investment

Reviewed by David Kindness
Fact checked by Yarilet Perez

Who doesn’t want to avoid taxes? Judge Billings Learned Hand famously summed up the American tax situation, saying, “Anyone may arrange his affairs so that his taxes shall be as low as possible … for nobody owes any public duty to pay more than the law demands.”

Avoiding taxes is one thing, but income tax evasion is another. Tax evasion occurs when a person or business uses illegal means to escape paying taxes, whereas tax avoidance is the practice of using legal means in order to lower the amount of taxes owed.

These famous tax evaders found ingenious (and illegal) ways to avoid paying up. Find out how much they owed and how they were caught.

Key Takeaways

• Tax avoidance is legal, but tax evasion, which involves using illegal methods to not pay taxes, can come with serious consequences.
• Many individuals have tried to evade taxes, from gangsters like Al Capone to celebrities like Wesley Snipes.
• Cheating the tax system can result in fines and jail time so it’s smart to just pay your taxes, not to mention that it is legally required.

Walter Anderson

Anderson’s case is the largest tax evasion case in the history of the United States. This former telecommunications executive was accused of hiding his earnings through the use of aliases, offshore bank accounts, and shell companies.

In 2006, Anderson entered a guilty plea in which he admitted to hiding approximately $365 million worth of income. He was sentenced to nine years in prison and restitution of $200 million.

A typographical error in the amount of the federal government’s judgment against Anderson has prevented him from having to pay the majority of the taxes owed.

The IRS conceded taxes and penalties for three years included in Anderson’s case, however, Anderson is still responsible for $23 million owed to the government of the District of Columbia.

Al Capone

This infamous mobster’s name has been associated with a variety of illegal acts including bootlegging, prostitution, and murder. However, only one illegal act landed Al Capone in prison—income tax evasion. Under Capone’s watch as boss of the Chicago Outfit, the organization generated estimated revenues of $100 million per year.

Due to the removal of the word “lawful” from the 16th Amendment in 1916, even income earned via illegal activities is subject to tax.

This put criminals like Capone in a bind because they could either admit to breaking the law and file proper taxes (essentially confessing), or cheat on taxes and risk getting jailed for evasion. In addition to paying fines and the outstanding tax bill, Capone was sentenced to 11 years in prison.

Joe Francis

The “Girls Gone Wild” creator is no stranger to controversy. In 2007, he was charged with felony tax evasion for reportedly filing false corporate tax returns. Authorities accused Francis of filing over $20 million worth of false business expenses in order to keep from paying taxes. A guilty plea allowed him to escape the felony charge.

However, it appears Francis has not fully escaped his tax woes. In November 2009, the IRS filed a tax lien against Francis. The tab is a whopping $33.8 million.

Note

If you pay your taxes late, the IRS will charge you a penalty. The penalty is 0.5% of the unpaid taxes for each month they remain unpaid, but it won’t exceed 25% of the unpaid taxes.

Wesley Snipes

Federal prosecutors have accused the “Blade” star of many offenses. Snipes allegedly hid income in offshore accounts and did not file federal income tax returns for several years. The actor’s federal tax debt was estimated to be in the range of $12 million.

In 2008, Snipes was acquitted of felony tax fraud and conspiracy charges but was found guilty of misdemeanor charges.

Snipes was sentenced to three years in prison. His accountant, Douglas P. Rosile, and tax protester Eddie Ray Kahn were charged as co-defendants. Rosile was sentenced to four and a half years. Kahn was sentenced to 10 years.

Leona Helmsley

Dubbed the “Queen of Mean,” this hotel operator reportedly told a former housekeeper, “We don’t pay taxes. Only the little people pay taxes.” Helmsley and her husband, Harry, accumulated a multi-billion dollar real estate portfolio.

Despite their immense wealth, they were accused of billing millions of dollars in personal expenses to their business in order to escape taxes. In 1989, Helmsley was convicted on three counts of tax evasion. She served 18 months of federal prison time. Coincidentally, she was ordered to report to prison on income tax deadline day for that year, April 15, 1992.

What Is the Difference Between Tax Avoidance and Tax Evasion?

Tax avoidance and tax evasion are methods of reducing the taxes you pay; however, they are on opposite sides of the legal system. Tax avoidance is legal whereas tax evasion is illegal. Tax avoidance involves reducing your taxes through legal methods, such as deductions, credits, and loopholes to lower your tax bill. Tax evasion on the other hand involves lying, creating fraudulent documents, not correctly reporting income, and other means which are not legal.

How Can I Legally Reduce My Taxes?

There are a handful of ways to legally reduce your taxes. Contributing to tax-advantaged retirement accounts, such as 401(k)s and IRAs reduces your taxable income. If you’re self-employed, you can take advantage of deductions such as office supplies, car payments, gas payments, travel, and more. Other ways to reduce your taxes are through charitable donations and health savings accounts (HSAs). For investing, you can employ tax-loss harvesting to offset the tax you pay on gains.

Does the IRS Check Every Tax Return?

No, the IRS does not check every tax return; in fact, the amount of tax returns they check is very few as most are automatically processed. The IRS does employ various systems to detect anomalies that could be red flags. If red flags arise, they can take a deeper look and ask for more information.

The Bottom Line

Some people go to creative lengths to save money, but there is a clear line between creativity and breaking the law. Minimizing taxes through legal means is a smart tax strategy but tax evasion comes with tough consequences. As we can see from the troubles of these five people, what you may save now will not be worth what you have to pay later.

Fact checked by Vikki Velasquez
Reviewed by Katie Miller

A 2024 survey from Investopedia and REAL SIMPLE found that 57% of women don’t hold any investments. Some who said they have retirement accounts don’t consider themselves to be investors. The two most common reasons women say they’re not investing are that they don’t know how to start or they don’t have enough money.

This data shows a need to reinforce two points: Women are investors and you don’t need hundreds or even thousands of extra dollars to get started. Shifting your mindset about investing can be the hardest part of starting your journey but it can pay off. 

Key Takeaways

• Experts say that shifting your mindset around investing can be the hardest part of getting started.
• Some things like fear, lack of knowledge, and lack of transparent peer-to-peer conversations hold women back from investing.
• Even investing a small amount of money now can be more valuable than investing a large amount of money years from now because of the power of compound interest.
• According to a Fidelity Women and Investing Study, women outperform their male counterparts in their investment portfolios by 40 basis points.

How Women Feel About Investing

Women have mixed feelings and participation rates when it comes to investing. The 2024 Her Money Mindset survey found that just 43% of respondents said they’re invested. Only 7% of women confidently said they know the most about investing compared to other financial topics.

The survey showcased the power and confidence that can be found in investing. Of the women who are invested, 61% said they’re proud of an investing decision they made. Here’s what some of the women-identifying survey respondents anonymously said when asked what financial decision or action they are most proud of.

• “Becoming more financially literate and learning about investing in something that can be used as a separate source of income. I have slowly but surely been investing in stocks and crypto when I have extra money.” Millennial, single, annual household income of less than $75,000.
• “I am most proud of myself for investing part of my savings into the stock market and learning about the everyday trends within the market.” Generation X, married or living with a partner, annual household income over $75,000.
• “Deciding right out of college to join my company’s 401k. If I didn’t do that, I would not be financially secure now.” Baby boomer, married or living with a partner, annual household income over $75,000.

These insights paired with data that shows that women are starting to invest at a higher rate than men are moves in the right direction. A lack of communication, knowledge gaps, and fear are still holding women back, however.

Changing the Mindset

Perhaps one of the most important ways to increase women’s awareness and participation in investing is talking about it but that’s not happening much.

The Her Money Mindset survey found that women get most of their financial information from the internet and family and friends. Seventy percent of women said they talk to their friends about money but only 34% of those talk about investing.

“As women, it is crucial for us to talk more about money and investing,” said Valerie Leonard, CEO and financial advisor at EverThrive Financial Group. “We must have empowering conversations with one another that will help bridge the gender gap and encourage our friends and the next generation to get smarter with money.”

It can be hard to trust what you don’t understand, too. A lack of information is the No. 1 reason women said they’re not investing.

Stephanie McCullough, founder and financial planner at Sofia Financial and host of the Take Back Retirement podcast, sees this often in her investment practice. She regularly tells women, “You don’t have to have all the answers. You just need to know what questions to ask and have the guts to ask them.” 

Note

The Her Money Mindset Survey found that investing is the No. 2 financial topic they want to learn more about, behind saving money.

