financial

Let’s just say they’re measured in quintillions. That’s a number followed by 18 zeroes

Fact checked by Timothy Li
Reviewed by Robert C. Kelly

Every year, the National Collegiate Athletic Association (NCAA) men’s and women’s basketball tournament whips fans into a frenzy, earning the event the nickname “March Madness.” Much of the interest stems from the ever-popular bracket challenge, where groups of individuals pay into a pool and attempt to pick the most winners. Whoever guesses the most games correctly wins the pool.

In 2014, Warren Buffett created a challenge for his Berkshire Hathaway employees: Whoever could correctly predict the outcome of all 67 games of the men’s bracket would win $1 billion. However, as Buffett doubtless knew, the odds of picking a perfect bracket are infinitesimally small.

Key Takeaways

• Each year, sports fans participate in March Madness bracket challenges, where they attempt to predict the winners of the NCAA basketball tournaments.
• In 2014, famed investor Warren Buffett promised $1 billion to any employee of his firm who correctly predicted every game of March Madness (for the men’s tournament).
• This offer has since been modified to $1 million for life for the winner, and the Berkshire Hathaway employee with the best bracket earns $100,000.
• The odds of picking a perfect bracket (all 67 games, including play-ins) are about one in 147.6 quintillion. For a 63-game bracket (excluding play-ins), the odds are one in 9.2 quintillion.

Understanding the NCAA Bracket

Early estimates indicated that $2.72 billion was expected to be wagered on the 2024 NCAA Men’s and Women’s Division I Basketball Tournaments through a mix of same-game parlays, prop bets, and bracket pools. Additionally, in 2024, ESPN’s Men’s Tournament Challenge set a new record with 22.6 million completed brackets.

The structure of the NCAA bracket is devised as a “loser-go-home” single-elimination format. Two teams play each other, and the winner advances while the loser is eliminated. The bracket consisted of 64 teams from 1985 on; however, the bracket was expanded in 2011 to include several early “play-in” games, and the field was expanded to 68 teams.

Because each team can either win or be immediately eliminated, the NCAA bracket consists of 67 games. At the end of 67 games, 67 teams will have lost and only one team, the NCAA champion, will remain.

Note

Some may state that the odds of guessing each game isn’t truly 50/50, as some teams will be favorites or have specific advantages. Throughout this article, the assumption is that each team has the same probability of winning any game they are in.

What Is Warren Buffett’s Bracket Challenge?

In 2014, legendary value investment guru Warren Buffett got in on the March Madness action when his investment company, Berkshire Hathaway, instituted its own bracket challenge. The challenge provided that any perfect-scoring employee—anyone who correctly predicts every game of the men’s tournament—would win $1 billion. Over time, this was modified to $1 million, every year, for life. The challenge promised smaller payouts for participants who came close.

In 2018, for example, the Berkshire Hathaway March Madness contest resulted in eight high-but-not-perfect scorers, who divided a $100,000 consolation prize, each pocketing $12,500.

What Are the Odds of Winning Buffett’s Bracket Challenge?

There are several different ways to calculate the odds of picking a perfect bracket. Some rely more heavily on math, while others allow for some looser assumptions.

Statistically, correctly picking all 67 winners is overwhelmingly unlikely. Consider the following mathematical facts:

• Each game has two possible incomes: Team A wins and Team B loses, or vice versa.
• To calculate the total number of ways that a player may fill out a bracket, you would need to take the total number of possible outcomes for each game (two) and multiply it out 67 times: (2 × 2 × 2…× 2, or 2^67).
• The odds of projecting all 67 winners is one in more than 147 quintillion.

Given how aggressively the odds are stacked against bettors, most bracket challenge participants don’t realistically expect to achieve a score of 100%. But many believe that they have a viable chance of predicting the teams that become known as the Sweet 16, which refers to the clubs that linger long enough to participate in the regional semifinal round.

Note

In the NCAA tournament, the teams of each region are assigned a seed number, ranging from 1 to 16, where the best team is given the first seed and the worst team receives the 16th seed. The opening games pit seeds against their numerical opposites. For example, the first-seeded team plays the 16th seed; the second seed plays the 15th seed; and so forth.

What Are the Odds of Partially Perfect Brackets?

Continuing with the assumption that each game has a 50/50 chance of being predicted correctly, there are still long odds to achieve even partially perfect odds through certain rounds. The table below outlines the odds of guessing all games correctly through each round (assuming a 68-team format in which each play-in game is predicted).

Odds of Correctly Predicting March Madness Games
# of Games	A Perfect…	Odds
36	first round	1 in 68.7 billion
52	Sweet Sixteen	1 in 4.5 quadrillion
60	Elite Eight	1 in 1.2 quintillion
64	Final Four	1 in 18.4 quintillion
66	Championship Game	1 in 73.8 quintillion
67	bracket	1 in 147.6 quintillion

If you or someone you know has a gambling problem, call the National Problem Gambling Helpline at 1-800-GAMBLER, or visit NCPGambling.org/Chat to chat with a helpline specialist. 

What About a 64-Team Bracket?

In some tournaments, the four play-in games may or may not count toward crafting a perfect bracket. Participants may not be required to submit their brackets until Thursday morning—the full first round of game play begins that afternoon. The good news is this means fewer games to predict; the bad news is there are still very long odds.

Running with the same mathematical assumptions as above, the task is to guess 63 games correctly. This results in a one-in-9.2-quintrillion chance of a perfect bracket. On the plus side, there’s a one-in-4.3-billion chance of guessing a perfect full first round after 32 games.

What Is Warren Buffett’s Bracket Challenge?

For several years, Warren Buffett’s company, Berkshire Hathaway, has offered to pay any employee who correctly calls the entire March Madness tournament $1 million a year for life. The tournament takes place over 63 games, plus four play-in games.

What Are the Odds of Having a Perfect March Madness Bracket?

The odds of scoring a perfect bracket across 67 games are about one in 147.6 quintillion. The odds of a perfect bracket across 63 games are roughly one in more than 9 quintillion. It is overwhelmingly unlikely that anyone will create a perfect bracket.

Has Anyone Ever Scored a Perfect March Madness Bracket?

No one has ever accurately guessed all games in a March Madness bracket. The closest brackets were in 2019, when one person accurately guessed the first 49 games in a row. Before that, in 2017, one person accurately guessed 39 consecutive games.

Who Has Scored the Best March Madness Bracket Ever?

With 49 games accurately predicted in a row, Gregg Nigl of Columbus, Ohio, scored the best March Madness bracket ever recorded, according to the NCAA. In 2019, the neuropsychologist was the first person to reach the Sweet 16, eventually breaking the streak in its second game when two-seed Tennessee lost to three-seed Purdue.

The Bottom Line

For millions of sports fans, filling out NCAA March Madness bracket challenge forms is an annual tradition. One of the biggest March Madness prizes available is at the investment firm Berkshire Hathaway, where Warren Buffett has offered any employee who creates a perfect bracket $1 million a year for life. No one has yet claimed the prize, although some employees with relatively high-scoring brackets have taken home some consolation cash for their efforts.

Six ways to legally pay less in taxes

Fact checked by Vikki Velasquez

Avoiding taxes completely isn’t legal or desirable; money has to come from somewhere to fund the social services and public works on which your community depends.

While you can’t avoid taxes entirely, it’s possible to lower your tax bill through strategic financial moves. You don’t have to be a top earner, either. Average, middle-class earners can use six strategies to lower their income taxes legally.

Key Takeaways

• The interest income from municipal bonds is generally free from federal income tax.
• You can use pretax dollars to contribute to certain retirement and employee benefit accounts.
• Business owners can deduct many expenses, including some health insurance costs.
• When you sell taxable assets, you can be taxed at a lower capital gains rate if you have held them for more than a year.
• Tax deductions and credits can lower both your taxable income and the amount of tax you owe.

1. Consider Investing in Municipal Bonds

When you buy a municipal bond, you are loaning money to the issuer in exchange for repayment with interest. Municipal bonds, which are issued by states or localities to fund things like roads and schools, tend to pay lower interest rates than corporate bonds. But they come with a distinct tax advantage: if you hold the bond until it matures, you don’t have to pay federal income tax on the interest you earn. In many cases, you also won’t have to pay state or local taxes if you live where the bond was issued.

Historically, municipal bonds have also had lower default rates than corporate bonds. From 1970 to 2022, the default rate for munis was 0.08%. By contrast, corporate bonds defaulted at a significantly higher rate of 6.9% in the same period.

Warning

In some cases, municipal bonds aren’t completely tax-free. If you purchase them at a discount equal to or greater than 0.25% per year until maturity, the bond is subject to a de minimis tax. This means that interest and gains from the discounted amount are taxed at ordinary income rates.

2. Take Long-Term Capital Gains

Investing strategically can lower your tax bill because income from long-term capital gains is taxed at lower rates than ordinary wages or job income.

Long-term capital gains apply to sales of assets that you’ve held for more than one year. This type of income is taxed at rates of 0%, 15%, or 20%, depending on your income bracket. By contrast, the tax rates for ordinary income go as high as 37%.

Capital Gains Tax Rates 2025
Filing Status	Income	Tax Rate
Single	up to $48,350	0%
	up to $533,400	15%
	above $533,400	20%
Married filing jointly	up to $96,700	0%
	up to $600,050	15%
	above $600,050	20%

Short-term capital gains, which apply to the sale of assets that have been held for less than a year, are taxed at ordinary income rates. If you plan to sell stocks, bonds, real estate, or other assets that generate capital gains, consider choosing assets that you have held for a year or more to lower your tax bill.

You can also use a tax-loss harvesting strategy to offset capital gains with losses. This involves deducting losses from gains to lower your total taxable income. If you plan to use tax-loss harvesting, talk with a tax professional to make sure you are doing it correctly.

3. Start a Business

Starting a side business can come with a variety of tax advantages. The IRS allows business owners to deduct many expenses that are necessary and regular in the course of operating their business. Possible deductions include:

• Home office
• Portion of home utilities and internet
• Vehicle use for business
• Business cell phone
• Self-employed retirement plan contributions
• Business travel

If you are self-employed, you can even deduct health insurance premiums if you meet specific requirements. When combined, these deductions can significantly lower your taxable income.

Important

To take these tax deductions, you must be operating your business intending to make a profit, not as a hobby. The IRS uses several factors to determine whether your work qualifies as a business, including whether you realize a profit in three to five years.

