. One example of a tax-deductible home improvement is repairing a broken window.

Repairs or home improvements that benefit your entire home and home office can be deducted as a percentage of the overall cost based on what percentage of your home is used for a home office.

For example, repainting your entire home for $1,000 does not mean you may write off the whole $1,000. If you only use 10% of your home exclusively for your business, then you may only write off $100 of the repainting cost.

Tips for Proper Documentation and Record Keeping

Documentation is critical to ensuring you bring receipts for your tax deductions. The IRS provides a worksheet to help homeowners track expenses that they think might be tax deductible.

Whether homeowners decide to use the IRS’s worksheet or keep their records in another way, they should keep any receipts, canceled checks, money orders, contracts, or other documents related to the home improvements for three years from the date of filing or two years from the date of the taxes paid.  

Considering renovations to personalize your home or boost property value? Check out our guide—Owning It: Investing in Your Home—to learn more about how to plan and pay for your project.

What’s the Difference Between a Tax Deduction and a Tax Credit?

Tax credits and deductions both mean taxpayers will owe less. The difference is in how they reduce that amount. Tax credits reduce what you owe dollar for dollar, while tax deductions reduce your adjusted gross income, meaning you pay taxes on a smaller amount.

Are Rental Property Renovations Tax Deductible?

The same IRS stipulations apply whether the home you are making improvements to is your primary residence or a rental property. Home improvements that meet the criteria for capital improvement, necessary medical alterations, or energy-efficient upgrades are eligible for tax benefits.

What Documentation Do I Need to Support My Home Improvement Deductions?

Homeowners should keep any receipts, canceled checks, money orders, contracts, or other documents related to the home improvements for three years from the date of filing or two years from the date of the taxes paid.

The Bottom Line

Some home improvement projects that make necessary modifications for medical needs, upgrades for energy efficiency, or improvements for the home’s value are tax deductible or offer tax credits.

These tax credits or tax deductions are only available in certain situations and with the proper documentation. Homeowners hoping to recoup some cheddar from their home improvement projects should chat with a tax professional before knocking down any walls.

Learn how tying the knot impacts benefits, too

Fact checked by Suzanne Kvilhaug
Reviewed by Samantha Silberstein

Marriage is about so much more than a wedding. While you daydream about your future home, family, and trips, it’s also a great time to discuss what you want your retirement to look like and how you will achieve that vision.

According to the U.S. Census Bureau, the median age for a first marriage is 30.5 for men and 28.6 for women. This data means that many of today’s couples are entering wedded life with some working years under their belts and perhaps some prior retirement savings and/or debt.

Given these realities and your desires to realize your dreams, it’s important to consider how the financial changes accompanying marriage may affect your retirement planning. 

Key Takeaways

• Marriage can significantly impact existing retirement plans, eligibility for survivor benefits, and access to spousal retirement benefits.
• It’s crucial to manage retirement savings as a married couple, because joint financial planning and shared expenses can affect retirement savings goals.
• It’s best to regularly review and update your retirement plans after marriage and any other life changes it might bring.
• Divorce can affect the division of retirement assets, based on how much you contributed to your accounts while married.

Marriage’s Impact on Retirement Savings

Combining finances is one of the most complex parts of joining lives with a significant other, especially, as ICOM Advisors’ Erin Willcutt said, “…a lot of couples today bring debt to the marriage. That puts automatic strain on the relationship.”

Navigating this past and current strain while keeping an eye on the future is where things can get complicated. But there are ways to make the transition to combined finances easier, and it starts with talking openly and honestly with each other.

“Communication remains a key aspect of a solid partnership,” says Jenica Bertalan, a financial advisor at Edward Jones. “That doesn’t change after saying ‘I do.'”

Couples should discuss their current financial status, future financial goals, and general attitudes toward money before walking down the aisle.  Opening these lines of communication early lays a solid groundwork for future conversations and keeps them from feeling awkward, according to Bertalan.

Important

If you haven’t been having these conversations regularly, now is the time to start.

Some of the biggest hurdles couples face in retirement planning are accurately considering their budget, spending habits, individual risk tolerances, and overall goals. It is tough to make a plan you can stick with as a couple if one of you is a saver and the other is a spender, or if you disagree on how to spend your money. Budgets are a great starting point for opening those lines of financial communication with your spouse.