The Truth: Women Are Investors—And Good Ones

Women outperformed their male counterparts in their investment portfolios by 40 basis points or 0.4 of a percentage point, according to a Fidelity Women and Investing Study.

The 2024 Her Money Mindset Survey reinforced that women who are investing are engaged with their portfolios and market happenings. This engagement may help drive portfolio performance.

Note

Thirty-one percent of invested women said they check the performance of their investments at least monthly and 29% check the performance of the stock market at least monthly, according to the 2024 Her Money Mindset Survey.

The research women are doing may be boosting confidence in their investing, too. One woman surveyed by Investopedia and Real Simple said that she focuses on “choosing to invest in stocks that pay dividends rather than focusing solely on performance and trends.” Another said her best investment strategy is “purchasing high-quality company stocks and holding them for the long term.”

Advice From Women, For Women

Our experts haven’t been shy about offering some advice. They focus on some key points.

Start now

Stephanie Tisdale, an avid investor and owner of Breakthrough Bookkeeping, said that learning to invest “was like drinking from a firehose.” There was so much information that she had a hard time distilling what was most important to her and her circumstances. This led to inaction for longer than she would have liked. She quickly realized the impact investing makes on reducing the distance between where she began at age 35 and where she wants to be.

Leonard said women’s desire to invest is usually tied to their goals. Women aren’t jumping into investing simply for the love of the game. She finds that they’re motivated to invest because they want to put kids through college, buy a new home, or save for retirement.

Time is your best friend when it comes to investing. The sooner you start, the more time you have to benefit from compound interest. Identify a goal you’re passionate about and invest with that goal and timeline in mind.

Money isn’t shameful

McCullough specializes in working with women investors and supporting them in meeting their financial goals. She finds that a lot of women self-describe as “a mess” because of societal stereotypes about overspending and being “bad” with money. Many of McCullough’s clients have never been taught about money and they take on the stereotypes as truth about themselves even when they’re not true. And most of the time, they’re not.

McCullough wants women to know that it’s not a character flaw and the shame spiral won’t get you any closer to meeting your goals even if it’s true that you’re not “good” with money now.

Consider what you can gain

McCullough frequently sees women enter the market “when the pain of staying where you are is greater than the pain of change.” Many tell her that they can’t believe they waited as long as they did, however, when they take the plunge into investing.

Important

Research by Fidelity confirmed that seven out of 10 women wished they would have started investing sooner.

Start small

One of the biggest reasons women say they’re not investing is that they don’t think they have enough money left over at the end of the month, according to the 2024 Her Money Mindset Survey. It’s a huge misconception that you have to have a lot of money to invest.

A great place to start is participating in an employer-sponsored plan like a 401(k) especially if your employer is offering a contribution match. You can also put a few dollars a month into a target-date ETF and let dollar-cost averaging and compounding interest work for you.  

McCullough said she wants to remind all women, “You can start long before you feel you know everything.”

Make a Plan

The first thing you should do to get started in investing is figure out why you want to save. The journey of investing should always start with goals and a timeframe. Are you planning to buy a house in five years? How much money will you need to make a necessary down payment? 

You can build a roadmap with investment products to get you there when you’ve answered these questions.

Look into individual retirement accounts, both Roth and traditional, and find out if your employer offers a 401(k) plan and matches contributions if you’re prioritizing retirement savings. Look into 529 Plans and Coverdell accounts if you’re hoping to save for education expenses. Look into mutual or index funds if you’re saving for long-term goals like building a dream home in 10+ years.

And, of course, you can always contact a financial advisor in your area of interest. You can find someone to guide you on your wealth-building journey if you have even $50 a month to invest.

Do I Have to Have a Lot of Money to Start Investing?

You don’t have to have a lot of money to start investing. Even small amounts can grow significantly with the power of compounding interest.  A small amount invested early can be worth more than a greater amount invested later. 

What Is the First Thing I Should Do to Start Investing?

First, consider your goals and timeline. They’ll determine the best products for you to use. Long-term goals will allow you to take more risks with products like stocks. Shorter-term goals can best be achieved with safer options that offer less growth potential. 

How Do I Build Wealth As a Single Woman?

You should first participate in employer-sponsored retirement plans up to the matching amount if you are eligible. Focus on paying down any high-interest debt and saving for emergencies then prioritize investing for long-term goals.

The Bottom Line

Investing can be intimidating for many women but they can be capable and conscientious investors when they take the first step and get started. Education is key to overcoming the hesitations that keep women out of the investment markets whether it be with self-directed research, conversations with seasoned investment professionals, or even conversations with friends.   

Remember, women are investors. 

Disclosure: Investopedia does not provide investment advice. Investors should consider their risk tolerance and investment objectives before making investment decisions.

Success is all about being prepared

Fact checked by Suzanne Kvilhaug
Reviewed by Andy Smith

Calling ahead to learn what kind of information a financial advisor would like you to supply before meeting for the first time is always a good idea. It will save you a lot of scrambling to collect the necessary paperwork at the last minute. An understanding of what to expect at the meeting can guide you as well.

Key Takeaways

• Your first meeting with a financial advisor can be an opportunity to get to know each other or an actual start of the process.
• Make sure the advisor understands your financial goals.
• Ask what the advisor charges and what you’ll get in return.
• Be prepared to round up documents including recent pay stubs, retirement plan account statements, investment accounts, and cash balances.

What to Expect

Your first in-person meeting may be little more than a meet-and-greet unless you’ve already had an introductory phone or Zoom conversation. It’s an opportunity for the two of you to decide whether you’re a good match.

“I usually tell potential clients they don’t need to bring anything. The point of the meeting is to get to know each other,” says Michael J. Garry, a certified financial planner (CFP) with Yardley Wealth Management in Yardley, Pennsylvania. “I start the meeting by asking what made them reach out to a financial advisor and what they’re hoping to get from the relationship. One exception to that is if in the initial call they express some need to make a financial decision that is pressing.”

Don’t be bashful about asking how much the advisor charges someone in your situation if you haven’t already worked it out beforehand. Some advisors charge by the hour. Others have flat fees for preparing a financial plan.

What Do You Need Help With?

The advisor you choose to work with may eventually want information regarding your income, investments, other assets, your current debts, insurance, and your tax situation. Your goals and expectations can be more important than any documents, however.

Why are you seeing the advisor? What do you hope to accomplish? Are you looking ahead to retirement and want to make sure you’ll have an adequate income to support you when the time comes? Are you thinking about how you might be able to provide for your heirs someday? Maybe you’re going through a major life change such as getting married or divorced, launching a new business, or facing the prospect of big college tuition bills.  

What to Take to Your First Meeting

You might want to have a few items handy for your first or perhaps second meeting.

• Most recent federal tax return
• Pay stubs
• Information on expected income such as a year-end bonus
• Latest Social Security statement
• A list of your investments and cash accounts
• Retirement plan statements
• Documentation of mortgage and property tax payments
• Documentation of outstanding debts
• Documentation of insurance policies

Many financial planners provide online portals where you can upload your documents in advance.

Important

Don’t forget to include any unusual sources of income such as a congratulatory bonus at work or an expected inheritance in your income total.

Your income 

Your most recent federal tax return or the last several years’ returns will tell the advisor a lot about your financial situation, particularly your income, investments, and deductions. Elizabeth Cox, a CFP with Merit Financial Partners in Westport, Connecticut, frequently works with divorced clients. Cox says that tax returns “often contain information that even the client isn’t aware of.” This can include investment accounts opened by their spouse.

You might want to collect some pay stubs if you work for an employer who provides you with them, especially if your income is higher or lower now than when you filed your taxes. Your pay stubs will also show how much you’re contributing to any at-work retirement plans.

Tell the advisor if your income is irregular. Make sure they know about if you usually get a big year-end bonus. Discuss how and why your income may wax and wane if you’re a self-employed freelancer.

A copy of your most recent Social Security statement will give the advisor an idea of how large a monthly benefit you can eventually expect even if retirement isn’t in your foreseeable future. Workers under aged 60 can get these on the Social Security website. Those age 60 and older also have the option of receiving paper statements annually.

Your investments and other assets

Make a list of any bank accounts, stocks, bonds, mutual funds, individual retirement accounts (IRAs), or other investments you own. The monthly or quarterly statements you receive from the financial institutions that hold them should show their current value.  

Gather the latest statements you’ve received from the plan administrator if you have a retirement plan at work whether it’s a traditional defined-benefit plan, a 401(k) or similar defined-contribution plan, or both. You should receive a statement at least once every three years in the case of defined-benefit plans and annually for defined-contribution plans.