4. Take Advantage of Retirement and Employee Benefits

If your employer offers a retirement account such as a 401(k) or 403(b) plan, having contributions taken from your paycheck can reduce your taxable income by up to $23,500 in 2025. If you are age 50 or older, you can contribute an additional $7,500 for a total of $31,000. A 55-year-old who makes $100,000 per year and maxes out their 401(k) contributions can reduce their taxable income to $69,000 and pay significantly less tax for the year.

If you don’t have a retirement plan through your work, you can still contribute up to $7,000 per year to a traditional individual retirement account (IRA), which also reduces your taxable income. If you have both an employer-sponsored plan (or your spouse does) and a traditional IRA, you may be able to deduct all or some of your IRA contributions, depending on your total income.

Many employers also offer other benefits, known as “fringe benefits,” that can reduce your total taxable income. These can include:

• Reimbursement for adoption expenses
• Flexible spending account (FSA)
• Dependent care FSA or dependent care assistance
• Educational assistance
• Tuition reduction
• Commuting cost reimbursement
• Group term life insurance

These benefits are either taken out of your paycheck or reimbursed to you by your employer after you pay them. Some of these benefits are excluded (or partially excluded) from being taxed and not reported on your W-2; others, like reimbursement for adoption expenses, are excluded from income tax but not other taxes and are still reported on your W-2.

5. Contribute to a Health Savings Account (HSA)

If you have a high-deductible health insurance plan, you can choose to open a health savings account (HSA) to go along with it. Like a 401(k), an HSA is funded with deductions from your paycheck. Contributions reduce your taxable income by an equal amount.

In 2025, the maximum deductible contribution to an HSA is $4,300 for individuals and $8,550 for families. A family with a $100,000 income who maxes out their HSA contributions for the year can reduce their taxable income to $91,450.

The funds in an HSA never expire. You can keep your HSA after you have a different health plan or leave your employer, including investing the money it in so it grows until you are in retirement. You don’t have to pay tax on the earnings, and any withdrawals from the account aren’t taxed if you use them to pay for qualified medical expenses.

6. Claim All Your Deductions and Credits

Claiming all the deductions and tax credits to which you’re entitled can significantly lower your tax bill.

A deduction lowers your taxable income. Many deductions are only available if you itemize rather than taking the standard deduction. However, some deductions can be claimed whether or not you itemize, including:

• Alimony payments
• Student loan interest
• Work-related education expenses for some government, military, self-employed, and disabled individuals
• Moving expenses for military service members
• Teacher expenses up to $300

If you itemize, you can also deduct donations to charity, capital losses, home mortgage interest, property taxes, medical or dental expenses that total over 7.5% of your adjusted gross income, and more.

Tax credits are an even better way to lower your taxes because they are a dollar-for-dollar reduction in the tax you owe. Common tax credits for low-to-average earners include:

• Child Tax Credit: $2,000 tax credit for each qualifying child, stepchild, sibling, or descendant claimed as a dependent on your tax return. To claim the full CTC, you cannot earn more than $200,000 if you’re a single filer or $400,000 if you’re married filing jointly.
• Child and Dependent Care Tax Credit: A portion of expenses spent on care for an eligible child or other dependent while the legal caregiver works or searches for work. Care can be for young children as well as children and adults who are mentally or physically incapable of caring for themselves.
• Earned Income Tax Credit (EITC): Tax credit aimed at working, low-income taxpayers based on income, marital status, and number of children. In 2025, the EITC is worth $8,046 with three or more qualifying children, $7,152 with two, $4,328 with one, and $649 with no children.
• American Opportunity Tax Credit: Up to $2,500 per year for the first four years of higher education expenses for eligible students.
• Lifetime Learning Credit: Worth $2,000 per return or a maximum of 20% of up to $10,000 of qualified educational expenses.
• Savers Credit: Credit for savings set aside by moderate- and low-income taxpayers, worth up to half your contributions to a retirement plan, IRA, or ABLE account.

The Bottom Line

You have to pay taxes, but you don’t have to pay more than you legally owe. By maximizing your deductions, credits, and employee benefits, and being strategic with your investments, you can save hundreds or even thousands of dollars on your taxes.

If you aren’t sure which strategies you qualify to use, talk to a tax professional. They can help you maximize your savings without getting into trouble with the IRS.

AI can boost efficiency and accuracy in inventory planning, logistics, data analysis, forecasting, writing business plans, and more

Fact checked by Suzanne Kvilhaug
Reviewed by David Kindness

Artificial intelligence (AI) can be used across many aspects of business planning, improving the accuracy and efficiency of processes like inventory planning, logistics, financial and sales analysis and forecasting, and project management. Entrepreneurs looking to launch a new business can also use AI to their advantage in writing a business plan.

However, the specific roles and applications of AI in business planning can vary depending on the nature and requirements of the business or industry.

Key Takeaways

• AI can significantly improve the accuracy and efficiency of data analysis for business planning and help identify new sales and business growth opportunities.
• Incorporating AI in business planning can improve forecasting by offering predictive capabilities.
• Automation of repetitive tasks and processes, such as pulling data for analysis, is another benefit of using AI in business planning.
• Ethical considerations such as potential biases in AI algorithms, as well as technical limitations with AI algorithms, must be addressed in any AI-driven business planning.

Benefits of Using AI in Business Planning

Business leaders looking to use artificial intelligence for business planning can benefit from the insights and efficiencies it provides. Here are some of the ways in which businesses can use AI for different business planning applications.

Improved Accuracy and Efficiency of Data Analysis

As many machine learning algorithms are designed to recognize patterns and process a large quantity of data in relatively little time, they can spot trends and offer insights that might not otherwise be evident. This can help in analyzing and deriving insights from large volumes of customer, order, financial, or other business-related information.

Enhanced Forecasting and Predictive Capabilities

Also referred to as predictive analytics, the ability of AI to make inferences about future outcomes using existing data can be a huge asset across many different business areas. For example, the food service company Sysco uses AI for inventory management as well as warehouse and delivery logistics planning. Another impactful business application for predictive AI models is financial and inventory planning.

Automation of Repetitive Tasks and Processes

Any business planning workflow that currently includes a manual, rote, or repetitive task might be a good candidate for automation using AI. Examples might include pulling data into a spreadsheet for analysis, generating or formatting data, processing documents or information, or requesting approvals.

Identification of New Business Opportunities

AI can help identify new growth strategies and opportunities in marketing and sales. Using AI-enabled customer relationship management (CRM) software can offer insights on lead generation, upsell or cross-sell opportunities, and customer service strategies. It can also provide businesses with the data to better personalize their offerings and target different segments of their customer base.

AI Tools and Platforms for Writing Business Plans

Many generative AI tools and software platforms are available to assist entrepreneurs with the task of writing a business plan. Here is a list of popular AI-based business plan generators.

ChatGPT

Although not a dedicated business plan generator, ChatGPT is one of the most well-known and accessible generative AI tools. Users can prompt ChatGPT to quickly generate ideas, draft outlines or sections, and edit or make text suggestions.

However, any information that ChatGPT provides on things like market research may not be up to date or reliable. Any data and references should be double-checked to ensure both factual and contextual accuracy, and the writing should be reviewed to ensure it aligns with the writer’s desired tone of voice.

Although a free version is available, a paid subscription to ChatGPT Plus costs $20 per month.

Notion AI

Notion is an AI-enabled workspace and project management tool. Although it can be used for more than just generating a business plan, Notion offers both free and paid AI-supported business plan templates.

As an AI-powered productivity tool, Notion can help users quickly generate text as well as automate workflows and tasks. This makes it a useful option for those who wish to use it for individual and team project execution as well as planning.

However, for those who simply wish to generate a business plan, the platform may present a bit of a learning curve and require an investment of time to understand how to use it properly.

Notion has a free plan, but its paid plans start at $8 per month.

ProAI

ProAI is an AI platform specifically tailored to business planning, research, and strategy solutions. It has dedicated tools for generating business plans, financial models, and pitch decks, as well as an AI business advisor that users can consult. It can also guide users in raising capital, including suggesting investors, funding amounts, and approaches.

Users input their business information and goals and link their social media, analytics, accounting software, and other data to the program, and it learns and adapts accordingly. As such, ProAI is a good tool for those looking for accuracy and assistance with financial projections.

However, compared to other tools, ProAI can take considerable time to generate a business plan (up to several days, depending on the depth and level of customization required). There are also potential privacy concerns associated with the sensitivity of data being shared.

ProAI plans start at $114 per year.

Simplified

Simplified is another workflow and productivity tool, with a suite of AI-powered programs to help users create all kinds of content, manage social media channels, and more. Their AI writing tool can offer suggestions and includes templates for specific types of business plans, from food trucks to real estate services.

Simplified’s business plan generator is geared toward solo entrepreneurs, small businesses, and startups. As it is easy to learn how to use, it is a good option for those who don’t want to invest significant time in understanding a new software. It can also generate different types of content, integrate with other platforms, and allow multiple users to collaborate, making it a useful tool for project management and execution.

However, the tool as a whole is not specifically designed for business planning, so it can be limited in terms of data analysis and industry-specific details.

Up to 2,000 words can be generated for free; after that, paid plans start at $20 per month.

Upmetrics

As a dedicated business planning tool, Upmetrics promises to simplify business planning with its AI-powered insights. It includes an AI assistant, a business plan builder with over 400 customizable sample plans, and a pitch deck creator. It also offers financial forecasting and templates to suit different business models.

Upmetrics can both generate and edit text, and users can adjust the tone of the content. It also offers users the ability to collaborate on documents, design cover pages, and drag and drop sections into the template.

Potential downsides might include privacy concerns around sharing financial and other business data, as well as relatively limited template options and customization options.

Upmetrics plans start at $7 per month.

AI Tools for Business Plans
AI Tool	Pricing	Description	Text Generation	Text Editing	Collaboration	Business Plan Templates	Financial Projections
ChatGPT	Free; paid plan is $20/month	All-purpose generative AI chatbot	✓	✓
Notion AI	Free; paid plan starts at $8/month	AI-enabled workspace tool	✓	✓	✓	✓
ProAI	Paid plan starts at $114/year	Dedicated AI business planning tool and business plan generator	✓	✓		✓	✓
Simplified	Free for up to 2,000 words; paid plan starts at $20/month	AI-enabled workspace tool	✓	✓	✓	✓
Upmetrics	Paid plan starts at $7/month	Dedicated AI business planning tool and business plan generator	✓	✓	✓	✓	✓

How to Use AI in Business Planning

AI can be used for business planning at many different stages, starting from when the initial vision for the business is being created. Here’s how to incorporate AI into your business planning.

