money

Reviewed by David Kindness
Fact checked by Vikki Velasquez

Many people may not know this, but Monaco is a sovereign country, and at less than one square mile, it is the smallest nation outside of Vatican City. The national language is French, which is probably why it’s often mistaken for a part of France.

Located on the Mediterranean near Italy, Monaco is just hours away from some of Europe’s major cities. It has a beautiful setting and high quality of life, not to mention superior cultural, educational, and medical programs.

There’s another plus to living in this sunny locale: very favorable tax laws. Many people choose to call this principality home because it’s a high-profile tax haven. The country’s personal and business tax laws and policies are relatively lax compared to those of many other nations.

In this article, we highlight some of the tax advantages of living in Monaco.

Key Takeaways

• Monaco is considered a tax haven because of its favorable tax laws and policies.
• To become a resident in Monaco, you must show proof of accommodation and sufficient financial resources.
• Monaco does not collect personal income tax or capital gains taxes.
• There are no property taxes in Monaco, but rental properties are taxed at 1% of the annual rent plus other applicable charges.
• Monaco eliminated taxes on dividends paid by local companies and does not charge a general corporate income tax.

Personal Income Tax

Monaco has not levied a personal income tax on its residents since 1869. An individual must intend to stay longer than three months a year to be considered a resident. Considering the strategic location of Monaco, which is easily accessible by airplane, boat, or train, it is very common for residents to work and even live in other countries in Europe.

For example, non-residents of the United Kingdom are allowed a 90-day stay. Many businesspeople who reside in Monaco work in the U.K. without exceeding the 90-day limit. This, in turn, makes them subject to Monaco tax laws, so any income earned in the U.K. avoids taxation in that country.

But there is a catch. Many countries in Europe consider this strategy tax evasion and try to impede it. For instance, French nationals residing in Monaco are subject to French income taxes, unless they became residents of Monaco before 1957.

Note

Monaco, Andorra, and San Marino aren’t part of the European Union (EU), but for many years they negotiated with the EU regarding an Association Agreement to participate in the EU’s internal market. In 2023 Andorra and San Marino successfully entered into an agreement with the EU, while Monaco and the EU suspended negotiations.

Capital Gains and Wealth Tax

A capital gain occurs when the value of a capital asset increases from its original purchase price when it is sold. Capital gains can be realized on any type of asset—for example, stocks, real estate, and other investments. Most countries, including the United States, impose a tax on capital gains. However, residents of Monaco do not pay capital gains taxes.

Similarly, Monaco also does not levy any net wealth taxes. Wealth taxes are charged on the net fair market value of someone’s assets. They are charged on a taxpayer’s assets less their liabilities. This tax is also called a capital tax or equity tax.

These rules don’t apply to current or prior French residents. These individuals may be subject to some amount of taxation. French citizens who transfer their residence or domicile to Monaco will have their worldwide property subject to France’s net wealth tax.

Property Tax

The real estate market in Monaco is open to residents and foreign investors alike. There are no restrictions on foreign ownership, and it’s fairly easy to buy or rent in the country. Keep in mind that buying or renting real estate is an important part of establishing residency in Monaco. According to the rules, you must own or rent a property for at least a year to become a resident.

If you own property in Monaco, it’s important to note that there are no property taxes in the principality. But that doesn’t apply to rentals. In fact, rental properties are taxed at 1% of the annual rent plus other applicable charges.

You will have to pay taxes if you sell your property. This tax is levied at a rate of 33.3% on any profits earned on the sale of real estate. However, losses on the sale of real estate can be carried forward for up to five years to offset any gains on other sales.

Business Taxation

Anyone who intends to operate a business must first apply for a permit. This includes anyone who intends to operate as a company, trade, sole proprietorship, or freelancer. Paperwork must be filed with the Welcome Office. The business owner must have a solid professional reputation and qualifications and must demonstrate the promise of stable business activity through a business plan.

Individuals must also understand the country’s business tax rules. There are favorable tax treatments for corporations. Companies with profits exceeding 25% from outside of Monaco are taxed at a rate of up to 33.3%.

Certain rules apply to businesses that operate within the principality. For instance:

• Monaco eliminated dividend taxes in 1963 for shares in local companies. This policy greatly increased the amount of foreign investment in the principality, as did the large availability of data privacy.
• The profits of Monaco-based companies are taxed if they engage in selling the licensing of trademarks, patents, manufacturing processes, or artistic copyrights.

Privacy

Monaco is known for its financial and professional secrecy laws. This means that it maintains a high degree of data privacy within its banking system, including the existence of wealth management and bank accounts and any related information like account balances and activity. Failure to abide by these standards results in punishment as per the Monegasque Penal Code. Keep in mind, though, that Monaco has signed transparency agreements with other countries of late.

Despite this, the government does have measures in place to counter money laundering and terrorist financing. The first anti-money laundering (AML) law was established in 1993 and continues to be amended as international standards change. This activity is monitored by the Financial Action Task Force, a global money laundering and terrorist financing watchdog.

Important

Monaco is known for financial secrecy but is increasing its transparency agreements with other countries.

Tax Havens Around the World

Monaco isn’t the only country in the world that attracts new residents and businesses because of its status as a tax haven. There are others that offer similar or other tax-based incentives, notably:

• Switzerland: Although banks can no longer operate anonymously, the country still registers high on the global privacy list because of its financial privacy laws. It continues to offer the wealthy a safe place to store their money and keep it there.
• Cayman Islands: This island nation doesn’t have a corporate tax. As such, it allows companies to set up subsidiaries to protect some or all of their income from taxation. Investors aren’t required to pay taxes on dividends or interest earned on investments, and the privacy laws are some of the strictest in the world.
• Panama: Companies incorporated in Panama that conduct offshore business aren’t subject to many forms of taxation, including corporate, withholding, income, and capital gains taxes. Panama has very favorable privacy laws that shield offshore corporations, trusts, and foundations.

How Does Monaco Make Money?

Monaco is a popular tourist destination because of its climate and casino. As such, the country relies heavily on the tourism industry to generate revenue. It also charges a value-added tax (VAT) of 20%, stamp duties on documents, and a 33.33% tax on corporations with profits exceeding 25% from offshore sources.

What Is the Cost of Living in Monaco?

The general cost of living in Monaco for a single individual is $1,858 a month. This figure doesn’t include accommodations and is about 106.3% higher than in the United States. Renting a one-bedroom apartment in the city center costs about $6,338 while renting one outside the city is $7,186. Rent costs are about 479.2% higher in Monaco than in the U.S.

Is Monte Carlo a Tax Haven?

Monte Carlo is an administrative area of Monaco. As such, it is considered a tax haven because of its favorable laws. For instance, individual residents aren’t taxed on personal income. The area also has a business-friendly tax structure because it only taxes profits on companies that earn 25% or more of their profits from overseas sources. They are charged at a rate of 33.33%.

The Bottom Line

Monaco has long been considered a tax haven because of its favorable personal and corporate tax rules. The country does not tax individuals on their income, and corporations within the country have favorable tax treatment.

If you’re thinking of moving because of these reasons, you must show proof of accommodation and that you’re able to sustain your lifestyle. As with any major life change, make sure you do your research before you take the plunge.

Reviewed by Samantha Silberstein

Homeownership may be a part of the American Dream—but in reality, roughly one in three American households (nearly 36%) lives in rentals, according to a 2020 report by the Joint Center for Housing Studies of Harvard University.

Renting has also become much more common among the age groups and family types that were traditionally more likely to own their housing. The report found—in fact, rentership rates for all age groups under 65 are at historic highs.

Since you’re dealing with something as vital and intimate as a person’s home—even if it’s only temporary—it’s important that everyone involved in the lease understands their legal rights.

Landlord-tenant laws generally fall under the jurisdiction of individual states. But since many state laws are very similar in scope, tenants and landlords throughout the U.S. should expect that no matter where they’re located, these are four things property owners should never do when they’re renting out a unit.

Key Takeaways

• Although landlord-tenant laws vary by state, there is generally some uniformity in certain areas.
• Landlords cannot enter tenanted properties without giving proper notice.
• Landlords cannot arbitrarily end someone’s tenancy before the lease expires.
• Arbitrary, mid-lease rent increases are not permitted unless specified in certain circumstances in the lease or by the municipality.
• The Fair Housing Act prohibits a landlord from discrimination in renting, representing properties, or providing services to tenants.

1. Enter Without Proper Notice

Even though the premises technically belongs to them, landlords can’t enter a rented home whenever they feel like it. According to many state statutes, they must provide at least 24-hour notice if they wish to enter an occupied property.

The notice must outline the reason for access and must be given in writing unless indicated otherwise by the tenant. (In some states, you must receive the tenant’s specific approval to provide notices electronically—that is, through email or text message.)

When a landlord gives proper notice, whether it is to make repairs, conduct a routine inspection, show the property to prospective future tenants, or carry out any other reasonable request, their tenant may have to invite them to the unit.

9 a.m. to 5 p.m.