Documentation of your mortgage payments if any and property taxes could be helpful if you own a home or other real estate. The lender should have provided you with a year-end statement if you have a mortgage, also known as Internal Revenue Service (IRS) Form 1098.  

Your debts

Make sure the advisor knows how much you owe to credit card issuers, auto lenders or leasing companies, and other creditors as well as the amounts of your monthly payments. The same goes for any student loans for which you’re personally on the hook, either yours or your child’s. The advisor can help you with budgeting if you’re having trouble keeping up with your bills.

Your insurance 

Your advisor will probably want to know how much insurance you have. They can tell you whether you have an adequate amount of life insurance depending on your stage of life. People with young children or other dependents may need a lot but those with no dependents may need little or none. Make sure the advisor knows how much insurance your employer provides, if any, in addition to any policies you’ve bought on your own.

The advisor might want to make sure you have sufficient liability coverage on your auto, homeowners, and optional umbrella policies as well in case you’re ever sued.

What If You Don’t Have These Documents?

You can usually retrieve these documents fairly quickly if you haven’t saved them or can’t easily locate them.

Your income

You should ideally hang on to your tax returns for at least three years but you can get copies from your tax preparer if you don’t have your most recent ones or from the Internal Revenue Service (IRS).

Cox notes that you can also request tax transcripts from the IRS. They contain much the same information as your tax returns and they’re free. Copies of tax returns were $43 each as of October 2024.

Your employer’s human resources department should be able to provide you with all the information on your pay stubs. 

Investments and other assets

The details regarding all your financial accounts should be readily available online. Your employer or plan administrator can provide information on your retirement accounts. Information on your mortgage and property taxes should also be available online, especially if you pay your taxes through an escrow account maintained by the lender.

You may otherwise have to consult your local tax authority or check your payment records such as canceled checks. 

Your debts

Information on your debts should be available online at your various creditors’ websites. You can also find your monthly payment amounts there or on your bank statements if you pay these bills through a bank account.

Your insurance

This information is often available online as well. Your agent should be able to help, too, if you purchased your policy through one.

Questions to Ask Your Financial Advisor

You shouldn’t hesitate to ask some questions either at your first meeting or even before then.

How are you paid?

Some financial advisors receive commissions on the products they recommend in addition to whatever they charge you. You might choose to go with a fee-only financial advisor to avoid this potential conflict of interest. They’ll be working only for you, at least theoretically.

What are your qualifications?

You can usually get this information from the advisor’s website but they shouldn’t be insulted if you ask them directly. Anyone can call themselves a financial advisor or financial planner but individuals who have gone through rigorous training and testing and have the credentials to prove it are usually proud of the fact.

Don’t be unduly impressed by a long string of letters after the advisor’s name. Some of those credentials are meaningful but others are of dubious value. Among the more highly regarded ones are the CFP held by both Cox and Garry and chartered financial consultant (ChFC). Fee-only financial planners will often indicate that they’re members of The National Association of Personal Financial Advisors (NAPFA). Some advisors also have credentials as certified public accountants (CPAs).

Will I be working directly with you?

Some financial advisors are one-person shops. Others have teams of associates. A junior person at the firm may be just fine for your needs but you’ll want to make sure you aren’t shuffled off to someone who isn’t right for you.

How Can I Find a Good Financial Advisor?

Ask trusted friends and co-workers for recommendations based on their own experiences. You can also ask an accountant or a lawyer. Don’t stop there, however, or you could inadvertently become the victim of an affinity scam. Check out the advisor with other independent sources.

How Can I Check Out a Financial Advisor?

You can use a variety of online resources to check out financial advisors depending on what sort of credentials they have or claim to have. You can find out whether someone is a CFP and if they’ve had disciplinary actions against them by using a search tool on the Certified Financial Planner Board of Standards website. The National Association of Personal Financial Advisors (NAPFA) has a similar search tool on its website.

What Is a Robo-Advisor and What Can It Do for Me?

Robo-advisors are online platforms that are typically offered by investment companies to help small investors build and manage their portfolios. They’re often available at a very modest cost. Human financial advisors sometimes work in conjunction with robo-advisors.

The Bottom Line

A financial advisor can help you with a lot of things but you’ll have to do some of the work yourself. Be prepared to clearly articulate the kind of help you need and round up whatever information the advisor requires to help them understand your situation and make useful recommendations.

Fact checked by Vikki Velasquez

Many Americans approach filing taxes with trepidation. In fact, 64% of Americans report feeling stressed about tax season. The best way to alleviate tax-related stress is to take a deep breath and file your return early, however. You’ll lower your stress level and get your tax refund back faster if you get your return in well in advance of the April 15 deadline.

“Filing your taxes as soon as your documents are ready offers both financial and mental benefits. While many Americans procrastinate, taxes are inevitable so why hold on to unnecessary stress and mental fatigue? Filing early lifts that burden off your shoulders while also unlocking key tangible benefits,” says Zack Gutches, a certified public accountant and lead financial planner at True Riches Financial Planning.

Key Takeaways

• You’ll get a quicker refund if you file your tax return early.
• You’ll have more time to plan how you’ll pay your taxes if you prepare your taxes early.
• Early tax preparers have more time to fix mistakes and they may save on tax preparation costs.
• Filing early will help you avoid penalties and reduce stress.

Get Your Refund Faster

A big advantage of filing your taxes early is that you’ll get your tax refund more quickly if you’re due one.

“The IRS processes returns on a first-in, first-out (FIFO) basis, meaning the earlier you file, the sooner you’ll receive your refund,” Gutches says. “Instead of giving the government an interest-free loan, you can put your money to work sooner, whether that’s earning 4%+ in a high-yield savings account, investing in a money market fund, or allocating funds toward debt repayment, retirement savings, or college funding,”

Important

There have been some concerns that tax refunds could be delayed in 2025 due to pending IRS budget and staff cuts, but the New York Times reported in February that any effect shouldn’t be significant if you e-file your return and it’s not flagged for errors. And it’s another good reason to file as early as possible in case the cuts do take effect.

More Time to Plan If You Owe

Nobody likes a tax bill but you’ll have more time to consider your options for paying if you prepare your taxes early.

“Even if you owe taxes, you don’t have to pay until April 15. Filing early gives you extra time to plan how you’ll cover the payment, whether that’s adjusting your budget, shifting funds, or identifying missed deductions, credits, or pre-tax retirement contributions to lower your tax bill,” Gutches says.

Protect Against Identity Theft

Another advantage to preparing your tax return early is that it helps to guard against identity theft.

“Tax-related identity theft is a growing issue,” Gutches says. “Fraudsters will attempt to file a return using your Social Security number before you do, claiming a refund in your name. Filing early helps block identity thieves from beating you to the punch.”

More Time for Corrections

You’ll give yourself time to catch and fix mistakes if you prepare your tax return well ahead of the April 15 deadline.

“Filing early allows extra time to catch any mistakes or omissions. If you spot any errors on the return, taxpayers can fix them and finalize without the added stress of a looming deadline,” says Prudence Zhu, a certified public accountant and founder of Enso Financial.

You can submit an amended tax return to the IRS if you catch a mistake after you’ve filed your return.

Reduced Costs

You may catch a break on your tax prep costs by preparing your return early.

“Some preparers offer discounts for clients who submit their documents early, and tax software companies often provide promotional codes early in the filing season,” Zhu says. “On the other hand, if you file last minute, expect higher prices and limited service options. Tax preparers’ schedules fill up fast during tax season.”

Maximize Tax Benefits

Early tax preparers have more time to explore tax-saving benefits.

“By filing early, taxpayers have more time to strategize tax-saving opportunities such as making last-minute contributions to tax-advantaged accounts like IRAs or HSAs, which can lower taxable income. It also gives you time to explore any potential deductions or credits you might have missed,” Zhu says.

You can also submit an amended return to the IRS if you realize after you’ve filed that you’re eligible for a tax credit or deduction that you didn’t claim.

Avoid Penalties

File early and you won’t have to worry about late filing penalties.

“Filing early allows more time to prepare for payment, minimizing the risk of penalties and interest for late filing,” Zhu says.

The Bottom Line

Preparing taxes early saves you stress and money. File an early return, and you’ll receive your tax refund more quickly. You’ll give yourself more time to plan how you’ll pay the tax bill if you owe one, more time to explore tax benefits, and more time to correct errors. You’ll be able to avoid penalties for late filing by not leaving your return to the last minute and you may save money on tax prep costs.