1. Write a business plan with an AI business plan generator. Whether you use one of the generators mentioned above or one of the many other tools available online, AI-enabled writing programs can provide anything from a draft outline to a comprehensive document to work from. However, don’t rely entirely on AI for a finished product; it’s important to review and check your business plan for things like accuracy, tone, and flow.
2. Use AI-powered automation to improve your business operations. To optimize the day-to-day operating processes of your business, pinpoint any workflows that include manual, rote, or repetitive tasks, such as note taking, data entry, or transcription. Then seek out AI automation tools to save time, make the tasks more efficient, and reduce errors.
3. Analyze your business data with AI. As your business starts to generate data, whether from leads, orders, sales, customer interactions, social media, or finances, AI can be helpful in capturing and analyzing it. In turn, this data can provide crucial information for making decisions about the future of the business in terms of both offerings and growth opportunities.
4. Capture insights with AI to forecast, plan, and set goals. Predictive AI models can be a huge asset in business planning, helping entrepreneurs draw conclusions about future states of business based on historical and current data. While this has obvious applications for business financials, it can also be useful for consumer trend forecasting, customer service, and logistics and inventory planning.

Ethical Considerations in AI-Driven Business Planning

As with any AI application, using AI for business planning is not without ethical concerns.

It’s important to be transparent about the use of AI to both stakeholders and customers in order to maintain relationships of trust and accountability. It’s good practice to make it clear to customers when they are interacting with AI, as with an AI chatbot or a piece of writing generated by AI, for example.

It’s also important to communicate with stakeholders, employees, and decision makers about the reasons for choosing to implement AI in the business and how it will be used, monitored, and maintained so that the appropriate policies and oversight are put in place.

Understanding and communicating how any AI model is programmed and why is also an important accountability and ethics consideration. Many AI models have been shown to reproduce patterns of bias and discriminatory behavior when it comes to gender, race, and other aspects of identity. For example, fintech software algorithms have been shown to replicate historical behaviors of discrimination against marginalized and racialized individuals because those algorithms learn from historical datasets.

Future Trends of AI in Business Planning

As AI models improve and their applications become more mainstream, expect to see AI becoming a feature in all kinds of programs, from financial software to go-to office productivity suites. This will offer both easily accessible information and automation.

Businesses will be able to create ever more personalized offerings for their customers, thanks to AI integrations in CRM software that can draw insights from large volumes of customer data.

AI tools are also changing the competitive landscape of business and entrepreneurship by making previously specialized creative and technical skills like writing, designing, and coding more accessible.

Companies that nimbly adopt and develop strategies to use AI may unlock a significant advantage, though soft skills and a human touch remain as important as ever. A 2023 survey by software company Redpoint Global found that although 73% of consumers believe there is a positive potential for AI in customer experience, 77% of consumers believe that positive customer experiences still require human interaction.

Can I Use ChatGPT to Write a Business Plan?

Among other types of content, ChatGPT can help users quickly generate a business plan by providing ideas, drafts, outlines, or suggestions. However, it’s advisable to review and validate any information that it provides to ensure it’s up to date and accurate.

Are There Free AI Tools for Writing Business Plans?

Many free generative AI tools, like ChatGPT, can assist in writing business plans. Notion and Simplified are examples that include business plan templates for specific types of businesses.

What AI Tools Can Be Used for Business Strategy?

Upmetrics and ProAI are two dedicated business planning AI tools that can provide research, strategy, financial forecasting, and presentation templates.

What Is the Future of AI in Business Strategy?

Areas where AI could further transform business strategy in 2025 include:

• Using decision intelligence to help companies augment existing business intelligence capabilities. Decision intelligence is the application of AI and other technologies to enhance decision making across all areas of a business.
• Using generative AI to transform content marketing and creative processes for businesses. Generative AI is a type of artificial intelligence that can produce content such as audio, text, code, video, images, and other data.
• Using swarm learning to improve performance across departments of a business. Swarm learning is decentralized machine learning that enables peer-to-peer collaboration without sharing data.
• Using embedded analytics to improve decision making across every business area. Embedded analytics is data analysis technology integrated directly into a business software application, platform, or web portal instead of being a separate tool.

The Bottom Line

AI can contribute to better efficiency in business processes, identify opportunities for growth, and provide insights by analyzing large volumes of data, making it a great asset to business planning. However, it’s worth taking a step back before implementing any AI tool in business planning to assess where and how AI can have the most impact.

Just like any other digital tool or technology, AI should be used to complement and bolster existing and future workflows, and should be implemented with an eye to both strategy and accountability.

From selling soft drinks to making billions of dollars

Reviewed by JeFreda R. Brown

Warren Edward Buffett, the legendary value investor, turned an ailing textile mill into a financial engine that powered what would become the world’s most successful holding company.

Known as the “Oracle of Omaha” for his investment prowess, Buffett has amassed a personal fortune of over $150 billion, according to Forbes. He inspires legions of loyal fans to make a yearly trek to Omaha, Neb., for an opportunity to hear him speak at Berkshire’s annual meeting, an event ironically dubbed “Woodstock for Capitalists.”

Key Takeaways

• Warren Buffett started investing at a young age, buying his first stock at age 11 and his first real estate investment at age 14.
• Buffett studied under the legendary value investor Benjamin Graham while pursuing a business degree at Columbia University (Harvard had rejected him).
• Buffett bought the ailing Berkshire Hathaway textile company, later to be used as a vehicle to acquire other businesses and make investments.
• Buffett is a true value investor, buying underpriced but solid companies and holding them for the long term.
• Buffett has always been a philanthropist and has pledged the vast amount of his personal fortune of more than $150 billion to the Bill & Melinda Gates Foundation upon his death.

Early Life and Education

Buffett was born to Howard and Leila Buffett on August 30, 1930, in Omaha, Nebraska He was the second of three children, and the only boy. His father was a stockbroker and four-term U.S. congressman. Howard Buffett was a member of the Republican party and espoused libertarian views.

Making money was an early interest for Warren, who sold soft drinks and had a paper route. When he was 14 years old, he invested the earnings from these endeavors in 40 acres of land, which he then rented for a profit.

At his father’s urging he applied to the University of Pennsylvania and was accepted at age 16. Buffett left that university after two years, transferring to the University of Nebraska.

Upon graduation his father once again convinced him of the value of education, encouraging him to pursue a graduate degree. Harvard rejected Buffett, but Columbia University accepted him. Buffett studied under Benjamin Graham, the father of value investing, and his time at Columbia set the stage for a storied career, albeit one with a slow start.

Upon graduation, Graham refused to hire Buffett, even suggesting that he avoid a career on Wall Street. The reason was that Graham himself had been rejected by Wall Street firms, which he believed was because he was Jewish.

Thus, Graham made it a policy only to hire Jews for his Wall Street company. Buffett returned to Omaha to work at his father’s brokerage firm. He married Susan Thompson in 1952, and they started a family. After three years Graham had a change of heart and offered Buffett a job in New York.

Note

Unlike his mentor Benjamin Graham, Buffett wanted to look beyond the numbers and focus on a company’s management team and its product’s competitive advantage in the marketplace when considering an investment.

Notable Accomplishments

Once in New York, Buffett had the chance to build on the investing theories he had learned from Graham at Columbia. Value investing, according to Graham, involved seeking stocks that were selling at an extraordinary discount to the value of the underlying assets, which he called the “intrinsic value.” Buffett internalized the concept but had an interest in taking it a step further.

In 1956, he returned to Omaha, launched Buffett Associates, and later purchased a house. In 1962, he was 30 years old and already a millionaire when he joined forces with Charlie Munger, whom he first met in 1959.

Their collaboration eventually resulted in the development of an investment philosophy based on Buffett’s idea of looking at value investing as something more than an attempt to wring the last few dollars out of dying businesses.

Along the way, the pair purchased Berkshire Hathaway (BRK.A), a dying textile mill. What began as a classic Graham-style value play became a longer-term investment when the business showed some signs of life.

Cash flows from the textile business were used to fund other investments. Eventually, the original business was eclipsed by the other holdings. In 1985, Buffett shut down the textile business but continued to use the name, eventually growing Berkshire Hathaway into a multi-billion-dollar holding company.

How Buffett Grew Berkshire Hathaway

When Buffett first bought shares in Berkshire Hathaway in 1962, the struggling textile firm was facing low-cost competition that threatened to push it under. Entranced by the stock’s low cost compared to its book value and net working capital, he purchased a controlling interest in 1965.

Shares were trading around $8 when Buffett bought the stock, rising to almost $20 in the late 1960s, when he became CEO. As of September 2024, shares in Berkshire Hathaway Class A stock trade at more than $679,000.

How did he do it? Buffet used the textile company’s profits to buy other companies, including the life insurance firm National Indemnity. The useful thing about life insurance companies, Buffett found, is the float: the capital available after premiums have been paid but before claims are paid out.

Buffett could use this float to invest further, buying securities and other businesses that could generate more money to be invested in more firms and more shares. He closed his investment partnerships by 1969, offering Berkshire Hathaway shares in lieu of cash, and bought insurance companies as wholly owned subsidiaries under the Berkshire umbrella.

He bought See’s Candies in 1972, a purchase that generated more cash flow for investing. He also invested in American Express, Bank of America, Coca-Cola, and Apple, among many others, focusing on solid brands and businesses with a secure economic moat.

Buffett bought for the long haul, preferring to buy and hold his investments, which tended to terrifically appreciate in value over time. He chooses firms with innovative, shareholder-focused management and high profit margins, seeking solid fundamentals when they’re available at a discount.

Buffett closed the last Berkshire Hathaway textile mill in 1985, growing the company steadily as a conglomerate instead. As of September 2024, Berkshire Hathaway owns more than 65 companies outright, with a market cap of more than $975 billion.

Wealth and Philanthropy

What do you do with your money when you are the world’s most successful investor? If you’re Warren Buffett, you give it away. Buffett stunned the world in June 2006 when he announced the donation of the vast majority of his wealth to the Bill & Melinda Gates Foundation, which focuses on world health concerns, U.S. libraries, and global schools, among other issues. It is one of the world’s largest transparent charities.

Buffett’s donations will come in the form of Class B shares of Berkshire Hathaway stock. His total donation to the Gates Foundation is 10 million shares. It will be given out in 5% increments until Buffett’s death or until the foundation fails to meet the spending stipulation or the stipulation that either Bill or Melinda Gates remains actively involved in the foundation’s activities. Buffett’s 2006 donation was 500,000 shares, valued at approximately $1.5 billion.

In June 2022, the foundation’s CEO, Mark Suzman, sent an email to the employees of the Bill & Melinda Gates Foundation. The email was also shared on the foundation’s website that Buffett’s contributions since 2006 have totaled more than $36 billion.