“Many couples have never made a household budget, so when they combine accounts and start paying bills, much of the nonessential spending comes to light,” Willcutt says. Reducing nonessential spending can help you redirect money to future retirement savings. Still, it’s a good idea for each spouse to retain some nonessential spending money, Willcutt says, as that’s likely to help make the budget stick.

It’s also critical to discuss how having children, if that’s your intention, will alter your financial planning. Will one of you be willing to step away from a career to stay at home if child care expenses are prohibitively expensive or there are other needs? Doing so would reduce your working income as a couple, and the unemployed spouse couldn’t contribute to an employer plan. You’ll also need to figure out how to balance saving for college vs. saving for retirement.

Again, openly discussing these subjects will help you, as a married team, to get on the same page. If you need help starting this conversation, a financial advisor can help you.

Questions to Ask Your Future or Current Spouse About Retirement

• At what age would you like to retire, and what does your retirement look like?
• Do you have any current retirement savings through an employer-sponsored plan, an individual retirement plan, or both?
• What are your attitudes toward spending vs. saving?
• What are your savings priorities?
• Are you open to including a financial advisor in our retirement planning?

Marriage’s Impact on Social Security and Survivor Benefits

One of the first things married couples should do after signing on the dotted line is update beneficiaries on their current retirement accounts, whether those are work accounts, individual accounts held at a broker-dealer, or both.

Marriage has little impact on your own Social Security benefits. You will not need to halve your benefits with your spouse or wait longer to receive benefits when you reach retirement age.

As long as you have enough credits to qualify for Social Security benefits, your wage and employment history alone determine your Social Security benefit.

Still, married people have more options when it comes to applying for benefits. For example, if one spouse earned more, and therefore will get a higher benefit, the other spouse can receive benefits up to 50% of that higher amount, if it’s more than their own. Also, spouses without enough credits to qualify for Social Security benefits can get up to half of their spouse’s benefit, starting at age 62.

Defined benefit plans or pensions are just one example of retirement plans that typically have a spousal benefit. 401(k)s, defined contribution plans, and other retirement plans have survivors benefits, too.

Note

Federal law requires that a spouse be the primary beneficiary on any employer-sponsored plans, which ensures that the funds existing in your retirement plan get paid to your spouse upon your death.

Divorce and Retirement Plans

Any retirement contributions you made before marriage are yours and yours alone in the event of a divorce. However, contributions you make during your marriage, even to an individual account, are considered marital assets.

Matching funds that your employer contributes to your 401(k) as part of your overall compensation are marital assets, too. During divorce proceedings, a judge will decide how much, if any, of your retirement assets acquired after marriage are split.

If you’re not yet married and have considerable assets, you might consider a prenuptial agreement. Any legal agreements made before the marriage about the division of assets and property, even those acquired during a marriage, can prevent a judge from later ruling to split those assets.

Fortunately, divorce has no impact on your Social Security benefit unless, as noted above, it is less than your ex-spouse’s benefit.

A marriage lasting 10 years or more entitles an ex-spouse who is age 62 or older, hasn’t remarried, and will receive a lower benefit than you to file for Social Security benefits under their former spouse’s record. However, even if the Social Security Administration (SSA) awards benefits to an ex-spouse, there is no impact on the amount of your benefits.

If you are considering divorce, meet with a financial advisor right away if possible. Planning to move forward financially after divorce is a process best started early.

Updating Retirement Plans 

Retirement plans are not a set-it-and-forget-it endeavor. Each new baby, new job, new house, and new dream can affect how much you’ll need in retirement, when you’ll need it, and how you plan to use it. Finance professionals are the right people to help you make a plan, stick to it, and update it when necessary.

Most financial advisors want to see clients at least once a year to check in with them, Willcutt says. Doing so will help you see your whole financial picture and get the most bang for your buck. A good financial advisor will want to make sure you can meet your goals while considering all of your available assets.

If there is a change in your marital status, your financial advisor is the expert to walk you through any financial adjustments to make. And your employer’s human resources department should be able to put you in contact with the person or organization that updates information on your work retirement plan.