The only hours that landlords can enter a renter’s unit in many jurisdictions: in other words, regular business hours on weekdays, from Monday to Friday.

A tenant cannot deny a landlord access to the property when proper notice is given, and the request is reasonable. However, the occupant may request to change the date or put in a clause in the lease to limit the number of times the landlord can enter the unit.

Exceptions and Violations

Even states that mandate advance-notice rules allow exceptions. There are two that usually apply: A landlord may enter the premises in an emergency, such as a fire or leak, or if they believe the tenant has abandoned the property.

A tenant who feels that their landlord violated the rules by entering their premises in a non-emergency without giving notice does have a few options. The first is to let the landlord know of the problem. If that doesn’t work, the tenant may be able to bring it to the attention of the local or state housing authority or file a trespassing claim with local police or the court system.

2. Unlawfully Evict Tenants

A landlord may evict a tenant for many reasons, but they must go through the proper legal channels and give the tenant due notice. The amount of days necessary for due notice varies by state and can range from nearly immediate to 30 days or more.

A landlord who does not follow the correct protocol generally faces an uphill legal battle if they end the rental agreement or a tenant’s occupancy before the lease expires. Landlords who abruptly lock a tenant out of the property without warning may fall within the definition of retaliatory eviction. Not only that but they may also be slapped with trespassing or burglary charges. Similarly, turning off utilities could be seen as intentionally putting a tenant in danger, especially if the local climate is prone to extreme heat or cold.

If a landlord violates housing laws, a tenant may be entitled to remedies, including monetary damages.

Important

On Sept. 1, 2020, the Centers for Disease Control and Prevention (CDC) issued an Agency Order, applying to residents earning less than a specified amount, the order banned evictions for nonpayment of rent. The order was extended several times due to an ongoing state of emergency due to the coronavirus pandemic. However, the federal ban ended on Aug. 26, 2021, and it was left up to the states to decide if to extend it.

3. Unjustifiably Raise the Rent

A lease is a legally binding contract. Once signed, there are very few circumstances under which the landlord can raise the rent. The only way the terms can be changed is if the increase meets a certain set of conditions in the lease itself. These may include:

• A new tenant joining the household
• The addition of a pet
• If the landlord significantly remodels part of the property

Landlords may also increase rent if the property is located in a city with rent-control or rent-stabilized ordinances that permit such changes. These ordinances define the circumstances under which the rent of qualifying properties—usually older ones—can be changed, and by how much. Increases might be tied to the rate of inflation, for example.

4. Discriminate Against Tenants

Unlike the other regulations, which stem from the states, the rules forbidding discrimination come from the federal government. The Fair Housing Act of 1968, also known as Title VIII of the Civil Rights Act of 1968, forbids anyone—including landlords—from refusing to rent to an applicant based on:

• Race
• Color
• National origin
• Sexual orientation
• Familial status
• Disability
• Gender

For example, you cannot advertise your rental property as being for families or individuals with no children allowed—yes, even families with children are protected under the FHA. Similarly, you cannot provide different terms or agreements for members of different protected classes than you do for other tenants.

The U.S. Department of Housing and Urban Development (HUD) ‘s Office of Fair Housing and Equal Opportunity (FHEO) acts as the chief enforcer of the FHA. On Feb. 11, 2021, HUD announced that it “will administer and enforce the Fair Housing Act to prohibit discrimination on the basis of sexual orientation and gender identity.”

Can My Landlord Evict Me?

Yes. A landlord may be within their rights to evict you but they must give sufficient notice and in most states, the owner must bring a court proceeding and obtain a judgment of possession from the housing court. Each state has its own set of landlord-tenant laws.

Can My Landlord Enter My Home?

Yes. A landlord can enter your home. However, the landlord must give proper notice to a tenant when they need to enter to conduct an inspection, show the property, or repair damage in the apartment.

Is It Hard To Be a Landlord?

If you want to become a landlord, you must be willing to put in the time and effort, it takes to be a good one. Being a landlord can be expensive, from purchasing a property to maintaining, plus it can be a risky venture, if tenants refuse to pay their rent or damage your property.

The Bottom Line

Property owners have to put in a lot of time, money, and effort if they want to become a landlord. And part of that effort means understanding what the law does and doesn’t allow them to do. Although a landlord may own a rental property, tenants have unique protections from discrimination, harassment, arbitrary rent increases, and wrongful eviction.

Aside from those dealing with discrimination, landlord-tenant laws vary by state, but as long as landlords maintain the home and leave tenants in peace—and tenants respect the property and pay their rent on time—chances are that neither will have to consult local statutes or complain to local authorities.

The widely followed Standard & Poor’s 500 Index is the standard by which stock market performance in the U.S. is often measured, as it tracks 500 of the largest and most stable publicly traded companies in the country. The index is weighted by market capitalization, which gives more significance to companies with larger market values. The top 25 stocks in the S&P 500 by weight are the largest, most influential companies in the index.

Key Takeaways

• The S&P 500 is widely considered to be one of the best measures of stock market performance and the health of the U.S. economy.
• The 500 stocks tracked by the index represent the nation’s largest, most economically significant companies
• The S&P 500 is weighted by market cap. The larger the company, the more influence its stock price has on the overall index.
• The top 25 stocks in the index are important to follow because of their strong influence on the performance of the index and the economy at large.

As of Jan. 27, 2025, the S&P 500 (SPY) had increased in value by 1.3% since the beginning of the year. In January, the index rallied to a new high before late-month selling took it back down again. The rise of the Chinese artificial intelligence startup DeepSeek led investors to dump other AI-related tech stocks, including Nvidia (NVDA), which lost nearly $600 billion in market capitalization.

How are Stocks Selected for the S&P 500?

To be included in the S&P 500, a company must:

• Be based in the United States and trade publicly on a major U. S. exchange
• Maintain a market capitalization of $20.5 billion and a float-adjusted market cap of at least 50% of the index’s total company-level minimum market capitalization threshold
• Have reported positive earnings in the most recent quarter, along with the past four consecutive quarters
• Have a float-adjusted liquidity ratio of 0.75 or greater.
• Have traded a minimum of 250,000 shares in the previous six months before evaluation

The S&P 500 reconstitutes each June. Companies removed from the index are not replaced until the next annual reconstitution.

Top Sectors in the S&P 500

The table below lists the S&P 500’s top sectors by weighting as of Jan. 27, 2025. The information technology, financials, health care, and consumer discretionary sectors carry a cumulative weight of about 68%. Meanwhile, the least-weighted sectors include energy, utilities, and real estate—which have a combined weight of just 7.87%.

Top 25 Companies by Index Weight

These are the top 25 companies by index weight. Since the S&P Global website fails to disclose the weighting of component stocks, we used the S&P 500 exchange-traded fund (ETF), the SPDR S&P 500 ETF Trust (SPY), in order to cite index weighting. The ETF’s holdings are a bit different, but SPY closely reflects the S&P weights.

As of Jan. 27, 2025, here are the largest SPY holdings by weight:

Why Are the S&P 500’s Top 25 Stocks Important?

The top 25 stocks in the S&P 500 by index weight are important to analyze because they can be used to gauge the health of the stock market and broader economy. These companies reflect the performance of key sectors and the benchmark itself.

The current period of outperformance by the technology sector, for example, shows how declining inflation, strong margins, and competitive positioning resulting in good cash flow can contribute to gains in the overall index.

How Do I Invest in the S&P 500 Index?

The simplest and easiest way to invest in the S&P 500 is to purchase the popular SPDR S&P 500 ETF (SPY), which reflects the minute-by-minute movements of the index. Other ETFs that also track the S&P 500 this way include the iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO).

There are also index funds that reflect only the closing price at the end of the day, including the Vanguard 500 Index Fund (VFIAX) and Fidelity 500 Index Fund (FXAIX). For those interested in more complex strategies, options and futures are also available, such as E-mini S&P Futures contracts, although these are only for those wishing to speculate on the future value of the index.

Advantages and Disadvantages of Investing in the S&P 500 Index

The central advantage of investing in the S&P 500 is the wide diversification it offers across many sectors and industries. By investing in the index, an investor generally reduces the risk associated with buying individual stocks. Over the years, an investment in the S&P 500 can produce long-term growth for those willing to wait out the accompanying short-term volatility.

A disadvantage of S&P 500 investing is how concentrated the index is in the top-performing stocks, a factor that sometimes skews results and can result in increased volatility. Some investors prefer an S&P 500 Equal Weight Index, where each component has an equal weight without regard to the size of its market capitalization.

The Bottom Line

The S&P 500 index weights companies according to their market caps. Larger firms are more heavily weighted than small firms, which carries some risks. The tech sector, which includes giants like Apple, Microsoft, and Nvidia, has an enormous influence on index results. In general, the stock market’s health and that of the U.S. economy can be measured by analyzing the S&P 500’s top 25 components.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

Fact checked by Vikki Velasquez

When you start looking into life insurance plans, there are two main types: term and permanent. Term life only covers you for a limited period, while permanent can stay in place for the rest of your life. However, the options don’t stop there. Many types of permanent life insurance cater to different needs and preferences. You can opt for whole life, universal life, variable life, and more.