The Wall Street Journal reported that his 2024 donation of 9,930,357 shares of Berkshire Hathaway stock amounted to $4 billion. Buffett expects stock price appreciation to increase that amount over time.

Note

In 2024, another stock donation of 695,122 shares was evenly divided among three charities run by Buffett’s children. An additional 993,035 shares went to a foundation run in honor of his first wife.

While the enormous size of the donation to the Gates Foundation was certainly a big surprise, Buffett’s charitable endeavors are nothing new. He’d been giving money away for 40 years through the Buffett Foundation, eventually renamed the Susan Thompson Buffett Foundation, which has one purpose: It offers college scholarships to low-income students in Nebraska.

Buffett always planned to give the bulk of his wealth to charity but initially insisted that that would occur posthumously. The change of heart is quintessential Buffett—rational, decisive, maverick, and blazing a path all his own. “I know what I want to do, and it makes sense to get going,” he famously said upon making the change.

Buffett’s Investing Strategy

Buffett’s investment philosophy is based on the principle of acquiring stock in what he believes are well-managed, undervalued companies. When he makes a purchase, his intention is to hold the securities indefinitely. Coca-Cola, American Express, and Costco all met his criteria and have remained in Berkshire Hathaway’s portfolio for many years.

In many cases he purchased the companies outright, continuing to let their management teams handle the day-to-day business. A few of the better-known firms that fit into this category include See’s Candies, Fruit of the Loom, Dairy Queen, Pampered Chef, Heinz, and GEICO.

Buffett’s mystique remained intact until technology stocks became popular. As a resolute technophobe, Buffett sat out the incredible run-up in technology stocks during the late 1990s.

Sticking to his guns and refusing to invest in companies that didn’t meet his mandate, Buffett earned the scorn of Wall Street experts and was written off by many as a man whose time had passed.

The tech wreck that occurred when the dotcom bubble burst bankrupted many of those experts. Buffett’s profits doubled.

Personal Life

Despite a net worth measured in billions, Warren Buffett is legendarily frugal. He still lives in the five-bedroom house he bought in 1958 for $31,500, drinks Coca-Cola, and dines at local restaurants, where a burger or a steak is his preferred table fare.

For years he eschewed the idea of purchasing a corporate jet. When he finally acquired one, he named it the Indefensible—publicly recognizing his criticism about money spent on jets.

Buffett married Susan Thompson in 1952. They separated in 1977 but remained married until her death in 2004. They had three children, Susie, Howard, and Peter. Thompson introduced her husband to Astrid Menks, a waitress, and Buffett and Menks began living together in 1978. They were married in August 2006.

Legacy

Considered to be the greatest investor of all time, Buffett has profoundly affected finance, business, philanthropy, investing, and more, and the principles he has shared throughout his life have shaped the minds of many entrepreneurs, investors, and others.

As chairman and CEO of Berkshire Hathaway, Buffett turned a small company into a multi-billion dollar conglomerate, acquiring some of the most prominent businesses in the U.S. His investment philosophy, rooted in value investing (buying undervalued stocks with the potential for long-term growth) has become a key strategy for investors around the world.

Buffett has maintained a folksy character, doling out pearls of wisdom when he speaks, and maintaining a frugal life, living in a home he purchased decades ago. His modest lifestyle despite his immense wealth has cemented him as a person of humility.

This character can also be witnessed through his philanthropic efforts, particularly through The Giving Pledge, which he co-founded with Bill and Melinda Gates, where he has promised to donate most of his wealth and suggests other people of such means do the same.

His belief in long-term investing, living simply, and positive business ethics have earned him a glowing reputation, one that will continue to influence people for decades to come.

How Did Warren Buffett Amass His Fortune?

Buffett’s fortune was built by highly researched and timely purchases of undervalued stocks and companies, which he would then hold for the long term. For most of the companies he bought, he let existing management remain in place, as they had obviously done a good enough job to make their company attractive to Buffett in the first place. He has been in stocks for the long haul, holding companies such as Coke and American Express for decades. (He still owns both.)

What Are Some of Buffett’s Pearls of Wisdom?

“If you aren’t willing to hold a stock for 10 years, don’t even think about holding it for 10 minutes,” wrote Buffett in 1996 in a letter to Berkshire Hathaway shareholders. Another famous quote, part of a 2008 opinion piece in the New York Times, is, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.” Indeed, Buffett is well known for his many investing aphorisms, which always come back to the simple rules of value investing.

What Does Warren Buffett Plan to Do With His Fortune?

The simple answer is give it away, which he plans to do by making mega-donations, primarily to the Bill & Melinda Gates Foundation, as he has established a great rapport with both of them and shares and respects their philanthropic causes, such as world health and women’s rights. Warren Buffet is legendarily generous in giving to causes he deems worthy, so it is no surprise he would give away the vast majority of his wealth to causes in need of funding.

The Bottom Line

The future looks to hold an increase in the amount of money that Buffett will continue to give. As he told BBC News in 2006: “I am not an enthusiast of dynastic wealth, particularly when the alternative is six billion people having much poorer hands in life than we have, having a chance to benefit from the money.”

Buffett has made his fortune by relying on the time-tested rules of value investing, meaning finding high-quality companies at fair market valuations. He then holds these investments for the long term, some indefinitely, always allowing the power of compounding to work its magic.

Fact checked by Suzanne Kvilhaug
Reviewed by JeFreda R. Brown

Cryptocurrencies have experienced intense growth since Bitcoin launched in 2009—both in market capitalization and public awareness. So it should come as no surprise that many retirement investors are wondering if crypto has a place in their 401(k)s or similar employer-sponsored retirement plans.

The momentum in crypto may be challenging for 401(k) plan administrators. With some providers now making it possible to include crypto among investments, plan fiduciaries must decide whether the asset class is a good choice to help people save for their retirement nest eggs.

Key Takeaways

• Retirement savers are interested in adding cryptocurrencies to their 401(k)s.
• Plan administrators should weigh the pros and cons of including cryptocurrencies in 401(k) plans.
• The U.S. Department of Labor has guided 401(k) plan investments in cryptocurrencies, indicating that plan fiduciaries should exercise caution.
• Plan administrators can add cryptocurrency as an investment option to their 401(k) plans, and some providers offer or plan to offer crypto access.
• Employers should implement strategies to mitigate risks associated with crypto investments and ensure compliance with regulations and fiduciary responsibilities.

Cryptocurrency Legalities and Regulations

Qualified retirement plans like 401(k)s must meet the minimum standards under the Employee Retirement Income Security Act (ERISA). The law does not specify which assets retirement investors can or cannot include in their 401(k), including cryptocurrencies.

Instead, the federal law imposes fiduciary responsibilities on the people who make decisions about retirement plans. This means that plan administrators, trustees, and the plan’s investment committee members must perform their due diligence and act in the best interest of the plan participants.

It’s up to the people who hold these fiduciary roles to determine whether it’s prudent to make crypto and other digital assets available to plan participants. The regulatory uncertainty surrounding cryptocurrency regulations could make it difficult for plan administrators to grapple with this question. But, there has been little progress on meaningful legislation to clarify the rules related to digital assets.

In March 2022, the U.S. Department of Labor (DOL) issued guidance for retirement plan decision-makers who may consider crypto’s place in retirement plans. In a strongly worded Compliance Assistance Release, the DOL advises “plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants.”

Note

A 2022 survey by Charles Schwab showed that 32% of 401(k) participants wish they could invest in cryptocurrencies through their plan. The interest was more pronounced among younger generations, with nearly half of millennial and Gen Z respondents expressing the desire to spice up their retirement portfolio with crypto; however, a 2023 survey showed that investments in crypto for retirement savings were down from 25% in 2022 to 14% in 2023.

Advantages and Disadvantages of Cryptocurrencies in 401(k) Plans

Plan administrators and other fiduciaries must weigh the pros and cons of offering participants cryptocurrency as an investment option in their retirement accounts. Let’s consider the potential benefits and risks of providing retirement investors access to cryptocurrency assets in their 401(k)s.

Advantages

Cryptocurrency enthusiasts argue that it has the potential for large returns that would otherwise be impossible with traditional investment types available through 401(k) plans. As such, 401(k) participants who manage to capitalize on an upswing in the crypto market could receive a nice boost toward their retirement goals.

Other benefits of adding crypto to retirement plans like a 401(k) include:

• The outperformance of cryptocurrencies when compared to traditional assets like stocks and bonds over the past decade
• Opportunities for growth and flexibility as cryptocurrencies become more accepted and are adopted as investment options for retirement plans

Disadvantages

The DOL’s statement highlights numerous concerns about the suitability of crypto as a retirement investment. In addition to risks relating to fraud, theft, and loss, the agency remains concerned that:

• These assets are speculative and volatile.
• Plan participants could lack the knowledge they need to make informed decisions about crypto.
• Cryptocurrency investments also present custodial, valuation, and regulatory concerns for those responsible for protecting the interests of plan participants.

Pros

• Potential for high returns

• Outperforms compared to typical plan assets

• Growth opportunity through potential increase in acceptance

• Flexibility for participants to select from broader range of investment choices

• Increasing availability from 401(k) plan providers

Cons

• High volatility and speculative nature

• Potential for fraud, theft, and loss

• Plan participants aren’t versed enough to determine valuations and make informed decisions

• Custodial issues and risks related to storing crypto assets

• Uncertain and evolving regulatory environment

Adding Cryptocurrencies to a 401(k) Plan

After carefully weighing the risks of offering cryptocurrency assets to retirement investors against the potential rewards, 401(k) plan administrators who decide to move forward have a couple of choices for making digital assets available to participants.

Administrators can generally opt to include cryptocurrency within the plan’s core investment options or through a setup similar to a self-directed brokerage window.

Download Link: Are your clients interested in crypto? Use this discussion guide.

Including cryptocurrency on the core investment menu makes these assets available to all participants in the plan. The potential drawback is that ERISA requires plan advisors to verify the suitability of any investments included on the core menu. In other words, if a crypto asset included on a plan’s core menu is determined to be imprudent, then plan fiduciaries are at risk of liability.

The other possibility is offering crypto through a self-directed window—a separate account that participants can open within their retirement plan to access a broader array of assets.

Making available a self-directed option allows participants greater freedom to allocate their retirement portfolios, providing access to funds not on the core menu, individual stocks and bonds, and cryptocurrency assets (if they’re available through the 401(k) provider).

Important

Plan administrators may allow investors to invest in crypto-related exchange-traded funds (ETFs) in their 401(k). In January 2024, the Securities and Exchange Commission (SEC) approved 11 Bitcoin ETFs that began trading on exchanges like the NYSE Arca and Nasdaq.