Reviewed by Ebony Howard
Fact checked by Suzanne Kvilhaug

Unclaimed property generally consists of unclaimed money in financial and bank accounts that have been dormant for more than a year. Each state has a process by which unclaimed property can be identified and reclaimed; these returned assets are worth billions of dollars every year.

Find out how to check if you have any unclaimed property and how to claim it.

Key Takeaways

• Unclaimed properties are assets or funds for which the rightful owner cannot be located or has left the account dormant for a prolonged period.
• Typically unclaimed funds and property are handed over to the state where the assets are located after a dormancy period has passed.
• States have established processes whereby legal owners of assets can reclaim unclaimed funds.
• When claiming unclaimed funds that have risen in value, taxes may be assessed on the current value of the property.
• If you claim property, it will be treated as ordinary income and taxed accordingly unless the property is related to a tax refund.

Reclaiming Property

The process for reclaiming unclaimed or escheated property varies by state, as the federal government does not have a central website for finding unclaimed property. Most state websites are similar in format and often fairly simple to navigate. The office of the comptroller is usually the official agency tasked with managing the list of unclaimed property.

Funds associated with unclaimed property may be absorbed and used in state operating expenses. Still, unclaimed property funds are nearly universally kept track of as debt to the property owner on record.

Once you’ve identified the website where unclaimed property queries are made, you can use criteria such as first and last name, business name, ZIP code, and city associated with the property to locate it.

Important

Many government agencies are prohibited from contacting owners of unclaimed funds/assets by phone. Scammers are aware of this limitation and may attempt to defraud individuals by claiming to have records of unclaimed property.

Unclaimed Property and Dormancy Period

Unclaimed property is essentially property that has gone unclaimed beyond the dormancy period. The dormancy period is the amount of time between when a financial institution reports an account or asset as unclaimed and when the government deems that account or asset to be abandoned.

For most states, the dormancy period is five years. When a property is officially designated by the state as abandoned or unclaimed, it undergoes a process known as escheatment. The state assumes ownership of that property until the rightful owner files a claim.

Depending on the state, the comptroller or state treasury office may make attempts to locate the rightful owner of the unclaimed property. Methods may include mailing notifications to the last listed address of residence or employment.

Property can often go unclaimed when the owner fails to report a new mailing address so this method can be less successful. States may also subscribe to online contact databases that could have more up-to-date information.

Escheatment

After the dormancy period, dormant accounts become unclaimed property. At this point, states have escheatment statutes take effect.

Escheatment state laws require companies to transfer unclaimed property from dormant accounts to the state general fund. This fund takes over record-keeping and returning of lost or forgotten property to owners or their heirs if the owner has passed away. This protects the unclaimed funds from reverting to the financial institutions at which they are held.

Owners can gain back the unclaimed property by filing an application with their state at no cost or for a nominal handling fee. Because the state keeps custody of the unclaimed property in perpetuity, owners can claim their property at any time.

A dormant account with no activity for a long time, other than posting interest, is also a potential case of unclaimed property. A statute of limitations usually does not apply to dormant accounts, meaning that funds can be claimed by the owner or beneficiary at any time.

Note

Financial institutions are required by state laws to transfer resources held at dormant accounts to the state’s treasury after the accounts have been inactive for a certain period. The length of this period varies by state.

Unclaimed Property and Taxes

Types of unclaimed property include uncashed payroll checks, inactive stocks, court funds, dividends, checking and savings accounts, and estate proceeds. When property accounts go unclaimed, they are turned over to the state for reasons that may include:

• Death of the account holder
• Failure to register a forwarding address after changing residence
• Forgetting about an account

Unclaimed property is not taxed while it is filed as unclaimed; however, the property may be officially recognized as taxable income when it is reclaimed. Some unclaimed funds such as investments from a 401(k) or an IRA can be reclaimed tax-free.

Example of Unclaimed Property

According to the Office of the New York State Comptroller, the state returns $1.5 million in unclaimed property to people who file claims each day. As of March 2025, the state had returned $137 million since the start of the year.

In addition, every year, the Internal Revenue Service (IRS) has millions in unclaimed federal tax refunds. While there is no centralized database for unclaimed funds, you can visit USA.gov’s unclaimed money from the government page and check the various links to sites that can help you find unclaimed money.

What Kind of Assets Can Be Unclaimed Property?

Unclaimed property is often cash, such as dormant bank accounts, tax refunds, or payroll checks. However, it can also include a variety of assets, such as stocks, dividends, bonds, utility deposits, insurance payouts, and tangible property.

What Is an Example of Tangible Unclaimed Property?

Tangible unclaimed property is physical property, rather than intangible property such as an uncashed paycheck. An example of tangible unclaimed property could be the contents of a safety deposit box that was abandoned or inherited.

Do All States Have Unclaimed Property Laws?

All states have unclaimed property laws, however, these laws differ from state to state. Unclaimed property is managed by the rules and regulations of the state where the property is held, not the state in which you currently reside.

The Bottom Line

Unclaimed properties are assets for which the owner can’t be located. These properties can be tangible, such as the contents of a safety deposit box, or intangible, such as unclaimed tax refunds. Unclaimed property can also be accounts that have been dormant for a prolonged period.

Unclaimed property is usually handed over to the state in which the assets are located after the end of the dormancy period. States then have rules and regulations governing how the legal owners of these assets can reclaim their property. Reclaimed property is treated as income and subject to ordinary income tax rates unless it is related to a tax refund.

Captive insurance can have perfectly legal tax and financial benefits, but some companies go too far

Reviewed by Lea D. Uradu
Fact checked by Vikki Velasquez

All businesses need to protect themselves against financial risk, and that’s where insurance comes into the mix. But, businesses don’t always have to purchase insurance from another company.

With captive insurance, a business can provide its own coverage, offering better protection against the types of risks it may likely face as well as potential financial benefits for the business owners. Captive insurance is also sometimes promoted as a tax shelter, but using it that way has its hazards.

Key Takeaways

• Captive insurance is a form of self-insurance for businesses.
• A captive insurance company may insure a single business or a group of them.
• Captive insurance can be less expensive than commercial insurance and better tailored to the specific needs of particular types of businesses.
• Captive insurance can also provide tax and other financial benefits to business owners.
• The IRS can challenge captive insurance arrangements that it believes to be skirting the law.

How Captive Insurance Works

A captive insurance company is owned by the business or businesses it insures. Unlike mutual insurance companies, which are also owned by their policyholders (who may number in the many thousands), captive insurance companies are both owned and controlled by policyholders. In a nutshell, captive insurance is a form of self-insurance. However, a captive insurance company is subject to state regulations just like other insurance companies.

While policyholders own the captive insurer, their ownership interest is not an investment in the true sense of the word. Ownership ceases when insurance lapses, such as when the business owner no longer needs coverage and stops paying for it. The policyholder cannot sell, gift, or bequeath anything.

Captive insurance companies can be set up in a variety of ways:

• A pure captive insures only its parent company and affiliated companies.
• Group captives can have multiple owners and insure multiple companies.

For example, companies in a single industry might form a captive insurance company (a group captive) to meet their special risk needs.

Captive insurers are common in the U.S. and other jurisdictions worldwide. Each country has separate rules about capitalization and how much surplus these insurers must retain. According to the National Association of Insurance Commissioners (NAIC), there are more than 7,000 captive insurers worldwide and about 90% of Fortune 500 companies have captive subsidiaries.

Important

Businesses risk their own capital when they decide to create their own captive insurance company.

Captive Insurance As a Tax Shelter

Captive insurance can have legitimate tax benefits for business owners. Premiums paid to a captive insurer can be tax-deductible if the arrangement meets certain risk-distribution standards. Thus, the business gets a current year write-off even though losses may never occur.

The Internal Revenue Service (IRS) laid out the rules (in publications in Rev. Rul. 2002-89 and Rev. Rul. 2002-90) under which captive insurance constitutes insurance for federal income tax purposes so that premiums are deductible.

There are two safe harbors under which captive insurance is viewed as real insurance (i.e., premiums are deductible):

• Fifty percent third-party insurance safe harbor. If the captive insurance company gets at least 50% of its premiums from unrelated third-party insureds, there is sufficient risk distribution.
• Twelve insured safe harbor. If the captive insurance company has at least 12 insureds, each having between 5% and 15% of the total risk, then there is sufficient risk distribution, too.

Risks of Captive Insurance

The IRS may still challenge premium deductions where it believes stopgaps thwart risk distribution, such as reinsurance or tax-shelter-like arrangements.