Unless you plan to change your name, there is no requirement to tell the Social Security Administration about your marriage or divorce unless you are actively receiving benefits. When you are ready to file for Social Security benefits or need to apply for disability benefits, contact the SSA with the appropriate information, and they will take it from there.

If you’re a millennial with your eyes on retirement, there are many resources that can help you plan your financial future.

How Does Marriage Affect Retirement Benefits?

Marriage will not reduce Social Security benefits but could improve your retirement income overall. Even if spouses do not have enough credit to qualify on their own, they may be eligible to receive benefits if they’re receiving disability or retirement benefits. These benefits won’t impact your benefits but may increase retirement income and help you decide when retirement is right for you.

Does My Ex-Spouse Still Get Half of My Retirement if They Remarry?

It depends on your marriage and divorce conditions, your state’s laws, and the judge’s ruling regarding your retirement accounts and plans.

How Many Years Do You Have to Be Married to Get Your Spouse’s Pension?

It depends on the type of pension, how long you have been married (and/or divorced), state laws, your income, and much more. It’s best to speak to an attorney or financial advisor familiar with pension plan laws.

The Bottom Line

Marriage is an exciting milestone that brings two people together to form a family and intertwines financial futures. Couples should consider marriage’s impact on retirement benefits and any future assets. It is also important, though far less fun, to discuss what happens to retirement assets in the event of a divorce or death.

Couples should continue openly and honestly discussing their financial goals, spending habits, and retirement plans. Plans change, and financial advisors can help keep couples focused on the bigger picture and work together toward their shared dreams.

Payhip makes money by collecting subscription and transaction fees

Fact checked by Vikki Velasquez
Reviewed by Katie Miller

Payhip is an ecommerce platform specifically targeted at digital content creators. It enables users to sell digital downloads, online courses, coaching, memberships, and physical products. It makes money from subscription and transaction fees, which vary by plan.

Payhip has a free plan that charges 5% transaction fees on each sale; a mid-tier plan that charges $29 per month with a 2% transaction fee; and a premium plan that charges $99 per month with no transaction fees.

Key Takeaways

• Payhip is an ecommerce website that enables users to create online storefronts.
• Payhip’s platform is designed with digital content creators in mind, and its users sell products like digital downloads, coaching services, online courses, memberships, and physical merchandise.
• Payhip has three pricing plans: Its free plan has no monthly cost but charges 5% transaction fees on each sale; its mid-tier plan is $29 per month with a 2% transaction fee; and its premium plan is $99 per month with no transaction fees.

Payhip’s Industry

Payhip is an ecommerce marketplace specializing in digital services like downloads, online courses, memberships, physical products, and coaching. It allows users to sell or purchase physical products online, manage inventory, fulfill orders, run promotions, collect reviews, and more. Payhip features a customizable store website builder, and users can connect their own custom domains or embed a checkout on their existing websites.

Payhip targets small- and medium-sized businesses and claims to have a user base of over 130,000 creators.

Some of its competitors are:

• Gumroad
• Sellfy
• Samcart
• Teachable
• Kajabi
• Wix
• Squarespace

Payhip’s Fundraising and Financials

As of March 2025 (using 2023 data), the company had not conducted any fund-raising rounds and has fewer than 10 employees:

• Net Assets (2023): £631,276
• Total Assets (2023): £855,866
• Total Liabilities (2023): £224,592

History and Leadership

Payhip was launched in 2011 by two entrepreneurial developers, Kahin Farah and Abs Farah. They previously founded Get Fractal, a service that converted HTML and CSS webpages to email client-friendly HTML and CSS.

Is Payhip.com a Legitimate Site?

Payhip is an e-commerce platform registered in the United Kingdom as a limited liability corporation. The website was operational as of March 2025.

What Are the Disadvantages of Payhip?

A few of Payhip’s disadvantages are the limited payment options of Paypal and Stripe and no SEO tools that help attract traffic.

What Is Payhip Used For?

Payhip provides an e-commerce platform that connects digital content creators to customers.

The Bottom Line

Payhip is an ecommerce platform targeted at creators who want to sell digital content, with the option to sell physical merchandise. Its many features address various digital applications involved in selling content, such as digital downloads, courses, coaching, and memberships. 