Mitigating Crypto Risks and Ensuring Compliance

The DOL advised 401(k) fiduciaries about approaching crypto with “extreme care.” Fortunately, there are a few things administrators can do to limit risk and ensure their plan remains compliant with all relevant rules and regulations.

One important measure is to leave the choice of whether to allocate retirement funds to crypto assets entirely up to the plan participants.

As such, they should always be available as a plan option, and administrators should steer clear of making riskier assets a required or automatic investment choice. Offering crypto through a self-directed window rather than within the core menu may be one way of clarifying that investing in these assets is not obligatory.

Another way to mitigate risk is to institute limits on the percentage of a participant’s portfolio that can be allocated to cryptocurrency assets. This lets retirement investors benefit from the diversification provided by crypto without exposing an unadvisable portion of their investments to heightened levels of risk.

The choice of plan provider can also be a key factor in ensuring compliance. Plan fiduciaries who wish to offer crypto investments could benefit from working with an experienced provider in making digital assets available to retirement investors.

Knowledgeable providers can offer educational materials to help participants make more informed decisions about crypto, and they can work with plan fiduciaries to install the proper guardrails to protect retirement investors against ill-advised or excessively risky allocations.

What Are the Potential Benefits and Risks of Including Cryptocurrencies in 401(k) Plans?

Cryptocurrency investments could benefit retirement investors by diversifying their portfolios and exposing them to the possibility of high returns. However, holding cryptocurrencies in a retirement account also exposes the investor to the volatility and instability of these digital assets.

The regulatory ambiguity surrounding cryptocurrencies and the possibility of more restrictive rules in the future also raise questions about the suitability of these assets for long-term wealth accumulation, which is central to the goals of retirement investors.

What Guidance Has the U.S. Department of Labor Provided Regarding 401(k) Plan Investments in Cryptocurrencies?

The U.S. Department of Labor issued a Compliance Assistance Release in March 2022 advising 401(k) plan administrators and other plan fiduciaries to adopt an extremely cautious approach when considering whether cryptocurrency assets constitute appropriate retirement investments.

How Can Plan Administrators Add Cryptocurrency as an Investment Option to Their 401(k) Plans?

Retirement plan administrators can either add cryptocurrency assets to the menu of core investment options or initiate or expand a self-directed window that allows participants the freedom to choose cryptocurrency investments. Both of these options depend on the services and offerings of the plan provider.

What Strategies Can Employers Implement to Mitigate Risks Associated With Crypto Investments in 401(k) Plans?

Employers and retirement plan administrators who decide to offer cryptocurrency investments can take several steps to limit the associated risks. Plan fiduciaries should stress that cryptocurrency allocations remain entirely optional, and there may be a benefit to providing participants with educational resources about any available assets.

Setting a limit on the percentage of a retirement portfolio that can be allocated to cryptocurrency can also be an effective guardrail, and working with plan providers who are experienced in offering crypto assets to retirement investors can help ensure a smoother process.

The Bottom Line

Many investors may be interested in including cryptocurrency assets within their retirement portfolio. Still, retirement plan administrators have the responsibility to tread carefully regarding the investment choices that they make available.

Due to the liability administrators inherit when creating plans, they should exercise caution regarding including cryptocurrency in retirement plans and highlight the volatility and other risks associated with the asset class for participants.

Plan administrators should carefully weigh these risks before allowing participants to invest in cryptocurrency. Administrators who decide to offer crypto investments can put some safeguards in place, like allocation limits and enhanced educational resources, to reduce risks and remain compliant with regulations.

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Day trading can be profitable for a select few, but the data suggests most traders will lose money.

Ever watched a TV series or a movie where a trader appears to make millions with just a few clicks of a mouse? That’s the Hollywood version of day trading—buying and selling securities within a single trading day. It’s easy to see why this approach has captured the imagination of so many people-who wouldn’t want to work market hours from home, be their own boss, and potentially earn millions?

But what’s the reality behind these depictions of success? Day trading can indeed be profitable, but it’s exceptionally challenging—and most people who try it end up losing money.

According to both academic and industry research, the success rate in day trading is quite low. Depending on the source, only around 3% to 20% of day traders make money. But that 20% estimate probably has as much to do with the time period studied—the dotcom bubble. It’s hard to know for sure, but it’s probably fair to say that up to 95% of day traders lose money.

So is day trading still worth pursuing? This article cuts through the hype to provide a practical guide for those considering entering this high-stakes arena.

Key Takeaways

• Day traders attempt to profit from intraday price moves and rarely hold positions overnight.
• The vast majority of day traders lose money.
• The factors that determine the potential upside of day trading include the limited amount of capital needed to get started, strategies used, markets chosen, and luck.
• Successful day traders are disciplined and stick with their strategy; they manage risk by using stop-loss orders and establishing profit-taking points.

Understanding Day Trading

Unlike investors who commit to long-term buy-and-hold positions or swing traders who might hold positions for days or weeks, day traders look to turn quick, small profits in a single trading day, liquidating all positions before the market close to protect against risks that could materialize overnight. They can hold positions for hours, minutes, and even seconds. Some trade once a day, while others can trade dozens or even hundreds of times a day.

Day traders attempt to exploit small price changes in highly liquid assets such as stocks, currencies, futures, or options. They use technical analysis as the basis of their trading system and leverage helps them increase their potential earnings (but it can also amplify their losses). Successful day trading demands in-depth market knowledge, swift decision-making, and access to real-time data.

Consider a hypothetical example: A day trader might start their morning looking at a stock that appears to be gapping higher on positive earnings news. They buy 500 shares at $50 and hope to sell at $51 (for a $500 profit). They set a stop-loss at $49.50. After holding for several minutes and seeing the price rise to $50.75, they might decide to exit with a $375 gross profit (before fees and taxes) before momentum fades.

Traders using different systems might trade make dozens or even hundreds of transactions in a day. This is why regulators created specific rules for so-called “pattern day traders“—anyone executing four or more day trades within five business days—requiring them to maintain at least $25,000 in their margin trading accounts.

Challenges and Risks

But why is day trading so challenging? First, it’s extremely difficult to predict price movements in such a short-term time frame. While swing traders or position trades can use established trends, and the buying of large institutions, to profit, intraday price movements are often driven more by news and emotion than trends.

Second, even a winning system will lead to consistent losses in the hands of a day trader with poor control of their emotions and impulses. The emotional and psychological biases inherent in human decision-making further complicate day trading, when important decisions must be made quickly.Overconfidence can lead to excessive risk-taking and overtrading, while loss aversion leads to poor decisions like selling winners to early and holding on to losers for far too long.

With the rise of algorithmic, high-frequency trading, amateur day traders are also now competing against professional firms with virtually unlimited resources and advanced technology—all while battling their own psychological biases like fear and greed.

Even if a trader has developed a winning system and mastered their emotions, they still have to overcome slippage and transaction costs and then pay taxes on whatever profits are left. Will they make enough money to live on and continue trading? Probably not.

Day Trading vs. Long-Term Investing
Aspect	Day Trading	Long-Term Investing
Time horizon	Seconds, minutes, hours	Months, years, decades
Decision drivers	Technical indicators, momentum, breaking news	Stock fundamentals, diversification
Transaction frequency	High (usually multiple times daily)	Low
Capital requirements	$25,000 minimum)	Can start with any amount
Tax implications	Short-term capital gains (higher than long-term rate)	Long-term capital gains

Is Day Trading Profitable?

While a small number of traders show exceptional success, the uncomfortable truth about day trading profitability is revealed in various academic studies and broker data:

• According to a study by the Brazilian Securities and Exchange Commission, approximately 97% of 1,600 day traders who persisted for more than 300 days lost money.
• One study of day trader profitability put their average net annual return at -$750 (a loss).
• A multi-year analysis of day traders in Taiwan found that a majority lose money in any given year, and less than 1% of the most profitable day traders from the prior year go on to earn positive abnormal returns the next year.
• Active day traders in the U.S. underperform a value-weighted index by an average 10.3% annually.
• Day traders engaging in more frequent and larger trades are more likely to suffer losses.
• An SEC report looking at records of 12 forex brokerages revealed around 70% of retail FX day traders lost money each quarter.

These dismal statistics point to an undeniable conclusion: The evidence is overwhelming that the vast majority of day traders will lose money.

Factors Influencing Day Trading Profitability

Despite the inherent challenges and poor outlook for day trading as a lucrative full-time job, there are certain factors that can influence the probability of success.

For those still determined to try day trading, several tools and resources are essential for getting started:

Factors that Help

1. Capital adequacy: Sufficient starting capital provides a buffer against inevitable losses and allows proper position sizing. Pattern day trader rules require a minimum balance of $25,000 in a margin account, but a buffer is needed to make trades to account for initial losses.
2. Knowledge and skills: A deep understanding of market mechanics, price action, and trading psychology is needed. Books, courses, and mentorship programs from legitimate trading educators are helpful.
3. Disciplined approach: Stick to an objective, predefined trading plan. Maintain focus and diligence. Day traders are only human and like nearly everyone else they can succumb to emotional biases with money on the line. Some of those biases include fear of missing out (FOMO), confirmation bias, overconfidence, loss-aversion, and anchoring bias.
4. Risk management: Limit potential losses with stop-loss orders or trailing stops. Set daily loss limits and keep backups and logs.
5. Technology and tools: Use professional-grade trading platforms, real-time data, and analytical software with reliable internet connections and backups. Many online brokers today offer reliable, low-latency platforms with advanced charting capabilities, order-execution tools, and market-depth information.
6. Market conditions: More liquid, actively-traded securities will have tighter bid-ask spreads.

Important

Emotional control and adherence to a well-defined trading plan are vital for day trading success.

Developing a Trading Strategy

A robust day trading strategy should include:

1. Entry and exit rules: Have specific, objective criteria for initiating and closing positions.
2. Position sizing: Follow established guidelines for determining appropriate position sizes based on account size, risk tolerance, and expected drawdowns.
3. Loss parameters: Fix maximum loss amounts per trade and per day.
4. Time frames: Understand the specific time frames you’ll analyze and trade within.
5. Securities selection: Become familiar with the criteria you’ll use for selecting the strategies and securities you’ll trade, whether stocks, futures, or forex pairs.

Most brokers and platforms today offer demo accounts for making “paper trades” to help beginning traders test their trading strategies. Before risking real money, new traders should invest time in simulation and paper trading to develop and validate their approach.