With so many options, it can be hard to know which life insurance policy or life insurance company is best for your situation. To help, here’s a breakdown of the main types, how they work, and when each is generally a good fit. 

Key Takeaways

• Term life insurance offers coverage for a set number of years.
• Permanent life insurance can cover you for the rest of your life.
• Permanent life insurance comes in various forms including whole life, universal life, and variable life. 
• You can modify and expand term or permanent coverage by adding riders.
• The best fit will depend on factors such as your budget, age, health, preferences, and the level of risk you are willing to tolerate. 

Main Types of Life Insurance

Interested in life insurance but not sure where to start? Here are the five main types to know.

Term Life Insurance

Term life insurance policies offer coverage that is limited to a set period—often 10, 20, 30, or even 40 years. You select a term and coverage amount and pay a periodic (usually monthly, quarterly, or annual) premium to keep coverage in force. If you pass away during the term in a way that doesn’t violate the contract, your beneficiary receives the plan’s death benefit. If you outlive the term, your coverage will end unless you opt for renewal.

Features

• Coverage for a set number of years
• Pays death benefit to the beneficiary if you die during the term
• May have a renewal option

Pros

• Affordable premiums
• Premiums do not increase during the term
• Insurers may allow renewals

Cons

• Doesn’t last for life
• Renewals bring premium increases
• No cash value component 

Ideal for:

Term life insurance is typically best for those who need affordable coverage during a period when they have large financial responsibilities. For example, if you’re the breadwinner of your family, you may want coverage while your children are growing up and you’re paying off your mortgage. Once it’s no longer needed, you can terminate the policy or let it lapse.

Whole Life Insurance (Permanent)

Whole life insurance policies offer coverage for the rest of your life—as long as you pay your premiums. They come with a fixed death benefit and a fixed monthly premium. (You can also opt for paying premiums less frequently, such as annually, which typically brings a slight cost reduction.) Premiums and death benefits are established when you initially sign up and stay the same as long as you keep the policy active. When you pass away, your death benefit will be paid to your named beneficiary.

Tip

Life insurance premiums are based on factors as age and health. The younger and healthier you are when you sign up, the lower the rate you can lock in for life.

In addition to a fixed death benefit, whole life policies come with a cash value savings component. Every time you make a premium payment, part of the payment goes toward your cash value. Interest then accrues on that money according to a fixed rate.

You can withdraw from or borrow against your cash value account during your life. However, that amount will be deducted from your beneficiary’s death benefit. You could choose to pay back a cash value loan and return to the original death benefit.

Features

• Permanent policy
• Cash value component, which can be used for loans, withdrawals, or to pay premiums
• Fixed premium and death benefit
• Guaranteed cash value growth

Pros

• Predictable premium payments
• Guaranteed death benefit amount
• Coverage for life
• Can borrow against or withdraw from cash value, or use it to pay premiums

Cons

• Initially much more expensive than term life
• Cash value may grow slower than with other policies
• No flexibility to adjust the premium or the death benefit

Ideal for:

If you’re looking for a predictable and low-maintenance life insurance policy that’ll cover you for the rest of your life, whole insurance can be a good fit. It helps you leave behind a sizable amount of tax-free money to your loved ones and gives you access to money during your life. On the downside, it does initially come at a much higher cost than term life insurance. However, the premiums will not increase as you get older as they do with other types of insurance, including term insurance renewal.

Universal Life Insurance (Permanent)

Universal life insurance is another type of permanent policy that’s designed to cover you for the rest of your life, as long as you pay the premiums and don’t deplete your cash value.

Like whole life insurance, it has a cash value savings component. However, unlike whole life, your premium and death benefit won’t be fixed. You can adjust them up or down to better suit your financial needs and budget throughout your lifetime.

You must pay enough to cover the policy’s underlying insurance cost, which goes up as you age. By design, you’re supposed to pay more than the insurance cost to build cash value when you’re younger, which helps cover the rising insurance costs as you get older. Otherwise, your premiums will go up.

Another difference between whole life and universal life is that interest on the cash value of a whole life policy accrues at a fixed rate, while interest on a universal policy accrues according to market interest rates. As a result, you can earn more when the market is up but can also earn less when the market is down. That said, many insurers have minimum performance guarantees for the cash value interest rate.

Features

• Permanent life insurance policy
• Adjustable premiums and death benefit
• Cash value component, which can be used for loans, withdrawals, or to pay premiums
• Cash value interest accrual linked to market interest rates

Pros

• Permanent policy
• Cash value can go toward loans, withdrawals, or premiums
• Flexible premiums and death benefit

Cons 

• Requires budgeting to maintain coverage
• Premiums go up if not enough cash value is saved 
• Cash value is more exposed to risk

Ideal for:

Universal life insurance can be a good fit for those who want permanent coverage but also want more flexibility when it comes to their premium payments. It’s also a good fit for those who are comfortable with a bit more risk due to the cash value being linked to market interest rates. 

Variable Universal Life Insurance (Permanent)

Variable universal life insurance is another type of permanent life insurance with a cash value savings component. The difference with this policy is that you invest your cash value into assets such as mutual funds. As a result, your cash value’s growth will depend on the performance of your investments.

However, many insurers let you allocate part of your premium to a fixed account with a guaranteed rate of return to limit your risk. This type of policy also offers flexibility when it comes to your death benefit and premium amount. 

Features

• Permanent policy
• Cash value growth tied to investments
• Flexible premiums and death benefit

Pros

• Permanent policy
• Flexible payments
• Cash value component, which can go toward loans, withdrawals, or premiums
• Investment options can help you grow your cash value faster
• Gives you control over how your cash value is invested
• Part of cash value can have a fixed rate of return 

Cons

• Risk of poor cash value growth and even losses
• Investment losses could lead to a reduced death benefit
• More fees and charges than other permanent policies 
• More complex than other life insurance types

Ideal for:

A variable universal life insurance policy is best for investment-savvy people who want more control over their cash value’s growth. You’ll be the one deciding where to allocate the funds so it’s important to have some investment know-how, as well as understanding the risk and reward potential at play. It can be a good fit for people who’ve already maxed out their retirement contributions and want to build additional savings for retirement.

Final Expense Life Insurance (Permanent)

Final expense insurance, also known as burial insurance, is designed to cover end-of-life expenses such as a person’s funeral. You don’t normally need to undergo a medical exam to get approved unless you have a serious pre-existing medical condition. Insurers may offer guaranteed acceptance for people in a certain age group. For example, Mutual of Omaha guarantees acceptance for applicants between the ages of 45 and 85 with up to $25,000 in coverage available.

In exchange for having no medical exam, final expense insurance charges higher premiums versus policies that do require a medical exam. Final expense policies also have low maximum coverage amounts. This is what keeps monthly premium payments relatively low. However, they’re likely to be even lower if you can get a small whole life policy that requires a medical exam.

Features

• Permanent coverage
• Medical exam may not be required
• Lower coverage amounts 
• Higher premiums for the amount of coverage offered
• Some offer guaranteed acceptance for certain age groups
• Cash value component, which you can borrow against, withdraw, or use to pay premiums

Pros

• Low coverage amounts keep monthly payments relatively affordable
• Sometimes guaranteed for elderly age groups
• No medical exam is required in many cases
• Permanent coverage
• Cash value component can go toward loans, withdrawals, or premiums

Cons

• Lower maximum coverage amounts
• Higher premiums than policies that require medical exams
• May not be available over a certain age (e.g. 85)
• Medical exams may be required for severe health conditions

Ideal for:

Final expense insurance is often a good choice for people who find other insurance policies inaccessible. It can provide a way to get coverage for your funeral, burial, and final bills if you’re getting toward the end of life and don’t have other resources to cover those expenses.  

Other Types of Life Insurance

In addition to the main types of life insurance, here are a few other variations you may come across when shopping around.

Short-Term Life Insurance

Short-term life insurance provides coverage for a very short period, such as one year. It’s designed for those who want loved ones to receive a death benefit if they pass in the near future. For example, Progressive offers one-year policies up to $200,000 that don’t require a medical exam.

Note

You might consider short-term life insurance to fill a temporary gap, such as if you’re in between jobs.

Variable Life Insurance

Variable life insurance is permanent coverage that lets you invest your cash value in a portfolio of sub-accounts, the same as variable universal life insurance. The key difference is that the premiums on variable life insurance are fixed. You cannot adjust them up and down.

Indexed Universal Life Insurance (IUL)

Indexed universal life insurance is a variation of universal life that allows your cash value component to earn interest by tracking a stock market index chosen by your insurer. You can enjoy flexible premiums along with the chance to earn more interest. However, there’s also the chance you’ll earn less. These policies have more return upside and risk than whole life but less than variable and variable universal life. 

Supplemental Life Insurance 

Supplemental life insurance is an option for additional coverage that some employers offer. If you find that the life insurance benefits your employee provides for free fall short of your needs, but supplemental life insurance is available, you could consider adding it at your own expense.