In 2016, the IRS identified micro-captive insurance transactions as a potential risk for tax avoidance or evasion. Such arrangements are still singled out as abusive tax shelters on the IRS’s “dirty dozen” list of tax scams and schemes.

As the IRS explains:

“Abusive micro-captives involve schemes that lack many of the attributes of legitimate insurance. These structures often include implausible risks, failure to match genuine business needs, and in many cases, unnecessary duplication of the taxpayer’s commercial coverages.”

How Captive Insurance Protects Businesses

Traditional insurance products may not meet a particular company’s needs, at least not at an affordable price. Captive insurance can provide coverage that is better tailored than is available through existing products. For example, professional services businesses and construction companies may find captive insurance appealing.

Trade associations may also offer captive insurance for their members. For instance, the Coin Laundry Association used captive insurance for many years because its members could not obtain traditional coverage for their 24-hour businesses.

The extent of this special type of coverage can be limited. According to the International Risk Management Institute, the typical captive insurance limit is $250,000 per occurrence.

The captive insurer does not protect losses over and above that limit, but companies with captive insurance can use reinsurance to cover losses that exceed the limit.

What Financial Advantages Does Captive Insurance Provide?

While the main reason for captive insurance is risk management, an ancillary benefit for businesses is that they stand to profit if the company’s underwritings are sound. Captive insurers generally distribute dividends to owners.

One way to increase these returns is to reduce claims. This can be done by better business practices aimed at safety so that claims are minimized or avoided. Another way is to control operating expenses. Captive insurance companies can run leaner operations than commercial insurers and don’t, for example, need the big advertising budgets that their commercial counterparts often have.

Who Regulates Captive Insurance Companies?

Like other types of insurance companies, captives are regulated primarily on the state, rather than federal, level. As the Insurance Information Institute notes, “A captive insurance firm must be licensed in each state in which it does business or must use a fronting insurer to do business across state lines. Most jurisdictions have established a specific regulatory framework based on the structure and operation of captives.”

The III adds: “Captives that are owned by publicly held companies also must comply with all the regulatory compliance and governance requirements stipulated by the Sarbanes-Oxley Act, enacted in 2002 to increase the accountability of boards of publicly held companies to their shareholders.”

What Is Reinsurance?

Reinsurance is a means by which insurance companies spread their financial risk through contracts with other insurance companies. Spreading the risk to other insurers allows ceding insurance companies to remain solvent by reducing the net liability from large or multiple losses.

What Are the Disadvantages of Captive Insurance?

A major potential downside of captive insurance is that the owners are putting their own capital at risk. Another is that it represents a long-term commitment.

As a 2021 report from the Insurance Information Institute notes, “Companies must commit significant capital in order to comply with minimum capitalization requirements…While considerably less capital is required when joining a member-owned group captive versus a single parent captive, member companies are generally expected to make a long-term commitment when joining the captive and it likely would not make sense unless they planned to remain in for at least three to five years.”

The Bottom Line

Captive insurance can meet risk-management needs for a small or large company while providing financial rewards for its owners. But this type of insurance is not for everyone.

Typically, initial premiums can run into the hundreds of thousands of dollars or even millions. And there are considerable start-up costs—often more than a quarter of a million dollars, to create a captive insurance company and cover fees to actuaries, attorneys, and others.

Fact checked by Vikki Velasquez

There are many reasons why teens should invest. The most significant advantage is the time they have to allow their investments to grow and increase in value, benefiting from the time value of money and compounding. 

The other not-so-obvious reasons are teenagers bring their views of the world as they see them from their generation, activities, interests, values, and culture. These might give them their own investment opinions about companies to invest in based on the products they sell, the culture, or the brand.

For instance, Millennials and Gen Z had an important role in driving environmental, social, and governance (ESG) investing because they voted about issues such as the environment and social equity through their investing. 

Sometimes it might seem confusing where to begin, but it does not have to be. There are many strategies and tools to help young people as they begin their investment journey. In this article, we break down the most important things that teens should know about investing.

Some people may have a misconception that investing is off-limits for people who are not yet legal adults. But unlike the casino or the bar, there are no age restrictions on investing. It is true that you generally need to be at least 18 years old to open your own brokerage account, but people younger than that have plenty of options to invest—although they require varying levels of supervision or collaboration with an adult.

Key Takeaways

• People who have not yet reached the age of legal adulthood have various options to begin investing in coordination with a parent or responsible adult.
• Beginning to invest at a young age provides significant advantages, as investments have a longer time to grow and benefit from the power of compounding.
• Although many brokerages and trading platforms have age restrictions, there are apps specifically geared toward teen investors.

The Importance of Investing Early

Beyond just being allowed to invest, younger people have an upper hand—quite simply, the sooner you begin investing, the more time your money has to grow. This early-mover advantage for younger investors is magnified by the power of compounding.

As you reinvest your capital gains and interest to generate additional returns, the value of your account can snowball higher, making it even more beneficial to start investing while time is on your side.

A quick example can illustrate the advantages of getting an early start. Let’s say you begin to invest for retirement when you begin your career at age 22.

If you consistently set aside $100 per month and earn a healthy 10% return on your investment (compounded annually), you will have $710,810.83 when you reach age 65. However, if you had started investing at age 15, you would have $1,396,690.23, or nearly double the amount.

Riley Adams, CPA, is the founder and publisher of the financial literacy website WealthUpdate and an expert on teen investing (as well as investing for all ages). For Adams, helping young people understand the benefits of investing early is an important step in encouraging their financial empowerment.

“The one thing, the last true edge in investing, is really time in the market,” Adams explains. People who realize this edge and begin to take advantage of it sooner in life increase their chances of financial success.

Custodial Accounts

In a custodial account, an adult controls the investments on behalf of a minor until they reach 18 or 21 years of age, depending on the state. Custodial accounts under the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are a great way to transfer assets to a child or teen, but the custodian adult maintains the legal responsibility and the final say over the investment decisions.

People younger than 18 can even get an early start on retirement planning through a custodial Roth individual retirement account (Roth IRA), but they will need earned income from a job or another paid activity to begin contributing.

There are also joint brokerage accounts that allow minors to share legal ownership with an adult, which may help younger people take a more active role, although investment decisions are generally subject to approval by the adult co-owner.

Are You Ready to Invest?

The benefits of investing when you’re young are clear enough, but some teenagers may still be wondering if they’re prepared to take the leap. Here are a few questions teens may want to ask themselves as they consider whether the time is right to make their first investments:

• Do you have money from a job or another source that you won’t need to access immediately?
• Can you afford to lose this money if your investments don’t play out as planned?
• If you’re under age 18, do you have a parent or another adult willing to help you invest?
• Do you know what you’re getting into? In other words, do you understand the investment you’re considering and how it works?

According to Adams, companies that teenagers frequently interact with can spark an interest in investing. Buying shares of a familiar company is a way to enter the stock market while following the critical advice of investing in what you know.

“Being engaged with companies you see on a regular basis gets you interested, makes you want to understand how they tick, how they grow, how they make decisions,” Adams says. “And then once you kind of understand that, digging a little deeper and asking the question of: Do I think this is good, do I think this is going in the right direction, and then do I have money that I want to invest in it?”

The Risk of Investing

Just as younger people need to be aware of the upside of investing early and often, it’s important for them to know the risks. Of course, the main downside to investing is that it’s possible to lose some—or all—of your money.

While the reality of potential losses is impossible to escape, different types of investments are riskier than others, allowing you to control the amount of risk you would like to take on. As a general rule, the riskier the investment, the greater its potential to provide you with higher returns.

Understanding this tradeoff is key for all investors—young and old—in determining their strategy. But yet again, youth has its advantages. Since younger investors have a longer time frame to remain in the markets, they can afford to take more risks, thereby increasing their potential rewards. When the inevitable market downturn strikes, younger investors have time to wait for the markets to recover.

This explains why the classic investment advice says that you should take more risks when your goals are far in the future but become more conservative as you approach the time when you’ll need to access your money. However, no matter your age, it’s important to discover your own style as an investor, ensuring that you’re OK with the level of risk you’re facing.

“People have different risk tolerances, and I think you need to be honest with yourself,” Adams advises. “If someone walks you through the logic of ‘You’re young, you should take on risk, you should let it grow’—but you just don’t feel comfortable with it, you absolutely should not do that. You should look for lower-risk investments that might not have as much upside but also might not have as much downside.”

Note

People younger than 18 can get an early start on retirement planning through a custodial account. In a custodial account, an adult controls investments on behalf of a minor until they reach 18 or 21 years of age, depending on the state. Note that the conditions for different types of accounts may vary by the financial institution providing the service.