The Bottom Line

Day trading offers the allure of quick profits but comes with enormous risks. Indeed, the odds are not in the average day trader’s favor. Success requires substantial capital, sophisticated tools, advanced knowledge, psychological discipline, and effective risk management. Even for those with these advantages, only a minority of day traders achieve consistent profitability.

The American economic historian and labor economist is the third woman to win the Nobel Memorial Prize in Economic Sciences

Fact checked by Suzanne Kvilhaug

Claudia Goldin is an American economic historian and labor economist, and the third woman to win the Nobel Memorial Prize in Economic Sciences (officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel). She is the first woman to have won the prize solo.

Best known for her historical research on women in the U.S. economy, Goldin’s work spans a wide range of topics, including the gender wage gap, women in the labor force, income inequality, education, immigration, and technological change. She has published several books, held multiple director roles with the National Bureau of Economic Research (NBER), and been recognized with many other awards and academic fellowships.

Key Takeaways

• Claudia Goldin is a prominent American economic historian and labor economist.
• She has made significant contributions to the field of economics, particularly in the study of gender and labor economics.
• She currently holds the position of Henry Lee Professor of Economics at Harvard University.
• She has received numerous awards and recognition for her work, including the 2023 Nobel Memorial Prize in Economic Sciences.

Early Life and Education

Born Claudia Dale Goldin in the Bronx, New York, in 1946, Goldin grew up wanting to be a scientist. She originally studied microbiology before discovering economics and pursuing an undergraduate degree in the field at Cornell University, earning a bachelor’s degree in economics in 1967.

Goldin then went on to get a master’s degree (1969) and doctorate (1972) focusing on labor economics at the University of Chicago.

Her study of American economic history delved into the economics of slavery and the post-Civil War South, and her realization that major changes in the labor force during this period had much to do with women, families, and children sparked her interest in focusing on the history of women in the labor force.

Career and Contributions

After her Ph.D., Goldin was hired as an assistant professor of economics in 1971 at the University of Wisconsin-Madison and taught there for three years. In 1974, she accepted an offer at Princeton University, where she taught economics for six years.

From 1979 to 1990, Goldin was a faculty member in the University of Pennsylvania’s economics department before joining the faculty at Harvard, the first woman to be granted tenure in her department.

Goldin was the director of the National Bureau of Economic Research’s (NBER’s) Development of the American Economy program from 1989 to 2017 and is currently a co-director of the NBER’s Gender in the Economy group. In 1999 and 2000, she was president of the Economic History Association, and in 2013, she was president of the American Economic Association.

As one of the first researchers to study the historical role of women in the U.S. labor force, Goldin has made huge contributions to the field of economics as it relates to gender and the workforce.

Her book, “Career and Family: Women’s Century-Long Journey Toward Equity;” published in 2021, explores how women have balanced their careers with their family life from 1900 until the present. In it, she characterizes and demonstrates how “greedy” work, or jobs that pay more for being on call or working long hours, contributes to the gender wage gap.

In an interview, Goldin said, “We know the gender gap is widened enormously when families are formed. … This doesn’t mean that women leave the workforce; it means that they take positions in which flexibility is cheaper. … It’s the cost of flexibility that really matters.”

Goldin’s other influential work focuses on the history of women’s participation in higher education, including the reasons why women now comprise the majority of university undergraduate enrollment numbers; the impact of the contraceptive pill on women’s marriage and career decisions; the social indicator of women’s surnames after marriage; and the life cycle of women’s employment.

Academic Positions and Affiliations

Goldin is currently the Henry Lee Professor of Economics and holds the Lee and Ezpeleta Professorship of Arts and Sciences at Harvard University. She is also a research fellow with the Institute of Labor Economics (IZA).

Goldin is a member of many notable organizations, including the National Academy of Sciences and the American Philosophical Society, and a fellow of the American Academy of Political and Social Science, the American Academy of Arts and Sciences, the Society of Labor Economists (SOLE), the Econometric Society, and the Cliometric Society.

From 1984 to 1988, she was editor of the Journal of Economic History. She has also served on several editorial and advisory boards for other journals and economics publications.

Awards and Recognition

Goldin has won many awards for her work, most notably the 2023 Nobel Memorial Prize in Economic Science. She is the third woman to receive the prize and the first woman to be awarded it solo. The prize was awarded for Goldin’s work on the history of women’s participation in the American labor market, “for having advanced our understanding of women’s labor market outcomes,” and cited as “the first comprehensive account of women’s earnings and labor market participation through the centuries.”

Specifically, Goldin mapped the trend of women’s participation in the American labor market and demonstrated that it did not follow a straightforward upward trajectory throughout the period of time she studied (the late 18th century to the late 20th century).

In fact, it formed a U-shaped curve: The participation of married women in the labor economy decreased during the transition from an agrarian to an industrial society and began to increase as the service sector grew in the early 20th century, then continued to increase as access to education and the contraceptive pill grew and career expectations for women shifted.

Some of the other notable awards she has received include: 

• The Richard A. Lester Prize for Outstanding Book in Labor Economics and Industrial Relations, for her 2021 book, “Career and Family” (2022)
• The Nemmers Prize in Economics from Northwestern University (2020)
• The BBVA Frontiers of Knowledge Award in Economics (2019)
• The IZA Prize in Labor Economics from the Institute of Labor Economics (2016)
• The Mincer Prize from the Society of Labor Economists for her lifetime contributions to the field of labor economics (2009)

Goldin has also been granted honorary doctorates, fellowships, and research grants from many major academic institutions and foundations.

Impact and Influence

One of the major impacts of Goldin’s Nobel Prize-winning work is that she provided a different explanation for the gender pay gap. Previously, the gap could be explained by gendered differences in educational and occupational choices. Goldin’s work demonstrates that much of the difference in earnings currently is between women and men working in the same occupation and that the gap in earnings usually arises when a woman gives birth to her first child.

Regarding this work, Jakob Svensson, chair of the Committee for the Nobel Memorial Prize in Economic Sciences, said, “Understanding women’s role in the labour [sic] is important for society. Thanks to Claudia Goldin’s groundbreaking research, we now know much more about the underlying factors and which barriers may need to be addressed in the future.”

Goldin’s lifetime work has had a huge impact on the field of economics, ushering in a missing perspective backed up by comprehensive data and analysis. Betsey Stevensen, professor of economics and public policy at the University of Michigan and one of Goldin’s mentees, said, “Claudia marched in to document the changing roles of women in society at a time when many male economists just didn’t care. Claudia understood that work and life were intertwined.”

Cecilia Rouse, a former Ph.D. student of Goldin’s, a former advisor to Presidents Barack Obama and Bill Clinton, and a former chair of the Council of Economic Advisers to President Joe Biden, commented on Goldin’s Nobel win.

She said, “What they recognized was a body of work, which piece by piece has helped us to fill in a portrait and understand the role of women in the economy over centuries. She has helped us to understand the wage structure over the 20th century. She’s done work on education, and she does so with intention; she does so creatively.”

What Are Claudia Goldin’s Notable Contributions to the Field of Economics?

Claudia Goldin has made many contributions to the study of labor economics as it relates to gender. Notably, she helped further the understanding of what causes the gender pay gap and when it tends to arise by mapping the history of women’s participation in the American labor market.

What Awards Has Claudia Goldin Received for Her Work?

Claudia Goldin has received many notable awards for her work, including the 2023 Nobel Memorial Prize in Economic Sciences. She also won the 2020 Nemmers Prize in Economics from Northwestern University, the 2019 BBVA Frontiers of Knowledge Award in Economics, the 2016 IZA Prize in Labor Economics from the Institute of Labor Economics, and the 2009 Mincer Prize from the Society of Labor Economists for her lifetime contributions to the field of labor economics.

How Has Claudia Goldin Influenced the Study of Gender and Labor Economics?

Claudia Goldin’s work changed the previous understanding of the gender pay gap by demonstrating that the majority of the current earnings difference is between men and women who are in the same occupation and that this difference tends to arise when a woman’s first child is born. Goldin has also done work on women’s participation in higher education; the impact of the contraceptive pill on women’s marriage and career decisions; and the life cycle of women’s employment.

What Are Some of Claudia Goldin’s Notable Research Areas?

As an economic historian and labor economist, Claudia Goldin has researched women’s participation in labor, the gender wage gap, education, immigration, technological change, and income inequality.

What Did Claudia Goldin Receive the Nobel Prize in Economics For?

Claudia Goldin was awarded the Nobel Memorial Prize in Economic Sciences “for having advanced our understanding of women’s labor market outcomes” and providing “the first comprehensive account of women’s earnings and labor market participation through the centuries,” according to the Nobel Prize committee.

The Bottom Line

Claudia Goldin has contributed much to the field of economics and beyond. As recognized by her 2023 Nobel Memorial Prize in Economic Sciences, her lifetime historical research and economic analysis have helped shape how we understand the gender pay gap and what factors contributed to women’s participation in the American labor market over different periods of time.

As the Henry Lee Professor of Economics at Harvard, she continues to publish, teach, and mentor, as well as contribute to research organizations such as the National Bureau of Economic Research (NBER) and the Institute of Labor Economics (IZA).

Signals To Watch for the State of the Market and the Economy

Reviewed by Charles Potters

Investors and policymakers always want tools to predict future trends and to make informed decisions. Economic indicators stand out among these tools as crucial signposts. They offer insights into the health and direction of an economy.

Leading, lagging, and coincident indicators form a trifecta of economic measures. Each plays a role in forecasting, confirming, or telling us about the market or the broader economy. They fall into one of three categories:

• Leading indicators point toward future events.
• Lagging indicators confirm economic or market shifts that are already in motion.
• Coincident indicators occur in real time and clarify the state of the economy.

Key Takeaways

• An indicator is a statistic that predicts and understands financial or economic trends.
• All indicators fall into one of three categories. They’re leading, lagging, or coincident.
• Leading indicators point toward possible future events.
• Lagging indicators are used to confirm a pattern in progress.
• Coincident indicators occur in real time and help clarify the state of the economy.

What Are Indicators?

An indicator is a statistic used to predict and understand financial or economic trends.

Some indicators seem lighthearted but, in the end, have a certain validity. The lipstick indicator was invented by Leonard Lauder, chair of the Estee Lauder cosmetic company. He claimed that rising sales of lipstick are an indicator of troubled times and he was right.

The most closely watched indicators are social, business, and economic statistics published by respected sources, however. These sources include various departments of the U.S. government. All are based on surveys that are conducted regularly, usually once a month. This allows the results to be tracked and analyzed over time.

The information provided by these indicators is very influential. Indicators help shape fiscal and monetary policy, business investments and strategies, and the value of share prices.