The platform is designed to be easy enough to use that sellers do not require any technical knowledge to set up a shop, but customizable enough that it can integrate into existing brands, businesses, platforms, and marketing strategies.

There Are Plenty of Options to Boost Efficiency and Productivity

Fact checked by Vikki Velasquez
Reviewed by JeFreda R. Brown

Artificial intelligence (AI) tools promise many benefits for small businesses, including increased efficiency, cost savings, better customer service, and growth opportunities.

These applications can help a small business owner automate business processes for greater efficiency, and analyze information for better planning. Others can enhance communication with customers.

Better yet, some of these tools, like ChatGPT and Google Docs, are free.

According to the Small Business and Entrepreneurship Council’s 2023 Small Business AI Adoption Survey, 83% of small business owners plan to use AI in the next year.

Key Takeaways

• Small businesses can use AI tools to assist in accounting, customer service, marketing, security, and recruitment.
• To smoothly implement AI, identify areas that need improvement, select the right tools, and train employees on their proper use.
• Don’t overlook the need to capture the information that AI is providing and incorporate the benefits into your business.

AI Tools to Consider

Choosing the right artificial intelligence tool from the many that are available will come down to the requirements of the small business and its day-to-day activities. Here is an overview of some of the applications and business areas that AI tools can support.

Accounting

AI can make accounting processes more efficient, offering categorization recommendations for transactions based on historical data.

Some AI tools can assist with data analysis for cash flow forecasting, accounts payable, and accounts receivable processing. They can even catch errors or irregularities in transaction data that indicate possible fraud or security risks.

Chatbots

A chatbot is an app that simulates human conversation through text or voice interactions. Added to a company website, it can field common questions and requests from customers.

That frees up the team to address more complex issues and extends customer service coverage to 24 hours.

Many chatbots also learn as they capture data, and can be connected to customer relationship management (CRM) software to integrate information on customer interactions.

Siri Is AI

Apple’s virtual assistant Siri is an example of AI. Siri uses machine learning, natural language processing, and voice recognition to respond to users.

Customer Relationship Management (CRM)

AI-enabled CRM software can help drive sales or identify marketing opportunities based on its learnings from customer behavior and data. For example, it can offer incentives based on a customer’s order value and frequency.

It can also predict future customer behavior, providing suggestions and insights into trends.

Customer Service Automation

Chatbots are one way to automate customer service. Many phone systems use voice-enabled AI to answer questions and direct calls, while tools like voice search can be helpful to direct customer calls.

As with chatbots, tools like these can extend customer service center hours without the need to hire around-the-clock support.

Cybersecurity

Small business owners looking to protect their business and customer data can use AI-powered cybersecurity tools to scan for data irregularities or patterns of unusual activity and receive alert notifications.

Marketing and Advertising

Generative AI tools such as ChatGPT, Midjourney, and Adobe Firefly can help with content creation for marketing and advertising applications from blog posts to social media captions, graphics, and emails.

Tools like Grammarly can help review or edit the content. Other AI tools can be used to schedule, post, or send content, and track the performance of campaigns, tests, or posts according to set metrics.

Recruiting

Reviewing resumes is a time-consuming task, and AI-powered software can take some of the load off recruiting. AI-powered tools can screen resumes and applications, and narrow down the candidate pool.

Translation and Transcription

AI translation tools provide a quick and easy way to translate text into other languages.

AI recording and transcription tools can be used to capture meeting notes or record follow-up tasks.

Benefits of Using AI Tools for Small Businesses

Small businesses can gain many advantages by incorporating AI tools into their operations:

• Improved efficiency: AI can increase employee productivity by reducing time spent on rote or recurring tasks.
• Cost savings: AI software can alert you to potential threats or errors (such as duplicate payments) by identifying irregularities in data, saving money, and reducing risk.
• Enhanced customer experience: AI chatbots and automated customer interactions can reduce the volume of calls and queries, freeing your team to focus on more complex customer interactions. They also extend the hours that your business can offer customer service. AI can assist in personalizing content to offer customers a unique engagement with the brand.
• Increased growth opportunities: Many AI programs incorporate machine learning algorithms, which can offer a greater understanding of customer behavior via pattern recognition that improves over time. This can lead to better sales and revenue growth.
• Better decision-making: AI can provide and interpret analytics on large volumes of key business data to enhance problem-solving.