Remember, the policy types available will vary from one insurer to the next. To find the best deal, shop around and browse the offerings and pricing from at least three reputable life insurance companies.

How to Choose the Right Life Insurance Plan

Choosing the right life insurance plan for you and your loved ones depends on a variety of factors. Thinking about why you want the policy is a good place to start. What do you hope to achieve from the death benefit, and for whom?

For example, do you want to cover your end-of-life expenses or pass on an inheritance? Do you want to ensure your family is supported financially if you unexpectedly pass? Your answers can help to point you in the right direction.

Beyond that, other factors to consider include:

• What you can qualify for: Life insurance requires you to fill out an application and undergo an approval process. Your ability to qualify for coverage will depend on factors such as your age, lifestyle habits, and medical history. You’ll want to find out if any plans that aren’t available to you.
• Your budget: How much can you spend on a life insurance policy monthly and yearly? The costs will vary greatly by the plan type and coverage amount you choose. Term life policies start as the most affordable but have a set expiration date, while permanent plans carry long-term growth potential if you can maintain the premiums. 
• Whether you prefer predictability or flexibility: Term and whole life policies offer fixed premiums and death benefits, while other policies such as universal life allow more flexibility. You’ll want to weigh the options to decide which is best for your budget and goals. 
• If you want to build cash value: Are you looking to build cash value that you can withdraw or borrow against? If so, that rules out term life policies. 
• If you need to modify standard coverage: Both term and permanent policies typically offer you a number of riders that you can use to customize your coverage. Common types of riders include ones that pay your premium if you become disabled, pay you monthly if you must stay in a long-term care facility, provide a death benefit if one of your children dies, or offer accelerated death benefits that enable you to receive cash advances if you are diagnosed with a terminal illness. 
• If you want control over your cash value’s growth: You’ll also need to consider how you want your cash value funds to be managed. Would you prefer a fixed rate of return? Then, a whole life policy would be best. If you want it attached to market interest rates, universal life would be the way to go. Further, variable life gives you a more hands-on situation where you can invest in a portfolio of sub-accounts.

By identifying your needs and understanding what the different types of life insurance policies offer, you can weigh your options to find the best fit for your situation. Then, you’ll be ready to shop around to find the best deal. 

What Is a Life Insurance Annuity?

If you die while covered by a life insurance policy, your beneficiary has options on how to receive the death benefit. If they are worried about budgeting the money all at once from a lump-sum distribution, they could instead select a life insurance annuity. The insurance company then splits the death benefit funds into payments guaranteed for a set number of years or even for the rest of the beneficiary’s life—the beneficiary will determine the plan. Annuity payments include accumulated interest.

What Type of Life Insurance Can You Borrow From?

You can borrow from life insurance policies that have a cash value component, which includes most permanent policy options. Part of each premium you pay goes to the cash value savings account, which accrues interest over time. You can then withdraw from it or borrow against it during your lifetime.

Can You Cash in Life Insurance While Still Alive?

Policyholders can cash out their life insurance policies while alive. One way to do so is to surrender the policy. In this case, you can take the surrender value cash payment, which is often subject to surrender fees. If your policy has accumulated cash value, you can also opt to keep it in place and borrow against it or withdraw funds. However, doing so will reduce future death benefits.

The Bottom Line

Life insurance can help you financially support loved ones after you pass away. Whether you want to cover your end-of-life expenses, pay off a mortgage, replace your income, or something else—it provides a way to do so.

However, the best life insurance plan for you will depend on various factors. It’s not one-size-fits-all. Now that you understand how the main types of life insurance work, you can weigh the features, pros, and cons to decide which will be most beneficial for your situation. If you still have questions or concerns, you can reach out to a financial advisor or insurance agent.

These are the top AI stocks based on best value, fastest growth, and most momentum.

Artificial intelligence (AI) bulls were caught off guard in January when Chinese startup DeepSeek launched a free AI assistant that quickly disrupted the market. The model showcased logic and reasoning capabilities comparable to ChatGPT but was developed at a fraction of the cost.

Shortly after its debut, DeepSeek overtook OpenAI’s ChatGPT as the top app on Apple’s App Store, sparking concerns about OpenAI’s dominance. Its unexpected rise came on the heels of a high-profile announcement by President Trump, outlining a $500 billion dollar joint venture between OpenAI, SoftBank, Oracle (ORCL), and MGX, to bolster U.S. AI infrastructure and promote American leadership in the sector. It remains to be seen how the AI race will play out, but 2025 is shaping up to be a pivotal year for groundbreaking developments.

Below is an analysis of the top AI stocks for February 2025, screened for best value, fastest growth, and most momentum.

All stocks are listed on the Nasdaq or New York Stock Exchange.

All data are current as of Feb 3, 2025.

Best-Value AI Stocks

Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing and the stock price will rise. Investors often use price-to-earnings (P/E) ratio to find stocks that are undervalued, as a lower P/E ratio can indicate that a company is valued at less than its fundamental value.

However, it may take multiple quarters or years before a turnaround materializes.  Some stocks may also remain cheap for a reason, falling into a “value trap,” continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value opportunity.

• Yiren Digital Ltd.: A fintech company based in China, Yiren Digital operates a financial marketplace connecting investors with borrowers. It offers payment processing, loan services, insurance products, and ecommerce products. Overall, the company continues to ramp up its AI initiatives, deploying new technologies to increase operational efficiency. To reinforce the AI narrative, Yiren recently joined the China Artificial Intelligence Industry Alliance (AIIA), signaling its commitment to innovation.
• I3 Verticals, Inc.: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. I3 has leveraged AI in multiple use cases, such as increasing customer engagement for its utility partners.
• Perion Network Ltd.: Perion is a global digital advertising company based in Israel. It leverages AI to enhance ad campaigns through its proprietary solutions, SORT and WAVE. SORT enables AI-driven targeting using real-time signals, while WAVE employs generative AI to create dynamic audio ads that adapt to context, behavior, and demographics.

Fastest-Growing AI Stocks

Growth investors look for companies with increasing revenue and earnings per share (EPS), believing these metrics signal strong business fundamentals and potential for value appreciation. However, relying on just one of these indicators can present an incomplete picture, as factors like tax law changes, mergers, or one-time gains can distort the numbers.

For a more balanced assessment, we screen AI growth stocks by looking at the most recent year-over-year percentage growth for both revenue and EPS, giving each equal weighting. We also excluded companies with growth rates in either category of 1,000% or more on the grounds that these are likely outliers.

• Sportradar Group AG.: Sportradar Group AG is a global sports technology company that provides data analytics, betting solutions, and media services to sports organizations, media outlets, and sportsbooks. Its core businesses include real-time sports data collection, AI-driven betting and gaming solutions, fan engagement tools, and integrity services that monitor and prevent match-fixing.
• Duolingo, Inc.: Duolingo is the world’s leading mobile learning platform, with over 113 million active monthly users learning new languages around the world. With technology at the core of its business, the company announced major AI-powered innovations at Duocon 2024 in September, including Video Call, which enables real-time language practice with an AI character.
• ODDITY Tech Ltd: ODDITY is a consumer tech company leveraging AI and data science to create digital-first beauty and wellness brands, disrupting traditional offline markets. The company currently boasts 50 million users and recently announced the acquisition of the intellectual property and research team of AI fintech, Fionic. 

AI Stocks With the Most Momentum

Momentum investing is a strategy that seeks to capitalize on existing market trends by investing in stocks that have recently outperformed their peers or the broader market. The core idea is that stocks on an upward trajectory are likely to continue rising as long as the fundamental drivers
behind their growth remain intact.

The momentum strategy has become synonymous with AI, owing to the fast growth of this sector. AI names can generate returns that far outpace established tech names, driven mostly by investor sentiment. While it’s a viable strategy for those with a higher risk tolerance, investors should also focus on the company’s underlying financials to ensure the anticipated growth prospects will materialize.

Here are the AI stocks with the highest total return in the last 12 months.

• Quantum Computing, Inc.: Quantum Computing is an integrated photonics and quantum technology company focused on developing accessible and affordable quantum computing solutions. While there is controversy around the commercial viability of quantum computers, the company has secured significant partnerships, including with NASA for applications in space missions.
• SoundHound AI, Inc. SoundHound’s proprietary technology offers fast, accurate voice recognition across various industries, including automotive, TV, Internet of Things (IoT), and customer service. Recently SoundHound announced a partnership with Rekor Systems to integrate voice-controlled AI with advanced vehicle recognition technology in police and emergency vehicles. This feature will allow police officers to receive real-time vehicle alerts and control critical in-car systems hands-free.
• Palantir Technologies, Inc.: Palantir provides advanced software platforms for data integration, analytics, and decision-making, for both government and commercial sectors. In December, Palantir Technologies extended its partnership with the U.S. Army in a $619 million agreement to enhance the Army Data Platform (ADP) with AI-driven data solutions for improved decision-making and operational efficiency.