What Teens Can Invest In

Once you get a sense of your own risk tolerance, you can begin researching investments with the characteristics that you believe will best help you reach your goals. Depending on what you hope to accomplish and in what time frame, here are a few of the more common types of investments, or asset classes, that you may choose to buy.

Stocks

When you buy a stock, you take over a small share of ownership, or equity, in a publicly traded company. Stocks can earn you money in two ways:

1. Many companies make payments known as dividends to their shareholders.
2. Stock prices fluctuate based on the market’s determination of the company’s value, and if the price of your stock goes up, you can sell it for a profit.

Because of their changes in value, known in the markets as volatility, stocks can be risky. If the company that you invested in begins to struggle, you may be left with shares that are worth less than you paid for them. However, with this risk comes higher potential returns, making stocks a useful investment for younger people with longer time horizons.

Funds

Whereas stocks represent a share in a single company, you can also buy shares of funds that invest in multiple stocks and other types of assets.

Directed by professional money managers, mutual funds invest in an array of assets based on an objective outlined in their prospectus. Exchange-traded funds (ETFs) also own a basket of different investments, but they are designed to track a specific market index, sector, or other assets, and unlike mutual funds, they are available to trade on the stock market.

Funds offer numerous advantages to younger investors. Since they comprise multiple investments in one, funds offer built-in diversification. In other words, investors in a fund automatically own a variety of assets, so if one component loses value, they won’t see their investment completely wiped out.

While some mutual funds charge steep fees for taking an active role in managing the portfolio, passively managed and index-tracking funds generally have low fees and a proven history of providing solid returns, particularly over the long term.

Bonds

Instead of equity, or ownership in a company, bonds are a type of debt instrument. When you buy a bond, you are essentially making a loan to the bond issuer, who agrees to pay back the principal amount borrowed along with interest payments. Bond issuers include governments as well as corporations.

Bonds are considered fixed-income investments because they provide preset payments over a particular time period. They are particularly useful for investors looking to generate a regular income. However, they are less risky than stocks and by extension offer lower return potential, making them less suitable for young investors seeking long-term growth.

Other Investments

Other types of investment assets could be suitable for certain young investors. For instance, certificates of deposit (CDs) allow you to earn a fixed interest rate on your investment over a specific time frame.

CDs work a lot like a savings account, but since you agree to leave the money alone for the duration of the investment, you generally earn a higher interest rate. CDs are more conservative than stocks or bonds, with a more moderate risk profile but lower return potential.

The list of potential investments does not stop there. From high-risk cryptocurrencies to derivatives including futures and options, there are plenty of ways to put your money to work. However, since these instruments are riskier and more complex, they are more suitable for advanced investors than for those who are just getting started.

5 Steps to Start Investing as a Teen

For a young person who has decided to invest some of their money, the question is: What’s next? Here’s a step-by-step guide to help teens get started along their investment journey:

1. Educate yourself about investing: There are plenty of online and printed materials to help you grasp the basics. You can also ask your parents or another person with investment experience to share their knowledge.
   
2. Set your investment goals: It’s important to be upfront about your end game. What do you want to do with the money? Is your goal far in the future? Setting clear goals will help you determine an investment strategy that works for you.
   
3. Select investments: With so many options available, researching potential investments can seem overwhelming. It is key to ask yourself what type of investment has the best chance of helping you reach your goals.
4. Open a brokerage account: You will need to open an account where you can buy and hold your investment assets. Although you will be unable to open a brokerage account on your own if you are under the age of majority, you can work with a parent, guardian, or trusted adult to open a custodial or joint account that will allow you to begin investing.
5. Buy your selected investment: Now it’s time to put your investment plan into action. The process may vary based on the investment you’ve chosen, but you should be able to buy almost any asset on your brokerage platform’s website or mobile app.

How Do You Invest If You Are Under Age 18?

If you are younger than 18, you cannot be the outright owner of a regular brokerage account. However, with the help of a parent, guardian, or another trusted adult, you are never too young to start putting your money to work for you. With adult supervision, you can open a custodial account, where the adult manages the investments on your behalf until you reach the age of majority, at which point you can take over official ownership. Alternatively, you can open a joint account where you and an adult legally share ownership of the assets.

Is It Illegal to Start Investing Under 18?

Although there are certain restrictions, no laws prohibit people from investing when they are underage. It is generally impossible for minors to open their own brokerage account, but custodial accounts and joint accounts allow young people to begin their investing journey with varying amounts of adult supervision.

How Can I Build My Wealth at 16?

It is never too early to think about your long-term financial future. At age 16, there are some restrictions on how you can invest, but you can get started fairly easily with the collaboration of a parent, guardian, or another dependable adult. The conventional wisdom is that, at a young age, you can afford to take more risks with your investments, which will help you maximize your returns over time. In practice, this means concentrating on stocks and funds that have the potential to appreciate in value over time.

What Is the Child Poverty Rate in the U.S.?

Child poverty rates in the U.S. have fluctuated across the decades but remain persistent and structural. According to the U.S. Census Bureau, child poverty is higher than the national poverty rate. In 2023 (latest information) child poverty was at 13.7% while the national rate was 11.1%.

Some of the highest rates of poverty are found among Black, Hispanic, American Indian, and Alaskan Native children rather than their White counterparts. This means that for many children and young people, finding the resources to invest may not be as realistic as it is for other groups.

The Bottom Line

Although underage individuals will need to collaborate with a parent or another adult to begin investing, teens have a leg up—the supreme advantage of having time on their side. Custodial accounts and joint accounts provide an opportunity for teens to get a head start on building their wealth.

Fact checked by Vikki Velasquez
Reviewed by Katie Miller

Corporate business travel involves the movement of individuals representing their organizations for work-related reasons. Whether it’s attending client meetings, industry conferences, or sealing business deals, this practice covers a range of activities essential for professional growth.

In the interconnected global business environment, where face-to-face connections matter, corporate business travel plays a central role in sustaining and expanding enterprises across borders. Businesses face challenges in optimizing this crucial element of their operations. Strategic considerations must be taken into account to use this element of business to its greatest potential.

Key Takeaways

• Corporate business travel can unlock new opportunities for business growth, offering the possibility of reaching new markets, connecting with a wider pool of prospects, or developing brand presence and reputation.
• Traveling for business has many benefits for individuals as well, providing them the chance to meet fellow employees, grow their careers by participating in different opportunities, and network within the industry, not to mention experience new destinations.
• Business traveler safety and security are top priorities during corporate travel.
• To ensure that travel goes smoothly and stays within budget, companies should implement corporate travel policies and best practices for employees traveling on behalf of the company.

Importance of Corporate Business Travel

There are many business-related reasons to travel. It can encourage team building, promote learning, offer different perspectives, provide connection to a wider network, open up new markets, and drive sales. And whether or not the trip is for a specific purpose (such as a conference or a retreat), the benefits for employees and companies alike can extend beyond the stated intent of the trip, building confidence, cultural competency, relationships, and company reputation.

Many employees consider the opportunity to travel for work a desirable job perk, as it can offer the chance to venture somewhere that they may not ordinarily go, or to have a trip paid for by their company. And although expenses are associated with travel from a corporate perspective, they may be well worth the return on investment in terms of potential leads or sales—plus, many travel expenses are tax deductible.

Types of Corporate Business Travel

Corporate travel can take many forms, including the chance for employees and executives to attend events, such as meetings, conferences, industry networking sessions, and fairs. Or a trip may take advantage of educational opportunities such as training sessions, seminars, and workshops. Retreats and guided trips can make for valuable team-building time in new contexts that unlock different perspectives and strengthen working relationships.

Businesses may send their employees to a different location to network, sell, teach, learn from, or generally connect with external contacts or internal employees in regional offices, or to act on behalf of the company in some way.

Additionally, from a client perspective, business travel may occur as a form of due diligence, ensuring that your vendors or suppliers are legitimate, legal, and compliant organizations—for example, traveling for regular audits to confirm that what you think is happening at your supplier organizations is actually happening.

Creating a Corporate Travel Policy

From a company perspective, travel can be a challenge to administer and manage. Costs can easily balloon out of control; travel logistics can be time-intensive to arrange; employees traveling on behalf of the company must be granted a great deal of trust; and like any form of travel, business travel can open up risks to safety, security, and health.

No matter the size of the business or the frequency or complexity of travel, a corporate travel policy can be a helpful tool for any company to set expectations for its employees, communicate guidelines and processes, keep expenses within budget, and streamline booking and logistics.