Best Practices for Implementing AI

To maximize the effectiveness of any AI tool, think of it like any other process or technology being introduced to the business. Here are some steps to consider:

1. Assess current processes. Identify areas or systems that could benefit from automation or increased efficiency through the use of an AI tool.
2. Do your research. It’s a crowded field. Comparative research on features and pricing can ensure you choose the right AI tool for the application and outcome. Check to make sure that the tool can be integrated with current systems and scaled according to the needs of the business as it grows.
3. Give your team a heads-up. Let any relevant team members know in advance that you’re introducing the tool, and answer any questions they may have.
4. Undergo and provide training. Ensure that anyone using the AI tool fully understands what it’s being used for and how to use it.
5. Monitor, maintain, and update. Keep the software maintained with any updates, and monitor its performance and usefulness.
6. Leverage insights or improvements. Understand how the tool plugs into the bigger picture of your business to ensure that you capture and incorporate the benefits it’s providing.
7. Continue to learn and adapt. Make time to reflect and solicit feedback on how the tool is working for the business and its employees, and take advantage of any machine learning capabilities that the tool can provide over time.

Challenges to Incorporating AI Tools

Small businesses need to take several factors into consideration when adopting AI tools. These include:

• Incorrect or inaccurate results: AI tools are limited by the amount or type of data they are trained on, and they can generate misleading or nonsensical results (referred to, aptly, as “hallucinations”). This is the case with many generative AI tools, whose outputs might need to be reviewed or fact-checked by a human to ensure their validity, relevance, and accuracy.
• Data privacy and security: The legal landscape around AI data privacy is still evolving. As AI models require data to train their algorithms, there are urgent concerns about the use and security of personal data. Any user of AI needs to stay alert to developments in this area.
• Bias and ethical considerations: Many AI models are designed to recognize patterns. They have been shown to reproduce existing patterns of discrimination. This was the case with an experimental AI recruiting software developed by Amazon. Trained on 10 years of resumes submitted to the company, it demonstrated significant bias against women, reflecting an existing gender gap in tech workers.
• Employee training: Because of the speed at which AI technology is evolving, it can be challenging to keep up with developments and changes and train employees accordingly.
• Potential job displacement: In 2023, Goldman Sachs predicted that AI could replace “the equivalent of 300 million full-time jobs,” replacing between a quarter and half of the workload of exposed occupations.

Future Trends in Small Business AI Tools

Advancements in AI tools hold many promising applications for small businesses.

The ability to increasingly personalize customer experiences by capitalizing on historical data, for instance, can offer small businesses a competitive edge.

As natural language processing models keep evolving, generative AI tools will become more powerful and more accurate. Tools are being developed to adapt this technology for more industries and specialized uses.

AI tools can also enable predictive analytics, providing valuable insights to decision-makers based on current and historical data. This can be particularly powerful in applications such as financial forecasting and inventory management.

What Are Some Free AI Tools for Small Businesses?

Many software suites are incorporating AI functionality. For example, Google Workspace Labs introduced AI-assisted capabilities to Google Docs, Sheets, and Slides.

Free tools like ChatGPT, Dall-E, Canva, and Grammarly can assist with content generation. Software like Fireflies and Otter can help with transcription and meeting notes.

How Can I Use an AI Chatbot in My Business?

Adding an AI chatbot to a business website can help address common customer inquiries, reducing the volume of calls or emails that staff members have to resolve.

Chatbots can also provide businesses with valuable insight about customer engagement and behavior.

Which AI Tools Are Best for Solo Entrepreneurs?

AI tools that offer automation or increased efficiency can be especially valuable for solo entrepreneurs with limited time and resources. Generative AI tools can assist with time-consuming or repetitive tasks such as writing captions or product descriptions. Recording technology can take meeting notes and provide call transcriptions. AI accounting tools can reduce the workload on those who can’t hire a dedicated bookkeeper.

The Bottom Line

AI tools can have a big impact on the success of a small business. However, it’s important to consider their uses thoughtfully and implement them well to capitalize on their benefits and guard against their drawbacks. In the wrong hands, AI can create issues in terms of privacy, security, accuracy, and bias.