Leading Indicators

Leading indicators are economic statistics that often anticipate trends, providing a means of forecasting economic activity. They typically change before the broader economy shifts, “leading” or in front of them.

Yield Curves

Yield curves plot the interest rates of bonds with equal credit quality but different maturity dates. The shape of a yield curve can provide crucial information about future economic conditions:

• A normal, upward-sloping curve often suggests economic expansion.
• An inverted curve where short-term rates exceed long-term rates has historically preceded recessions.

Negative yield curves haven’t borne this out yet in the 2020s, however.

New Housing Starts

It indicates that builders are optimistic about demand in the near future for newly constructed homes when housing starts to rise. Builders are cautious when they fall because they’re worried about building homes that can’t be sold. Housing starts are therefore seen as a sign that home sales are slowing or at least that builders fear they will.

Purchasing Managers’ Index (PMI)

The PMI measures the health of the manufacturing and service sectors based on surveys of private-sector companies:

• A score above 50 indicates expansion.
• A score below 50 suggests contraction.

Money Supply

The overall amount of money circulating in an economy can signal future economic strength.

• Increases in the money supply often correlate with economic growth.
• Reductions in the money supply can indicate a potential economic slowdown.

These indicators can provide a more comprehensive view of potential economic directions when they’re analyzed collectively. No single indicator is infallible, however. There are arguments among experts over just how much we should trust each of these indicators, alone or with others.

Lagging Indicators

Lagging indicators can only be known after the event but that doesn’t make them useless. They confirm patterns.

The unemployment rate is one of the more reliable lagging indicators. The overall economy has slowed if the unemployment rate rose last month and the month before. Lower employment means less spending in the economy so this suggests that the slowdown will continue.

The consumer price index (CPI) measures changes in the inflation rate and is another closely watched lagging indicator. Few events cause more economic ripple effects than price increases. The U.S. Federal Reserve kept raising the fed funds rate to battle post-pandemic inflation in the 2020s. That campaign seemed to have worked by 2024.

Coincident Indicators

Coincident indicators are data points that usually change simultaneously with general economic conditions. They’re viewed as reflecting the present economy as a result. Leading indicators look ahead and lagging indicators look behind. Coincident indicators reflect the present or the very recent past.

Important

All three types of indicators are used together to get a better, fuller sense of what’s in store for the economy and the market.

Personal income is a coincident indicator of economic health. Higher personal income numbers coincide with a stronger economy. Lower personal income numbers mean the economy is struggling.

The gross domestic product (GDP) of an economy is also a coincident indicator. This is the real GDP for the U.S.: the GDP adjusted for inflation.

How Reliable Are Leading Indicators for Predicting Economic Shifts?

Their dependability varies. The yield curve correctly signaled all nine recessions from 1955 until the late 2010s with only one false positive. Changes in the economy can mean that it’s no longer the signal it once was, however. The lesson is that the effectiveness of indicators changes over time because of structural economic shifts or policy changes.

How Are Advances in Data Analytics Changing How Experts Use Economic Indicators?

Big data analytics and artificial intelligence are enabling the creation of new, more subtle indicators of economic shifts. Satellite imagery is used to estimate retail sales by counting cars in shopping mall parking lots. Social media sentiment analysis is being explored as a potential leading indicator of consumer behavior.

These data sources offer more frequent and granular insights than traditional monthly or quarterly reports. They also present challenges in terms of data quality and privacy concerns, however.

Do Global Events Change How We Read Economic Indicators?

Global events can significantly distort the usual power of indicators to tell us about the economic currents. Many traditional indicators became less reliable during the COVID-19 pandemic because of economic disruptions and the inability to collect the necessary data. Economists turned to high-frequency data like credit card spending or mobility reports for more real-time insights.

The Bottom Line

Leading, lagging, and coincident indicators are part of a tool kit for understanding and forecasting economic trends. Leading indicators such as yield curves, new housing starts, and the PMI, offer signs of future economic activity. These forward-looking metrics help investors and policymakers to anticipate potential economic changes and react accordingly.

Lagging indicators like unemployment rates and corporate profits, confirm long-term trends but are slower to reflect changes. They serve as a retrospective view of the recent economic past.

Coincident indicators including GDP and retail sales move with the economy. They provide a real-time snapshot of present conditions.

Interpreting these indicators requires careful consideration of global events, structural economic changes, and evolving market dynamics, however. Many indicators are signals but not direct readings of the economy and experts often clash on how to read these signals in light of others arising from changes in the markets.

Crypto scams and security breaches have remained a serious concern ever since the advent of cryptocurrencies some 15 years ago.

With worldwide crypto losses estimated at $10+ billion in 2024 alone, vulnerabilities have left some investors worried about what they can do to protect themselves.

Key Takeaways

• Reports suggest that crypto scams and hacks result in billions of dollars in yearly losses.
• Ponzi schemes, phishing, and fake exchanges are common scams, while hackers focus their attacks on vulnerable exchanges and smart contracts.
• Use only reputable platforms alongside two-factor authentication (2FA) and keep your private keys secure.

Types of Crypto Scams and Hacks

Although blockchain technology is designed to prevent tampering, the fundamental weaknesses are typically in the ecosystem that exists around it.

Defrauding people out of their money is a trick as old as time. The cryptocurrency space has simply provided scammers with new tools and techniques to do so. Bad actors take advantage of people’s natural penchant for greed combined with a limited understanding of blockchain technology and the irreversibility of transfers to separate victims from their digital assets with little chance of recovery.

Common Crypto Scams

• Ponzi/pyramid schemes: Paying early investors with new investor funds while falsely claiming returns come from legitimate growth.
• High-yield promises: The most popular, these lure investors with false guarantees of exceptional, risk-free returns.
• Pump-and-dumps: Artificially inflate asset prices through misinformation, then sell holdings at the peak.
• Pig butchering: These involve cultivating online relationships before persuading victims to send crypto.
• Rug pulls/exit scams: Abandon projects and abscond with investor funds after generating initial excitement.
• Phishing/crypto-drainer: Create fake websites or emails to steal credentials or trick users into approving transactions that drain wallets.
• Impersonation/livestream scams: Impersonate celebrities/influencers to promote fake giveaways, often requiring upfront deposits.
• ATM scams: Create urgent justification for consumers to take cash from their bank accounts and put it into a Bitcoin ATM.
• Address poisoning: Sending tiny amounts from similar-looking addresses to trick recipients into using the wrong address for future transactions.
• Recovery scams: Target previous victims with false promises to recover lost funds for a fee.

Hong Kong-based BitForex executed a suspected rug pull in February 2024, withdrawing about $56.5 million in cryptocurrency before going dark.

Crypto Hacks

While scams have people unwittingly handing over their crypto, hacks target vulnerabilities in the code, infrastructure, or security protocols of third-party platforms, exchanges, and wallets, allowing attackers to bypass security measures and steal funds directly from the system.

Common Crypto Hacks

• Smart contract hacking: Exploiting vulnerabilities in blockchain application code.
• 51% attacks: Controlling majority mining power to manipulate blockchain transactions.
• Person-in-the-middle attacks: Intercepting communications between users and crypto services.
• Exchange breaches: Attacking crypto exchanges through security vulnerabilities.
• DNS hijacking: Redirecting users from legitimate crypto websites to malicious clones.
• Brute force attack: Testing all possible password combinations to gain unauthorized access.

Some Notable 2024 Crypto Hacks
Incident	Amount Stolen	Description
DMM Bitcoin	$305 million	Japanese exchange hacked
PlayDapp	$290 million	South Korean blockchain-based gaming platform hacked
WazirX	$235 million	Indian crypto exchange hacked
Radiant Capital	$50 million	Flash loan attack on DeFi lending platform
Gala Games	$22 million	Blockchain gaming company hacked
Prism Finance	$12 million	White-Hat exploit of smart contract

Important

North Korea is the largest state-sponsor of crypto hacks, stealing $6-plus billion in crypto assets since 2017.

How To Protect Your Crypto

Protecting crypto requires certain measures:

• Use reputable platforms: Choose regulated exchanges and wallets with proven security records and positive reviews.
• Enable 2FA: This adds an extra security layer.
• Reject unrealistic claims: If it sounds too good to be true, it probably is.
• Secure private keys: Never share keys, and use cold storage for long-term holdings.
• Strong passwords: Use unique, complex passwords.
• Update software: Keep wallet applications and security patches current.
• Verify websites: Check URLs and security certificates before entering credentials.
• Stay informed: Learn about emerging scams and security best practices.
• Monitor activity: Regularly review transactions for unauthorized access.
• Report suspicious activity: Alert platforms and authorities immediately if fraud is suspected.

The Bottom Line

In 2024, the crypto space saw significant losses from scams and hacks, netting thieves and fraudsters billions. Investors and holders can protect themselves by adopting best practices, thereby ensuring a smoother, safer engagement with the crypto market.

Investopedia & Travel + Leisure identified top locations in each region for retirees

Fact checked by Sienna Wrenn

When you picture retirement, what do you see? Perhaps you imagine yourself hiking through lush mountains or kayaking on scenic lakes. Or maybe you see yourself enjoying the sunny shores of a coastal beach—fishing, perhaps, or just resting on the sands with a view of the sea.  

It’s easy to daydream but pinning down an actual location for your retirement vision can be trickier. Which location matches your vision—and most importantly, where can your money go the furthest?

To help inform your decision-making, Investopedia collaborated with Travel + Leisure to identify 50 of the best U.S. cities to retire in. Based on our research, we selected 10 cities in five regions across the U.S. that blend below-average costs living costs, health care access, and cultural and recreational opportunities. 

Key Takeaways

• With rising housing costs, inflation, and health care expenses, choosing a retirement destination where your money stretches further is crucial.
• This list highlights 50 best U.S. cities to retire in, considering factors like housing, taxes, health care access, and local amenities.
• There are budget-friendly retirement options in every region of the U.S., so you might not have to move far to save money.
• Waycross, Georgia has the lowest median home value price on our list, while Eagle Pass, Texas has the lowest monthly food costs and taxes.
• Ultimately, the best location for your retirement will depend on your goals, budget, and preferred lifestyle.

Top 50 Cities Where Lifestyle & Affordability Meet

Northeast

1. Hermitage, Pennsylvania 

This small town has a median age of 45 and a median household income of $60,614. Golf lovers—you’re in luck: Hermitage has 12 public golf courses, including the world’s only free golf course. 

2. Johnstown, Pennsylvania

Don’t overlook this small town of just 17,809 people. Johnstown also boasts low median housing costs of just $711 and many activities for the outdoor enthusiast, including skiing, fishing, hiking, and more. 