In creating a corporate travel policy, companies might consider the following for both domestic and international travel, as applicable:

• Purpose(s) of travel
• Which employees are eligible to travel
• Booking and expense approval processes
• Risks and liabilities of travel and how to manage them
• Expectations for employee behavior, including acceptable and secure uses of technology, personal vs. leisure time, communication, and entertainment while traveling
• Eligible expenses for employees while traveling, including per diem rates if applicable
• Determine if employees will be reimbursed for their expenses or given a corporate credit card to use
• Financial tracking, recordkeeping, and reimbursement processes
• Acceptable booking practices and costs, including preferred agents or vendors
• Travel insurance

Of course, policies must also be communicated and enforced to ensure compliance and fairness. Including a travel policy as part of a corporate handbook or reviewing it in an onboarding or training module can be a good way to ensure that all employees receive and understand the information. Making it easily accessible for future reference on a shared drive or company portal will encourage employees to refer to it often.

Note

Business travel managers estimate, on average, that spending on domestic and international corporate travel is at 77% and 74%, respectively, of where it was before the COVID-19 pandemic. And two-thirds (67%) of business travel professionals are optimistic or very optimistic about the industry outlook for 2025.

Corporate Business Travel Best Practices

There are many best practices that both employees and companies can keep in mind around corporate business travel to ensure that it is a successful experience. These encompass everything from administration and financing to employee behavior and well-being.

Booking Corporate Travel

Booking travel can be labor-intensive and time-consuming. To improve the booking process, save on costs, and streamline expense reporting, it can be helpful to designate preferred travel agencies, online platforms, vendors, and lodgings for employees and executives to book with. If the size of the company allows, it can also be helpful to hire an employee or team specifically to oversee and administer corporate travel, or designate this duty as part of an employee’s broader job description.

Managing Travel Expenses and Budgeting

There are many financial considerations when it comes to corporate business travel, and expenses and budgets must be carefully managed to keep costs under control. Many travel expenses are tax deductible and can be written off, representing potentially significant savings for a company. Setting a budget and clear guidelines for employees about what can be an expense and what cannot is a must, as is creating and enforcing policies and procedures around tracking and reporting expenses.

Many corporate credit cards offer travel rewards and cost-saving opportunities for business travel, as do many other vendors and suppliers in the corporate travel industry. Businesses can take advantage of these to reduce inefficiencies and save on costs.

Ensuring Traveler Safety and Security

As with any trip, business trips are not without safety and security risks, including the potential for political or civil unrest, crime, illness, injury, accidents, emergencies, natural disasters, cybersecurity breaches, or theft.

To protect their employees against unexpected and undesirable circumstances, at a minimum, businesses will want to have a travel insurance plan in place. It’s also helpful for businesses and employees to undertake some form of travel risk assessment to aid them in navigating potential risks, and outline safety and emergency preparedness guidelines within a corporate travel policy.

Employees should also know how to call if something goes sideways, such as hotel booking issues. A travel agent? A supervisor? If there’s a hurricane, you don’t have a car, and your flight is canceled, can you book another last-minute flight to get around the weather to get home? These details should be planned ahead for.

Maximizing Productivity During Business Trips

The overlap of business and leisure, sometimes referred to as “bleisure,” is one of the main draws of corporate business travel. However, there can also be pitfalls associated with this gray area. It can be difficult to stay productive while working remotely, whether due to the many distractions of a new environment (positive and negative), or because the trip entails an increased workload or time spent away from day-to-day job duties.

Employees looking to manage their time efficiently while away should get clarity on the intended purpose and expected outcome of their trip, and their employer’s and teammates’ expectations for their workload and communication frequency. They can also plan ahead to make the most of their travel time and downtime, and anticipate time zone differences to ensure smooth communication and adjustment to jet lag.

It’s important for employees to maintain work-life balance while traveling on behalf of work. Researching food, entertainment, and fitness options and preparing accordingly can pay off in terms of mental and physical wellness, especially for frequent travelers.

Tips for Business Travel Etiquette

Traveling anywhere, whether domestically or internationally, comes with responsibilities and expectations regarding employee behavior. Perception is one of the most important factors to remember when traveling as a representative of your company. You represent your company out in the public, so you need to ensure you’re displaying any key values that your company represents when interacting with vendors, clients, and peers.

This applies to cultural sensitivity as well. Travelers should do research in advance of their trip to ensure that they can be mindful of local customs and professional etiquette and behave with awareness and respect. Even the basics, such as learning appropriate forms of greeting or how to handle money and payment, and committing a few common words or phrases to memory can go a long way toward demonstrating good intentions and building a new relationship across cultures.

Sustainable and Responsible Business Travel

Recognizing that corporate travel can have a negative impact on the environment, many businesses and individuals are reexamining their travel practices and policies to see where they can make improvements. One example is reducing emissions by booking different means of transportation when possible. In general, seeking out vendors or companies that promote sustainable travel practices and responsible tourism, and that support local communities and ecosystems, can be a good first step to reduce environmental impact.

Technology and Tools for Corporate Business Travel

Software and technology tools can be immensely useful across all aspects of corporate business travel. Travel management and booking platforms; apps for tracking expenses, navigation, or converting currency; and translation and communication tools are all things that employees and businesses alike can take advantage of before, during, and after traveling.

When it comes to technology, it’s important to account for cybersecurity risks and only bring what is necessary to reduce the potential impact of damage, loss, or theft.

What Is an Example of Corporate Business Travel?

There are many work-related reasons to travel, but many businesses will have their employees travel for conferences, events, sales and networking, seminars, meetings, team building, retreats, and to open up new business growth potential.

How Does Corporate Business Travel Work?

Corporate travel is simply travel for business-related purposes, so the nature of the trip will depend on its length and purpose. Companies whose employees travel frequently on behalf of the business should consider creating a corporate travel policy with information and guidelines for their employees.

Who Handles Corporate Business Travel?

Some businesses employ internal teams or individuals to manage corporate travel and business trips. At other times, employees are responsible for making their own arrangements within guidelines laid out by the company. There are also corporate travel agencies that businesses can leverage to streamline and optimize their bookings and costs.

What’s New About Corporate Business Travel in 2025?

Corporate business travel trends for 2025 include travel planning assisted by artificial intelligence (AI), continuing growth in sustainable and responsible travel, inclusive travel policies, virtual tours of hotels and meeting spaces before booking, the New Distribution Capability (NDC) data interface, travel safety apps, continuing growth of in-person events, personalized travel experiences, and continuing use of travel apps and platforms.

The Bottom Line

Corporate business travel can be an invaluable path to both business growth and individual career development, building strong relationships and teams. No matter what form it takes, it’s prudent for companies to collect, implement, and communicate best practices for business travel to their employees in a company handbook or corporate travel policy. This should incorporate areas such as expense and booking management, safety and security, productivity, sustainability, technology, and employee behavior and etiquette.

Reviewed by Lea D. Uradu

Home Equity Loan vs. Personal Loan: An Overview

A home equity loan and a personal loan both offer one-time, lump-sum payments that are required to be paid back in installments over an agreed-upon period of time. However, the main difference is that home equity loans are a specific form of secured loan in which the borrower’s home is used as collateral. Personal loans, on the other hand, can be secured or unsecured by collateral and are a much broader and varied category.

As personal loans tend to have a less intensive approval process than that of a home equity loan, they can generally be quicker and more straightforward to obtain. While home equity loans usually will take longer to be approved, they tend to offer a lower interest rate than a personal loan and potentially a higher loan amount as well. Before pursuing either option, however, it’s important to consider the amount you need and the intended purpose of your loan. 

Key Takeaways

• Home equity loans and personal loans both offer lump-sum payments to be paid back in installments over a specified time period.
• A home equity loan is a type of secured loan in which the borrower’s home is used as collateral, whereas personal loans can be secured or unsecured by collateral.
• Personal loans tend to be quicker and more straightforward to approve, while home equity loans require a property appraisal and a lengthier application and approval process.
• Home equity loans usually offer a lower interest rate than personal loans, but both usually offer lower interest rates than credit cards. 
• Both loan types can be used for a variety of purposes, though home equity loans can offer larger amounts, depending on the borrower’s home equity.

Loan Structure and Purpose

In a home equity loan, money is borrowed using the value of your home (more specifically, your home equity) as collateral. The Federal Trade Commission (FTC) defines home equity as “the difference between what you owe on your mortgage and how much money you could get for your home if you sold it.” This is why a home equity loan is sometimes referred to as a second mortgage.