Advantages of AI Stocks

Mass Disruption

AI is a rapidly evolving sector with applications across nearly every industry, from health care to finance and cybersecurity. As adoption accelerates, AI companies have significant room for revenue expansion and market dominance. Furthermore, ongoing advancements in research and development are enhancing AI models’ reasoning and adaptability, unlocking even greater disruptive potential.

Innovation

AI-driven automation enhances efficiency, leading to reduced costs for businesses. Companies leading in AI development can secure long-term competitive advantages, making them attractive investments in both the short and long term.

Investor Enthusiasm

AI stocks often experience strong investor enthusiasm, driving rapid price appreciation. With ongoing advancements in machine learning, automation, and generative AI, market sentiment remains highly bullish, fueling momentum-driven gains.

Disadvantages of AI Stocks

High Valuations and Market Speculation

Many AI stocks trade at high valuations due to investor enthusiasm and growth expectations. While the AI sector has strong long-term potential, some companies may be overvalued, leading to the risk of significant price corrections. Speculative investments, particularly in early-stage AI companies, can result in inflated valuations that may not be supported by actual revenue or profitability.

Regulatory Risks

AI technology is increasingly facing scrutiny from governments and regulatory bodies worldwide. Concerns over data privacy, algorithmic bias, job displacement, and national security risks could lead to stricter regulations that impact operations and growth prospects. The legal landscape around AI is still in its early stages, and new laws around transparency, intellectual property rights, and ethical AI development are being fleshed out.

Stiff Competition

The AI industry is highly competitive, with major players such as Alphabet (GOOGL), Microsoft (MSFT), Nvidia (NVDA), and OpenAI continuously advancing their technologies. This rapid pace of innovation means that companies that fail to stay ahead may become obsolete. Additionally, emerging AI startups such as DeepSeek can disrupt established players seemingly overnight, making it difficult for investors to predict long-term trends.

The Bottom Line

AI stocks offer significant growth potential, fueled by rapid technological advancements and strong investor enthusiasm. However, high valuations, regulatory uncertainties, and intense competition pose risks that investors must carefully navigate. While AI remains a compelling long-term investment, careful scrutiny of a company’s financials and thorough risk management are essential to avoid speculative bubbles and hype.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

Tax season happens every year, yet it somehow always sneaks up on us. Tax season isn’t, in fact, a seasonal event. You can organize and prepare for taxes all year round so that when those deadlines arrive, you’ll be first in line to call it done.

Key Takeaways

• Prepare for tax season year-round to ensure a smoother and less stressful filing process.
• Work with your tax professional to develop a clear checklist covering income, deductions, credits, and other relevant financial details. Keep it updated to avoid last-minute scrambling.
• Upload and organize your tax-related documents into a secure digital system (like Box.com) throughout the year, sorted by categories from your checklist.
• Partner with a CPA and CFP who focus on proactive tax strategy to help minimize your tax burden year-round rather than just preparing your return at the last minute.

What I’m Telling My Clients

1. Work From a Check List

Work with a tax professional who provides a clear checklist of what you’ll need to hand over when it’s tax time. With that same checklist in mind, make sure you’re keeping track of your documents so you’re not caught off guard the next time tax season rolls around. 

With a clear checklist, you won’t have to work from memory–and you won’t be reinventing the wheel each year. Your checklist should be broken down into buckets like:

• Income (W2 wages, equity compensation, retirement plan withdrawals, real estate sales, interest received from your savings, income from your investments, etc.)
• Deductions (tax-advantaged retirement contributions, donations, interest payments like your mortgage, etc.)
• Credits (education and childcare expenses, energy improvements, estimated taxes, etc.)
• Other (gifts, rental property, business ownership, etc.)

2. Use a Digital Filing System

Throughout the year, upload relevant documents for each of your accounts/actions into a secure digital filing system. (We like Box.com at Hendershott Wealth Management.) 

For simplicity’s sake, you can start a folder labeled “2024 Tax Docs” (or whatever year you’re preparing for). 

Tip

Keep your folders organized into the same buckets as your checklist so you know exactly where all the relevant documents are.

Not only will you skip scouring your email and web portals for donation receipts at tax time, but when you file things appropriately throughout the year, you’ll also help avoid the number one issue that leads to inaccurate tax returns: not giving all of the relevant data to your CPA. 

3. Work With Tax Savvy Professionals

Good financial oversight means knowing what you’ll owe (or be owed) come tax time.

Working with a CPA and CFP who focus on tax strategy, which is proactive, rather than just tax preparation, which is reactive, can help you save on your taxes throughout the year. They can help you understand and strategize around various topics you might not be as familiar with, such as minimizing capital gains taxes, understanding contribution limits, the Tax Cuts and Jobs Act (TCJA), and more. 

Warning

 If you choose to work with a financial advisor, do your research to make sure they understand taxes.

The Bottom Line

Benjamin Franklin wasn’t wrong when he said, “Nothing is certain except death and taxes.”

While we can’t predict the circumstances of our passing, we can bring predictability to our taxes. With organization, preparation, and a team of financial professionals you trust, your tax bill can be minimized, and your tax prep stress can quickly become a thing of the past.

Discover the phrases that shaped the last quarter-century.

Fact checked by Suzanne Kvilhaug
Reviewed by Katie Miller

Since its founding in 1999, Investopedia has been an online source of financial definitions, analysis, and advice. The site’s financial dictionary includes topics, terms, events, and technology that define the financial world. To celebrate Investopedia’s 25th anniversary, we looked back to 1999 to revisit the most important terms.

Cybersecurity

1999 marked the close of the century and the millennium, an era characterized by Prince’s “Little Red Corvette,” Y2K, and the launch of Investopedia. Many feared digital systems would not handle the numerical change from 1999 to 2000 and the infrastructure would experience interference or collapse. The term “cybersecurity” was defined as companies secured data and technology.

Broadband

The early days of the commercial internet included the sound of a telephone modem dialing up an ISP (internet service provider). Luckily, broadband, a.k.a. high-speed internet, appeared in the early 2000s.

Telephone companies and communications startups built ADSL (asymmetric digital subscriber lines) that transmitted data at speeds of 512k per second—nine times faster than dial-up. ADSL gave way to fiber-optic broadband and could transmit data at 30Mb per second—fast enough to watch feature films at the click of a mouse and trade stocks at lightning speeds.

Bubble

This term is synonymous with the Dotcom days of irrational exuberance when the stock market was flooded with internet companies in the late 1990s—or companies pretending to have an internet strategy—and Wall Street and Main Street investors rushed in. When the early money moved out, and many of these high-flying stocks fell short on profits, the bubble burst and sent the Nasdaq down nearly 80% from its peak. 

Insider Trading

The film Wall Street popularized the term “insider trading” in 1987. Martha Stewart helped bring it back to the headlines in 2001 when she was implicated in an insider trading case involving ImClone, a pharmaceutical company. Martha Stewart was convicted in 2004 of lying about the stock sale, conspiracy, and obstruction of justice. She served five months in prison, five months of home confinement, and two years probation.

Bear Market

Given that a bear market—a 20% decline of an index from its most recent high—occurs on average every 3.6 years, this term has been very popular over the past twenty-five years.

The bear markets of 1999 to 2001 and 2008 to 2010 cut the stock market in half and washed away wealth and investor confidence. The bear market at the onset of the COVID-19 pandemic in 2020 was swift and painful, lasting only 33 days.

Ponzi Scheme

Ponzi schemes were named after Charles Ponzi, who ran one of the largest fraudulent investment schemes in the 1920s. Ponzi promised 50% returns on investments in international mail coupons. In 2008, Bernie Madoff ran the largest Ponzi scheme in history, defrauding thousands of investors an estimated $65 billion over at least 17 years.

Subprime

The core of the Great Financial Crisis was the homeownership boom at the turn of the century fueled by lenders making risky loans to subprime borrowers—those with poor or no credit history. Subprime loans were then bundled into risky financial products called collateralized debt obligations, from which synthetic collateralized debt obligations were born.

Important

Investopedia celebrated its 25th anniversary in 2024 and looked back to see what’s changed, emerged, and shaped today’s financial ecosystem and your finances. Learn more here. 

Too Big To Fail

During the subprime crisis from 2006 to 2008, the world’s largest banks were dangerously exposed to the loans they made to less-than-credit-worthy borrowers. The collateralized debt obligations the banks owned were underwater due to plunging home prices and rising foreclosures. Storied financial institutions like Lehman Brothers and Bear Stearns were at risk of bankruptcy as shareholders abandoned ship and debt-holders demanded their money. 

U.S. Treasury Secretary Hank Paulson, Fed Chair Ben Bernanke, other regulators, and bank executives created a plan to rescue key banks deemed “too big to fail.” This included the Troubled Asset Relief Program (TARP) where the government bought over $400 billion in mortgage-backed securities and bank stocks in the largest financial bailout.

Great Financial Crisis

A recession lasted from December 2007 to June 2009—the longest since World War II—and a bear market that erased more than half of the market value of the S&P 500. The Great Financial Crisis crippled the U.S. economy, costing nearly 9 million job losses, or an average of 700,000 per month.