3. Altoona, Pennsylvania

If you are craving a bigger town than our previously mentioned Pennsylvania recs, Altoona might be for you, with a population of 42,418. For history buffs: Altoona owes its origin and growth to the Pennsylvania Railroad, chartered in 1846.

Tip

Pennsylvania doesn’t tax Social Security or individual retirement (IRA), 401(k), or pension withdrawals.

4. Utica, New York

Utica, located just an hour’s drive from Syracuse, offers affordable home prices and reasonable housing costs overall. Oneida County, where Utica is located, offers 379 health care providers such as doctor’s offices, clinics, and home health agencies.

5. Union, New York

Want to live in New York State but avoid the super-expensive housing prices closer to New York City? Union, New York could be for you. Located upstate in the Appalachian Mountains, the town offers median home prices of  $171,100.

Note

New York State does not tax Social Security but does tax IRA, 401(k), and most pension withdrawals.

6. Springfield, Massachusetts

Springfield is the third-largest city in Massachusetts, with a population of 1,533,337. It’s only 16 miles from Bradley International Airport and offers over 20 hospitals countywide.

7. Conway, New Hampshire

Conway’s median population age skews a bit older at 54, which is nice for those seeking a more laid-back community. Though the population is a small 10,340, there are still over 70 arts and entertainment venues within its county.

8. Vineland, New Jersey

Vineland might not have the lowest median home value on our list at $205,600, but retirees can save on groceries with monthly food costs at a more affordable rate of $620.

9. Concord, New Hampshire

Outside of four beautiful seasons, this capital city offers a solid health care system, with 40 hospitals and about 250 health care providers including doctor’s offices and clinics within its county.

10. Pittsfield, Massachusetts

The cost of living in Pittsfield is higher than others on our list, with a median home value of $266,400. However, the climate risk level is relatively low, and the closest major international airport, Bradley International, is only 41 miles away from its county center.

Southeast

1. Waycross, Georgia

This small town of 13,643 offers affordable housing, with a county median home value at $106,500 and median monthly housing costs of $736. Check out its historic downtown district or Okefenokee swamp lands. 

Tip

Waycross’s median home value is the lowest on our entire list.

2. Danville City, Virginia

Danville boasts the lowest transportation costs on our list, with $1,058 monthly costs. Other factors are low, too: county monthly food costs net out at $586 and average monthly taxes at $556.

3. Litchfield Beach, South Carolina

Want pristine beaches? Say no more. Litchfield’s median age is 52, and the population is just 10,393, so you can relax without the crowds that other areas attract.

4. Wheeling, West Virginia

Wheeling is among the lower monthly transportation costs on our list. The climate risk level is also relatively low, which is a plus.

5. Natchez, Mississippi

Set on the Mississippi River, Natchez’s median monthly housing costs are a low $592, and on top of that, Mississippi doesn’t tax Social Security benefits or IRA, 401(k), or pension withdrawals. 

6. Tryon, North Carolina

Craving small-town living? Tyron is for you: it has a population of just 1,620 and a slogan of “The Friendliest Town in the South.” Tyron also has mild weather and a very low climate risk rating.

7. Alexandria, Louisiana

Alexandria has over 400 health care providers including doctor’s offices, clinics, and home health services and 37 hospitals in its county. Louisiana also doesn’t tax Social Security.

8. Sebring, Florida

This small town located in central Florida skews older, with a median population age of 54. Sebring offers low monthly taxes at around $549, and is home to several “lake beaches.”

9. Paducah, Kentucky

Quilting lovers—get excited. Paducah is known as “Quilty City USA.” On top of that, Paducah has low monthly food costs, so you can eat and quilt comfortably.

10. Paris, Tennessee

Bonjour, Tennessee lovers. Paris’s median monthly housing costs are affordable at $643. The overall climate risk rating is relatively low, too.

Midwest

1. Gregory, South Dakota

This tiny town of 1,219 offers low housing prices, with median home values at $129,000. Its climate risk rating is also very low.

Note

South Dakota doesn’t tax Social Security or IRA, 401(k), or pension withdrawals.

2. Toledo, Ohio

Big city lovers, Toledo is for you. With a population of 236,646, it boasts 887 health care providers such as doctors, clinics, and home health agencies and 81 county hospitals. The Toledo Museum of Art has over 30,000 pieces on display.

3. Poplar Bluff, Missouri

Located between St. Louis, Memphis, and Little Rock, Poplar Bluff has our list’s second-lowest county monthly food costs.

4. Corning, Iowa

Corning’s county is 65 miles from Eppley Airport and has a population of just 1,465. Its median home value of $116,900 is among the lowest for midwestern spots. 

Note

Corning is the birthplace of Johnny Carson.

5. Farmington, Missouri

Craving low taxes? Residents of St. Francis County where Farmington is located pay among the lowest taxes on our list, sitting at $577 on average per month. Farmington also is home to Indian Lake Park, which is a perfect setting for your swimming and canoeing dreams.

6. Youngstown, Ohio

This large town of 58,847 sits in Mahoning County, which only 46 miles from Pittsburgh International Airport. It’s also home to the Butler Institute of American Art, founded in 1919. 

7. Bay City, Michigan

This 31,905-person waterfront town offers an affordable spot for those who want to live in Michigan.

8. Mason City, Iowa

Mason City has a rich musical heritage and offers homes for less than $155,000. Iowa also doesn’t tax Social Security benefits or 401(k) withdrawals.

9. Saginaw, Michigan

Saginaw offers over 400 health care providers including doctor’s offices and clinics and has a median age that skews younger—41 years old.

10. Muncie, Indiana

This large town offers great affordable housing options and is home to Ball State University.

Southwest

1. Las Vegas, New Mexico

While you won’t find the glitz and glitter of Las Vegas, Nevada in this small town of 12,814 people, you will find some of the lowest median housing and transportation costs on our list.

2. Santa Rosa, New Mexico

This itty-bitty town of just 2,742 has a very low county climate risk score. Santa Rosa offers scuba diving, horseback riding, and golf, too.

3. Hugo, Oklahoma

Hugo’s median monthly housing costs of $608 are among the lowest among these 50 places. Plus, Oklahoma doesn’t tax Social Security benefits.

4. Port Arthur, Texas

Home to delicious Cajun seafood, this large town of 55,393 has some of the lowest monthly grocery costs on our list.

5. Eagle Pass, Texas

Eagle Pass’s county boasts the lowest monthly taxes of all 50 places on our list. The median age is also the lowest on the list, at a hair above 30.

6. Longview, Texas

Though the median home value is among the highest in the Southwest, at $185,800, the median household income is also the highest in the Southwest, at $64,809.

Note

Texas does not tax Social Security benefits or IRA, 401(k), or pension withdrawals.

7. Parker, Arizona

Overlooking the Colorado River, Parker has the second-lowest median monthly housing cost on the list, at $539.

8. Albuquerque, New Mexico

Albuquerque is New Mexico’s largest city, with a population of 558,736. You can reap the advantages a big city offers, such as being only 4 miles from Albuquerque International Sunport Airport, having access to over 1,500 health care providers, and enjoying low average monthly transportation costs of $1,081 (the second lowest on this list.)

9. Muskogee, Oklahoma

Located 53 miles southeast of Tulsa, Muskogee is below the median for home values on the southwestern part of our list, with prices at $138,800.

10. Lake Havasu City, Arizona

With a county median age of 53, this large town is retirement-friendly, offering bird-watching, water activities, and golfing.

West

1. Pocatello, Idaho

Pocatello offers 416 health care providers and 17 county hospitals. Furthermore, history lovers can check out the Idaho Museum of Natural History, located on Idaho University’s Pocatello campus. 

2. Butte-Silver Bow, ​​Montana

Low climate risk and beautiful hiking? Check out Butt-Silver Bow, which also offers the lowest median monthly housing costs on our western list.

3. Twin Falls, Idaho

Home to the Shoshone Falls, a waterfall known as “the Niagara of the West,” Twin Falls has a relatively low climate risk and manageable cost of living.

4. Pomeroy, Washington

Pomeroy has the second-lowest monthly housing costs of our western picks. With a population of just 1,439, it is perfect for the retiree craving small-town living. 

5. Omak, Washington. 

Giddyup, retirees: Home to the Stampede Rodeo, Omak offers sandy beaches plus the lowest county monthly taxes of the Western states on our list.

6. Great Falls, Montana

Home to Great Falls International Airport, Great Falls sits halfway between Glacier National Park and Yellowstone National Park. It also has a relatively low climate risk rating.

7. Carson City, Nevada

While Carson City’s median home values are the highest on the whole list at just under $400,000, Nevada doesn’t tax Social Security benefits or IRA, 401(k), or pension withdrawals. Plus, Carson City’s transportation costs are among the lowest of the western picks.

8. Evanston, Wyoming

Evanston has the highest county median household income of the western list at $82,672. Wyoming doesn’t tax Social Security benefits of IRA, 401(k),  or pension withdrawals.

9. Ontario, Oregon

This small town has the lowest monthly food costs out of the western spots. Ontario has scenic mountain ranges and river canyons—perfect for outdoor enthusiasts. 

10. Pueblo, Colorado

One of the largest cities on our list, Pueblo, has a population of over 100,000. It has over 300 health care providers and an affordable cost of living. Ski lovers can hit the slopes at Monarch Mountain, just two and a half hours away. 

Note

To learn more about how we created this list of 50 best places to retire, read our methodology.

Why Affordability Matters in Retirement

As people live longer, finding an affordable place to retire is more important than ever.

Housing costs are going up, with median home prices up 24% from 2020 to 2024. According to Pew Research, inflation has also increased the cost of food and goods, with 74% of Americans expressing concern over rising prices in late 2024.

Note

The national inflation rate average has more than doubled since 2020.

Health care is another primary concern, with a typical couple needing over $300,000 for medical expenses in retirement (excluding long-term care).

These expenses can quickly add up, and the cost of living shows no signs of decreasing. Where you choose to retire can have a significant financial impact, so it’s important to prioritize what matters most to you. You may want easy access to a major airport for family visits or focus on finding the most tax-friendly state. Perhaps owning a new home is a dream, so you want the lowest housing costs out there. Everyone has different goals and priorities, so it’s important to weigh these factors when making your decision.

The Bottom Line

With more than half of adults aged 50+ worried about not having enough money to retire comfortably, affordability is key. Our list takes into account factors like housing costs, grocery bills, tax laws, and more to help you make a more informed decision about where to retire. There’s no one-size-fits-all solution, but we hope our list provides a helpful starting point for your retirement planning.