Many personal loans are unsecured, but secured personal loans, which can be backed by collateral like a certificate of deposit (CD), stocks, a vehicle, or savings, are also available.

Personal loans can be used for a variety of purposes, including consolidating credit card debt, paying off higher-interest debt, paying for large expenses (such as a major home appliance or a vacation), or even establishing or improving your credit score. 

Home equity loans also can be used for a range of purposes, such as debt consolidation, large one-time expenses, or educational or medical expenses. Keep in mind that a home equity loan is a lump-sum payment, so a home equity line of credit (HELOC) may be a better fit for situations (such as a lengthy home renovation project or starting a business venture) where a large amount of ongoing funding is required or money will be needed continually over a period of time. 

In considering which loan to access for financing in the specific case of home renovations or improvements, a home equity loan may be a better option than a personal loan. This is because in most cases, the interest paid on personal loans is not tax deductible; however, home equity interest payments are—on the condition that the home equity loan is used to “buy, build or substantially improve the taxpayer’s home that secures the loan.”

Loan Application and Approval

Personal Loan Application and Approval

When applying for a personal loan, the following usually will be taken into consideration by the lender:

• Your credit score and credit report
• Your income and employment status 
• Any debt you may have (specifically, your debt-to-income (DTI) ratio)
• The interest rate permitted by the applicable state law 
• Collateral (if applying for a secured loan)

The loan amount and the length of the repayment term are also important factors that will determine the loan’s interest rate.

Keep in mind that personal loans may also include fees such as:

• Origination fee
• Fees for processing documents and paperwork
• Credit insurance (optional)
• Disability insurance (optional)
• Non-filing insurance (for secured loans)
• Late penalty fees

Home Equity Loan Application and Approval

When you apply for a home equity loan, a lender will calculate your loan-to-value (LTV) ratio or combined loan-to-value (CLTV) ratio to consider how much money they will allow you to borrow. This calculation essentially answers this question: If the house is sold, would it cover the amount owed by your original mortgage and this additional loan, and by how much? It is also a large factor in determining the interest rate of your loan. Usually, the lower your LTV, the lower your interest rate. 

To determine the value of your home, there is usually an appraisal process similar to that of getting a conventional mortgage. This can entail various fees and closing costs. Your income and credit history also will be taken into consideration. The maximum amount that you can borrow is usually equal to around 80% of your home equity. Keep in mind that lenders may have a minimum amount that they will lend in this type of loan agreement.

Interest Rates and Payment Terms

The interest rate on a personal loan can be fixed or variable, and it can be lower than that of a credit card but usually higher than that of a home equity loan (especially in the case of unsecured personal loans). In general, evaluate a personal loan interest rate by comparing it to the national average: If it’s lower, that’s a good sign. Personal loan terms can range in length—it’s advisable to choose the shortest loan term for which you can afford monthly payments.

Home equity loan interest rates are usually fixed, and they tend to be lower than both personal loans and credit cards because the home is used as collateral. However, the risk here is that if the loan is not paid off, the lender can repossess and sell the home to cover the remaining debt. It also means that if the value of your home decreases, you may end up underwater—the amount that you owe may exceed the value of the home.

Other Considerations 

When considering any loan, it’s important to shop around and compare the terms and deals offered by different banks, credit unions, and financial companies. Under the Truth in Lending Act (TILA), lenders are required to disclose the following information before borrowers sign any loan agreement so that they can understand and compare different offers:

• The full amount you are borrowing 
• Repayment amounts and their due dates
• How much it costs to borrow the money (referred to as the finance charge and includes interest and any fees applicable to the loan)
• The annual percentage rate (APR) 
• Any penalties that may apply for late payments
• The consequence(s) of not paying back the loan and actions that the lender may take
• Any penalties that may apply for paying the loan back early

Try using a loan calculator to get an idea of how much you’ll end up paying. 

How Do People Use Personal Loans?

Investopedia commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, and Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.

What Is the Difference Between a Personal Loan and a Home Equity Loan?

The biggest difference between a personal loan and a home equity loan is the structure. A home equity loan is a specific type of secured loan that uses the borrower’s house as collateral. While both offer lump-sum payments, the amounts for each can vary, and the approval process is different (usually significantly shorter in the case of personal loans).

What Is the Downside of a Home Equity Loan?

Perhaps the biggest downside of a home equity loan is that your house is used as collateral. If you default on the loan, then your lender may be able to seize your home.

Does a Personal Loan Have Lower Interest Rates Than a Credit Card?

Personal loans can have lower interest rates than a credit card, but not necessarily. It will depend largely on the length and type of the loan (e.g., secured vs. unsecured) as well as the borrower’s credit history. 

The Bottom Line

In considering whether to pursue a personal loan vs. a home equity loan, it’s important to determine whether either option is best for your financial situation (or whether another type of credit, such as a line of credit or a refinancing option, might be more suitable). Use a loan calculator to get an idea of how much you will potentially be spending. Considering the purpose of the loan and the amount that you’ll need, shop around for the best options among various lenders, and ensure that you understand the entire agreement and any associated fees before signing anything.

Reviewed by Eric Estevez

Nike, Inc. (NKE) is a leading textile, apparel, footwear, and accessories company with a market capitalization of $107.4 billion as of March 2025.

Phil Knight, Chairman Emeritus, started the company by selling shoes from his car. Nike began as Blue Ribbon Sports in 1964 and was incorporated as Nike in 1971. It launched its initial public offering (IPO) in 1980. Nike operates in North America, Western Europe, Central and Eastern Europe, Japan, and China.

Key Takeaways

• Nike is a global brand that makes sneakers and athletic wear for sports professionals and retail consumers.
• Nike has steadily increased its annual dividend since its founding.
• Nike’s first quarterly dividend payout was $0.05.

Dividend Policy

Nike, Inc.’s annual dividend was $1.60 as of Mar. 13, 2025 with a yield of 2.17%. The average dividend yield of the consumer goods sector is 2.22%.

Nike has paid quarterly dividends ranging from $0.5 to $0.88 per share, adjusting for its stock splits. Nike’s dividend initially increased by an average of 15.8% annually. Two of Nike’s competitors include Under Armour and Adidas. UA does not pay shareholder dividends. Adidas’ annual dividend was $0.239 on Mar. 13, 2025 with a yield of 0.2%.

Note

In 2024, analysts projected Nike is poised to become an S&P 500 dividend aristocrat. A dividend aristocrat must have increased its dividend for 25 consecutive years and be included in the S&P 500 Index.

Earnings Trends

For quarterly and annual reports, Nike includes operating segments for the NIKE and Jordan Brands in North America, Europe, Middle East/Africa, Greater China, and Asia Pacific/Latin America. Converse is also a reportable operating segment and reports for the design, marketing, licensing, and selling of casual sneakers, apparel, and accessories.

For fiscal year (FY) 2024, annual revenues increased 1% to $51.4 billion from $51.2 billion in FY 2023. Footwear represented 68% of yearly revenue. The North America segment accounted for 43% of revenue.

Dividend Ratios

In FY 2024, Nike returned $6.4 billion to shareholders through share repurchases and dividends. The company reported an annual EPS of $3.73, a 15.48% increase from 2023. In the most recent data, Nike’s dividend payout ratio was 40.64% in 2023. The dividend payout ratio indicates the portion of EPS paid to investors in cash dividends.

Nike’s Future Outlook

Earnings results for the quarter ended February 2025 are expected to show a year-over-year decline in earnings based on lower revenues. Nike lowered revenue expectations for 2025 but continues to focus on innovation and franchises. In 2024, Nike introduced the AlphyFly 3 to basketball and the Sabrina 1, a shoe that works across genders. 

Risks in 2025 include a volatile global economy, including sustained high inflation and interest rates. Fluctuations in the markets and exchange rates for foreign currencies impact global markets. Nike depends on the availability and acceptable pricing for commodities and raw materials such as cotton or petroleum derivatives.

How Often Does Nike Pay Shareholder Dividends?

The company pays a quarterly dividend to shareholders in or around January 5, April 5, July 5, and October 5.

Has Nike Ever Had a Stock Split?

Nike has offered a 2 for 1 stock split to investors seven times from 1983 to 2015.

Who Is the CEO of Nike?

As of 2025, Elliott Hill is the President and CEO of Nike, Inc.

The Bottom Line

Nike, Inc. is considered a dividend leader and projected to be a “dividend aristocrat,” S&P stocks that have consistently increased shareholder payouts. Nike returned $6.4 billion to shareholders through share repurchases and dividends in FY 2024.