Dodd-Frank Act

Regulatory reform followed the crisis of 2008-2009 with laws like the Dodd-Frank Wall Street Reform and Consumer Protection Act, which curtailed bank lending and mandated minimum capital requirements for lending institutions. 

The Dodd-Frank Act created the Consumer Financial Protection Bureau (CFPB), a regulatory watchdog established to help consumers navigate their financial choices, take action against predatory companies and practices, and promote financial education.

Occupy Wall Street 

The Occupy Wall Street movement was born and quickly spread through social media and civic protest when people took over Zuccotti Park in New York City in the heart of the financial district in 2011. Demanding reform and reining in bonuses and salaries for banking executives, the movement was one of the first major protests in the U.S. to use social media apps like Twitter and Facebook to organize and gain media attention.

Bitcoin

Even though the first Bitcoin was created or “mined” in 2009, the appeal and popularity of this decentralized cryptocurrency didn’t blossom until around 2014.

Creator Satoshi Nakamoto remains pseudonymous. Cryptocurrency was invented as a means of exchange and a tradable asset on a decentralized blockchain independent of the global banking system. By 2024, Bitcoin was a widely held and traded asset among retail and institutional investors. 

Note

In 2009, the first recorded value of one Bitcoin was $0.009. As of Feb. 2025, one Bitcoin traded over $99.000, and those long-time holders have created a name for their loyalty: HODL (Hold on for Dear Life).

Affordable Care Act

The Affordable Care Act (ACA) is the comprehensive health care reform signed into law by President Barack Obama in March 2010. Commonly referred to as Obamacare, the law includes a list of healthcare policies intended to expand access to health insurance to millions of uninsured Americans. The ACA expanded Medicaid eligibility, created a Health Insurance Marketplace, and prevented insurance companies from denying coverage due to preexisting conditions.

ESG

As the impact of climate change became more evident and younger generations of investors cared more about the ethics and governance of the companies they invested in, Environmental, Social, and Governance (ESG) investing took root across the financial services industry. New index funds and ETFs were launched. From 2014–2022, assets under management for ESG-related products worldwide doubled from around $15 trillion to $30 trillion. 

Black Swan

A Black Swan is an unpredictable event beyond what is normally expected of a situation with potentially severe consequences like the Great Financial Crisis and the COVID-19 pandemic.

FAANG Stocks

The FANG acronym represents the stocks of Facebook, Amazon, Netflix, and Google. They were four of the fastest-growing large-cap tech stocks in 2013, and CNBC’s Jim Cramer added Apple into the mix in 2017 and expanded FANG to FAANG. They dictated the direction of the market-weighted indexes like the S&P 500 and the Nasdaq.

Racketeering

Racketeering broadly refers to criminal acts involving extortion or schemes to extract illegal profits that involve a “racket” or group of people. The 1970 Racketeer Influenced and Corrupt Organizations Act (RICO) lists the federal crimes associated with racketeering.

These crimes include bribery, fraud, gambling offenses, money laundering, financial and economic crimes, obstructing justice or a criminal investigation, and murder for hire. Racketeering charges have been leveled against Donald Trump, the Gambino crime family, FIFA, and Young Thug, among others.

SWIFT

Financial institutions use the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system to quickly, accurately, and securely send and receive information. The SWIFT system was formed in 1973 with 239 banks in 15 countries. By 2022, it had expanded to more than 11,000 institutional members from more than 200 countries and territories. In 2022, the U.S., U.K., and the E.U. disconnected seven Russian banks from the SWIFT network as sanctions in response to the war in Ukraine. 

Brexit

Brexit is a portmanteau of “Britain” and “exit.” This geopolitical divorce dominated headlines worldwide as the United Kingdom voted to leave the European Union in 2016, threatening to break up an economic and political alliance formed decades earlier. It took the U.K. four years to officially leave the European Union, which it formally did on January 31, 2020. Despite fears of economic chaos spreading through the region, Brexit came in like a lion but left like a lamb. 

Inflation

Inflation was the dominant economic theme in the U.S. during the recovery from the COVID-19 pandemic in 2021. A combination of trillions of dollars in stimulus funds and other government spending, combined with a shortage of goods, spiked the inflation rate to a multi-decade high of 8% in 2022, forcing the Federal Reserve to sharply raise interest rates to bring it down closer to its target of 2%. 

Meme Stocks

A new generation of day traders embraced meme stocks or speculative and shorted stocks like Gamestop and AMC Entertainment.  Day traders used social media community platforms such as Reddit’s r/wallstreetbets to encourage one another to bid these stocks higher and hold on with “Diamond Hands” (never sell) to rake in some “Tendies” (profits). Meme stocks gave birth to this new trading vocabulary and popularized market sensations like Roaring Kitty and Dave Portnoy. Many meme stocks lost up to 90% of their value between 2021 and 2024.

Inverted Yield Curve

When the yield on long-term U.S. Treasury debt is less than the yield on short-term, investors are pessimistic about the near-term future of the economy and a pretty reliable harbinger of a recession. An inverted yield curve used to be a sign that a downturn was on its way.

However, beginning in July 2022, the yield curve in U.S. Treasury bonds of various durations was inverted for over 650 days–the longest stretch on record–and there was no recession. 

Artificial Intelligence

The term “Artificial Intelligence” was originally coined in 1956 by Dartmouth College Professor John McCarthy. A.I. exploded into the investing universe in 2022 as Alphabet, Meta, Microsoft, and Nvidia, devoted R&D money to using machine learning across their products and services. 

Artificial intelligence is a buzzword for data processing, machine learning, language models, and consumer-facing applications like OpenAI’s ChatGPT and Google’s Gemini.

Tariffs

Tariffs are part of global trade and include raising fees on imports. After his election in 2016, President Donald Trump imposed over $300 billion in tariffs against China and the E.U. The Biden administration kept many of those tariffs in place and added a few more around semiconductor imports. In 2025, President Trump began his tenure with new tariff proposals on Mexico, Canada, and China.

American Dream

The term “American Dream” is much older than Investopedia. It was originally coined by American historian and writer James Truslow Adams in his 1931 book The Epic of America.

This has been one of the most popular and controversial terms on our site for many years as Investopedia has tried to provide readers with information to achieve the so-called American Dream—earning enough money to afford to raise a family, educate kids, afford a home, save enough for a comfortable retirement, and take a few vacations.

Common-law spouses may enjoy benefits similar to those with a marriage license

Reviewed by Khadija Khartit

What Is a Common-Law Marriage?

A common law marriage is a legally recognized marriage between two people who have not purchased a marriage license or engaged in a ceremony overseen by an officiant. In the United States, common-law marriage is allowed in several states. Not all states address common-law marriage with a statute but use public policy to determine validity.

Key Takeaways

• A common law marriage is a legally recognized marriage between two people who have not purchased a marriage license or engaged in a ceremony overseen by an officiant.
• Fewer than a dozen states and the District of Columbia recognize common-law marriages.
• Common-law spouses who meet their states’ requirements are eligible for most of the financial benefits of a married couple, including Social Security.
• Both married and common-law married couples must file for divorce if they wish to be separated.

Choosing Common-Law Marriage

Some couples choose to forgo the legalities of marriage and opt for a common-law relationship. This type of union recognizes a couple as somewhat equivalent to being legally married even if vows were not exchanged in a civil or religious ceremony and a marriage license was not obtained.

States that allow common-law marriage may not have statutes in place but require conditions to be met for a couple to be considered married by common law such as:

• The couple lives together in a state that recognizes common-law marriages.
• Live together for a consistent period, such as seven or 10 years.
• Introduce themselves to friends, neighbors, and coworkers as a married couple, calling each other “my husband” or “my wife” and perhaps using the same last name.
• Maintain joint finances such as leases/mortgages, bank accounts, and credit cards.
• Neither partner is married to someone else.

Note

If a state recognizes common law marriage and a couple does not want to be seen as married, they must sign a living together contract—especially if they own property together or use the same last name.

Benefits of Common-Law Marriage

• Tax Returns: Common-law couples where common-law marriage is not recognized cannot file joint tax returns with the IRS. Instead, they must either file separately or as head of household. However, couples recognized as married by common law enjoy many benefits as legally married couples, provided they have lived in a state that recognizes common law for most of their marriage.
• Separation: A common-law marriage can only be legally ended through a divorce. In states where the practice is recognized, it must be dissolved like a traditional marriage.
• Social Security: Partners can receive Social Security benefits if they can prove the number of years they lived together in a common-law state.
• Medical Benefits: When recognized as married in an eligible state, combining health insurance policies may reduce the amount paid in monthly premiums compared to those paid individually.
• Tax Benefits: Recognized common-law marriage partners are exempt from the gift tax for gifts to each other, enjoy unlimited marital exemptions for their estate up to the federal estate tax limit, and can claim deductions for mortgage interest if they co-own a house or have children.
• Wills: Inheritance of a common-law marriage spouse’s property is allowed with a valid will. However, if a spouse dies without a will, their children and other family members assume the inheritance rights, leaving the surviving common-law spouse with none.
• POA: Use of a medical power of attorney (POA) designating a common-law spouse as the person to make medical decisions when they are incapable.

If one spouse buys property without putting the other on the deed, it can be sold without the other’s consent. Couples should consider purchasing major assets using co-ownership agreements to avoid this.

Where It’s Legal

Fewer than a dozen states and the District of Columbia recognize common-law relationships, and each of those states has specific requirements that must be met:

• Colorado: If contracted on or after Sept 1, 2006. Common-law spouses must be 18 or older and not prohibited by other laws.
• Iowa: Intended to support dependents, but otherwise not banned.
• Kansas: Couples must be mentally capable of committing, must be 18 or older to marry, and must represent themselves as married in the community.
• Montana: Not prohibited and not invalidated by the state’s marriage chapter.
• New Hampshire: The statute uses the phrase “cohabitation” not “common-law marriage,” saying such unions can be recognized solely for inheritance purposes. This may occur when an estate is settled after one of the partners dies if the couple lived together for three years before the death.
• Oklahoma: Aside from unions formed before Nov. 1, 1998, common-law marriage has been the subject of conflict between state law and the courts. To be recognized as a qualified common-law marriage, the individuals must prove that they are living together, financially interdependent, not related by blood that would prohibit marriage, and are 18 or older.
• Rhode Island: Both partners must intend to be married and act as if they are married. This means they must live together and present themselves as married to friends and family.
• Texas: Both parties in an informal marriage must consent to be married, live together, and tell others they are married.
• Utah: For a “marriage not solemnized,” both partners must be able to agree to the marriage, and others must know them as a married couple.

Some states have ruled that only those unions that met the state requirements for a common-law marriage by a specified date will be recognized—not those that happened later. Those states and dates are:

• Alabama: Jan. 1, 2017
• Georgia: Jan. 1, 1997
• Idaho: Jan. 1, 1996
• Ohio: Oct. 10, 1991
• Pennsylvania: Jan. 1, 2005. Partners must also exchange vows to be married uttering “words in the present tense, uttered with the view and to establish the relation of husband and wife.”
• South Carolina: South Carolina abolished common-law marriages on July 24, 2019, but recognizes common-law marriages that occurred before that date.

Important

Filing taxes as a legal common-law couple allows partners to take advantage of many tax deductions, including the American Opportunity Tax Credit (AOTC), Child and Dependent Care Tax Credit, Earned Income Tax Credit (EITC), and the Lifetime Learning Credit (LLC).

History of Common-Law Marriage

Common-law unions were prevalent on the European continent in the Middle Ages. The Council of Trent mandated weddings performed by a priest and two witnesses and outlawed them in the Roman Catholic nations.

In October 1855, the concept of a common law marriage was defended at the New York Surrogate’s Court. The case involved the passing of John Tummalty who, though unmarried, had a long-standing relationship with someone in which he did not have a formal ceremonial marriage. The court ruled that society would not benefit if such relationships in which children could be born were no longer considered valid in the eyes of the law.

The U.S. Supreme Court ruled in Meister v. Moore in 1877 that if a state’s law did not specifically prohibit it, a non-ceremonial marriage could be lawful and enforceable.

Are Same-Sex Common-Law Marriages Permitted?

The U.S. Supreme Court’s decision in Obergefell v. Hodges made same-sex marriages legal in 2015. The Respect for Marriage Act passed in 2022 recognized any marriage between two individuals as valid under state law. This federal law creates statutory protections for same-sex marriages, including common-law marriages. Some states, like Pennsylvania, that recognize common-law marriages established by a specific date are retroactively determining if same-sex couples had common-law marriages established before the state’s timeline.

How Do Common-Law Marriages and Civil Unions Differ?

Common-law marriages are different than civil unions. A civil union is a legal relationship between two people that confers rights only on the state level. Civil unions were primarily a way for same-sex couples to have a legally recognized relationship before same-sex marriage became legal in all 50 states after the Supreme Court made its ruling in the 2015 case of Obergefell v. Hodges. Not all states recognize civil unions. Whether a couple is same- or opposite-sex, a civil union provides no right to federal protections or benefits.

Is There Common-Law Marriage in the U.K.?

Many people choose to live with their partners in the United Kingdom just as spouses do after they get married. But there is no definitive law surrounding common-law marriages in England and Wales. Couples in Scotland are able to make limited claims in the event of a separation or death while those in Northern Ireland only have access to legal protection in certain cases.

The Bottom Line

A common law marriage is legally recognized in several states. Couples who meet their states’ requirements are eligible for most of the financial benefits of a married couple, including Social Security and tax benefits.

Reviewed by JeFreda R. Brown
Fact checked by Kirsten Rohrs Schmitt

Many food entrepreneurs, including Martha Stewart, Debbie Fields—the famous Mrs. Fields—and Paul Newman began their food empires in their home kitchens.

For people skilled in cooking and baking, starting businesses in their home kitchens might sound easy enough, since they already have the equipment and ingredients needed to launch. However, owning a home-based food business has its challenges, including legal requirements and costs, which make some entrepreneurs wonder whether selling food from home is worth it.

Key Takeaways

• Those looking to start a home-based food business must look to their state’s cottage food laws.
• Cottage laws dictate what foods the sellers can offer and where they can sell those foods.
• Sellers of food made at home must have food-handler permits, which are typically granted following a brief training course.
• Sellers can’t offer anything that requires refrigeration, due to the risk of food-borne illness.
• Sellers must label products clearly, stating that they were made at home and have not been inspected. 
• Sellers can’t surpass a certain income limit without needing to comply with commercial food manufacturing laws.

Cottage Food Laws

Many states have enacted cottage food laws to create more income-earning opportunities for their residents. Cottage food laws, which are enacted by state legislatures and enforced by local health departments or state departments of agriculture, are designed to eliminate some of the red tape involved in commercial food production and make it easier for home-based businesses to sell food.

However, these laws limit the types of food that home-based entrepreneurs can sell. They also prohibit the amount of money that people can make; entrepreneurs who achieve financial success from their efforts may be required to submit to the same requirements as commercial food businesses.

Cottage food laws vary among the states, and those interested in selling food from home should consult their local laws before launching their businesses.

States also require home-based food business owners to have food handler permits, which typically require a brief training course. Most states charge a nominal fee that covers the course and the permit.

Prohibited Foods and Labeling

In a nutshell, people who sell food that they make at home are prohibited from selling any food that promotes food-borne illness, which typically boils down to foods that require refrigeration. This limits entrepreneurs from selling home favorites such as cheesecakes, ice cream, certain types of pies, and meat, poultry, and dairy products.

People who manufacture food at home can only sell low-risk foods such as coffee and tea blends, dry foods such as granola, chips, and popcorn, baked goods such as bread, cookies, and some cakes, and jams and preserves. Many food items fall within acceptable parameters.

Home-food business owners also must label their products. The labeling requirements are simple and involve including language along the lines of “This product is made at home and has not been inspected.”

Some states limit the places where home-based food manufacturers can sell their goods, which often includes farmers’ markets, roadside stands, and individual consumers. For their safety, home-based food entrepreneurs should carry business insurance.

Note

Coffee, tea, chips, popcorn, muffins, cookies, jams, and honey are among the items, all non-refrigerated, that home-based food entrepreneurs are allowed to sell.

Kitchen Inspections

In most cases, the local health department only inspects a home-based food manufacturer’s kitchen if a consumer makes a complaint.

States also require business owners to have their kitchens inspected if they’re planning to sell food to third parties, such as grocery stores. People who sell food only at farmers’ markets, roadside stands, and directly to consumers should take the normal precautions to keep their kitchens clean.

To pass inspection, people who want to sell food to third parties may need to invest in additional kitchen equipment, such as refrigerators, sinks, and storage areas, at their own expense.

Is It Worth It?

Figures are scant when it comes to determining how much money home-based food business owners make. Some earn a few hundred dollars a month from regular participation in farmers’ markets and from stands that sell popular niche products, while others may earn more money by focusing on festivals and larger events.

It’s important to note that states set limits as to how much home-based food businesses can earn before needing to comply with commercial food manufacturing laws. For example, California has a two-tier system. Tier 1 allows the sale of food at farmers’ markets, festivals, and home deliveries with a sales cap of $75,000. Tier 2 allows for sales at retail outlets and grocery stores with a sales cap of $150,000.

To determine whether it makes financial sense to start manufacturing and selling food from home, a person must start with a solid business plan, itemize the costs of getting into business, and conduct market research.

Can I Sell Food From Home?

Yes, you can sell food from home; however, the rules vary by state. Most states have cottage food laws that specify what kind of food you can sell and where. Some states require food safety training, permits, or kitchen inspections. It’s best to check your specific state’s laws on selling food from home.

Can I Turn My Home Into a Commercial Kitchen?

It is possible to turn your home into a commercial kitchen, however, it will depend on zoning laws. Many residential areas do not allow full-scale commercial operations due to the noise, traffic, and mess they attract. You would most likely need a zoning variance or special permit and it’s possible your neighbors may protest against it. Before you get started, check with your local health department and zoning office to see if it’s even possible.

Which Foods Are Not Regulated by the FDA?

Foods that are not regulated by the Food and Drug Administration (FDA) include meat, poultry, certain processed egg products, and catfish, all of which are regulated by the U.S. Department of Agriculture.

The Bottom Line

Starting a home-based food business can be an enjoyable and rewarding experience, especially if you love cooking. It can also be a great way to make money on the side as many of the initial costs, such as kitchen equipment, have already been purchased.

However, selling food from home comes with many legal and financial challenges. Cottage food laws determine what kind of food can be sold and where. Additionally, while it’s possible to make some profits at farmers’ markets and festivals, larger profits and continued success depend on meeting regulatory laws, research, and obtaining permits.

The first month of January saw a rout in tech stocks, with the Technology Select Sector SPDR Fund (XLK) down 2% year-to-date. Investors were caught off guard on Jan. 27 by the launch of a new free AI assistant from the Chinese startup DeepSeek. The model demonstrated logic and reasoning capabilities on par with market leader ChatGPT, at a fraction of the training and development cost.

Nvidia Corp (NVDA) was hit particularly hard, shedding nearly $600 billion in market cap amid reports that DeepSeek’s model required significantly less graphical processing power to train. While the full impact of the tech sector’s sell-off remains uncertain, it’s clear the AI landscape has been disrupted by DeepSeek’s entry.

Below is an analysis of the top tech stocks for February 2025, screened for best value, fastest growth, and most momentum. All stocks are listed on the Nasdaq or New York Stock Exchange. We excluded stocks with a price under $5, an average daily trading volume of less than 100,000, and a market cap of less than $300 million.

All data are current as of Feb. 3, 2025.

Best-Value Tech Stocks

Value investing is about finding stocks trading below their true worth, with the expectation that the market will eventually correct the mispricing. Investors often use price-to-earnings (P/E) ratio, looking for stocks with a low P/E ratio to uncover value. Typically, a lower P/E ratio signals an undervalued stock because it means the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts.

However, bargain hunters must exercise patience, as it may take multiple quarters (or years) before a turnaround materializes. Some stocks may also remain cheap for a reason, falling into a “value
trap,” continuing to underperform despite appearing undervalued. Moreover, the P/E ratio should not be viewed in isolation. Investors should ask why a stock is trading at a discount to its peers and whether that gap is likely to close due to a business recovery, or the market recognizing the value
opportunity.

• Yiren Digital Ltd: A fintech company based in China, Yiren Digital operates a financial marketplace connecting investors with borrowers. The company offers payment processing, loan services, insurance products, and ecommerce products. Yiren Digital reported a stable third quarter of 2024, with total revenue up 13% year-over-year. Overall, the company continues to ramp up its AI initiatives, deploying new technologies to increase operational efficiency.
• i3 Verticals, Inc: i3 Verticals specializes in developing and acquiring software solutions for the public sector and health care markets. On Dec. 19, i3 Verticals announced the signing of a partnership contract with Saskatchewan Province to provide motor carrier registration services, increasing its public sector presence in Canada.
• Weibo Corporation: Weibo Corporation is a leading social media platform in China. The company generates revenue primarily from advertising and marketing, as well as premium user services. As of September 2024, it had 587 million monthly active users.

Fastest-Growing Tech Stocks

Growth investors look for companies with increasing revenue and earnings per share (EPS), believing these metrics signal strong business fundamentals and potential for value
appreciation. However, relying on just one of these indicators can present an incomplete picture, as factors like tax law changes, mergers, or one-time gains can distort the numbers.

While growth investing offers the potential for high returns, it also comes with risks, such as inflated valuations, market volatility, and companies failing to sustain rapid expansion. Investors should
be cautious of excessive hype, unsustainable growth rates, and external economic factors that could impact performance. For a more balanced assessment, we employ a dual-metric approach. We equally weight the most recent year-over-year (YOY) percentage growth in both revenue and earnings per share (EPS), giving each consideration to provide a clearer view of each company’s true growth trajectory. In addition, we exclude companies that exhibit extraordinarily high growth rates—specifically, those with quarterly growth exceeding 1,000%—since these are outliers not likely on a sustainable trendline.

• Sportradar Group AG: Sportradar Group AG is a global sports technology company that provides data analytics, betting solutions, and media services to sports organizations, media outlets, and sportsbooks. Its core businesses include real-time sports data collection, AI-driven betting and gaming solutions, fan engagement tools, and integrity services that monitor and prevent match-fixing.
• ODDITY Tech Ltd: ODDITY is a consumer tech company leveraging AI and data science to create digital-first beauty and wellness brands, disrupting traditional offline markets. The company currently boasts 50 million users and recently announced the acquisition of the intellectual property and research team of AI fintech company Fionic.
• Applovin Corporation.: AppLovin is an advertising company that helps businesses reach and monetize audiences through its software platform and mobile gaming portfolio. The company operates two segments: Its Software Platform earns revenue by matching advertisers with publishers in real-time auctions, and its Apps business generates revenue through in-app purchases and in-app advertising on free-to-play mobile games.

Tech Stocks With the Most Momentum

Momentum investing is a strategy that seeks to capitalize on existing market trends by investing in stocks that have recently outperformed their peers or the broader market. The core idea is that stocks on an upward trajectory are likely to continue rising as long as the fundamental drivers
behind their growth remain intact.

This strategy is particularly popular in the tech sector, where innovation, product launches, and market disruptions often lead to rapid stock price appreciation. However, investors must carefully monitor stock valuations, as fast-rising stocks often outpace their fundamentals. When valuations become overstretched, they can form speculative bubbles that are vulnerable to sharp selloffs if market sentiment shifts. Here are the tech stocks with the highest total return in the last 12 months.

• Red Cat Holdings, Inc: Red Cat is a drone technology company specializing in integrating robotic hardware and software for military, government, and commercial applications. Owing to strong demand for its military drones, Red Cat guided 2025 revenues in the range of $80 million to $120 million, up from $17.8 million in fiscal 2024.
• Quantum Computing, Inc.: Quantum Computing is an integrated photonics and quantum technology company focused on developing accessible and affordable quantum computing solutions. While there is controversy around the commercial viability of quantum computers, the company has secured significant partnerships, including with NASA, for applications in space missions.
• Exodus Movement, Inc.: Exodus is a financial technology company that provides secure, user-friendly self-custodial cryptocurrency wallets, allowing users to manage, swap, buy, and sell digital assets.

Advantages of Tech Stocks

Growth Potential

Tech companies, especially those in emerging sectors like artificial intelligence, cloud computing, and cybersecurity, often experience rapid revenue and earnings growth. Many tech firms have scalable business models that allow them to expand globally, while maintaining high gross margins.

Innovation

The tech industry is constantly evolving, with companies pioneering groundbreaking innovations that reshape entire industries. Investors in leading tech firms can benefit from major technological shifts, such as AI, and automation, creating long-lasting competitive advantages.

Recurring Revenues

Many tech companies, particularly those in software, cloud computing, and digital services, operate on subscription-based or recurring revenue models, ensuring more stable and predictable cash flows. These models provide businesses with greater revenue visibility, reduce dependence on one-time sales, and enhance customer retention through long-term contracts and service integrations. Additionally, recurring revenue helps mitigate economic downturns by offering consistent income streams, while also enabling companies to reinvest in research, development, and expansion

Disadvantages of Tech Stocks

Volatility

Tech stocks are known for their high volatility because rapid technological changes and competitive pressures can lead to significant price fluctuations. They often carry high valuations based on growth expectations, making them susceptible to market corrections if they fail to meet these
projections. Furthermore, regulatory challenges and geopolitical tensions can impact the sector, introducing additional risks and uncertainties for investors.

Valuation Risks

Owing to their high growth potential, many tech companies trade at high earnings or revenue multiples, making them susceptible to overvaluation. If growth expectations do not materialize, these stocks can experience sharp declines, leading to potential losses for investors. Moreover,
early-stage tech companies often allocate a significant portion of their capital to staffing and marketing to sustain their high growth rates. As a result, they tend to remain unprofitable in their initial stages, often relying on outside capital to fund expansion, despite achieving higher gross margins than companies in non-technology sectors.

Regulatory and Competitive Challenges

The tech industry faces increasing scrutiny from regulators on issues like data privacy,
antitrust concerns, and cybersecurity. Tech giants such as Meta Platforms (META)
and Alphabet Inc (GOOGL) are no strangers to regulatory probes and fines.  Additionally, competition is fierce, with companies constantly innovating to maintain their market position, which can erode profitability and market share over time.

The Bottom Line

Tech stocks offer compelling investment opportunities due to their high growth potential, continuous innovation, and recurring revenue models, making them a dominant force in the global economy. AI is set to be a major driver of technological advancements in 2025, with the potential to
disrupt all major industries. However, the sector can be volatile, with regulatory scrutiny expected to increase along with innovation. Investors should exercise caution, ensuring that even the most promising tech stocks are evaluated critically to avoid getting caught up in market bubbles or
speculative hype.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.